MAY 2015

VICTORY IN EUROPE (VE) DAY, 8th MAY 1945. GAZA, Australian casualties. Commonwealth War Graves.
(Source, The Conversation, Matt Hardy, Deakin University)

The soul destroying humiliation of living in lands only valued for their oil.
(Graeme Wood, Atlantic Magazine)

The 2*C temperature limit defines a ‘warning line’ not a ‘guard rail’.
Climate Analytics, Berlin.

Victory in Europe (VE) Day
Clash of Cultures
The Winds of Climate Change
The Budget, Macro-economics, Climate Change plus a RED ALERT
Fortress Australia and the ANZUS Treaty
A Power Stirs
Chinese Investment in Australia
Rural Bliss

Victory in Europe(VE) Day 8th May 1945.
LEST WE FORGET-but we do.
(Peter Carlin, Poets Corner)
Australian War dead, 40,400 in European, African and Middle Eastern theatres.

Clash of Cultures
There is a growing awareness that the Islamic State of Iraq and al-Sham (IS) is more than blood crazed fighters or a ‘death cult’. Top management is controlled by educated Arabs that include medical, scientific and management cadres. There are Ba’athist military officers who served under Saddam Hussein. Many were hardened in the US Camp Bucca military prison in Iraq. It was in this prison that the seeds of IS were germinated within the mix of violent ideological extremists and former Ba’athist military officers ( SG Group Intel Briefs).
IS is quite unlike al-Qaeda, IS requires territory to remain legitimate and it has developed a top down structure to control and administer its territories. The movement has a medieval religious ethos with a commitment to return civilisation to a 7th century legal culture.
Although many Muslims reject IS it would be wrong for the West to deny it is a religious organisation with a theology that must be understood by the West. The theology is based on the original perfection of the Quran and reinterpretation constitutes apostasy. Such belief requires that IS is committed to purifying the world by killing vast numbers of people.
The strength and attraction of IS is based on a bitter accumulation of grievance generated from history over the past century, that is since the demise of the Ottoman Empire. Grievances include the partition of the Middle East by the West, the resulting bad governance supported by the West, the shifting social mores and the soul destroying humiliation of living in lands only valued for their oil. In the background is the lingering primal memory of the great Umayyad and Abbasid caliphates and associated culture.
The IS ranks are strongly infused with Islamic vigour and there is no shortage of male and female volunteers from Europe, United States, Indonesia, and Australia. The IS propaganda machine generates enthusiasm but no deviation from the sacred texts of the Quran. Slavery and other atrocities are spelt out within the holy texts, e.g. Sura 70:29-30; Quran 8:12.
Denouncing IS can be counter productive if the teachings of the Quran are questioned. The West is facing a faith based ideological problem that is reinforced by an entrenched political and sociological problem that has been imposed on the Middle East by a Capitalistic West. Until the memory of imposed bad governance following WW1 and the humiliating memory of a people and lands only valued for oil is expunged a “Cause” will remain. Contained by the West with the support of both Shia and Sunni moderates the IS will possibly ‘bleed’ to death. This will not be quick as an ideology must be turned around. There is a risk the Islamic State and al-Quaeda may discover a common cause and this will increase the threat (What IS really wants. Atlantic Magazine, 2015).
The Australian government has not spelt out how ‘deradicalisation’ of IS volunteers will be attained. Under IS social media pressure potential recruits become idealists and espouse an ideology that seeks the past purity and glory of Islam, this provides an objective and sense of purpose. The Australian government will have to enthuse young Muslim minds with a sense of purpose and a replacement ideology. Punishment and vilification will be counter productive, remember Camp Bucca.
Giving young minds a new sense of direction will be difficult and it cannot be achieved by repression or force, again remember Camp Bucca.
Both Russia and China have offered only the most tentative cooperation with America and neither are involved on the ground. Russia is well aware of its unstable Muslim underbelly while China’s north-west region is a hotbed of Sunni Uighur independence ferment. Both regions have provided volunteers for the IS militia.

The Winds of Climate Change.
Two intertwined global warming trends have been reported by the National Oceanic and Atmospheric Administration (NOOA) and the Council for Scientific and Industrial Research (CSIRO) on carbon dioxide concentrations in the atmosphere and the rise of sea surface temperatures round Australia and the Antarctic.
For the first time the global average carbon dioxide levels have exceeded 400 ppm and green house gases are rising by more than 2 ppm per year. NOOA calculates that cutting fossil fuel emissions by 80% would only slow down the rise above 400 ppm but, of course, this is politically impossible.
From ice core data the 400 ppm concentration is the highest for the past 650,000 years. Around 1750 global CO2 emissions were about 11 million tonnes per year while in 2009 emissions were in the region of 32 billion tonnes ( Climate Analytics, Berlin).
The UN Convention on Climate Change has just issued an alert that “the world is in a new danger zone’ and tipping points for the following might become irreversible : drought, sea level rise, acidic oceans, loss of Arctic sea ice, melting of Antarctic and Greenland ice caps, methane release from permafrost and dengy fever.
Concurrent with rising greenhouse gas levels it was announced sea surface temperatures have risen by 0.7*C with warmer areas, up to 2*C higher, in north-western and east Australian waters. These warmer condition have generated a spate of cyclones over north Queensland waters and unusually strong East Coast lows along the south-eastern Australian coast line. The Bureau of Meteorology (BOM) has recently forecast another El Nino for south-east Australia, in conjunction with the Queensland drought (see map) this is worrying news.

The Budget, Macro-economics and Climate plus a RED ALERT
It is not often the celestial bodies moon, earth and sun are in syzygy alignment (yoked together, Greek), less often does a budget, macro-economics and climate change align in this most unfortunate manner. Two item in the May budget, the small business stimulus and the proposed funding assistance to develop Northern Australia infrastructure are both facing economic and climate headwinds.
The stimulus to small business of instant asset write down of up to $20,000 per item must be rationalised against Australia’s historically low interest rate of 2% and the appreciation of the $A against the $US, the Reserve Bank has hinted the rate may be further reduced. The Australian economy is flat lining, capital inflow has dried up and capital will tend to flee. The budget objective is to generate expenditure and promote youth employment. The tax reduction of 1-5% is derisory i.e. a $150 deduction in a $10,000 taxable income. In the following budget talk back comment a recurring theme was that $20,000 was far short for many business upgrade or replacement costs. It was the Canadian experience where economic stimulation resulted in increased productivity but not appreciable increased employment.

Queensland's current plus three year drought
Queensland’s current plus three year drought

The budget is to encourage infrastructure funding for Northern Australia-laudible. There is mounting evidence that climate change will progressively adversely affect the north. Rolling forecasts on the back of recent past and future weather disasters should be locked into development plans, the implications of 400 ppm, and increasing, atmospheric carbon dioxide must be understood. Currently 80% of Queensland is drought declared with the 31 month rainfall deficiency the lowest on record (Map above. Source BOM, Australia), the Northern Territory has also suffered a below average 2014-15 wet season. One swallow maketh not a summer, neither does a few bad years prove fundamental climate change however the Abbott government must back infrastructure expenditure with a rolling climate trend analysis, without this information there is a risk of creating a failed ‘food bowl for Asia”.
RED ALERT. What the Government did not tell Australians when the budget (dominated by the end of the mining ‘boom’) was being dissembled is the disturbing decline in national capital investment-hence the strident attempt to generate capital expenditure and employment in the small business sector. Australian Bureau of Statistics (ABS) figures show capital expenditure figures fell by 4.7% for the quarter ending March 2015 as the budget was under preparation.
As mining investment came off the boil the hoped for rebound in manufacturing and investment services has not happened and these sectors are also declining. Manufacturing has fallen by 30% in the past 15 months and services by 20% in the past 18 months.
These are serious trends, forward estimates for 2015-16 are 25% below those for 2014-15. Westpac has indicated the Reserve Bank may be forced to reduce interest rates below 2%. ” Good for home buyers”, despite encouraging comment by the Treasurer this epizeuxis ‘Nope! Nope! Nope!’ by the Prime Minister would for once be appropriate. The cranials in our society will be wondering if Australia is about to join the exclusive ‘Sputtering Economies Club’ lead by Europe and America.

Fortress Australia and the ANZUS Treaty
The March blog noted the United States had quietly moved its Caribbean communication base to Western Australia. Not so quiet has been the proposed transfer of military bases to other locations including Australia. At a high level meeting in Washington it was announced a fleet of B1 bombers are to be rotated in Australia. These are supersonic long range aircraft with a payload of eighty 500 pound bombs.
There followed an immediate Australian political hubbub resulting twenty four hours later in a bemusing Pentagon statement there had been an ‘official miss-spoke’ and ‘there are no plans for B1 bombers to be rotated as of now but the United States intends to increase the rotation of of B52 bombers, fighters and refuelling tankers. Marine numbers on rotation to Darwin will also be increased.
The ‘miss-spoke’ cannot be a figment but probably reflects back room strategic discussions in the Pentagon. The American ‘pivot’ to Asia will certainly involve increased military hardware based in the Australasian region. Australia’s cooperation and support in the roll out of the ‘pivot’ policy is important to America. (RN AM and Late Line, 16 May). The Australian language matched the contorted phraseology of the Pentagon. The Prime Minister’s response approximately ‘the US does not have any plans to bring those aircraft to Australia’. This statement is heavy with the unstated and is not a rejection of the idea.
The cause of this political verbal minefield is the increasing Chinese military grip on disputed territorial claims in the South China Sea. The Chinese activities have been described as terra farming or geo-engineering (Prof. H White, Strategic and Defence Studies, ANU). Strings of coral atolls are being constructed into air strips capable of accommodating heavy military aircraft. This work is proceeding some 800 km from the Chinese coast and about 200 km from the Philippines. The United States have been reluctant to directly challenge Chinese activity in these disputed waters but now this problem has to be addressed. Its relationship with South-East Asian allies is at stake. Also in the mix are extensive areas of sea bed oil and gas deposits in this region.
China is not only flexing its muscles in a show of strength but its international trade is dependent on maintaining sea route safety in the South China Sea and the Malacca Straits. Chinese maritime power through a ‘string of pearls’ policy has developed or investigated naval base options in Pakistan, Seychelles, Mauritius and Myanmar. China has already conducted naval exercises with Iran in the Persian Gulf. All this to protect China’s oil imports, 55% of which originate in the Persian Gulf, pass through the Malacca Strait and into the South China Sea.
A seasoned commentator stated ‘China is slicing its way salami like to a leadership role in Asia’. Apparently incompatible with current bellicose behaviour in the South China Sea its initiative in setting up the Asia Infrastructure and Development Bank is the obverse side of the same coin. Already a dilemma for Australian foreign policy has arisen, Australia acceded to the Chinese request to join while America wanted Australia to remain outside this economic coven.
There is a deja vu with this B1 ‘bombshell’ and the salami slicing progress of the United States in creating an Australian military outpost. Back in the sixties there was initial unease over the construction of the Pine Gap communications facility, then further unease when an American general in Darwin let slip that Haliburton, an American arms contractor associated with Dick Cheney former Vice President, had completed the Alice Springs-Darwin railway. Critics stated there would never be enough traffic to justify its construction, at some stage it could play a vital role in moving heavy military assets and supplies towards northern front lines. Then there was diverse comment several years back on the rotation of American marines in Darwin. The recent relocation of the Caribbean communication facility to Western Australia appears to have occurred under the radar. Now there is to be a rotation escalation of B52 bombers, fighters and refuelling tankers based at Tindall air base, south of Darwin. Additional marines will be rotated from the Darwin base. Perhaps the B1 bombers were intended to be a high flying decoy!!!
Ultimately Australia will have to make a decision to go with our biggest trading partner, China, or go with our biggest ally, America. If Australia is forced to make a decision the ramification will be vast.
Sixty-five years ago Australia was reluctantly involved in another great decision when Winston Churchill had to make the judgement whether Great Britain should join the European Union or support the Empire. It chose Europe and forced Australia into the trading arms of the very recent enemy Japan and its potential bete noir, China. Will Australia’s great Federation fear yet come to roost?
The big picture is that History does happen and Empires do rise and fall.

A Power Stirs.
While eyes and armaments are directed towards the South China Sea the rising giant, Indonesia, is stirring by gaining economic and military strength, the IMF is forecasting an approaching sea change. Within ten years Indonesia is slated to have attained air superiority over Australia. What then of American marine and air bases in Northern Australia?
By 2020 the IMF estimates Indonesia will be the world’s 16th largest economy (GDP $1.3 trillion), Australia will be at 14th ($1.49 trillion). In purchasing power Indonesia will be three times that of Australia.
Translating this into air superiority there are looming implications for Australia and the ANZUS Treaty. America will supply Strike Fighters to Australia and Russia will supply Sukhoi Fighters to Indonesia, cost and capability compared:
*American Fighter $230 million x 100 = $23 billion, missile cost $1.1-1.7 million each, software superiority for now. Australia may not take the full 100 fighters.
*Russian Fighter $100 million x 180 = $18 billion, missile cost $0.57 million each, flies two miles higher, longer range and faster than the American fighter.
It is estimated China, Japan, and Indonesia will have military superiority exceeding that of Australia in about a decade this is against a perception the United States is projecting less power than previously. (Source: Weekend Australian, 23-24 May.) The years of ‘turning back the boats’ may be numbered and in the future let us hope ‘Australia has no greater friend than Indonesia!’.

Chinese investment in Australia
The Rockhampton Beef Exposition has drawn large crowds, among them are are at least 350 prospective Chinese importers of Australian beef which include representatives of the Xiangyu Group who are planing to invest between $300-$500 million over the next five to eight years in integrated grazing, feed lot and abattoir enterprises. The driving force is ‘an obligation to make a contribution to the Australian beef industry’: code for ensuring a stable beef supply for China. The recent purchase of the Glenrock cattle station (March blog) in the Upper Hunter for #45 million provides weight to interest at Rockhampton.
In tandem, the Chinese investment in housing in Australia is attaining new levels. Investment for year ending June 2013 was $5.4 billion and for 2014 was $8.7 billion, at an estimated cost of $2 million per dwelling this is 4,600 dwellings in the Sydney/Melbourne region. Credit Suisse estimates $60 billion will be invested in new Chinese housing in the next six years, this is equivalent to 25,000 new units at $2.5 million each. It is reported that Melbourne and Sydney have higher valuations than London,New York and Tokyo.

Rural Bliss
Not only do Cabbages and Kings have a use by date so too does farm machinery and rural domestics. The past few months has witnessed a rolling snowball of mechanical and electrical failures necessitating repairs and replacements that has pushed expenditure to haemorrhage flows.
Recalcitrant and failed equipment includes the waterhole high pressure pump, blocked reticulation lines, domestic water pump, ride-on mower, push mower, computer, electric drill, quod motor bike, electric iron, toaster, television and, shiver my timbers, the electric blanket. Hither too among the 21st century plasticised comestibles the old faithful 1985 Hoover washing machine that has regularly thundered round the laundry has,alas, become incontinent, it too must go!