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Head of £2.3 billion trust says wealth preservation is the key


Lord Jacob Rothschild has warned investors that the world is mired in the most dangerous geopolitical situation since World War II.

The 78-year-old chairman of RIT Capital Partners, a £2.3bn trust, used the organization’s annual report to caution savers that the focus of the firm would be the preservation of shareholders’ capital and not short term gains.

Rothschild said that “a geopolitical situation perhaps as dangerous as any we have faced since World War II” has created a “difficult economic background” of which investors should be wary.

Rothschild, whose business associates include Warren Buffett and Henry Kissinger, blamed the fraught climate on, “chaos and extremism in the Middle East, Russian aggression and expansion, and a weakened Europe threatened by horrendous unemployment, in no small measure caused by a failure to tackle structural reforms in many of the countries which form part of the European Union”.

“RIT is popular among private investors thanks to its excellent track record and its conservative approach to conserving capital,” notes the Telegraph’s Richard Dyson. Rothschild and his daughter Hannah jointly own shares in the trust worth approximately £160m.

Rothschild’s warning follows reports from January’s Davos Economic Forum during which it was revealed that the wealthy are purchasing secret hideaways in remote locations in order to escape social upheaval and possible riots.

Economist Robert Johnson made headlines when he divulged that “hedge fund managers all over the world….are buying airstrips and farms in places like New Zealand because they think they need a getaway.”

Johnson cited income inequality and the potential for civil unrest and riots as the reason for the panic.

“A lot of wealthy and powerful people are quite afraid right now – they see us on an unstable trajectory,” said Johnson. “As the system doesn’t have proper resources, as it doesn’t represent people, things are getting more and more dangerous as say Ferguson, Missouri brings to bear.”

Realtors in New Zealand subsequently confirmed the flight to safety by the elite, noting that “paranoia” and concerns about personal safety and global crises were driving the trend.

6 NATO ships to stage war games in Black Sea

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Six NATO warships arrived in the Black Sea on Wednesday to take part in exercises with the Bulgarian, Romanian and Turkish navies, the Alliance’s Maritime Command (MARCOM) said in a statement.

The six vessels in the exercises are assigned to Standing NATO Maritime Group Two (SNMG2), which is headed by US Rear Admiral Brad Williamson.

SNMG2 currently consists of flagship US cruiser guided missile, the USS Vicksburg, as well as Canada’s HMCS Fredericton, Turkey’s TCG Turgutreis, FGS Spessart of Germany, Italian frigate ITS Aliseo and ROS Regina Maria of the US.

“The training and exercises we will conduct with our Allies in the Black Sea prepares us to undertake any mission NATO might require to meet its obligations for collective defense,” Williamson is cited as saying by the MARCOM’s website.

“We are here at the invitation of the Turkish, Bulgarian and Romanian governments and look forward to enhancing our interoperability with their navies,” the Rear Admiral added.

The drill will include simulated anti-air and anti-submarine warfare exercises, simulated small boat attacks and basic ship handling maneuvers.

The deployment of NATO vessels in the Black Sea is a scheduled visit, conducted “in full compliance with international conventions,” MARCOM stressed.

The group is expected to leave the Black Sea and make its way back to the Mediterranean later in March, it added.

“NATO regularly deploys ships to the Black Sea for maritime awareness and training. This scheduled deployment, given Russia’s continued assertiveness, carries an additional message of reassurance to allies in the region,” a NATO official told Reuters.

Previously, Russia’s envoy to NATO, Aleksandr Grushko, said Moscow will take “necessary countermeasures” in response to the Alliance’s increased presence in the Black Sea, which washes the shores of Russia, Ukraine, Turkey and several other countries.

NATO sent additional ships to the Black Sea after Russia’s reunification with the Republic of Crimea in March last year and the beginning of military conflict in April same year.

The USS Vella Gulf, USS Ross, USS Truxton, and USS Taylor – as well as warships from other NATO member states – were spotted in the area.

In July 2014, NATO deployed a total of nine vessels to the Back Sea, setting a record in the post-Soviet period.

Despite the Montreux Convention of 1936 allowing warships of non-Black Sea states to stay in the area for no more than 21 days, the alliance has managed to secure its presence by constantly rotating vessels.


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The fate of the Greek bailout remains up in the air


Last week Greece received a four-month extension of its $277 billion bailout program. The parliaments of Finland, Estonia and, most importantly, Germany, as well as Greece’s other EU partners, approved the bailout program that was agreed to Feb. 20, provided that Greece submit a list of planned reforms. Greece submitted six pages of reforms last Monday, but not all of Greece’s creditors think they are sufficient.

Christine Lagarde, managing director of the International Monetary Fund (IMF), wrote a letter to Dutch Finance Minster Jeroen Dijsselbloem, who is also president of the Eurogroup of eurozone finance ministers, expressing her concern that Greece’s proposed reforms were not specific enough, nor did they contain sufficient assurances on their design and implementation. The letter is the most recent, and public, indication of the IMF’s hesitancy toward Greece and its bailout program.

Brazil, in particular, has been outspoken in its objections to the IMF’s involvement in the Greek bailout. As a representative of 10 other developing countries on the IMF board of directors, Brazil “thinks Greece got a special deal and was allowed to borrow an extraordinary amount of money without respecting legal obligations,” says Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics. That highlights a fundamental difference between the IMF and the European Central Bank (ECB) and the Eurogroup: The IMF can only disperse funds if legal requirements are fulfilled.

While the IMF has been the most openly skeptical of the extension, the ECB, Greece’s biggest creditor, has also expressed concerns over Greece’s commitment to reform. The European Commission, the third member of the so-called troika of international creditors, is more favorable to Greece, but its influence on the bailout negotiations is minimal given that it has no money at stake, underscoring divisions within the troika. “The reason many countries, particularly Germany, keep the IMF involved is because they don’t trust the commission,” says Kirkegaard. These countries see the commission as being too soft on Greece and also lacking the track record of the IMF, which “has a long history of experience with structural reforms,” Kirkegaard adds.

That clearly sets the IMF apart within the troika. The IMF’s role in the Greek bailout, Kirkegaard explains, “is to oversee, verify and check reform progress on the ground in Greece.” Having the IMF’s experience in this area is particularly reassuring for Germany and other northern European creditor countries that want to know that their contributions to Greece are not being squandered. But that is not to suggest the IMF acts as political cover for northern Europe. “This is simply how the IMF does business, and they are good at it,” says Kirkegaard.

Since the deal that Greece and the troika reached last week is more of a stop-gap measure and doesn’t cover Greece’s financing needs, all sides will have to meet again soon to prevent Greece from running out of money well before June, and possibly in a matter of weeks. Greece’s radical left government, led by the Syriza party, will once again have to persuade the IMF and the eurozone to give them more money—no easy task. As Kirkegaard puts it, “There is a deal, but it is more a temporary cease-fire. The war will go on raging very soon.”

The fate of the Greek bailout, and with it the future of Greece and its economy, remains up in the air. Greece needs a more comprehensive deal to save it from complete economic collapse. Though whatever the final deal is, “it will look more like what the eurozone wants,” according to Kirkegaard. Syriza came to power at the end of January on a staunchly anti-austerity platform and vowed not to negotiate with the troika. Already in their first month in office, Prime Minister Alexis Tsipras and other Greek leaders have had to walk back several of these campaign promises.

However, Greece has won some minor victories in the negotiations. Greece is now able to propose changes to the bailout plan and not simply accept what the troika dictates. At least rhetorically, “Tsipras can claim he ended the troika,” adds Kirkegaard, as the Eurogroup communiqué on the bailout program makes no mention of the troika, but instead speaks of “partners.” Though it is only a shift in language, Tsipras can still present it as a concession won from Greece’s creditors.

Some are also painting the revised fiscal goals and the allowed lower primary budgetary surplus—that is, the budgetary balance before servicing debt—as a Greek win. But as Kirkegaard notes, “The fiscal targets reached last year became meaningless after the economic and political uncertainty because of the snap election. The troika responded to this uncertainty and lowered the targets.”

Syriza is also unlikely to win any concessions on broader structural reforms. The Greek government has already changed its language on how it will phase in a new minimum wage and shifted its policy on rehiring public sector workers.

While the debate over austerity rages on, the debt talks so far have signaled that the IMF’s hard line on reform and monitoring will likely push Athens’ radical left government to the center in order to reach a comprehensive deal. Syriza may have no other choice. “It is like Greece is currently falling from the 50th to the 40th floor,” Kirkegaard says. “It will hurt. But if they don’t reach a deal, they could fall all the way to the ground, which will hurt more.”


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“Moderates” is anyone who is not part of the Islamic State

The CIA supported and equipped “moderate” rebels in Syria are loosing out against al-Qaeda affiliate Jabhat al-Nusra. The last “moderate” group active in north Syria, Harakat Hazzm, had to give up its headquarter -including a ware house full of U.S. weapons- to Jabhat al Nusra and dissolved.

The U.S. military plans to recruit, pay and train new “moderate” rebels but the effort is starting veeerrry slow. Just 100 have been vetted so far to be “moderate” enough for the program. There are simply too few non-Jihadi rebels and warlords available willing to die for U.S. dollars.

A solution to the lack of qualified “moderate” personal is the rebranding of non-moderate groups into “moderates”. James Clapper, the U.S. Director of National Intelligence, recently moved into that direction:

Moderate these days is increasingly becoming anyone who is not affiliated with ISIL. And so, you know, we are attempting to engage with them, and that’s the whole point of the train and equip proposal — project that the Department of Defense is gearing up for, is to vet, recruit and train and equip opposition in sufficient size and capability to actually make a military difference.And so one of our challenges is, again, the recruiting and vetting part. So we picked people that not only are moderate, whatever that is, but also we have to be sensitive to complying with the international rules of law, which in this environment is a pretty tough order.

“Moderates”, Clapper used gestural scare-quotes, is anyone who is not part of the Islamic State. That would, it seems, include Jabhat al-Nusra who three years ago parted from IS and kept their allegiance to AlQaeda. Jabhat al-Nusra has been fighting the Islamic State ever since.

That Clapper thought of Jabhat and similar Jihadi groups like Ahrar al-Sham, is obvious from his reference to international law. The United Nations Security Council classified Jabhat as an international terrorist organization. Supporting it, like Israel does in south Syria, is a violation of UNSC resolutions. As a veto wielding member the U.S. would not like to be caught doing that.

Jabhat al-Nusra is a Jihadi group following al-Qaeda. It is obviously a non-moderate groups but as it fights against the Islamic State it is now, under Clappers new definition “moderate” and thereby qualified to receive U.S. support. Still there is the damned international law issue that has to be circumvented.

Now just in time a U.S. puppet entity in the Persian Gulf comes up with a solution for that problem:

Leaders of Syria’s Nusra Front are considering cutting their links with al Qaeda to form a new entity backed by some Gulf states trying to topple President Bashar al-Assad, sources said.Sources within and close to Nusra said that Qatar, which enjoys good relations with the group, is encouraging the group to go ahead with the move, which would give Nusra a boost in funding.

Intelligence officials from Gulf states including Qatar have met the leader of Nusra, Abu Mohamad al-Golani, several times in the past few months to encourage him to abandon al Qaeda and to discuss what support they could provide, the sources said.

They promised funding once it happens.

The Nusra Front is listed as a terrorist group by the United States and has been sanctioned by the United Nations Security Council. But for Qatar at least, rebranding Nusra would remove legal obstacles to supporting it.

A “rebranded” Jabhat al-Nusra would of course still fight the Syrian government as its primary enemy. Destroying the Syrian government is also the primary aim of the Wahhabi government of Qatar. New-Nusra would fight the Islamic State only after having secured enough resources and geography to be able to expand further. Its ideological essence would not change and its aim in the end would be to create its own version of an Islamic state.

[I]f Nusra is dissolved and it abandons al Qaeda, the ideology of the new entity is not expected to change. Golani fought with al Qaeda in Iraq. Some other leaders fought in Afghanistan and are close al Qaeda chief Ayman Zawahri.

Rebranding Jabhat al-Nusra to then declare it “moderate” in the new definition of DNI Clapper may be the plan. It worked in Libya. But I doubt its feasibility in the much longer Syria conflict. It would be a very difficult sale even for the mighty U.S. propaganda brigades. It would also mean that the organization Jabhat al-Nusra, as it now exists, would fall apart. Many of Nusra’s fighters have joined for ideological reason and to be members of alQaeda. Should Nusra revoke its oath to al-Qaeda those fighters would leave and very likely join the Islamic State.

The only reason to stay with New-Nusra would be the Qatari and U.S. money and equipment that would flow to it. But as the demise of earlier U.S. supported “moderate” groups show money and weapons are not the decisive factor in winning the fights on the ground.


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Tensions over Ukraine continue to build despite ceasefire


Russian fighter jets are practicing attacking NATO ships in the Black Sea in another dramatic sign that tensions over Ukraine continue to build despite a fragile ceasefire agreed last month.

“Russia’s newest Su-30 fighter jets and Su-24 attack bombers are using two NATO ships in the Black Sea to practice penetrating anti-air systems,” reports Sputnik, citing a source at the Sevastopol naval base.

Asserting that the NATO ships are conducting drills based around “repelling air attacks,” Moscow is taking the opportunity to practice “maneuvering and conducting aerial reconnaissance” outside the range of the ships in order to “practice attack scenarios”.

The report also states that Russia is closely monitoring the movements of the ships, namely the USS Vicksburg missile cruiser and the Turkish TCG Turgutreis frigate, and the assignments they are performing.

Three Su-30 jets and four Su-24 bombers carried out reconnaissance on the ships yesterday.

The exercises coincide with an unannounced test of nuclear weapons near the central Russian city Yoshkar-Ola. Russia’s Strategic Missile Forces (SMF) said the exercise was based around an assessment of the “condition and security provisions” of nuclear weapons in the Yoshkar-Ola Missile Unit, which is armed with the Topol intercontinental nuclear-capable ballistic missile complex.

Russia has also sought to demonstrate its military might with a series of maneuvers over sovereign European airspace. The latest incident involved two Tu-95 ‘Bear’ long-range strategic bombers which flew 40 kilometers off the Irish coast with their transponders turned off, forcing air traffic control to re-route commercial flights to avoid a collision.

Sporadic fighting in eastern Ukraine between pro-Russian rebels and Kiev forces continues to be reported despite an agreement from both sides to withdraw heavy weapons from the region. At least 6,000 people have been killed since the conflict erupted last year.