The Chinese RMB and Luxembourg

My Orchids. Phalaneopsis "Let a Thousand Flowers Bloom."
Photo ET

The Chinese RMB and Luxembourg 

Today saw an event that lies outside the routines in the Luxembourg Financial Center: the People’ Bank of China granted a 50 billion RMB Qualified Foreign Institutional Investor quota to Luxembourg. A welcome development to more specialization and away from past erring. 

Luxembourg for Finance reported this:

Today, the People's Bank of China has announced the granting of a 50 bn RMB RQFII quota to Luxembourg. The RQFII (RMB Qualified Foreign Institutional Investor) scheme was launched in Hong Kong in 2011 and has been expanded to other jurisdictions since 2013 enabling offshore RMB to be reinvested into the Mainland securities market.

Luxembourg Minister of Finance, Pierre Gramegna, said: “The granting of the RQFII quota again demonstrates China’s recognition of the Luxembourg financial centre as one of Europe’s main hubs for international renminbi business. We are proud to play such a significant role in the process of the internationalisation of the renminbi.”

Luxembourg has made the UCITS a globally recognized brand and more than 67% of UCITS funds distributed internationally are based in Luxembourg. Luxembourg is the largest investment fund centre in the world after the US. The RQFII scheme is particularly useful for fund managers who use Luxembourg as a platform for cross-border distribution. Major international and Chinese fund promoters had already set up RQFII funds through Luxembourg domiciled vehicles, using other jurisdictions' quotas. Luxembourg's European and global investor base will now be able to use the RQFII scheme directly to invest up to 50 bn RMB on the Chinese capital market.

Together with the designation of ICBC as RMB clearing bank in Luxembourg, the RQFII quota consolidates Luxembourg’s prominent position as a leading RMB hub in Europe

.

Luxembourg ranks first in Europe when it comes to RMB deposits (61,5 bn RMB), loans (61,1 bn RMB) and RMB in investment funds (296,3 bn, all figures H2 2014). The Luxembourg Stock Exchange is also the exchange with most Dim Sum bonds listed in Europe (45 in H2 2014). With a market share of 12% of global Dim Sum bond listings, it ranks third behind Hong Kong and Singapore.

Please click here to read the press release.

When the Swiss help Luxembourg’s anti-money laundering

My Orchids. Phalaneopsis “Grüezi”. 

Photo W. Tell

When the Swiss help Luxembourg’s anti-money laundering

You always need an expert who knows more than you. Though I’m glad Abacha’s (stolen) money could be uncovered in Luxembourg, the irony isn’t lost on anyone that our Swiss brethren in arms do such a good job with Luxembourg's transparency.

Read “The Nation”. Nice picture too

Luxembourg is feeding new issues to the Centre for Investigative Journalism CIJ

My Orchids. Phalaneopsis "Investigation".
Photo ET

Luxembourg is feeding new issues to the Centre for Investigative Journalism CIJ

Luxleaks got a grotesque after play. Luxembourg prosecutors brought charges against a French journalist, Edouard Perrin, who used documents from Price Waterhouse that were obviously obtained without the knowledge of the company. PwC has brought charges against a former employee for stealing confidential documents. Edourd Perrin is now suspected to be an “accomplice” in the infractions committed against PwC.

While Luxembourg has otherwise an ongoing effort underway to refurbish its name through a vast “Nation branding” effort, it doesn’t miss an opportunity to poison that effort.

After years of struggles to defend a bank secrecy that obviously could not be defended, it finally got out of the “Schmuddelecke” to cite the former President of the bankers association. This was the infamous machine for tax evasion. It is off the table, and the discussion is over.

The problem at hand is tax avoidance. This is another animal than tax evasion, as there is a semblance of legality to it. The only problem attached is political: how to justify a scheme that certainly hurts others in the world community. Luxembourg has agreed to discuss. So the problem was going away. Actually, who still talked about Luxleaks?

As the dust cleared, it became visible that many others practiced what they criticized in Luxembourg, maybe in a more restrained fashion. Belgium, the Netherlands, Ireland and many others covered their sudden nakedness. Even toxic French tax regulators have practices such as Crédit d’ Impôt. And New York State has some. And the list goes on.

Basically, though no documents were circulating, the Luxembourg rulings were for years well known as a principle: you go to see Marius Kohl, the ruler, and your world will be OK.

The discussions to have is why are people fleeing the tax hells, and what is good behavior in international tax competition? There will eventually be rules, agreed upon by countries with physical borders, to be applied to international corporations that are virtual countries without borders, advised by the Big Four without borders. Who is poised to win this game?

Meanwhile it is incomprehensible why the Luxembourg prosecutors re-ignite the cold ashes from Luxleaks with the Perrin case. And get exposed for its not so liberal interpretation of freedom of Press. It is probably because the Luxembourg government lost control over its judiciary. In this case, it is bad timing for the Nation branding. However, Montesquieu’s separation of powers must finally have arrived in Luxembourg.

The Luxembourg Justice system, upstream and downstream.

My Orchids. Phalaenopsis "Bommeleeër"
Photo SREL

The Luxembourg Justice system, upstream and downstream.

Or: The tribulations of the Luxembourg Government in the realm of terrorism.

On September 24, 2014, resolution 2178 of the UN Security Council was adopted unanimously. It was one of the 6 highest meetings since the United Nations was created 70 years ago. The resolution defines a global strategy in the fight against terrorism, including against foreign terrorist fighters.

Excerpt from the wording of the resolution:

"In resolution 2178 (2014), adopted unanimously by its 15 members, the Council expressed its desire to expand to foreign terrorist fighters, especially those who are recruited by the Islamic State of Iraq and the Levant (EIIL ) and the Front el-Nosra, sanctions currently affecting individuals and entities covered by the Committee against Al Qaeda.

Acting under Chapter VII of the UN Charter, it expressed "strong commitment to consider" the inclusion on this list of "groups, undertakings and entities associated with Al-Qaida to finance, arm, organize and recruit for or supporting acts or activities, including using the new technologies of information and communication such as the Internet and social media. "

Luxembourg is with the United States co-author of the resolution 2178

As a Member of the United Nations Security Council, Luxembourg has joined the United States to be co-author of the resolution. Even within the confines of this "Machin", the United Nations according to de Gaulle, it is a small feat for Luxembourg. In his speech of 24 September 2014 before the Council, Luxembourg’s Prime Minister Xavier Bettel said in particular:

"To counter this threat, there is no magic formula. As we are all concerned, it is clear that we must act together. The response of the international community and the Security Council must live up to this challenge. In this regard, I welcome the resolution 2178 (2014) that we have just adopted unanimously at the US initiative. Luxembourg was honored to be a co-sponsor. »

Mr. Bettel then filtered the essence of the decisions taken to counter the phenomenon of foreign terrorist fighters:

• intensify efforts to prevent radicalization that can lead to terrorism, and to fight against violent extremism;

• prevent those who want to go fight with terrorist groups to travel to conflict zones;

• intensify efforts to dry up the sources of financing for foreign terrorist fighters.

Regarding the financing of terrorism, Mr Bettel added "that as an international financial center, Luxembourg is aware of its special responsibilities in this area and has developed a comprehensive and consistent set of legislative measures and regulations in the fight against money laundering and terrorist financing, and paying particular attention to their implementation. »

Quite logically, in pursuit of this strong commitment, the government filed January 7, 2015, the draft 6761 law "On implementation of certain provisions of resolution 2178 (2014) of the United Nations Security Council amending the Criminal Code and the Code of Criminal Procedure.” That is exactly the same resolution that Luxembourg inspired as a co-author, and is impressed on the whole world.

Discomfort in the Luxembourg judiciary?

First one would have thought that the Luxembourg government, before launching into a co-authorship of a resolution of the Security Council, with the purpose to influence how justice is administered globally, would have taken care to consult its wisest magistrates. If it did so, then apparently their advice was ignored.

What offends the black robes is the perception that the rights of citizens would be better protected by the judicial services than by the secret services, reports PaperJam. There seems to lie the fundamental conflict that magistrates bring up: how to conduct preventive measures without the intelligence services?

It is this preventive aspect that bothers the defenders of traditional criminal law. They perceive possible threats "to essential values ​​such as the presumption of innocence, the requirement of sufficient evidence (and therefore at least preparatory acts  to an offense) the right to a fair trial, public hearings , transparency and legality of evidence not to mention the motivation of decisions and of any right of appeal. »

It is wise to raise the alarm when approaching a slippery slope.  In this case we advance among others to the concept of “crime of thought or intent”. With this advance upstream of the criminal act itself, a mere suspicion would trigger the implementation of a whole new arsenal of remedies that go beyond present criminal methods and values?

Terrorism is not just a criminal case

Terrorism lies at the intersection of the act of war, the war crime, and the criminal case. Neither Resolution 2178 nor the proposed Bill extend these aspects. Magistrates in their criticisms only graze them with their comments on the use of secret services. All failed to further discussions on the status of "enemy combatants" or “foreign terrorist fighters”. Comments are confined to considerations that some would summarize as anti- SREL, the Luxembourg secret service.

Yet aspects of war should have been considered, as the United States, co-author of the resolution, have Guantanamo as a skeleton in their closet. It is an element of controversy. But it has also been adopted as a solution to a dilemma that many seem to disapprove. Official Luxembourg is among the critics of Guantanamo. President Obama is too. It is a pity that this discussion did not take place, as it would have highlighted the legitimate conflicts on both sides regarding the detention of a terrorist. Their threat to society makes their incarceration a necessity, yet raises all the questions around Guantanamo.

There are first those who say that terrorism is a form of warfare. ISIS and other terrorist groups are saying the same. They are actually declaring war. It is hard to imagine that these terrorists, as a corollary of their declarations of war, would also apply the Geneva Conventions on war to anyone falling into their hands, civilian or military. They murder them brutally.

Guantanamo has been an initiative to more or less maintain a semblance of adherence to these conventions and rules. The argument draws on the sources of the Geneva Convention, on non-state actors in armed conflict who, defined in this way, "do not enjoy the rights and privileges of a regular fighter; the non-state actor is a common criminal, and it is permissible to take him out by summary convictions and repressive measures. A fighter can only see his regular status recognized if he carries arms openly and if he wears distinctive signs. "(Julie Saada, and others" non-state actors in armed conflicts "Agence Universitaire de la Francophonie, 2010).

The resolution does not clarify the foreign terrorist fighter’s status. Whether war is declared or not has certainly legal and political implications. In the end, facing a threat calls for a legitimate self-defense. Which means answering war with war. That being, the overarching requirement is then not to violate the principles of the military art. In this case, certainly not the one that requires the constant search for information. But in this war the enemy melts into the population which makes it difficult to detect him before he commits an act of war. The search for intelligence has necessarily to target events leading up to the act of war, well before its planned execution. From this perspective, the prevention of terrorism is less a police operation happening mostly after the fact, than a clandestine intelligence operation. It is a mistaken use of assets to have Police and Secret Service engaged at the same level at the same time with similar assets on a same operation.

The discussion to define the acceptable limits of the resolution was unfortunately truncated. To extract a law from resolution 2178 that both has preventive applications and gives reassurances to the guardians of the principles, it needs a narrow application.

Lacking deep consensus, the law should be very specific

This law reverses the burden of proof , which has the magistrates concerned. The suspect has to provide proof of innocence. To mitigate potential abuses, the law should have a narrow application.

The need to be specific requires a public list, published and maintained by the government or an international organization such as the United Nations, describing the possible offenses and a public list of designated terrorist organizations such as ISIS, Hamas, Al Qaeda, Boko Haram and Hezbollah. Thus, the mere fact of developing those activities and joining such organizations should be publicly well described crimes. The  clearly announced intention to develop activities supporting and joining these terrorist organizations are evidence "prima facie" to establish that a person is a terrorist. Unless the defendant presents evidence to clear himself. This obligation to prove his innocence is the important fact: the burden of proof has shifted to the suspect.

It is clear that the resolution and the new legislation that results from it were born out of fear, and that we can expound on public acceptance to trade freedoms for more security. We have already traded freedom for more security, as for instance the intrusive checks for airport security, which affects 100% of us. This new law will actually affects only 0.01% of the population, the terrorists and terrorism candidates. Ultimately, the law opposes the right of an individual to belong to a terrorist organization against the right to life of the rest of us, we the 99.9% of the population.

The Luxembourg courts will be hell for the “faux-jihad”

It would have been interesting to see the Luxembourg magistrates focus also on a real homegrown current scandal, which concerns them directly, and affects the new law dramatically, far beyond the other theoretical but legitimate concerns. I'm talking about the incredible disruptions in the Luxembourg Justice system that fails to deliver justice within a reasonable time. Indeed, Luxembourg justice is often delayed, so denied, or worse, dismissed through lack of resources, expertise and political will.

At the start of the new "judicial year" in the fall of 2011, Attorney General Robert Biever confirmed what all criminals and their victims know: Luxembourg is a judicial Paradise for criminals, a hell for their victims, as Justice does not have the means for its mission. According to the Prosecutor, especially when it comes to financial crime and money laundering (including terrorist financing raised by Mr. Bettel at the UN) a prescribed 1,500 cases have been shelved for lack of means from 1990 to 2011, which is about 75 unpunished financial crimes a year! Luxembourg is also regularly convicted by the European Court of Human Rights for its violations of Article 6-1 of the European Convention on Human Rights on fair trials, including unreasonable delays.

I like to quote the tragicomic case of a stolen cow brought by a farmer from Mertzig / Luxembourg: after 12 years of proceedings, the European Court of Human Rights ruled against Luxembourg for failing to adequately organize its justice, and give the man (and the cow?) his day in court. I don’t even mention the case of the century, actually the case of two centuries, known as the Bommeleeër (the bomber): after 30 years of proceedings, there is still no hope of seeing an end to it. The 22 bombings have not produced enough evidence to close the case, but the top police officers were sacked, though no magistrates, revealing the level of distrust and infighting in the Luxembourg system.

This judicial inefficiency punishes the victims. I myself have a pending case for over 11 years as a complainant, without seeing the end of it. So men and women, victims of crime are left with wasted years through official negligence, laziness or incompetence, a scandal for the country that is the co-author of Resolution 2178, which gives recommendations to the world on how to organize their Justice for the fight against terrorism.

This aspect of the defective organization of the Luxembourg courts, or rather the lack of a mandatory system to cycle through the different stages of the procedure within a reasonable time, is undoubtedly the most powerful argument to ventilate serious reservations about this bill. Because the burden of proof has shifted, the suspect has now to prove his innocence. The Luxembourg legal system, desperately slow in all areas, must absolutely speed up its procedures. For the new anti-terrorism law, where an innocent person could be falsely accused of terrorism, so incarcerated or otherwise legally restricted, the procedural delays create a new class of victims of the unreasonable delays: the falsely accused who cannot produce a proof of innocence to the court in a reasonable time-frame.

Some call the proposed Bill the “Luxembourg Patriot Act”, an implicit criticism of the United States. I would add that other European prime target on American values: Guantanamo. If the Luxembourg anti-terrorism law is applied with the traditional delays described above, the "prima facie" terrorist, who is falsely accused, risks his Guantanamo in Luxembourg for a long, long time. Maybe he will see more than one Attorney General retire, before his own release.

Cargolux: you name it, we just culture it

Extreme Wing Wave. Photo ET

Cargolux: you name it, we just culture it

The slogans of Cargolux are going downhill, from the excellent “You name it, we fly it” to another one more generic “Spirit of Cargolux”, to a recent banal “just culture” where it is not sure if “just” means fair, or simply. It must be simply. As in Radio 100,7 station’s interesting summary from April 17, that “Luxembourg simply cannot handle Cargolux”.

That summary just simply lists the sorry state of affairs, freely translated: a general management that simply cannot and will not, top managers who simply left, a general manager who simply creates chaos, a Board that simply sits there for the benefits, a President who simply cannot be blamed, a government that simply is Pontius Pilatus unless it is a nice sunny day, a minister for aeronautics whose strategic decisions simply don’t fly, and a foreign shareholder who simply has to subsidize if numbers don’t add up.

I think this adequately summarizes the simple just culture thing, unfortunately. Though I would probably add a CFO who has a simple view of the world, and simply adds up numbers, that are anything else than helping the Spirit of Cargolux, unless it means “Spirit of Cargolux Italia”. By the way, it has to come up again that Cargolux Italia loses money hand over fist. Any sound decision maker has to look at the possibility of closing it. The Osaka route no longer requires it to exist. I’m told that even with 5 aircraft, the company still would write a loss.

Maybe the increasing crisis starts right there, at the number crunchers. So it appears that if CV wants to write black ink, the solution is to simply spend less, like is done on the good guys at Cargolux Italia who earn less but even work more and never get sick. Then you can lose some costly pilots in Luxembourg, simply through attrition, hopefully some others leave all by themselves, and maybe you overwhelm some of the pilots on sick leave who are violating the curfew. Fire them for cause, not in an open manly fashion. No the sneaky way, like spying on them, faking just simply a friendly discussion, but firing out a registered mail firing the unsuspecting person. That startled all the straight talkers!

Alright, it is a great move if you want to quell the revolution. In any organization you may find black sheep, though here it smells like settling scores. Certainly fear spreads around as the for Luxembourg unusual brutality of HR policies develop. Oh, to their merit, they tried also a Marie-Antoinette who famously said “But give them some cake”, when the French Revolution developed under her balcony. CEO Reich had his cake moment, with a policy to reward people with extra vacation, if they did not have any sick leave during the year. I’m told that quite some people rather simply leave, and check out other opportunities. It all seems to rest on the shoulders of a management team that fights everyone as if they were the last righteous quadrant. This needs to stop.

The effects on morale must be disastrous. Putting a private eye behind people to spy on them is not developing trust. If morale goes down, productivity goes down. By how much? Take a number, say 5% of the bottom-line. (I have included the cost of private eyes helping in the destruction of morale). Oppose that to an authentic positive “Spirit of Cargolux” that boosts productivity instead by 5%. And you have the cost of negative managing.

Generally personal destinies of employees have never been impacted the way they were through the sick leave episode earlier this month. Two captains got fired on very short notice. One captain had 22 years of career at Cargolux. Two co-pilots got also fired, and one FO got away with a warning letter.

Rumor has it that the whole affair was bungled rather than handled, with all the trauma, distrust and possibly the fears one can imagine. The startling piece is the obvious use of private eyes to spy on people. A legitimate control would have to emanate from the Caisse Nationale de Sante (CNS). How many people were spied on, and how many are still spied on now? At what cost actually? It appears that the SVP Flight Operations was not taking part in the massacre, nor was the VP HR.

People learnt that something weird was going on through program cancellations and other unexpected changes. Interestingly the meetings were held by Wieger Ketellapper, investigated officially for the famous extreme wing wave maneuver last year at Paine Field. His well-written but self-serving exculpatory own message is below. Reading it leaves an uncomfortable feeling with regards to that language of “just culture”, and the elements of shrewdness, possible score-setting, and intrusion into the lives of those pilots and their families.

The official reasons for dismissal are not yet known. It seems that’s the law. But could it be for being on sick leave too often? The timing for such a companywide health issue action then would be particularly bad, at a time when the specter of the German Wings disaster is still haunting people’s minds. Or would it rather be because those fired were not home after curfew? For an extreme wing wave you are allowed to write your own guilty, sorry, I learnt a lesson, let’s all stick together in the just culture memo on a not acceptable event. But violating the curfew by 30 minutes while on sick leave calls for immediate termination? I’m afraid hearing the many personal details and dramas, that a line was crossed and a guerilla started. It is not corporate issues, it is getting personal.

So the finger pointing has started, far more than I relate here. These rumors go: Is it OK if the CEO dropped the ball on Russian air rights, if you do extreme wing waves, maybe slam an aircraft on the runway that your knees go through the shoulders? The just culture lets you get away with it?

The answer may lie here in this message from last year, from the person in charge of firing pilots:

Dear colleagues,

on the occasion of the Paine Field takeoff investigation closure, I would like to address the same and a few further personal matters.

The Paine Field Takeoff.

First and foremost, it need not be reiterated that the takeoff in Paine was well outside the norm and not an acceptable event. The initial outcry was understandable. I know the enormous pride and effort that you as Cargolux pilots put into your professionalism. The event was rightfully perceived as hurting that very professionalism, in particular due to the fact that there was involvement of persons ultimately responsible for safety and standards.

I would like to thank the investigation team for their important role in closing this event. The processes that were followed were the same as for any other exceedance or incident that Cargolux has had in the past and I am thankful and proud to work for a company that subscribes to just culture and equal treatment.

The investigation has resulted in findings and recommendations that I agree with but, even if no intent on my part was established, as commander of the event flight, I am nothing less than fully responsible. Because of the broad responsibilities and effect of my positions as management pilot and instructor-examiner, I have decided on a few steps that go beyond the recommendations of the final report.

The instructor-examiner group trains and maintains the highest standards in the industry with full dedication. I know about the struggle they sometimes have, bringing an unpleasant message to their trainees and examinees. Consequently, I feel that my role in the ultimate outcome of the event flight, does not allow the trainers and checkers to be an effective team if I continue to be part of it. Therefore I have decided to withdraw from these activities.

Personal Matters.

It leaves me to address a few personal matters that are intertwined with corporate issues.

Upon becoming aware of the Paine takeoff event, some parties attempted to entice direct punitive action, steer public opinion and encourage upheaval without knowing the complete facts. I would not condone such behavior on the part of any person in Cargolux management nor will I condone it in the future, be it directed at anybody regardless of position. I have made mistakes and I am grateful for the lessons learned. Cargolux just culture has passed a hard test with flying colors. I ask that you join me in embracing just culture and ask you to observe the principle that it applies to every employee without exception.

The Way Forward.

The stressors in Cargolux are plentiful and the resultant discontent is understandable. In the last years, we have seen large shifts in shareholders, upper management, company performance and network stability. As a management pilot it is easy to forget the doubts and concerns of others regarding company performance and outlook when one is always close to the source. Information flow is a challenge in every company and Cargolux is no exception. It is however no less important to instill a sense of security and belongingness.

As a manager, I have had to make difficult decisions that have affected personal lives of some colleagues. If at any time I might have appeared as indifferent, cold or disinterested, I (and my family) can assure you that I have carried the troubles of our colleagues home with me. In the aforementioned professionalism amongst you all, leading by example, respect for each other and team spirit are alive and well, and much appreciated. To match that in management will be my primary goal in the near future. Life is a continuous lesson and those that live it are continuous students; my promise to you is that I will be a good student and relentless in keeping up our safety culture.

I am inviting you to come and talk to me. I am as much interested in your ideas as you are entitled to honest answers.

Sincerely yours,

Wieger.

Oman Air seals joint venture deal with Cargolux

My Orchids. Oncidium "Muskatnuss". Photo ET

Oman Air seals joint venture deal with Cargolux

Just Thursday, we got the news initially: Scandale au Luxembourg: le gouvernement s’immisce dans les affaires de Cargolux, une société privée.

And it caused great emotion, as Minister Bausch, who insists that the government does not interfere with Cargolux, a private company, was seen on a picture signing the Cargolux – Oman Air agreement. So the government does interfere on fine weather occasions?

Today, three days later, Trade Arabia produced a report and released another picture, showing another signing ceremony with other people, including Dirk Reich for Cargolux. I guess, this was a parallel ceremony. So now we have two pictures for the record. If this is a success, we’ll use Bausch’s picture, and celebrate his great leadership. If not, then it’s Reich’s picture, the scapegoat on call. You name it, we pull it.

“Modern Vision. Timeless Traditions.” Is Oman Air’s Slogan

Cargolux: when does the bleeding stop?

My Orchids. Brassavola nodosa "Wing Wave". Photo ET

Cargolux: when does the bleeding stop?

Below is the reproduction of a message distributed by Marcel Funk, Manager of Flight Operations, who by April 30 resigns from his positions as Executive Vice-President, ExCom member and Accountable Manager. He will leave the company by December 31.

No Luxembourg national is left in management, and some would argue that with him leaves the last really trusted  manager. I would have thought that preventing the bleeding from going on would have been a priority at any cost. Unfortunately the swarm of crises will not help employee morale.

Yet rumor has it that yet another significant employee, Chief Technical Pilot Captain Sten Rossby is also to leave. It is a worrying evidence that these key people are leaving by their own decision. They are not fired, on the contrary, they have successfully played important roles in the company, as did predecessors who left already.

In a nutshell, how to destroy good will? Have trusted managers resign, drag your feet on CWA negotiations, send more aircraft to Cargolux Italia. Oh, to be complete, communicate only on a need to know basis, and declare a corporate ban on disclosing inside information. Voilà!

That’s why I can’t tell if a wing waver will get waved in, to replace Marcel Funk.

The Iran Nuke Talks: Redline, Deadline, Schmedline

My Orchids. Paphiopedilum Ayatollah.
Photo ET

The Iran Nuke Talks: Redline, Deadline, Schmedline

In a surreal exercise, the world learns from the Twitter accounts of the dapper negotiators inside the Hotel Beau Rivage in Lausanne, that the “cornerstones” for an agreement have been accepted. People, we have a deal! Or rather a skeleton, and now we need to put muscle on it. That will take months, during which the cornerstones will be questioned again.

Where is this thing going? Basically, these are asymmetric negotiations. It is as if Miss World, standing in for “World Peace”, were negotiating with Joseph Stalin. Stalin will gladly accept his own version of World Peace.

On one hand, the US has given up its role as the world’s policeman. The President got elected to precisely do that: disengage, stop wars, close Gitmo, and reduce defense spending. That is what exactly is going on the US side. 

The policeman leaving to go home does not get unnoticed by those who run the stop signs, or snatch the old lady’s purse. When one moves out, someone else moves in. It is China for sure, Russia the "me-too", and obviously regionally it is Iran. As US disengagement goes on, Iran’s expansion in the Middle East to fill the void is going on too, mostly through proxies and sponsored terrorist groups. As a corollary of those ambitions comes Iran’s nuclear aspiration, and the development of course of complete weapons systems, including ICBMs. If Iran were Miss Universe, those would be unnecessary frivolities.

Bottomline: Asymmetric negotiations favor Realpolitik: assessing the counterpart’s possibilities, not its intentions. Those who ignore this rule, have to rely on the goodwill and on trust in the other side’s perceived or declared intentions. Generally this posture loses the negotiations.

The Redline, Deadline, Schmedline posture obviously suits Miss Universe. No qualms when you violate a Schmedline. It was only a suggestion. If in addition you said that military force is not an option, there is no compelling reason not to run the stop sign. If later you advise, and a surrogate is coming back later arguing that all options are again on the table, it earns that Defense Secretary a lot of funny comments. It came even to the point, when the usually not so aggressive Europeans gave a show of exasperation upon the violation of yet another Deadline, that they left town. Officially without bad feelings.

All the while when on the other side, the mighty Ayatollah yells “Death to America” into the crowd. And a top general of this militaristic theocracy definitely announces that the planned destruction of Israel is non-negotiable.  

Welcome to the new world order: we’ll have chaos for a while until we have figured out who fills the voids. Arab States understood that they better take things into their own hands, intervening in Yemen. I’m sure a couple are already cooking Uranium themselves. Israel knows, that it has been dropped. Its new unlikely allies sharing common concerns are its Arab neighbors, that are not yet under Iranian control.

And Luxembourg? If you are small, look for allies other than your allies plagued by weakness. Who will it be then? Russia, because of the oligarchs’ money? We tried Qatar. Will it be China? We have the relevant Chinese banks in Luxembourg, we do Cargolux-China, and we’ll participate in the China sponsored Asian Development Bank. I’m learning Mandarin already, which could be another indication. Or will it be Iran? Our Secretary of State visited even the shrine to Ayatollah Chomeini. However he was snubbing the Israelis at the UN, when we helped create the present World Chaos as a member of the Security Council.