BC Regulators Missing In Action on Unauthorized Fracker Dams

A Dam Big Problem: Regulator Breakdown as Fracking Companies in BC’s northeast build dozens of unauthorized dams

in BC’s northeast build dozens of unauthorized dams - See more at: http://www.policynote.ca/dam-big-problem/#sthash.B29cvnLm.dpuf

by CCPA

May 3, 2017

A subsidiary of Petronas, the Malaysian state-owned petro giant courted by the BC government, has built at least 16 unauthorized dams in northern BC to trap hundreds of millions of gallons of water used in its controversial fracking operations.


An unauthorized Progress Energy dam where millions of gallons of freshwater 
was found impounded in early April. It is among “dozens" of unpermitted 
dams spread across northern BC, a CCPA investigation has found.
Photo by Garth Lenz

The 16 dams are among “dozens” that have been built by Petronas and other companies without proper authorizations, a senior dam safety official with the provincial government told the Canadian Centre for Policy Alternatives, which began investigating the problem in late March after receiving a tip from someone with knowledge of how widespread the problem is.

Two of the dams built by Progress Energy, a wholly owned subsidiary of Petronas, are towering earthen structures that exceed the height of five-storey apartment buildings. Petronas has proposed building a massive Liquefied Natural Gas plant in Prince Rupert, which if built would result in dramatic increases in fracking and industrial water use throughout northeast BC.

The two dams are so large that they should have been subject to review by BC’s Environmental Assessment Office (EAO). Only if a review concluded that the projects could proceed would the EAO’s office have issued a certificate, and only then could the company have moved on to get the necessary authorizations from other provincial agencies.

But nothing close to that happened because the company never submitted its plans to the EAO before the dams were built.

Now, five years after construction on the two dams began, the CCPA has learned that BC’s Environmental Assessment Office has belatedly launched an investigation. Other agencies are also scrambling to figure out what to do as evidence emerges of extensive unauthorized dam-building on their watch.

Another 13 Progress Energy dams are being retroactively reviewed by the Oil and Gas Commission (OGC).

That’s because on December 23, 2016, the company applied simultaneously to the Province for 13 water licences to impound water behind dams that it had already built.

The huge challenge now before the OGC, which has authority to grant water licences to Progress Energy and other natural gas companies operating in the region, is that under BC’s old Water Act as well as the new Water Sustainability Act, companies are not allowed to build dams that impound freshwater without first obtaining authorizations.

It now falls to the OGC well after the fact to decide whether the water licences will be granted. Because engineering plans for the dams were not submitted to provincial dam safety officials before the structures were built, the OGC must also retroactively determine whether the dams are structurally sound, and if they are not, whether they should be ordered shut down.

The 16 dams are among “dozens” that have been built by Petronas and other companies without proper authorizations.

The latter is a distinct possibility. During its investigation, the CCPA uncovered evidence that one of the dams built by Progress/Petronas showed signs of failure last year, which would have sent a wall of water and mud rushing toward a gas-processing plant not far downstream. The OGC subsequently ordered the company to dewater the dam.

Complicating matters considerably, the dams are located close to natural gas industry drilling and fracking sites. Fracking involves pumping immense amounts of water under extreme pressure below ground to “liberate” gas trapped in dense rock formations. Throughout northeast BC, the intensity of that pressure-pumping has triggered numerous earthquakes, including a 4.6 magnitude tremor at a Progress/Petronas fracking operation in August 2015 that was felt 180 kilometres away.

That means in addition to assessing the general engineering integrity of dozens of unauthorized dams, the OGC must also consider how seismically sound they are.

Progress/Petronas dams just the beginning

Progress/Petronas is not alone. Details on many more unpermitted dams are expected to emerge in the coming months as other natural gas companies apply retroactively for water licences.

The full extent of the unauthorized dam building is not yet publicly known. But according to Jim Mattison, a former comptroller of water rights for the provincial government, the extensive network of energy industry dams and other water impoundment structures is vast. And, to date, largely unregulated.

During a phone interview on April 20, Mattison said there are “certainly more” than 100 large dams that have been built by or for energy companies operating in the region. At the end of the day, he says, additional fieldwork may reveal that there are “200 or more” such facilities.

Mattison has reached that conclusion after researching the problem under contract to BC’s Ministry of Forests, Lands and Natural Resource Operations (FLNRO). The research includes analysis of satellite imagery and remote sensing data.

Complicating matters considerably, the dams are located close to natural gas industry drilling and fracking sites.

Mattison said that work shows there are literally “thousands” of artificial water bodies across northeast BC. The list includes everything from small dams and dugouts built by landowners to capture and divert water on private farmlands that is subsequently sold to fracking companies; borrow pits used to excavate earth for roadbeds and other oil and gas company infrastructure; and, at the top of the pyramid, massive earthen dams built on crown lands by Progress/Petronas and others.

This vast and dispersed network of water impoundment structures is likely to have extensive effects on everything from aquifers, to ecologically unique and sensitive muskeg systems, to water levels in fish-bearing streams and rivers, to beaver ponds and wetlands, and to fish, animal and plant communities of importance to numerous First Nations.

Problem known – public not notified

Records obtained by the CCPA indicate that the Oil and Gas Commission, Ministry of Forests, Lands and Natural Resource Operations and the BC Environmental Assessment Office are all aware of numerous unauthorized dams, and that they may contravene key provincial laws and regulations including the Water Sustainability Act, the Environmental Assessment Act, and provincial dam safety regulations.

Even though some of the dams may pose significant environmental, public health and safety risks, the CCPA has found no documentation that a single provincial government agency or ministry has issued a press release or safety advisory about the problem. Nor have we found any evidence that the government has charged or fined any companies for the unauthorized dams they’ve built.

Evidence that Progress Energy and other companies had built numerous unauthorized dams began to surface last spring, but without fanfare. In a rarely read quarterly report, the OGC published a 24-word “summary” of an order it had issued to Progress Energy.

The summary said:

“Remove excess water from storage structure, and submit engineering assessment and certification of structural integrity in accordance with the Dam Safety Regulation.”

It ended with two words: “Compliance ongoing.”

The offending dam’s location was vaguely listed as “Town.”

The full extent of the unauthorized dam building is not yet publicly known.

In mid April the CCPA requested a copy of the full order from Graham Currie, the OGC’s director of corporate affairs. Currie was also asked to comment on Progress’s water licence applications and the EAO investigation. On April 21, he refused to provide any information, saying in an email that the OGC had to “remain impartial as a government agency” during the writ period or interregnum. He recommended applying for a copy of the full order by submitted a formal Freedom of Information request, a process that typically takes months. Generally, government rules restrict the release of information during the election period, but the rules usually apply only to Cabinet documents.

In response to questions sent by email, Progress Energy communications advisor Eryn Rizzoli acknowledged that the company had been ordered to dewater the dam.

“Progress Energy has complied with all conditions as detailed in Order 2016-003 49(1)(b). Dewatering of this facility was completed in May 2016. The facility is not in use at this time,” Rizzoli wrote.

“Progress actively assesses and monitors the Company’s entire water impoundment inventory,” Rizzoli added. 

 “This includes conducting engineering and geotechnical assessments and submission to relevant government and regulatory agencies, where required.”

Contacted by phone on April 5, Scott Morgan, head of FLNRO’s Dam Safety Section, recounted learning more about the scope of unauthorized dam building by Progress and other companies during a conference call last summer. On the call were several OGC officials, one of whom said at one point:

“By the way, we have a problem.”

As the call progressed, Morgan recounted hearing there were “dozens” of dams that had been built without proper authorizations, including at least nine that were “over nine metres high.” Two of the larger dams were more than 15 metres high, which meant they should have been reviewed by the Environmental Assessment Office before being built.

Fracking operations driving corporate rush for freshwater

Petronas and other companies drilling and fracking for natural gas in the Montney shale gas play in BC’s Peace River region now pressure-pump up to 160,000 cubic metres of water underground at individual gas wells.

The largest of the Progress/Petronas dams holds almost enough water to complete one major frack job, meaning it holds considerably more water than that which spilled from the Testalinden dam, a 10-metre high structure that failed near the community of Oliver in 2010, triggering a mudslide that destroyed five homes but miraculously took no lives.

In the event Petronas decides to invest in its proposed Prince Rupert LNG facility, it will need access to considerably more freshwater.

Collectively, the 13 water licence applications filed by Progress Energy on December 23, 2016 amount to a significant water grab, an attempt to corral up to 683,000 cubic metres of freshwater for use in the company’s fracking operations.

Only the most basic information on the applications is publicly available. But what is clear is that Progress/Petronas intends to store stream water at each location. In many cases, the water source is unnamed. But in other cases, streams are listed including Caribou, Barker, Apsassin and Grewatch creeks. The database records say nothing to indicate that in all 13 cases, Progress Energy was applying for permission to store water behind dams that it had already built.

Field visit confirms: dam first, water application second

The information is contained in a searchable database maintained by FLNRO’s Water Allocation Section. The Ministry retains powers to issue water licences to all applicants except fossil fuel companies, which apply to the OGC for such authorizations. BC’s oil and gas industry is the only entity in the province that has its own dedicated regulator when it comes to water authorizations.

On the call were several Commission officials, one of whom said: “By the way, we have a problem.”

The CCPA asked the Water Allocation Section for the precise geographical coordinates for Progress Energy’s new water licence applications. The coordinates were then used to locate one of the sites, about a half-hour helicopter’s journey northwest of Charlie Lake, near Fort St. John.

Eventually, after flying over brown stubbly hayfields, ranging cattle and remote farms, dusty grey aspen forests, dark spruce trees and myriad natural gas company operations, a distinct rectangular structure with large earthen berms was spotted in the distance.

Closing in on the site, it was clear that massive amounts of earth had been excavated to make walls that topped out at about nine metres in height. The sloped walls or berms had trapped an enormous amount of freshwater that was coated in a thin sheet of ice on a cool mid-April afternoon. Water could be seen trickling into the reservoir along a dark brown muddy industrial road down which a large yellow excavator was making its way.

The dam had been strategically built to create a new reservoir that would capture freshwater flowing downhill. Clearly as far as Progress Energy’s “application” for Water Licence 9000226 was concerned, the dam was already built and the water already impounded.

According to the scant information available on the government’s website on water licence applications, the dam is capable of supplying 135,475 cubic metres of freshwater. It is the single largest application for water storage of the 13 Progress Energy has retroactively applied for approval.

Following the field visit, Progress confirmed in an email to the CCPA that there are “existing fresh water storage structures” at the 13 locations and that last year’s passage of the new Water Sustainability Act “necessitated” that the company now apply for water licences at those locations.

Progress did not elaborate on why it felt that under the old Water Act it was unnecessary for the company to apply to the government before building its dams.

First Nations consultation?

Almost all of BC’s natural gas deposits are located in the northeast of the province, where First Nations live and are signatories to the historic Treaty 8. Signatories to the treaty include the Blueberry River First Nation (BRFN). The Nation is currently before the courts in a potentially precedent-setting lawsuit in which it is seeking compensation for the “cumulative” environmental damages to its traditional lands and waters from a host of industrial developments including natural gas drilling and fracking operations, hydroelectric dams, mines and logging activities.

Given that so many dams were built without proper oversight, First Nations including BRFN are unlikely to have been properly notified or consulted about what the companies intended to do on their traditional lands. For example, had proper protocols been followed, water license applications would have been turned over to First Nations for review and consultation well in advance of such licences being granted, let alone dams being built.

Given that so many dams were built without proper oversight, First Nations are unlikely to have been properly notified or consulted.

Conflicting accounts

During a short telephone conversation in early April, EAO project assessment manager Teresa Morris confirmed that the two massive Progress Energy dams are being investigated, that Progress is aware that the unauthorized dams are under scrutiny, and that the company had indicated to the EAO that it would apply to have the projects “exempt” from the EAO process.

At present, there is nothing publicly available on the EAO website indicating that the unpermitted dams are being looked into by the agency.

Morris said the Progress dams would be listed on an EAO registry of projects if and when Progress Energy applies to have them retroactively exempted from EAO review.

Asked if the EAO had received such an exemption request, Morris said in early April and reconfirmed on April 18: “No we have not. When we do, a public webpage will be established.” She referred all further questions to David Karn, a senior communications officer in government communications and public engagement with the Ministry of Environment. Contacted on April 28, Karn said that the interregnum period prevented him from commenting.

A listing by the EAO would be the first indication that a provincial environmental agency was reviewing dams built by one of the biggest Liquefied Natural Gas proponents in the province.

According to Progress Energy, however, the company has already filed its exemption applications. In response to questions from the CCPA, Progress Energy’s Eryn Rizzoli wrote:

“The British Columbia Environmental Assessment Office is reviewing two project descriptions submitted by Progress in accordance with the Environmental Assessment Act and Reviewable Projects Regulation.

“Progress Energy has requested an exemption from the full review process for two existing fresh water storage structures that have been in service for several years without any incident or failure.”

The CCPA has yet to receive a response from the province explaining why the EAO’s office is saying one thing and Progress is saying another.

Late in game OGC to decide safety of gas industry dams

Until recently, responsibility for the safety of all dams in the province, including any built by fracking companies, rested with dam safety officials in FLNRO. Proper procedure required the companies to first apply to the OGC for a water licence, and then for dam-design and building plans to be submitted to FLNRO for review and approval.

But that has recently changed. Last year, former provincial water comptroller, Glen Davidson, granted an OGC request for one of its staff to be designated a dam safety officer.

The only two dams that may fall outside the OGC’s purview are the two massive structures currently under investigation by the EAO.

Three years ago, Davidson appeared before the Joint Review Panel, which had been convened to review the Site C hydroelectric project. During his presentation, Davidson noted that all dams “are inherently dangerous structures” but that risks “can be minimized and managed.”

“I think surprisingly to most folks, on average, we get about one dam failure a year in BC, but most of these are very, very low consequence and they probably don’t even make the papers, so most people are not aware of them,” Davidson said.

One tool to minimize risks that higher consequence dams could fail, Davidson said, is for dam safety officials to review engineering specifications on dams before they are built. Davidson noted that provincial dam safety officials have internal capacity to do that, but that there is also precedent when dam safety officials feel it is warranted to hire independent engineers to do more rigorous assessments.

Davidson noted that when his office had to deal with many independent power producers and their plans to build run-of-river dams, the office hired “an independent engineer that reported to the Province. And we asked that independent engineer to review the designs, the design drawings and give the Province advice on subsequent approvals.”

The precedent is there, then, for the OGC to insist that independent engineers be brought in to advise on the quality and the safety of the dozens of dams built by Progress/Petronas and others.

Knowledge that so many dams have been built across northeast BC raises many questions.

Implications

As investigations continue on at least three fronts, provincial government officials must now decide just how many companies may have broken rules and what the consequences of breaking those rules should be. They must also determine how government regulation of the industry could have broken down as badly as it did.

Under the provincial Environmental Assessment Act, a company breaks the law when it builds anything that is a “reviewable project” under the Act, without first obtaining permits to do so. A first offence can trigger a $100,000 fine. All subsequent offences can trigger fines of up to $200,000.

Penalties for companies found guilty of “general offences” of the provincial Water Sustainability Act can be far more severe. If a company “without lawful authority . . . diverts water from a stream or aquifer” or if it “constructs, maintains, operates or uses works” that have not been authorized, it can be fined up to $200,000 and personnel can be jailed for up to 6 months. If the company is found guilty of an “ongoing offence” the penalty may be a $200,000 fine per day.

The consequences for “high penalty offences” under the act are even more severe. If a company “constructs, places, maintains or makes use of an obstruction in the channel of a stream without authority to do so”, the penalty can be up to a $1 million fine and one-year prison sentence. The fine for a continuing high penalty offence can be as much as $1 million per day.

The Province’s Dam Safety Regulation also itemizes numerous requirements for companies building dams to ensure their safe operation following construction, the violation of which can result in fines of up to $200,000 for general offences and up to $1 million for major offences.

“The problem here goes way beyond whether or not one company broke the law,” Calvin Sandborn, legal director of the University of Victoria’s Environmental Law Centre says.

“The problem is that vast swathes of the landscape – of entire ecosystems, of entire hydrological systems – are disrupted, likely permanently.”

“The Province still doesn’t have a handle on the scope of the risks. And they are making feeble attempts to deal with this region-wide disaster,” Sandborn added.

Knowledge that so many dams have been built across northeast BC raises many questions. In the coming weeks, the CCPA will strive to obtain answers to these questions.

How widespread is the construction of unauthorized dams by energy companies?

Which companies are engaged in building unauthorized dams?

Where are these dams, and how large are they?

Which dams are now under retroactive review by the Environmental Assessment Office and/or Oil and Gas Commission?

Why have these reviews and investigations not been made more public? (Only following a tip by a person with inside knowledge did the CCPA begin this investigation and gain information needed to complete this report.)

Why do no fines or penalties appear to have been levied to date?

How many dams have been decommissioned and where are they?

Does it make sense for the OGC to both issue permits to oil and gas companies allowing them to drill and frack for natural gas and to be the public’s environmental and public health and safety watchdog as well?

Or has the time come to turn that important monitoring and enforcement role over to an arms-length agency?

With at least dozens of unpermitted dams already built in the province’s northeast fracking fields, the time has come for answers to such questions and a whole host more.

This investigation was undertaken as part of the Corporate Mapping Project (CMP). The CMP is a six-year research and public engagement initiative jointly led by the University of Victoria, the Canadian Centre for Policy Alternatives’ BC and Saskatchewan Offices, and the Alberta-based Parkland Institute. This research was supported by the Social Science and Humanities Research Council of Canada (SSHRC).

Vote to Protect BC’s Endangered Old-Growth Forests!

TAKE ACTION: Tell the 2017 Provincial Election Candidates to Protect BC’s Endangered Old-Growth Forests!

by BC Forest Movement

May 4, 2017

BC’s old-growth coastal temperate rainforests are some of the rarest ecosystems on the planet. Home to some of the world’s largest trees, old-growth forests are not only iconic – they support unique plants, animals and cultures.

And yet they’re disappearing before our eyes. Send a message to demand action from our politicians! Our spectacular but threatened old-growth forests are endangered by industrial logging, despite their environmental and economic benefits.

On BC’s southern coast, satellite photos show that at least 75% of the original productive old-growth forests have already been logged, including well over 90% of the lowland ancient forests where the richest biodiversity and largest, most magnificent trees are found.

Old-growth forests are important because they:

• Support unique wildlife.
• Provide clean water for people, wild salmon, and other wildlife.
• Store vast amounts of atmospheric carbon.
• Support the tourism industry.
• Are central to many First Nations cultures.

Despite the continuation of old-growth logging in BC, forestry jobs are declining across the province, largely due to:

• Resource depletion from the unsustainable liquidation of the biggest, best old-growth trees in the valley bottoms and lower slopes.

• A failure by the BC government to enact incentives and regulations for companies to retool old-growth sawmills to process smaller second-growth logs and to develop value-added wood industries.

• The vast export of raw logs to foreign mills, resulting in the loss of thousands of potential BC milling jobs.

The Ancient Forest Alliance is calling on the BC government to implement a comprehensive, science-based plan to protect BC’s endangered old-growth forests while ensuring a sustainable, value-added second-growth forest industry.

Thousands of concerned British Columbians from diverse segments of society; multiple chambers of commerce, including the BC Chamber of Commerce; the Union of BC Municipalities; the Association of Vancouver Island Coastal Communities; the Public and Private Workers of Canada (who represent pulp and paper mill workers); and many others have all called on the provincial government to increase the protection of BC’s remaining old-growth forests and transition to a sustainable, value-added, second-growth forestry industry, which would support and enhance forestry jobs in BC at the same time!

Now, with the BC provincial election quickly approaching, it’s time to make our voices heard! Liberal, NDP and Green Party candidates need to know that protecting old-growth is good politics and that their constituents demand action.

SEND a MESSAGE to BC’s key politicians and government HERE!

3) Or WRITE to key provincial politicians and the BC government, demanding that they:

• Undertake a Provincial Old-Growth Strategy to ban or quickly phase-out old-growth logging wherever old-growth forests are now scarce (ex. Vancouver Island, Lower Mainland, BC Interior, etc.)

• Ensure the sustainable logging of second-growth forests (which now constitute most of southern BC’s forests).

• End the export of raw logs to foreign mills in order to ensure a guaranteed log supply for BC mills.

• Assist in the re-tooling of BC mills and the development of value-added wood processing facilities to handle second-growth logs.

• Support First Nations Tribal Parks, protected areas, and land use plans with legislation and financial support to help develop conservation-based, sustainable economies in their communities.

Visit the Ancient Forest Alliance’s website to view photos, videos, news or to sign up to our newsletter.

Click to see maps and statistics on the remaining old-growth forests on BC’s southern coast.

Messages are sent to:

BC Liberal Party Leader Christy Clark | BC NDP Leader John Horgan | BC Green Party Leader Andrew Weaver | Steve Thomson, BC Liberal candidate for Kelowna-Mission | Mary Polak, BC Liberal candidate for Langley | Scott Fraser, NDP candidate for Mid-Island-Pacific Rim | Carole James, NDP candidate for Victoria-Beacon Hill | George Heyman, NDP candidate for Vancouver-Fairview | David Eby, NDP candidate for Vancouver-Point Grey | Dan Hines, BC Green Party Forestry Critic | BC Minister of Forests, Lands and Natural Resource Operations | BC Minister of Environment | BC Premier.

Amnesia of Convenience: Bridging America's Militarist Memory Gap

Memory Loss in the Garden of Violence: How Americans Remember (and Forget) Their Wars

by John Dower - TomDispatch

May 4, 2017   

Some years ago, a newspaper article credited a European visitor with the wry observation that Americans are charming because they have such short memories. When it comes to the nation’s wars, however, he was not entirely on target. Americans embrace military histories of the heroic “band of [American] brothers” sort, especially involving World War II. They possess a seemingly boundless appetite for retellings of the Civil War, far and away the country’s most devastating conflict where American war deaths are concerned.

Certain traumatic historical moments such as “the Alamo” and “Pearl Harbor” have become code words -- almost mnemonic devices -- for reinforcing the remembrance of American victimization at the hands of nefarious antagonists.

Thomas Jefferson and his peers actually established the baseline for this in the nation’s founding document, the Declaration of Independence, which enshrines recollection of “the merciless Indian Savages” -- a self-righteous demonization that turned out to be boilerplate for a succession of later perceived enemies. “September 11th” has taken its place in this deep-seated invocation of violated innocence, with an intensity bordering on hysteria. 

Tomgram: John Dower, Terror Is in the Eye of the Beholder

[Note for TomDispatch Readers: I have a special offer for you today. John Dower has agreed to sign and personalize copies of his magnificent new Dispatch Book, The Violent American Century: War and Terror Since World War Two, for any TD reader who contributes at least $100 ($125 if you live outside the United States) to this website. This is a book that has been praised by Noam Chomsky, Seymour Hersh, Andrew Bacevich, Marilyn Young, Juan Cole, Adam Hochschild, James Carroll, and Ariel Dorfman. It’s a historian’s classic vision of how our violent world has actually worked these last 75 years. This offer will only be available for a limited time, so check out our donation page today by clicking here. Otherwise, remember that you can simply buy a copy of the book at Amazon (which, if you use this link, gives TD a few extra cents at no cost to you) or at publisher Haymarket Books at a significant discount by clicking here. Tom]

Our lives are, of course, our histories, which makes us all, however inadvertently, historians. Part of my own history, my other life -- not the TomDispatch one that’s consumed me for the last 14 years -- has been editing books. I have no idea how many books I’ve edited since I was in my twenties, but undoubtedly hundreds. Recently, I began rereading War Without Mercy: Race and Power in the Pacific War, perhaps 33 years after I first put pen to paper (in the days before personal computers were commonplace) and started marking up a draft of it for Pantheon Books, where I then worked, and where I later ushered it into the world.

As it happens, however, my history with the author of that book dips significantly deeper into time than that. I first met Pulitzer Prize-winning historian John Dower in perhaps 1968, almost half a century ago. We were both graduate students in Asian studies then, nothing eminent or prize-winning about either of us in an era when so much of our time was swept away by opposition to the Vietnam War. Our lives, our stories, have crossed many times since, and so it was with a little rush of emotion that I opened his book all over again and began reading its very first paragraphs:

“World War Two meant many things to many people.

“To over fifty million men, women, and children, it meant death. To hundreds of millions more in the occupied areas and theaters of combat, the war meant hell on earth: suffering and grief, often with little if any awareness of a cause or reason beyond the terrifying events of the moment...”

That book -- on World War II in the Pacific as a brew of almost unbearable racial hatreds, stereotypes, and savagery -- would have a real impact in its moment (as, in fact, it still does) and would be followed by other award-winning books on war and violence and how, occasionally, we humans even manage to change and heal after such terrible, obliterating events. John's work has regularly offered stunning vistas of both horror and implicit hope. He’s an author (and friend) who, to my mind, will always be award-winning. So it was, I have to admit, with a certain strange nostalgia that, at age 72, so many decades after I first touched a manuscript of his, I found myself editing a new one. It proved to be a small, action- and shock-packed volume on American global violence and war-making in these last 75 years. In doing so, I met on the page both my old friend who had once stood with me in opposition to the horror that was America’s war in Indochina and the award-winning historian who has a unique perspective on our past that is deeply needed on this war- and violence-plagued planet of ours.

So many years later, it felt like a personal honor to be editing and then publishing his new work, The Violent American Century: War and Terror Since World War Two, at Dispatch Books. If it’s a capstone work for him, it seemed like something of a capstone for me as well, both as an editor and, like all of us, as a historian of myself. Tom

Memory Loss in the Garden of Violence: How Americans Remember (and Forget) Their Wars

by John Dower

Such “victim consciousness” is not, of course, peculiar to Americans. In Japan after World War II, this phrase -- higaisha ishiki in Japanese -- became central to leftwing criticism of conservatives who fixated on their country’s war dead and seemed incapable of acknowledging how grievously Imperial Japan had victimized others, millions of Chinese and hundreds of thousands of Koreans foremost among them. When present-day Japanese cabinet members visit Yasukuni Shrine, where the emperor’s deceased soldiers and sailors are venerated, they are stoking victim consciousness and roundly criticized for doing so by the outside world, including the U.S. media.

Worldwide, war memorials and memorial days ensure preservation of such selective remembrance. My home state of Massachusetts also does this to this day by flying the black-and-white “POW-MIA” flag of the Vietnam War at various public places, including Fenway Park, home of the Boston Red Sox -- still grieving over those fighting men who were captured or went missing in action and never returned home.

In one form or another, populist nationalisms today are manifestations of acute victim consciousness. Still, the American way of remembering and forgetting its wars is distinctive for several reasons. Geographically, the nation is much more secure than other countries. Alone among major powers, it escaped devastation in World War II, and has been unmatched in wealth and power ever since. Despite panic about Communist threats in the past and Islamist and North Korean threats in the present, the United States has never been seriously imperiled by outside forces. Apart from the Civil War, its war-related fatalities have been tragic but markedly lower than the military and civilian death tolls of other nations, invariably including America’s adversaries.

Asymmetry in the human costs of conflicts involving U.S. forces has been the pattern ever since the decimation of Amerindians and the American conquest of the Philippines between 1899 and 1902. The State Department’s Office of the Historian puts the death toll in the latter war at “over 4,200 American and over 20,000 Filipino combatants,” and proceeds to add that “as many as 200,000 Filipino civilians died from violence, famine, and disease.” (Among other precipitating causes for those noncombatant deaths, U.S. troops shot most of the water buffalo farmers relied on to produce their crops.) Many scholarly accounts now offer higher estimates for Filipino civilian fatalities.

Much the same morbid asymmetry characterizes war-related deaths in World War II, the Korean War, the Vietnam War, the Gulf War of 1991, and the invasions and occupations of Afghanistan and Iraq following September 11, 2001.

Terror Bombing from World War II to Korea and Vietnam to 9/11

While it is natural for people and nations to focus on their own sacrifice and suffering rather than the death and destruction they themselves inflict, in the case of the United States such cognitive astigmatism is backlighted by the country’s abiding sense of being exceptional, not just in power but also in virtue. In paeans to “American exceptionalism,” it is an article of faith that the highest values of Western and Judeo-Christian civilization guide the nation’s conduct -- to which Americans add their country’s purportedly unique embrace of democracy, respect for each and every individual, and stalwart defense of a “rules-based” international order.

Such self-congratulation requires and reinforces selective memory. “Terror,” for instance, has become a word applied to others, never to oneself. And yet during World War II, U.S. and British strategic-bombing planners explicitly regarded their firebombing of enemy cities as terror bombing, and identified destroying the morale of noncombatants in enemy territory as necessary and morally acceptable. Shortly after the Allied devastation of the German city of Dresden in February 1945, Winston Churchill, whose bust circulates in and out of the presidential Oval Office in Washington (it is currently in), referred to the “bombing of German cities simply for the sake of increasing the terror, though under other pretexts.”

In the war against Japan, U.S. air forces embraced this practice with an almost gleeful vengeance, pulverizing 64 cities prior to the atomic bombings of Hiroshima and Nagasaki in August 1945. When al-Qaeda’s 19 hijackers crash-bombed the World Trade Center and Pentagon in 2001, however, “terror bombing” aimed at destroying morale was detached from this Anglo-American precedent and relegated to “non-state terrorists.” Simultaneously, targeting innocent civilians was declared to be an atrocity utterly contrary to civilized “Western” values, and prima facie evidence of Islam’s inherent savagery.

The sanctification of the site of the destroyed World Trade Center as “Ground Zero” -- a term previously associated with nuclear explosions in general and Hiroshima in particular -- reinforced this deft legerdemain in the manipulation of memory. Few if any American public figures recognized or cared that this graphic nomenclature was appropriated from Hiroshima, whose city government puts the number of fatalities from the atomic bombing “by the end of December 1945, when the acute effects of radiation poisoning had largely subsided,” at around 140,000. (The estimated death toll for Nagasaki is 60,000 to 70,000.) The context of those two attacks -- and all the firebombings of German and Japanese cities before them -- obviously differs greatly from the non-state terrorism and suicide bombings inflicted by today’s terrorists. Nonetheless, “Hiroshima” remains the most telling and troubling symbol of terror bombing in modern times -- despite the effectiveness with which, for present and future generations, the post-9/11 “Ground Zero” rhetoric altered the landscape of memory and now connotes American victimization.

Short memory also has erased almost all American recollection of the U.S. extension of terror bombing to Korea and Indochina. Shortly after World War II, the United States Strategic Bombing Survey calculated that Anglo-American air forces in the European theater had dropped 2.7 million tons of bombs, of which 1.36 million tons targeted Germany. In the Pacific theater, total tonnage dropped by Allied planes was 656,400, of which 24% (160,800 tons) was dropped on the home islands of Japan. Of the latter, 104,000 tons “were directed at 66 urban areas.” Shocking at the time, in retrospect these Japanese numbers in particular have come to seem modest when compared to the tonnage of explosives U.S. forces unloaded on Korea and later Vietnam, Cambodia, and Laos.

The official history of the air war in Korea (The United States Air Force in Korea 1950-1953) records that U.S.-led United Nations air forces flew more than one million sorties and, all told, delivered a total of 698,000 tons of ordnance against the enemy. In his 1965 memoir Mission with LeMay, General Curtis LeMay, who directed the strategic bombing of both Japan and Korea, offered this observation: “We burned down just about every city in North and South Korea both... We killed off over a million civilian Koreans and drove several million more from their homes, with the inevitable additional tragedies bound to ensue.”

Other sources place the estimated number of civilian Korean War dead as high as three million, or possibly even more. Dean Rusk, a supporter of the war who later served as secretary of state, recalled that the United States bombed “everything that moved in North Korea, every brick standing on top of another.” In the midst of this “limited war,” U.S. officials also took care to make it clear on several occasions that they had not ruled out using nuclear weapons. This even involved simulated nuclear strikes on North Korea by B-29s operating out of Okinawa in a 1951 operation codenamed Hudson Harbor.

In Indochina, as in the Korean War, targeting “everything that moved” was virtually a mantra among U.S. fighting forces, a kind of password that legitimized indiscriminate slaughter. Nick Turse’s extensively researched recent history of the Vietnam War, for instance, takes its title from a military order to “kill anything that moves.” Documents released by the National Archives in 2004 include a transcript of a 1970 telephone conversation in which Henry Kissinger relayed President Richard Nixon’s orders to launch “a massive bombing campaign in Cambodia. Anything that flies on anything that moves.”

In Laos between 1964 and 1973, the CIA helped direct the heaviest air bombardment per capita in history, unleashing over two million tons of ordnance in the course of 580,000 bombing runs -- equivalent to a planeload of bombs every eight minutes for roughly a full decade. This included around 270 million bomblets from cluster bombs. Roughly 10% of the total Laotian population was killed. Despite the devastating effects of this assault, some 80 million of the cluster bomblets dropped failed to detonate, leaving the ravaged country littered with deadly unexploded ordnance to the present day.

The payload of bombs unloaded on Vietnam, Cambodia, and Laos between the mid-1960s and 1973 is commonly reckoned to have been between seven and eight million tons -- well over 40 times the tonnage dropped on the Japanese home islands in World War II. Estimates of total deaths vary, but are all exceedingly high. In a Washington Post article in 2012, John Tirman noted that “by several scholarly estimates, Vietnamese military and civilian deaths ranged from 1.5 million to 3.8 million, with the U.S.-led campaign in Cambodia resulting in 600,000 to 800,000 deaths, and Laotian war mortality estimated at about 1 million.”

On the American side, the Department of Veterans Affairs places battle deaths in the Korean War at 33,739. As of Memorial Day 2015, the long wall of the deeply moving Vietnam Veterans Memorial in Washington was inscribed with the names of 58,307 American military personnel killed between 1957 and 1975, the great majority of them from 1965 on. This includes approximately 1,200 men listed as missing (MIA, POW, etc.), the lost fighting men whose flag of remembrance still flies over Fenway Park.

North Korea and the Cracked Mirror of Nuclear War

Today, Americans generally remember Vietnam vaguely, and Cambodia and Laos not at all. (The inaccurate label “Vietnam War” expedited this latter erasure.) The Korean War, too, has been called “the forgotten war,” although a veterans memorial in Washington, D.C., was finally dedicated to it in 1995, 42 years after the armistice that suspended the conflict. By contrast, Koreans have not forgotten. This is especially true in North Korea, where the enormous death and destruction suffered between 1950 and 1953 is kept alive through endless official iterations of remembrance -- and this, in turn, is coupled with a relentless propaganda campaign calling attention to Cold War and post-Cold War U.S. nuclear intimidation. This intense exercise in remembering rather than forgetting goes far to explain the current nuclear saber-rattling of North Korea’s leader Kim Jong-un.

With only a slight stretch of the imagination, it is possible to see cracked mirror images in the nuclear behavior and brinksmanship of American presidents and North Korea’s dictatorial dynastic leadership. What this unnerving looking glass reflects is possible madness, or feigned madness, coupled with possible nuclear conflict, accidental or otherwise.

To Americans and much of the rest of the world, Kim Jong-un seems irrational, even seriously deranged. (Just pair his name with “insane” or “crazy” in a Google search.) Yet in rattling his miniscule nuclear quiver, he is really joining the long-established game of “nuclear deterrence,” and practicing what is known among American strategists as the “madman theory.” The latter term is most famously associated with Richard Nixon and Henry Kissinger during the Vietnam War, but in fact it is more or less imbedded in U.S. nuclear game plans. As rearticulated in “Essentials of Post-Cold War Deterrence,” a secret policy document drafted by a subcommittee in the U.S. Strategic Command in 1995 (four years after the demise of the Soviet Union), the madman theory posits that the essence of effective nuclear deterrence is to induce “fear” and “terror” in the mind of an adversary, to which end “it hurts to portray ourselves as too fully rational and cool-headed.”

When Kim Jong-un plays this game, he is simultaneously ridiculed and feared to be truly demented. When practiced by their own leaders and nuclear priesthood, Americans have been conditioned to see rational actors at their cunning best.

Terror, it seems, in the twenty-first century, as in the twentieth, is in the eye of the beholder.

John W. Dower is professor emeritus of history at the Massachusetts Institute of Technology. His many books include War Without Mercy: Race and Power in the Pacific War and Embracing Defeat: Japan in the Wake of World War Two, which have won numerous prizes including the Pulitzer, the National Book Award, and the National Book Critics Circle award. His latest book, The Violent American Century: War and Terror Since World War Two (Dispatch Books), has just been published.

Follow TomDispatch on Twitter and join us on Facebook. Check out the newest Dispatch Book, John Dower's The Violent American Century: War and Terror Since World War II, as well as John Feffer's dystopian novel Splinterlands, Nick Turse’s Next Time They’ll Come to Count the Dead, and Tom Engelhardt's Shadow Government: Surveillance, Secret Wars, and a Global Security State in a Single-Superpower World.

Copyright 2017 John W. Dower

Site C Dam's Mad Math

Irrational Economics of Site C Dam Project

by Peter Ewart  - BC Worker

April 28, 2017

The BC Liberal government is plunging ahead with its controversial Site C dam project in the northeast of the province, despite more dire warnings from researchers and experts in the fields of energy and water, and broad community, Indigenous, and environmentalist opposition. Because of its colossal costs, as well as the importance of lower cost electricity to the BC economy, many feel this project could seriously harm or even destabilize the provincial economy in the future.

In that regard, on April 19, researchers with UBC's Program on Water Governance issued a report calling for a suspension of the construction of the Site C Dam on economic grounds.[1] Site C, a mega-project undertaken by BC Hydro and promoted by the BC Liberal government, is estimated to cost $8.8 billion (and likely more after all costs are factored in), making it the largest public works infrastructure project in the province's history. One estimate puts the cost at about $5000 per BC household.[2]

The researchers argue that the "business case" for the dam project is weak as a result of a "dramatic decline in projected energy needs," continued low prices in the US, and a significant reduction in the cost of alternative sources of electricity such as wind, solar, geothermal, and natural gas.

Once in operation, the dam will generate a 100 per cent surplus of electricity. This excess will extend for nearly a decade after commissioning, resulting in as much as a $1 billion loss (in addition to construction costs).

The shortfall will have to be made up for by BC Hydro which likely means dramatically jacked up power rates for home, commercial and industrial users across the province.

In the opinion of the researchers, suspending the construction of Site C (and having the project reviewed by the BC Utilities Commission) is still within the realm of possibility economically speaking. Using BC Hydro's own figures, either suspending or canceling the project "would save between $500 million and $1.65 billion, depending on future conditions."

Many hundreds of people from across BC have come forward to express their views on Site C and have a say on matters that affect their lives, but they are blocked by the political system. Photo shows hundreds of "Stake in the Peace" stakes purchased by BC residents and planted at a farm in Bear Flat along the Peace River, with money going to fund the resistance
to the Site C project.

In their conclusions, the researchers note that without a suspension or cancellation, the economic risks of Site C will likely only magnify as time goes on.

This particular report is just the latest in a number of reviews and reports, as well as expert statements, slamming the Site C project as an economic boondoggle and potential disaster. Indeed, even sections of the corporate establishment have expressed their doubts in past years.

In the early 1980s, BC Hydro put forward a proposal to build a Site C dam. However, the BC Utilities Commission, a regulatory body established by the provincial government, recommended the dam proposal be rejected on the grounds that it was not needed then, and that BC Hydro's forecasting of electricity demand was faulty.

In the late 1980s, the proposal was resuscitated; but, by 1993, even the head of BC Hydro at that time, Marc Eliesen declared that the Site C project was dead, because "the fiscal exposure [was] too great ... the dam too costly" and the environmental impact unacceptable.[3]

However, despite previous verdicts and longstanding opposition from various quarters, the BC Liberal government in 2010 announced to the surprise of many that Site C was "on again" as a "clean energy project." The government also announced that Site C and various other projects would be exempted from review by the BC Utilities Commission. In making the decision, then-Premier Campbell claimed that demand for power was to increase by 20 to 40 per cent in BC over the next two decades. This claim has subsequently been proven wrong as electrical energy demand has remained more or less flat since 2005.

In 2013, a Joint Review Panel was commissioned by the federal and provincial governments to review the proposal.[4] It concluded that BC "will need new energy and new capacity at some point" and that Site C would be the "least expensive of the alternatives." But it also stated that BC Hydro "had not fully demonstrated the need for the project on the timetable set forth" and recommended that the project demand estimate and other aspects be referred to the BC Utilities Commission for review.

Since then, Dr. Harry Swain, former Chair of the Joint Review Panel, has come out fully against the project arguing that the electrical power will not be needed and that the government's failure to explore alternative energy sources amounts to a "dereliction of duty."[5] He has further stated that "people are going to wind up paying for a stranded asset through their taxes for years and years to come. Hydro will not have the financial capacity to pay it, so it will fall the guarantors of their debt, that is, the taxpayers."[6]

Internationally recognized energy expert Robert McCullough and economist Dr. Murray Shaffer issued a research report in 2013 that concluded "there is not a need and justification for Site C as proposed by BC Hydro" and that there were far cheaper energy alternatives.[7]

For his part, Marc Eliesen, who is no longer with BC Hydro, has also become a fierce critic, predicting that the final cost "will be in the range of $11 to $12 billion," that the dam project "is scheduled to become a big white elephant,"[8] that the project is "totally irrational," and that it "does not make any economic sense."[9]

David Austin, a lawyer who specializes in energy issues, was able to cross examine BC Hydro executives in front of the BC Utilities Commission in August 2016. In the course of the cross examination, the executives revealed the astounding news that the Site C project would not be paid off for 70 years after it is finished (in 2024). Austin noted that the provincial government was proceeding from "a completely unorthodox financial analysis" and that "you just don't do that in this day and age."[10]

While some sections of the corporate establishment, like the BC Chamber of Commerce, have expressed full support for the Site C project, other sections over the years have expressed reservations or have come out in direct opposition. For example, Richard Stout, the then-executive director of the Association of Major Power Customers of BC, stated in 2014 that the "original load forecasts [put forward by BC Hydro] are going to be wrong" and that "it's not the right project right now."[11] The Association is made up of some of the largest BC Hydro customers including pulp & paper, solid wood, mining, electrochemical and petrochemical corporations representing about 20 per cent of the domestic electricity load in BC.

Another former executive director of the Association, Dan Potts, argues that "the huge cost [of Site C] will rob the province of valuable resources that could be used to deliver other needed government services as well as burden the BC economy with debt and high electric power rates that will sap our competitiveness."[12]

Since 2014, the Association has not made any further statements about Site C, either for or against. However, Stout and Potts continue to speak out strongly against the project.

What has become clear is that sections of the corporate establishment have clashing interests in regards to Site C, with the government favouring certain sectors over others, and the oligarchs over everyone else. For example, the BC Liberal government has promised liquefied natural gas exporters and fracking companies electrical power from the Site C dam to be provided at below cost.[13]

Yet other sectors of industry have expressed worries about future power costs for them. For example, the Canfor Taylor pulp mill is one of the major customers for electricity generated by BC Hydro. Craig Thomson, energy and environment supervisor at the mill, was quoted in 2014 as saying that "industry in BC was built with a foundation of low power rates, but in the last five years that has changed and Site C would be the final straw .... Possibly it's going to drive our industry out of business."[14]

Interestingly, in 2015, Susan Yurkovich, who was executive vice president at BC Hydro, and led the development of the Site C project, left that position and became president of the Council of Forest Industries, an organization that includes many of the major customers of BC Hydro, some of whom would likely also have been members of the Association of Major Power Customers of BC. As noted before, the Association, although speaking out against Site C in 2014, has been quiet about it since then. Was this the result of some kind of compromise or deal struck between the BC government, BC Hydro and the major power customers? If so, that is similar to what happened when BC Rail was privatized. In that case, it seems the big forest companies were given lower shipping rates for a period of time in exchange for holding back their concerns about the rail sell-off.

For its part, the news website Business in Vancouver published an editorial in 2015 arguing that "the potential for runaway costs on Site C is significant, and the rationale for investing in the megaproject remains questionable."[15]

Over the years, Site C proponents, including BC Hydro and the BC government, have put forward various, often shifting, reasons to justify the construction of the dam, including meeting future provincial energy needs, supplying fracking operations and the LNG industry, creating jobs, and exporting power to Alberta and the U.S. But the purpose of this huge and costly mega-project remains hazy with many observers and critics left scratching their heads. Certainly, when stacked up against the greater good of the province and its people, it is irrational and reckless.

In determining the purpose, perhaps a better idea is to ask the question: Who benefits from this potential stranded asset? Certainly, the monopolies constructing the dam will profit hugely, as will the banks and institutions financing it, and the oil and gas industries which will receive power likely at greatly reduced rates.[16]

So why is the BC government continuing to push ahead with the controversial project? Is this a case of a faction of the financial oligarchy, in league with government, seizing control of a publicly-owned asset for its own narrow interests in defiance of the public interest and even other sections of the oligarchy? Is it yet another example where the oligarchy has discarded the old regulatory structures (like the BC Utilities Commission) that were used in the past for sorting out inter-oligarchic contradictions, as well as giving an appearance of public oversight?

Now what tended to be hidden before has erupted into an open "law of the jungle" situation where the winner takes all and damn the consequences, no matter the destruction wrought upon the economy and people of the province by an out-of-control faction of the financial oligarchy.

Such capture of a public enterprise by private interests has already happened in British Columbia and Canada many times over the last several decades, one of the most notorious examples being the takeover of BC Rail, a Crown corporation, by the private North American monopoly CN Rail.

Indeed, this may well be the ultimate aim of burdening BC Hydro with huge debt and stranded assets like Site C; that is, to eventually break up, sell off and privatize the public enterprise. This privatization is already well on its way. Since 2002, the BC Liberal government has ordered all new power projects (with the exception of Site C) "to be privately built and financed with the new power contracted to BC Hydro at high guaranteed rates."[17]

Given the evidence, it is entirely reasonable that the Site C dam project be halted immediately on economic grounds, let alone the very legitimate other concerns of Indigenous peoples, farmers and environmentalists.

It is also entirely reasonable, and a growing necessity, that British Columbians and Canadians need a new direction for the economy. A direction in which we, rather than out-of-control financial oligarchs, have control over our future. A direction that strengthens the public interest rather than the irrational and reckless schemes and private factional interests of the oligarchy.

Peter Ewart is a columnist and writer based in Prince George, British Columbia. He can be reached at: peter.ewart@shaw.ca

Notes

1. R. Hendriks, P. Raphals and K. Bakker, "Reassessing the need for Site C," Program on Water Governance, University of British Columbia. 2017.

2. "A tremendous cost," www.justthedamfacts.ca.

3. Marc Eliesen, quoted in "Four decades and counting: a brief history of the Site C dam," DeSmog Canada, March23, 2017.

4. Report of the Joint Review Panel. Minister of Environment, Government of Canada & BC Minister of Environment. May 2014.

5. Harry Swain, quoted in Stakeinthepeace.com.

6. Harry Swain, quoted in "Hydro bill madness," Sierra Club BC, March 2017.

7. Marvin Shaffer, "Assessment of the need for and alternatives to the Site C project." Peace Valley Environmental Association, November 25, 2013.

8. Marc Eliesen, quoted in "Hydro bill madness," Sierra Club BC. March 2017.

9. Marc Eliesen, quoted in "They're killing the Peace River Valley now," Andrew Nikiforuk, The Tyee, December 17, 2015.

10. David Austin, quoted in "Taxpayers on the hook for Site C dam until 2094," Nelson Bennett, Business in Vancouver, November 1, 2016.

11. Richard Stout, quoted in "B.C. Business Community Slams ‘Astronomical' Cost of Building Site C Dam," Judith Lavoie, DesmogCanada, June 10, 2014.

12. Dan Potts, quoted in "Site C dam: A waste of your money," Peace Valley Environmental Association.

13. "Hydro bill madness," Sierra Club BC, March 2017.

14. Craig Thomson, quoted in "B.C. Business Community Slams ‘Astronomical' Cost of Building Site C Dam," Judith Lavoie, DesmogCanada, June 10, 2014.

15. "Cost uncertainty a Site C certainty," Editorial, Business in Vancouver, December 1, 2015.

16. "Executive decree hands billions to monopolies to construct and finance Site C dam." BC Worker, February 23, 2016. 17. Edith Cohen, "Liberal government cover-up," BC Worker. Feb. 5, 2014.

This article was originally published in BC Worker on April 28, 2017

Desperately Seeking Reason: Unpacking Trump's North Korea Policy with China Watch's Peter Lee

China Expert Peter Lee on Pacific Free Press TV

by C. L. Cook - Pacific Free Press TV

3 May 2017

Chris Cook interviews China Watch's Peter Lee (April 28, 2017) about the latest developments in Asia - North Korea in particular. Thanks to Newsbud.com for their China Watch intro.

Future Certain: Blockchain Grows, Despite US Recalcitrance

Global Blockchain innovation: US Lags Wurope and China Lead

by Richard Kastelein - Venturebeat

April 16, 2017

No one can predict the future of blockchain in the same way we could not predict the future of the Internet in the early ’90s. But it is clear this technology is going to have a significant impact. From corporations to startups and governments to organizations, the race is on to tap into the concept of distributed and decentralized trust in order to reduce friction and build more honest, transparent, and efficient frameworks for business and governance.

The U.S. has been somewhat quiet on the blockchain startup front, which has more to do with regulatory issues than a lack of companies that can innovate, and that has resulted in an absence of blockchain buzz in Silicon Valley. Kraken and Coinbase are both in the Bay Area but are cryptocurrency-centric, and there’s a real shortage of U.S.-based blockchain startups working on projects in health, energy, insurance, supply chain, and many of the other verticals that are being explored in other countries.

Although a quarter of all global blockchain companies on Outlier Ventures’ brilliant blockchain tracker are from the U.S., they are mostly cryptocurrency or bitcoin-focused; few are tapping blockchain’s huge potential for non-currency purposes.

New York is the epicenter of the American blockchain community, primarily because the financial industry is scrambling to figure out how to deal with the very real threat it is facing with distributed ledger technology. But New York is also home to a couple of big players outside finance: Consensys is the main player on the global Ethereum stage pushing blockchain beyond banking. 

And Digital Asset Holdings has raised more than $70 million from 15 of the world’s largest technology and financial firms to build secure and distributed processing tools to speed up settlement, reduce costs, and enhance security and transparency in regulated industries. CEO Blythe Masters, an economist and former executive at JPMorgan Chase, turned down a job to run Barclay’s investment division to build the company.

SEC puts breaks on U.S. ecosystem

But overall, the blockchain ecosystem in America is moving slowly. The U.S. Securities and Exchange Commission has put up a major roadblock to innovation by not addressing the new phenomenon of Initial Coin Offerings (ICOs) and providing no regulatory framework for them to exist, thus stagnating U.S. blockchain developments.

While Singapore and Switzerland are starting to swing open the doors as the only two jurisdictions in the world where tokens are treated as an asset and not as a security, the SEC is dragging its heels, which is not good for American innovators who want to raise funds using these unique financial instruments or for Europeans and Asians who want to open up to U.S. investors.

Some European ICOs are even IP-blocking Americans from participating due to the potential legal implications; and that’s not great for American investors. However, American Brock Pierce and his VC team from Blockchain Capital recently decided to take a chance at disrupting their own industry by doing their own ICO — the world’s first KYC AML compliant crowdsale. Pierce raised 20 percent of his firm’s next fund by selling digital tokens to investors last week, pulling in $10 million in six hours.

But it was not easy. He had to incorporate the entity doing the ICO in Singapore and use Regulation S and D exemptions with the SEC in order to raise money from international investors as well as domestic investors. For the U.S., that limited the raise to a mere 99 accredited American investors, while the rest of the world could invest as much as it wanted.

“It’s my belief that in the next 10 or 20 years, no startup in the world will be financed in any way other than as a token,” Pierce told American Banker.

The good news is that at least eight states are working on blockchain legislation promoting the use of bitcoin and blockchain technology, which is promising. But on the federal level, no bills have been submitted. 

Canada proves more blockchain friendly

Canada has an active blockchain startup community mainly due to the fact that Ethereum emanated from the Toronto bitcoin community and there is a cluster of talent centralized in the country’s largest city, starting with Vitalik Buterin, who is the brain behind Ethereum. Not to mention, William Mougayar and Don Tapscott, two of the most prominent authors in the blockchain space are also out of Canada. And unlike the U.S. SEC, which has been quiet, the Canadian Securities Administrators (CSA) have been more proactive by launching a new fintech “sandbox” program aimed at blockchain startups and other firms working with financial technology. 

China actively fosters blockchain adoption

Figuring out what is going on in China is always complicated when you are looking in from the outside. According to Jane Zhang from Skyledger, based in Shanghai, the government is taking a tolerant approach. Zhang, a power player in the Chinese blockchain community says they are smart enough to know the next big thing.

In a recent interview she said that some of the bitcoin exchanges are even lending without a banking license, which, she says, shows the Chinese government is more interested in protecting innovation than anything else.

“The central government is putting massive investment into some of the poorer regions in China and are planning to build blockchain parks to entice some of the top blockchain minds globally to come to China backed with significant funding,” said Zhang. “There are a lot more blockchain startups this year than last year.”

Her own team at Skyledger consists of an elite global group of blockchain developers, many from Eastern Europe, who have moved over to Shanghai to work on her private blockchain platform, which was just chosen by the Dubai government for Customs and Immigration.

The ICO scene is currently unregulated in China with over two million people participating and more and more blockchain startups choosing token sales to raise innovation and growth capital.

“The Chinese government do not see the ICOs as a threat,” Zhang said. “They are actually encouraging them simply by the fact they are not stopping them.”

The Chinese market has seen a flurry of developments over the past year with the formation of consortia such as:

• China Ledger Alliance: Comprises regional exchanges to create an open source blockchain protocol to support an eventual ‘Internet of Everything’ for China.

• Financial Blockchain Shenzhen Consortium: Has members that include Ping An Insurance (part of R3, a global consortium of more than 50 financial companies involved in R&D for blockchain usage) and a Tencent subsidiary. This consortium intends to collaborate on research and group-wide blockchain projects, with a focus on capital markets technology, securities exchange, trading platforms, banking, and life insurance. It aims to create a securities trading platform prototype and develop credit, digital asset registry, and invoice management services.

• Qianhai International Blockchain Ecosphere Alliance: Aims to establish an efficient ecosystem for developing blockchain technology and its applications by combining mainland China and international talent, technology, and capital. The Alliance, which includes Microsoft, IBM, and Hong Kong’s Applied Science and Technology Research Institute (ASTRI), hopes to accelerate the commercialization of blockchain R&D and promote its application to support China’s social and economic development Australia, New Zealand test the waters

And not to leave out Antipodea, Australia’s Central Bank is conducting internal blockchain research and China behemoth Alibaba is using blockchain to fight China’s fake food, with a supply chain project being trialed in New Zealand and Australia. 

Europe in the lead

Europe in many ways has led the blockchain rush. The notable open source culture that permeates the continent lends itself well to the new dynamic of blockchain, and both private and public entities are actively involved in blockchain projects.

And in fact, the majority of ICOs are currenting being conducted by European blockchain startups — many from Eastern Europe.

In terms of blockchain hubs, the main concentrations of startups are in London, Amsterdam, Barcelona, Berlin, and Switzerland’s Cryptovalley.

Estonia’s Guardtime is not only working with its own government to use blockchain for health records but has also contracted with organizations such as NATO. Plus, America’s Nasdaq has reached out to the tiny country in the Baltics to develop applications. Skype cofounder Jaan Tallinn has also kicked off a blockchain startup marketplace based in Estonia called Funderbeam.

The United Kingdom’s chief scientist, Sir Mark Walport, unleashed a massive 88-page blockchain report in January, outlining the potential of blockchain and showing how it can transform the delivery of public services and boost productivity in government. Soon after, GovCoin Systems Limited, a London-headquartered financial technology company, announced blockchain trials to support government aims in streamlining the distribution of welfare benefits.

The Isle of Man government has begun to use a blockchain registry to record which companies on the Isle of Man are active in using the system of distributed online ledgers.

Bank Of England Governor Mark Carney stated earlier this year that the BoE is looking into the policy and technical issues posed by Central Bank Digital Currencies (CBDC) and developing blockchain proof-of-concepts.

The Netherlands’ ING Bank completed a whopping 27 blockchain Proof of Concepts (POCs) by February, and Dutch banking giant Rabobank has also been very active. Global health giant Philips was well ahead of the pack, exploring blockchain for health in early 2016. And the Dutch Central Bank did a full fledged bitcoin clone experiment with something called DNBcoin and is moving forward with more tests.

The Danish Central Bank is even more game with plans to eventually issue blockchain-based E-krone as its reserve currency. And the French Central bank is also testing blockchain.

Sweden is ready to move into land rights with a public-private effort to record land titles on a Blockchain that began in March.

Brussels very recently proposed a blockchain pilot to examine regulatory issues as the executive branch of the European Union wants to create a blockchain proof-of-concept focused on regulation.

Although the legal aspects have not been sorted out at the EU level, Switzerland is forging the way. In April, Swiss regulatory body FINMA announced its supportive position for a new licensing category for financial innovators carrying out some banking activities, but with limited acceptance of client assets and no lending activity. Compared to a full bank, the licensing requirements would be less extensive because the risks are lower and the scope of business is limited.

This is a game changer for ICOs.

Therefore, it’s no wonder that the 30 km vale between Zug and Zurich has been coined Cryptovalley and is considered the center of the blockchain startup ecosystem globally.
Who will move fastest?

The next few years are going to be interesting as blockchain continues to gain traction and creates both threats and opportunities to existing business models. The question is: Who will innovate fastest with this technology? It’s up in the air at this point, but clearly ICOs are going to have an impact on the ecosystem in the short to medium term; and much will depend on the regulators who have the power to freeze or free up the new liquidity being created via ICOs, which will provide the fuel for the next generation of blockchain innovation.

Richard Kastelein publishes Blockchain News and is currently interim Chief Marketing Officer for Blockchain Humanitarian startup Humaniq. He is the founder of ICO design and architecture firm Cryptoalchemy and cofounder of education company Blockchain Partners. Kastelein has advisory roles with ICO-fueled Blockchain startups DECENT and Exscudo, sits on the steering committee of the Blockchain Ecosystem Network, and is involved with Europe’s upcoming ICOs event, CryptoFinancing, in London.

Trump's DPRK Deke: North Korea Chatter as Cover for Syria Gambit?

Is North Korea a Diversion for a US-Jordan Invasion of Syria?

by Mike Whitney - CounterPunch

May 3, 2017  

“Syrian President Bashar Al-Assad said that his country has information that Jordan is planning to send its troops into southern Syria in cooperation with the United States….’Jordan is not an independent country. Whatever the United States wants, it will happen,’ said Assad.”  — Middle East Monitor

“In the event of a de-facto partition of Syria, the US and its allies will get a strategically important region. It is through Deir Ezzor that the proposed gas pipeline from Qatar is supposed to run….The Deir Ezzor province is also home to Syria’s largest oil deposit, the Al-Omar. …the city and the province are of particular value since the deposits there contain the highly valuable light sweet crude usable in the production of gasoline and diesel fuel.”  — South Front, “The Stronghold of Deir Ezzor; What You Need to Know”

The United States is not going to launch a preemptive attack on North Korea. The risks far outweigh the rewards and, besides, the US has no intention of getting bogged down in a conflict that doesn’t advance its geopolitical objectives. The saber-rattling is just an attempt to divert attention from the Syria-Jordan border where the US and Jordan are massing troops and equipment for an invasion of Syria. That’s what’s really going on. The Korean fiasco is a smokescreen.

True, the Trump administration is milking the situation for all its worth, but that doesn’t mean that they want a war with the North. That’s not it at all. Washington wants to deploy its controversial THAAD anti-missile system to South Korea, but it needs a pretext to do so. Hence, the ominous threat of an “unstable, nuclear-armed North Korea”, that’s all the justification Washington needed to get its new weapons system deployed. Mission Accomplished.

But the Terminal High Altitude Area Defense system (THAAD) isn’t aimed at North Korea, it’s aimed at China, and China knows it which is why it has protested its deployment repeatedly. The US wants to surround China and Russia with military bases and missile systems that are integrated into its broader nuclear weapons system. These lethal systems are a crucial part of Washington’s plan to pivot to Asia and rule the world into the next century. Here’s the rundown from Tass:

“Anti-missile elements that are being deployed around the world are part of a very dangerous global project aimed at securing US’ overall overwhelming superiority to the prejudice of security interests of other states….The US missile defense architecture is tilting the strategic balance of forces in the area of offensive weapons and creates more and more serious risks of global instability.” (“US anti-missile systems in Eastern Europe violate INF Treaty”)

And here’s how Russian President Vladimir Putin summed it up:

“The US is developing an anti-missile defense system which”….when it is operational… “there will be a moment in time when our entire nuclear capability will be neutralized, which means that the entire global balance of power will be overturned.. This means one of the powers will have absolute security and be able to do whatever it likes in regional conflicts. We’re talking about unrivaled power in global conflicts. ..This system forces us to create weapons that can nullify the system asymmetrically.” (Tass)

Is missile defense something the American people should want?

Heck no. Just think of the number of people that Uncle Sam has slaughtered in the last 16 years. Now try to imagine if all the constraints on Washington’s rampaging were removed allowing the US to conduct its bloody war on the world with complete impunity?

No one in their right mind would ever give the Washington crazies that kind of power. It’s a prescription for global annihilation. Besides, absolute security for one country means no security for everyone else.

But deploying the THAAD anti-missile system is just one part of Washington’s North Korea swindle. The fear-mongering is also being used to grease the wheels of the Military Industrial Complex (MIC). Here’s the scoop from The Hill:

“Sen. John McCain’s (R-Ariz.) push for a $7.5 billion fund to bulk up the U.S. military’s capabilities in the Asia-Pacific is gaining momentum as tensions with North Korea mount. The commander of U.S. forces in the region threw his support behind the idea this week, “This kind of money can help us bring together our allies and partners,” said Patrick Cronin, senior director of the Asia-Pacific Security Program at the Center for a New American Security. …The … proposal has gained more visibility amid the intensifying concerns over North Korea and its nuclear program.” (“McCain plan gains momentum amid North Korea threats”, The Hill)

So the MIC lackeys in Congress had already been pushing this latest boondoggle, but they needed a trumped up crisis in North Korea to put them over the finish line. Typically, the process is called “creative advertising”, which means scaring the shit out of the public so you can rip them off. Here’s more from the same article:

“I’d like to thank Chairman McCain and this committee for proposing and supporting the Asia-Pacific Stability Initiative,” Adm. Harry Harris, commander of U.S. Pacific Command, said at Thursday’s hearing. “This effort will reassure our regional partners and send a strong signal to potential adversaries of our persistent commitment to the region.”

The weapons manufacturers love sugar-daddy McCain who’s always on-hand with gobs of moolah.

Here’s more:

“We can thank North Korea for one thing in this,” said Harry Kazianis, director of defense studies at the Center for the National Interest”. “They’re amplifying the imbalance in the Asia-Pacific.” (The Hill)

Good idea, let’s thank North Korea for this latest windfall for the weapons makers. Why not? Let’s send Kim a nice big valentine from the American taxpayer with John McCain’s name writ large at the bottom.

In any event, Washington’s policy towards North Korea hasn’t changed. All the chest thumping and fireworks are just part of a circus sideshow designed to justify additional defense splurging and missile deployment. At the same time, the media is trying to divert attention from critical developments in the Middle East, particularly the Syria-Jordan border where Washington has rallied its proxy-fighters into a makeshift army that will (likely) invade southern Syria, charge northward to Deir Ezzor, establish a no-fly zone over the occupied territory, and partition the area east of the Euphrates preventing loyalist forces from reestablishing Syria’s sovereign borders. That appears to be the basic game-plan. Check this out from the Middle East Monitor:

“The Syrian regime of President Bashar Al-Assad said that his country has information that Jordan is planning to send its troops into southern Syria in cooperation with the United States…

“We have this information, not only from mass media, but from different sources”…

Speaking to The Washington Post, King Abdullah of Jordan reiterated that a planned joint operation could take place against terrorists. “It is a challenge, but we are ready to face it in cooperation with the US and Britain.” (“Assad accuses Jordan of planning Syria invasion”, Middle East Monitor)

The pretext for the invasion will be to fight ISIS, but the real goal is to seize the eastern part of the country consistent with a plan that was concocted by the Brookings Institute two years ago. After 6 years of covert support for CIA-backed militants on the ground, the Trump administration appears to be leaning towards a more traditional military approach. Here’s more from the LA Times:

“Reports have also emerged of Jordanian and U.S. troops on the section of the Jordanian border opposite southwest Syria, a possible prelude to a campaign in which rebels, supported by Jordanian and coalition forces on the ground, would overrun Islamic State’s pocket in the Yarmouk basin, near southwestern Syria’s borders with Israel and Jordan.” (“How long can Jordan keep walking the Middle East tightrope?”, LA Times)

Naturally, Moscow is concerned about the developments on the Jordanian border. Last week, Russian Foreign Minister Sergei Lavrov issued a statement saying, “We will pay special attention to the issues most important for us which concern the situation on the Jordan-Syria border.”

Also worrisome, is the fact that US Defense Secretary James “Mad Dog” Mattis has been traveling across the Middle East rallying Washington’s allies in Saudi Arabia, Egypt and Israel. Mattis sees the fighting in Syria as a proxy-war between the US and Iran for influence in the region. This same erroneous view is shared by all of the main powerbrokers in the Trump administration.

“Everywhere there’s trouble in the region, you find Iran,” Mr. Mattis said on a stop in Riyadh, adding that nations in the region are working to “checkmate Iran and the amount of disruption, the amount of instability they cause.”

These latest developments take place just days before the resumption of negotiations in Astana, Kazakhstan (May 3 and 4). Russia, Turkey, Iran and a number of the leaders from the rebel groups will gather to see if they can agree on the terms of a ceasefire and an eventual settlement to the 6 year-long war. The Trump administration’s cruise missile attack on a Syrian airbase in early April has boosted the morale of many of the jihadists militias and is keeping them away from the bargaining table. In other words, Trump’s unexpected escalation has sabotaged Putin’s efforts to resolve the crisis and end the hostilities. The last thing Washington wants in Syria is peace.

A number of reports have confirmed that Trump has handed control of his foreign policy to his Generals, Mattis and McMaster. And while Mattis has shown little interest in getting more deeply involved in the Syrian conflict, McMaster sees Russia as a “hostile revisionist power” that “intimidates our allies, develops nuclear weapons, and uses proxies under the cover of modernized conventional militaries.”

McMaster is a hard-boiled militarist with a driving animus towards Russia. In a speech he delivered at The Center for Strategic and International Studies, McMaster offered this remedy for so called ‘Russian aggression’. He said: “what is required to deter a strong nation that is waging limited war for limited objectives… is forward deterrence, …(is) convincing your enemy that (he) is unable to accomplish his objectives at a reasonable cost.”

McMaster can be expected to use his “forward deterrence” theory in Syria by trying to lure Putin into a confrontation with US forces east of the Euphrates. But there’s no reason to think that Putin will fall into the trap, in fact, it seems highly unlikely given the potential for a catastrophic face-off between the two nuclear-armed superpowers. Instead, Putin will probably take the high-road, present his case to the UN Security Council, and denounce the US intervention as another example of Washington’s destabilizing and expansionistic foreign policy.

Putin’s worst mistake would be to base his strategy entirely on the situation on the battlefield. He doesn’t need to liberate every inch of Syrian soil to win the war. Let the US and its proxies seize the territory, establish their military bases and no-fly zones, throw up a DMZ along the Euphrates, and wade deeper into the Syrian morass. Putin has other fish to fry. He needs to focus on winning hearts and minds, strengthening alliances and building a broader coalition. He needs to look like the only adult in the room, the rational leader whose sole ambition is to end the dispute and restore security. He needs to establish a contrast between his behavior and that of his recklessly-violent and mentally-unstable rival, Washington, whose flagrant disregard for international law and civilian lives has plunged the Middle East and Central Asia into chaos and carnage.

If Putin’s ultimate goal is to rebuild the system of global security based on the bedrock principles of national sovereignty and greater representation for all the countries in the world, he must lead by example. Restraint and maturity in Syria will move him closer to that goal.
 

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

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