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The Nile entering the Eastern Mediterranean. NASA image 1993

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by ERIC TOUSSAINT

 

Sovereign debt has been a crucial factor in a series of major historical events. From the early 19th century, in Latin American countries such as Colombia, Mexico and Argentina, struggling for independence,as well as Greece when seeking funds for its war of independence, these nascent countries borrowed from London bankers under leonine conditions which finally subjugated them into a new cycle of subordination.

Other states lost their sovereignty quite officially. Tunisia enjoyed some amount of autonomy in the Ottoman Empire, but was indebted to Parisian bankers. France used the ruse of debt to justify its tutelage over Tunisia and its colonization. Ten years later, in 1882, Egypt similarly lost its independence. In the pursuit of recovering debts owed to the English banks, Great Britain launched a military occupation of the country and then colonized it (http://www.cadtm.org/Debt-as-an-ins… ).


Debt “assures” the domination of one country over another

The Great Powers were quick to realise that the interest from a country’s external debt would be massive enough to justify a military intervention and a tutelage, at a time when it was considered acceptable to wage wars for debt recovery.


The 19th century Greek debt crisis resembles the current crisis

The problems flaring up in London in December 1825, ensued from the first major international banking crisis. When banks feel threatened, they no longer want to lend, as could be seen after the Lehman Brothers crisis in 2008. Emerging states, such as Greece, had borrowed under such obnoxious conditions, and the sum in hand was so little compared to the actual loan, that fresh borrowing became necessary to repay their existing debt. When the banks stopped lending, Greece was no longer able to refinance its debt and so suspended repayments in 1827.

This is where the “debt system” is similar to the present scenario: the French and British monarchies, and the Russian Tsar – the “Troika” of the time – approved of a loan to Greece and its emergence as an independent state in order to destabilize the Ottoman Empire. In exchange, in 1832, they signed a “Treaty on the sovereignty of Greece”, which I bring to light in my book. It established a monarchy, while the independentists wished for a Republic. Otto I, the chosen regent, was a 15 years-old Bavarian prince, who had no knowledge of Greece or its language. The document stipulated that the monarchy’s budget should have a provision giving priority to the repayment of the debts to the three powers. The repayment would be routed through the Rothschild Bank of Paris through which the London bankers would be paid. Greece must also reimburse the Troika’s expenses for installing this monarchy and for recruiting 3,500 Bavarian mercenaries to wage a war of “independence”.

I have also shown that in the early 19th century, only 20% of Greece’s loans actually arrived in Greece. The rest was diverted to paying Rothschild’s commissions, the fees of the mercenaries, their travel expenses to Greece and other expenses incurred in creating the monarchy.

Since then, Greece has been living in a situation of permanent subordination, which has been even more manifest since 2010. Once again, public authorities joined hands to raise funds to pay private creditors: this time, the French, German, Belgian and Dutch banks.

History also points to a complicity between the ruling classes of the indebted countries and the creditor states

To understand the history of the debt system, the role of the local ruling class has to be kept in mind. It always urges the authorities to borrow internally and externally, these funds permit the bourgeoisie to avoid being heavily taxed. This class also lives on the income from the government bonds issued by its own country.

When Benito Juárez, the Mexican Liberal Democrat, partly repudiated the debts previously contracted by the conservatives, some of the bourgeoisie requested French naturalization hoping that France would use the pretext of reimbursing its nationals to try to overthrow the regime with a military intervention.
The same holds true today. At the end of 2001, when Argentina suspended debt repayment, the country’s bourgeoisie was offended, because the Argentine capitalists held a large part of the debt that had been issued on Wall Street.

The concept of “odious” debt that was developed in the 1920s was produced neither by the left nor by “alterglobalists”

During the 19th century, there was a series of debt repudiations, especially in the United States. In 1830, social upheavals led to the overthrow of corrupt governments in four of the states. These states also repudiated their debt to crooked bankers. Infrastructure projects planned with this debt had never materialised due to corruption.

In 1865, when the “North” won against the “South”, it was decreed that the latter should abrogate their debts to banks for financing the war (this is the 14th Amendment to the Constitution of the United States). A debt was considered “odious” because it was contracted to defend slavery.

At the end of the 19th century, the United States also refused to allow Cuba, which had gained independence with the help of US military intervention, to repay Spain’s debt incurred in Paris on behalf of its colony. The United States considered it “odious” because it financed the domination of Cuba and the wars that Spain waged elsewhere.

In 1919, Costa Rica repudiated a debt contracted, for his family, by the former dictator Tinoco. The arbitrator who intervened and ratified the repudiation happened to be a former US president. The reason: the loan was intended for personal purposes.

Alexander Sack, a Russian legal theorist, who was exiled in Paris after the Bolshevik revolution, formulated a legal doctrine based on all these jurisprudence cases. He stated that the debts contracted by a previous regime are binding on the nation, but there is an exception: if the debt was contracted against the interests of the people and the creditors were aware or could have been aware of it, the debt can be decreed odious and be cancelled.

Sack was a conservative professor, seeking to defend creditors’ interests, and preach them caution about to whom they are lending and the purpose. His statement shows that it is possible for nations to repudiate a debt, should it be odious.

The Greek debt is “odious”

Since 2010, the Troika has been asking Greece to repay loans that have clearly been granted against the interest of the Greek people. Their fundamental rights have been throttled and their living conditions have deteriorated under such impositions. There is evidence that the money lent returned immediately to the foreign or Greek banks responsible for the crisis. It can also be proved that the Troika governments were perfectly aware and responsible for this because it was they who dictated the contents of the memorandum.

This conclusion is also valid for France

A bevy of audits, submitted in April 2014, identified 59% of the French debt as illegitimate. It did not serve the interests of the French people. It benefited a minority that enjoyed tax cuts, and banks charging high interest rates.

After a repudiation, will the States be able to find banks willing to lend again?

There is certainly an apprehension regarding creditors, but the widespread idea that a state is less likely to get fresh loans once it repudiates a debt is quite false. For example, Mexico repudiated its debt in 1861, 1867, 1883, and 1913, but found new lenders each time. This is because some bankers do not hesitate to lend when they see that a country has regained good financial health after suspending its debt service or repudiating its debt.

After repudiating its debt in 1837, Portugal went on to contract 14 successive loans with French bankers. In February 1918, the Soviets repudiated the debts contracted by the Tsar. A blockade was enforced, but it was lifted after 1922, when the British decided to lend to the Russians, so that they could buy British equipment. Germany, Norway, Sweden and Belgium followed suit. Even France renounced the blockade, even though 1.6 million French had bought Russian securities, through Crédit Lyonnais, that were repudiated after the revolution. It was the major French metallurgical producers that pressed for French loans to the Soviets, because they could sense orders at their doorsteps.

Another example: in 2003, ten days after invading Iraq, the US Treasury Secretary called upon his G7 colleagues to cancel Saddam Hussein’s debts, arguing that they were odious. The United States, however, had lent a great deal to Iraq in the late 1970s and in the 1980s to wage war against Iran. In October 2004, 80% of Iraq’s debt was cancelled.

Debt is also a stranglehold that prevents any alternative

Illegitimate debt needs to be cancelled before resources can be freed and a policy for ecological transition can be implemented, but this step alone is insufficient! Repudiating debts without implementing other policies concerning banks, money, taxation, the focal points of investments and democracy… would entail a rerun of the debt cycle. Repudiation must be part of an overall plan.

 

“I was mad when I left the camp. The fact that this is a man-made conflict, that one man has done so much harm to so many people, it’s heartbreaking,” Nikki Haley said after meeting South Sudanese refugees living in western Ethiopia.

Haley, the United States ambassador to the United Nations adds that the South Sudanese President Salva Kiir must be held accountable for the social and security tragedy that the country has been subjected to.

“At some point President Kiir needs to be held accountable for all of the tragedy that he’s caused these people,” Haley stressed after meeting South Sudanese refugees in Gambella.

I was mad when I left the camp. The fact that this is a man-made conflict, that one man has done so much harm to so many people, it’s heartbreaking.

The pain in the stories of refugees from S.Sudan is a reminder we can’t look away. We can’t let armed conflict be their only choice.

 

She is due to meet with Salva Kiir in Juba on Wednesday morning. South Sudan is the second-leg of her African tour which started in Ethiopia and is due to end with a trip to the Democratic Republic of Congo (DRC).

Some of the women at the camp told harrowing stories of how they had to flee violence back home. One woman spoke about eating the flesh of her burnt child, whiles another recounted being forced to eat the flesh of an “enemy,” Reuters reported.

The United Nations has warned that South Sudan’s civil war is providing “fertile ground” for a genocide. Kiir’s government has denied U.N. allegations of ethnic cleansing.

Since South Sudan spiraled into civil war in 2013, just two years after it gained independence from Sudan, nearly 350,000 refugees have flooded into Gambella. Almost 90 percent are women and children and they are mainly from the Nuer ethnic group.

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On Tyranny

“The odd American idea that giving money to political campaigns is free speech means that the very rich have far more speech, and so in effect far more voting power, than other citizens”. Timothy Snyder

The more money you have the more democracy you can buy.

Professor Mekonen Haddis

Trump

Trump vs. the National Security Establishment: Will There be a Revolution in US Foreign Policy?

Since the beginning of his presidential campaign, Trump had been savaged by the National Security establishment, castigated as unfit to lead, dangerous, incompetent, and ignorant.  These criticisms were woven together in an August 8 letter signed by fifty former National Security officers, denouncing a possible Trump presidency.   His national security team was also severely ridiculed by establishment media from the New Republic’s “Trump’s Court Jesters”, as “a rogues’ gallery of outcasts and opportunists, has-beens and never-weres, conspiracy-mongers and crackpots,” to the “Who?” of Top experts confounded by advisors to Donald Trump” from the New York Times.  Trump responded to the letter stating that these are the same people who brought us two decades of war – and his advisor Sam Clovis sardonically remarked that the National Security team is composed of people who “work for a living.”

Putting aside these castigations, Trump’s most egregious national security faux pas is his contestation of the Russophobic paradigm that has dominated US foreign policy since the end of WWII and the establishment of the National Security Act of 1947.  Trump’s contestation further amplifies his purported hubris to even raise the question of NATO – and his contemplation of the end of the seven decade US occupation of Europe (“We cannot afford it”).  Such perspectives fly in the face of the entire history of the National Security establishment, which, since the founding of the National Security Council (NSC), has sought to contain its former allies (Russia, and then, China) and maintain US hegemony on the European continent.

Trump could respond, of course, that Obama’s conflict with Russia is a distraction from the war on terrorism, especially in its current incarnation as ISIS.  Trump envisions Russia and the US working in tandem to defeat terrorism – and sharing the spoils of war in real estate, oil and infrastructure contracts.  Trump would of course have his war against radical Islam, but it will be fought alongside Russia.  If the presence of Carter Page and Michael Flyn on his National Security team tells us anything, it is that Trump does not see Russia as a threat, but as a potential partner in geopolitical and international business affairs.  Trump has substantial business interests in Russia and the Middle East and approaches the decade’s long conflict from a business security paradigm.  Indeed, Trump went so far as to suggest the US let Putin defeat ISIS on his own. “What do we care?”

It is clear from the intensity of its reaction to Trump’s faux pas that the National Security establishment will not tolerate deviation from the official script.  Since its beginning in the crucible of anti-Communism, the NSC – and through its surrogate organisations, such as the CIA and FBI – has waged a continuous war, internationally and domestically, on perceived threats to US global hegemony.  Russia has always been perceived as the greatest threat to a Pax Americana.  The NSC projected a strategy of full spectrum dominance from the outset, acting through political interference, regime change, assassination, cultural propaganda, psychological warfare, and domestic political repression.  This plethora of acts has come to be known collectively as the Cold War and it is Russia (and its potential supporters) which continue to be the primary target of global US national security strategy.

From this perspective, it was no accident that George H. W. Bush, a former CIA director, invaded the Middle East as the Soviet Union (a permanent, veto-wielding member of the UN Security Council) teetered on collapse.  Alongside Turkey, a longstanding NATO ally, the Middle East stood as the holy grail of global military and economic dominance – and the containment or destruction of Russia.  Before the dust settled in Iraq, Clinton undertook the eastward expansion of NATO which now stands with baited breath at Russia’s border.

Russia objected to the second Gulf War – and to Libya – but stood on the side lines of the Middle East until its 2015 intervention in Syria.  The root of Russia’s intervention lay in the dangers of regime change in Syria, especially following the US orchestrated coup d’etat in Ukraine in 2014.  What is at stake for Russia is the security of its European gas and oil markets which it sees threatened by the US and its allies.

On the one hand, Qatar, Saudi Arabia and Israel seek regime change in Syria in order to build a gas pipelines to Europe.  On the other hand, the US disrupts Russian supply chains – via the Ukrainian crisis and the European sanctions regime – to destabilize Russia and Russian-European relations.  Crimea is significant, in this light, as it is a primary distribution hub for Europe, a status threatened by the coup d’etat.  The reunification of Crimea with Russia took place directly against the background of the Syrian conflict as a response to the overall US strategies of containment and market displacement.  Further pressure has been placed on Russia through oil price deflation from shale gas and oil smuggling by ISIS.

US strategy in Syria has tragically metastasized into a policy of “nation destroying”, of proxy, mercenary warfare, destabilization, partition and ethnic cleansing (the “refugee crisis”).  Syria has made a horrific sacrifice for the US national security obsession with Russia.

For Trump to ask, “What do we care?” clearly exposes why the national security establishment has condemned his candidacy in such vitriolic terms.  In its view, to allow Putin to win in Syria would be not only to accept Assad, but also to give Russia a permanent presence in the region. To exclude and push Russia back has always been the US objective and Trump’s Russophilia is a direct challenge to the National Security establishment and its plan to throw Putin out of Europe.

Trump has however won the election and he is on a direct collision course with the National Security establishment.  Of course, Trump is an unlikely revolutionary.  He has never said he would defy the National Security Act of 1947 (no president has), which means that he will accept its shadowy apparatus and its bureaucratic methodologies. Indeed, he supports increased NSA surveillance, expanded military spending, CIA activism, FBI phone hacking, etcetera. He is simply suggesting a different target for business-as-usual, by reminding us of our last propaganda cycle, the “War on Terror”.

Yet, Trump has thus far failed to articulate the “big picture” of a Russian rapprochement in the context of the necessity of a US glasnost – of a deconstruction of the National Security state.  During a campaign characterised by serial violations of longstanding taboos (Sanders’ opposition to the CIA, his support of the Sandinistas and Cuba) and Wikileaks’ disclosure of sensitive and damaging government and campaign documents, Trump squandered his opportunity to lay out a credible vision for either radical reform or revolution.  Indeed, he has been happy to simultaneously endorse the NSA surveillance state and Wikileaks – and without irony.

Trump’s has thus far failed to articulate a coherent vision of a cooperative, multi-polar world – in other words, to invite ordinary citizens to demand a radical change in the concept of national security and of the place of the US in the world.  If he does not challenge the NSC, Trump’s insurgency will expose itself as a distraction to the urgent task of finding a pathway out of the labyrinth of empire.  In its naivety, Trump’s “revolution” would then serve to further merely consolidate the unquestioned impunity of the National Security state.

If Trump is serious, he will set forth a coherent critique of US national security and the constitutional disaster that is the National Security Act.  If Trump is serious, he will defy the National Security Act.

 

James Luchte

 

Moving Stones and Speaking Trees: the War in South Sudan
In 2012 John Kerry declared in a Senate Foreign Relations Committee Hearing that the United States had “helped midwife the birth of this new nation” of South Sudan. His choice of verb—soon to become fashionable—is revealing, not only about the motivations and world view of the speaker and government he represents but it also raises the question of what child was brought into the world. What does the word reveal? To begin with, the “midwife” peddlers delete the South Sudanese from their long, traumatic history of liberation struggle against the North, dating back at least to the Torit Mutiny of 1955, blithely skipping over the fact that the United States was actually on the side of the oppressors. In fact, when the SPLM/A (Sudan People’s Liberation Movement/Army) was founded in 1983, the Khartoum government was Africa’s biggest recipient of US aid and arms. The relationship only soured after the First Gulf War when Khartoum supported Saddam Hussein and, especially, after 9/11 when it was known that the regime had harbored Osama bin Laden.
There has been plenty of foreign interference in South Sudan, going at least as far back as the Egyptian slave raiders of the third millennium BCE, all the way through to nineteenth-century Christian missionaries, the ineffectual regime of Governor General Charles George Gordon who, the British believed, as Deborah Scroggins writes, brought “peace and orderly government” (p. 53) to a territory as big as Western Europe before he ended up beheaded, and the toxic meddling of the British Lonrho (“Investing in the growth of Africa”) mining tycoon Tiny Rowland, who bankrolled politicians all over the continent in the 1980s and supported both North and South Sudan in order to prolong the war because, that way he believed, he would get access to mineral-rich zones away from government control. The US, then, cannot claim all the glory but it certainly played its part in the birth pangs of the independent state of South Sudan. This “nationhood by whatever means necessary” was helped along by a bunch of, let’s say, forceps wielders, among them the powerful US Israeli lobby (after all, South Sudan is a good customer of Israel’s surveillance and weapons technology, and in 2013 it promised it would sell oil to Israeli companies) and, naturally, homegrown US oil interests, especially given the strong foothold of China in the country and, notably, of the Chinese National Petroleum Corporation.+
The cozy relationship between Washington, UN and South Sudanese elites is an important background to Nick Turse’s new book, Next They’ll Come to Count the Dead: War and Survival in South Sudan, because it at least partly explains the awful silences he addresses. The Center for Public Integrity has shown that the government of South Sudan spent $2.1 million on Washington lobbying and public relations firms from 2014 to the end of 2015, trying to brush up its image while some five million of its people were in dire need of humanitarian assistance and about 20% had fled their homes. Unable to pay its civil servants, the “government” that needed the image makeover is intermittently headed, in a highly volatile partnership, by Salva Kiir and Riek Machar, Dinka and Nuer respectively, with a long history of enmity which they both periodically whip up by manipulating tribal sentiments among their factions inside (more or less) the SPLA, which is purportedly the new country’s “regular army”. They also got a bit of freebie air-brushing by the head of the much-criticized, failing-to-protect UN mission, UNMISS, Hilde Johnson, who has a penchant for referring to her high-up friends as “cadres”, “freedom fighters” and “comrades”. There are other cover-up buddies such as a decades-old clique of US-based policy wonks who called each other names like “Emperor”, “Deputy Emperor” and “Spear Carrier”, at least two of whom are now special advisors to Kiir.
In fact, in terms of what are usually thought of as government functions, the South Sudanese variety can hardly be called a “government”. For more than two decades, small empires in the day-to-day running of the country have been conquered by sundry humanitarian organizations (many run by American evangelical Christians) shaping a sort of “republic of NGOs” (for more on this, see Haiti). The anti-governance repercussions are far-reaching because the NGOs may have taken over state powers but they do not have the capacity for dealing with nation-wide problems like emergency response in a catastrophic situation of actual or perpetually looming civil war and its attendant disasters of famine, hunger, refugees and the unburied dead. In one of the most heavily armed countries of the world, stockpiling weapons with no policy for managing the excess has clear priority over health, education, public service, infrastructure and especially justice.
Turse’s book is essentially about justice. He gives a voice to today’s victims of the latest round in centuries of foreign interference which, since it must be concealed behind words like “midwife” or President Obama’s description of the new era ushered in by two rival warlords as a “time of hope”, also means that sufferers must be silenced or, equally horribly, never mentioned, even when dead. So “[…] year after year, President Obama provided waivers to sidestep the 2008 Child Soldiers Prevention Act by which Congress prohibited the U.S. from providing military assistance to governments filling their ranks with children […]”, in order to keep up political and military backing for known war criminals. It was a gamble of “looking the other way” (p. 72) or prettying up the unspeakable that would have dreadful results in the civil war which broke out in South Sudan in 2013. The pain described by Turse’s informants is unbearable and it is even worse knowing that western governments knowingly loosed the “blood-dimmed tide” of a ghastly birth. No wonder Turse quotes from Macbeth, “Blood will have blood” (p. 11).
The lines immediately following Macbeth’s prophecy—“Stones have been known to move, and trees to speak. / Augurs and understood relations have /[…] brought forth / The secret’st man of blood”—well describe the distressing task Turse has set himself with this book. When gravestones move and trees speak, when the guilty are brought to justice, then the dead may have a measure of justice. And when the crimes are so heinous that there are no gravestones, the trees, the augurs and “understood relations” must whisper the truth. “They’re not supposed to kill old ladies” (Bor, p. 45); “We had to hide the past by collecting all the remains […] (Mayor of Bor, p. 56); “They gave me a gun […] I followed big men around” (Osman, 15, p. 66); “I want to go to school” (Zuagin, child soldier, maybe 15, p. 70); “They lined us up outside of a building and started shooting at us” (Nuer man, Malakal, p. 93); “They shot the [baby] boy in front of his mother” (woman in Bentiu, p. 119); “Watch how we will rape your daughter” (government-allied militiamen to a woman in Unity State, who raped the younger daughter, set her on fire and raped another daughter, pp. 119-120). Listen to the “understood relations” here for they give a portrait of the “government” which Hilde Johnson wants to support with more international “engagement”.
Even the bodies must be silenced. No one knows how many there are, who they are or where they are. But “Naming the Ones We Lost” is an unfunded volunteer-reliant, project aiming to do just this, “since neither the government, nor the opposition, nor any foreign NGO, aid organization, or civil society group has bothered to identify the victims of South Sudan’s conflict”. This “one-of-a-kind work”, Turse says, “is meant to plant the seeds of accountability in this otherwise justice-barren land” (p. 105). The ages of the first seven victims, three generations, on a “spreadsheet of pain, regret and loss” read by Turse, were 11, 81-85, 15, 12, 28, 31-35 and 14 (p. 105). Imagine what they meant to their families, their communities. But this is lost on all the NGOs which have declined to support the project. However, the South Sudanese human rights activist Edmund Yakani does. “This argument—peace first, justice later—doesn’t work. Peace is a result of justice.” (p. 73). The mere idea is so dangerous that Yakani is in danger from none other than the “National Security Service” but, “Quitting is not an option” (p. 111). Among his many projects of trying to bring justice to South Sudan is a database, an “encyclopedia of horrors” (p. 107) compiled from “South Sudan Eye Witness Declaration Forms” consisting of pages of detailed questions.
For all the beautiful words of the Universal Declaration of Human Rights, many peoples have no rights, not even to be named after they are murdered by government forces. You only have to do a thought experiment, transferring the experience of the mother who saw two daughters raped and one of them set alight to the streets of Chicago, London or Berlin and imagining the outcry. What Nick Turse describes happened in South Sudan…. It is not as if the South Sudanese are any less eloquent than their fellow humans in the West. They are simply not heard because very few people think their suffering is significant enough to know about and others who do know about it need to silence it.
Nick Turse is a most honorable exception. A South Sudanese reporter who could not speak (because, in South Sudan, journalists are harassed, imprisoned, abducted and murdered) asked him to “write the first draft of this history” although he had another book in mind. He accepted the challenge and took a step towards justice in this devastated country. However, in a recent interview he says, “Long-standing grievances have basically just been papered over. I am hoping against it, but I fear that in the coming months or years we are going to see the country collapse back into conflict. I fear it could be even worse than what happened in 2013. I hope against hope that I am wrong about this, but I fear that war will return to South Sudan.”
The present situation of Kiir’s temporary triumph over Machar and ongoing seething tribal grievances among the “freedom fighters” lamentably seems to forebode that he is right to fear. And if war once again returns to South Sudan, who is going to be responsible for the wellbeing of the child that was so wanted but so roughly, so irresponsibly “midwifed”?
by:Anna Martín

A well written piece by Pepe Escobar on a very sensitive and dangerous situation.

Professor Mekonen Haddis

Between a Rock and a Hard (South China) Place

The Permanent Court of Arbitration in The Hague, backed by the UN, essentially ruled that there is no legal basis for China to claim historic rights to vast sections of the South China Sea included in the ‘nine-dash line’.

Here it is, in full legalese: “China’s claims to historic rights, or other sovereign rights or jurisdiction, with respect to the maritime areas of the South China Sea encompassed by the relevant part of the ‘nine-dash line’ are contrary to the Convention and without lawful effect to the extent that they exceed the geographic and substantive limits of China’s maritime entitlements under the Convention.”

Well, nothing is black and white in such an immensely complex case. The Philippines were advised by a powerhouse Anglo-American legal team. China had “no agents or representatives appointed.”

Beijing argues that all the attention over the South China Sea revolves around conflicting sovereign claims over islands/rocks/reefs and related maritime delimitations – over which the court has no jurisdiction. Attributing territorial sovereignty over maritime features in the South China Sea goes beyond the 1982 United Nations Convention on the Law of the Sea (UNCLOS).

Beijing does abide by Article 298 of UNCLOS – which excludes compulsory arbitration on maritime boundaries. This, by the head of the Chinese mission to the EU, Yang Yanyi, is a fair summary of the Chinese position. And in fact the court did not allocate any islands/rocks/reefs/outcrops to disputing nations; what it did was to point towards which maritime “features” are capable – under international law – of generating territorial rights over surrounding seas.

What transpired in The Hague certainly won’t solve the riddle, asargued here. Beijing had already made it very clear, even before the ruling, it would fiercely reject all findings.

Yet now the narrative is being calibrated; Beijing is open for talks, as long as Manila sets the ruling aside. Jay Batongbacal, from the University of the Philippines, cuts to the heart of the issue: “Publicly stating that junking the arbitration is a condition for resuming negotiations gives no room for face-saving on either side.”

And face-saving – the Asian way – must now be the name of the game. New Filipino President Rodrigo Duterte – a.k.a. ‘The Punisher,’ due to his stint as a crime-busting mayor of Davao City – does have an agenda, which is to improve his country’s appalling infrastructure. And guess where crucial investment would have to come from.

So Duterte’s domestic reform agenda points to economic cooperation, not confrontation, with China. He already gave – contradictory – signs he would be willing to visit Beijing and strike a deal. Undoubtedly, however, he would have a hard time convincing Beijing to stop military-related construction in the South China Sea, as well as not imposing an Air Defense Identification Zone (ADIZ).

But he might have a shot at proposing the sharing of natural resources, as in the vast South China Sea wealth of unexplored oil and gas. Yes, because once again the South China Sea is all about energy – much more than the roughly $4.5 trillion of shipping trade that traverses it every year; “freedom of navigation” has always been more than assured for all. For Beijing, the South China Sea is an all-out energy must have, as it would constitute, in the long run, another key factor in the “escape from Malacca” master plan of diversifying energy sources away from a bottleneck that can be easily shut off by the US Navy.

Now, with the US Navy already intruding and over-flying the South China Sea, the stakes cannot but get higher.

It’s… a rock!

The absolute majority of the islands/rocks/rocky islets/reefs/shoals claimed by China, Brunei, Malaysia, Philippines, Vietnam and Taiwan in the South China Sea are uninhabited – with some of them underwater at low tide. They may cover a total of just a few square kilometers – but are spread out over an immense 2 million square kilometers of sea, and included in China’s ‘nine-dash line’, which claims sovereignty over the majority of island chains and nearby waters.

So in this key department regarding the question: ‘Who’s the rightful, sovereign owner of certain islands in the South China Sea,’ the ruling was a major blow to Beijing. Justification had always relied on historical texts, ranging from the 4th century BC to the Tang and Qin dynasties. During the – short – Republic of China period, 291 islands, reefs and banks were mapped and qualified as part of the ‘nine-dash line’ in 1947.

So ‘Red’ China, in 1949, actually inherited a claim made by the rival Republic of China. Fast forward to 1958, when China under Mao issued a declaration framing its territorial waters within the ‘nine-dash line’ – encompassing the Spratly Islands. Adding to historic irony, North Vietnam’s then prime minister, Pham Van Dong, agreed with then Chinese premier Zhou Enlai.

Now it’s a completely different story. Even though Beijing and Taipei continue to agree, China and Vietnam are on opposite sides. The Hague ruled, “There was no legal basis for China to claim historic rights to resources within the sea areas falling within the ‘nine-dash line’.” An extra problem is that Beijing never really explained what the line meant, legally.

The Hague also downgraded what could be seen as islands to the status of a bunch of rocks. Thus they are not territory-generating. Most of the South China Sea in fact is declared as neutral international waters.

So if we’re talking about rocks, their surrounding territorial sea stops at a mere 12 nautical miles. And they obviously don’t qualify for exclusive economic zone (EEZ) status, with a radius of 200 nautical miles.

If no EEZs apply to the Spratlys, what may happen in the near future is that Philippines, Malaysia, Brunei and Vietnam could each draw their own EEZ-style lines from their major islands or coastline into that section of the South China Sea – and claim the respective rights.

The ruling does spell trouble for the Mischief and Subi reefs – the two biggest land “formations” in the South China Sea after massive Chinese reclamation. Now they have been downgraded to “low-tide elevations” – they only emerge above water at low tide. This means these two major Chinese bases in the Spratlys would have no territorial sea, no EEZ, nothing, apart from a 500-metre safety zone surrounding them.

Meet the Spratly Rocks

And then there’s the extraordinary case of Taiping – the largest “island” in the Spratlys, with an area of about half a square kilometer. Taiping is occupied by the Republic of China, which as everyone knows is not recognized as a sovereign nation by the UN, by the court in The Hague, or by any other Southeast Asian nation for that matter.

Beijing never questioned Taipei’s claim over Taiping. But as Taiwan is part of China, even without physically occupying Taiping, Beijing could still claim the right to draw an EEZ.

The Philippines, for its part, argued that Taiping has neither civilian habitation nor sustainable economic life, because it is a military garrison. The Hague agreed. So Taiping island was also downgraded to “rock” status. No 200 nautical miles EEZ then, which would reach very close to the Philippines’ Palawan province.

So in a nutshell there seem to be no “islands” left among the more than 100 “rocks” in the Spratlys. Time to call them the Spratly Rocks then?

According to the court, none of the Spratlys were “capable of generating extended maritime zones … [and] having found that none of the features claimed by China was capable of generating an exclusive economic zone, the tribunal found that it could — without delimiting a boundary — declare that certain sea areas are within the exclusive economic zone of the Philippines, because those areas are not overlapped by any possible entitlement of China.”

Ouch. As if this was not enough, The Hague also condemned China’s land reclamation projects – all of them – and the construction of artificial islands at seven “rocks” in the Spratlys, stating these had caused “severe harm to the coral reef environment and violated its obligation to preserve and protect fragile ecosystems and the habitat of depleted, threatened, or endangered species.”

Since 2012, all of the Paracel Islands have been under Chinese control. As for the Spratlys, they are a mixed bag; Vietnam occupies 21 “features”, the Philippines 9, China 7, and Malaysia 5. The song, though, remains the same; sovereignty issues cannot be settled under international law, as they all fall outside of The Hague’s jurisdiction.

So what happens next – apart from endless haggling about the conclusions? Beijing and Manila must talk – in a manner that Beijing saves face; the Association of Southeast Asian Nations (ASEAN) should step up its game and act as a mediator. That does not mean China will cease to create “facts on the sea” – as in most of the South China Sea. After all, they’ve got the (military) power. With or without a ‘nine-dash line’. And be it over islands, reefs, “low-tide elevations” or a bunch of rocks.

Pepe Escobar