Monthly Archives: August 2021

“We Will No Longer Sell Crude Abroad”: Mexican President AMLO

This is good news for Mexico’s long-beleaguered state-owned oil company, Pemex, but not such good news for the US’ refinery industry.

Last Thursday, Mexican President Andrés Manuel López Obrador made another public statement that won’t have gone down well in Washington’s corridors of power — or for that matter Texas, Louisiana, California or any other US state with a big refinery. Lopéz Obrador — commonly referred to as AMLO — said that Mexico will stop selling crude oil abroad and will only extract the oil that it needs to produce the gasoline the country requires. It is all part of the president’s quest for energy self-sufficiency.

AMLO also claimed that Mexico’s long-suffering state-owned oil company Petróleos Mexicanos (Pemex) is finally putting its decades-long crisis behind it

“Pemex is recovering from a crisis inherited from many years of neglect, because the goal of the previous neoliberal governments was for Pemex to go bankrupt in order to privatize oil… to ruin Pemex and the Federal Electricity Commission (CFE ). Fortunately, the people of Mexico said enough was enough. The change has occurred and we have dedicated ourselves to strengthening Pemex and the CFE … and we have already pulled Pemex out of the hole it was in.”

That s somewhat debatable. It’s true that in July this year Pemex’s average daily crude output reached 1.772 million barrels — its highest level since September 2018. It’s also true that in 2020 Pemex finally put an end to an unbroken 15-year rough patch of sliding production. It reported an average daily output of 1,705 million barrels. But the margin was tiny, just 4,000 barrels per day. And according to a Bloomberg report, admittedly featuring lots of unnamed sources, Pemex has apparently taken to inflating its numbers by measuring crude production at a warmer temperature than government regulators:

Pemex gauges hydrocarbon production at 20 degrees Celsius (68 degrees Fahrenheit), rather than the National Hydrocarbons Commission’s 15.56 Celsius standard, said the people, who asked not to be identified because the information isn’t public.

When combined with Pemex’s longstanding practice of counting a light oil known as condensate in its overall crude tally, the temperature bump swelled output figures by the equivalent of about 16,000 barrels a day going back to the start of 2020, the people said.

Regardless of the veracity of Bloomberg’s unsourced allegations, one thing is clear: AMLO’s quest for energy independence is gaining momentum. And it is almost certain to have raised the hackles of some very large business interests north of the border.

Bad News for US Oil Giants and Refiners

In February, a fierce winter storm in Texas resulted in days of crippling outages, not only in Texas but also large swathes of Northern Mexico that depend on natural gas supplies from the US for its electricity. The chaos wreaked by the storm, including astronomic energy bills, were a stark reminder of the risks of depending too much on one’s neighbors for energy. Prices for imported gas that Mexico uses to generate power spiked 5,000% during the crisis, Lopez Obrador said.

“What is the lesson in all of this? We must produce,” he said, referring to gas, but also to gasoline and diesel. “We are seeing that we must seek to be self-sufficient.”

In April, Mexico’s lower house of congress passed AMLO’s proposal to tighten state control over the country’s fuel market. The bill now just needs to clear the senate, where the ruling Morena party and its allies have a majority. If approved, the initiative would overturn large parts of the country’s hydrocarbon law. Most importantly, it would expand government control over fuel distribution, imports and marketing. It would allow authorities to suspend permits based on national or energy security, as well as let Pemex take over facilities whose permits have been suspended.

In May, AMLO announced that Royal Dutch Shell had agreed to sell its controlling interest in the Deer Park refinery in Houston, Texas to its partner Pemex for $596 million, making Pemex the sole owner of the refinery. This should significantly reinforce Pemex’s refining capabilities, reducing its dependence on US imports.

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Why Is the Gates Foundation Funding the UK’s Medicines Regulator?

Just as importantly, why is the regulator laying off 20-25% of its workforce in the midst of a global pandemic?

On August 13, the UK government published a response to a freedom of information request in relation to the Medicine and Healthcare products Regulatory Agency (MHRA) — the UK’s equivalent of the FDA. The question it was in response to enquired as to whether or not the agency had received funding from the Bill and Melinda Gates Foundation. The answer was yes:

We do receive funding from the Bill and Melinda Gates Foundation as well as other sources outside government such as WHO. This funding mainly supports work to strengthen regulatory systems in other countries…

The current level of grant funding received from the Gates Foundation amounts to approximately $3 million. This covers a number of projects and the funding is spread across 3-4 financial years. We are an executive agency of the Department of Health and Social Care.

The story didn’t attract much attention at the time. In fact, not a single newspaper or broadcaster even bothered to cover it, perhaps because there didn’t see much in it. After all, $3 million (with an “m”) is not even that much money these days. And the Gates Foundation (GF) is a charitable organization — the biggest of its kind, with roughly $60 billion in assets — so what could possibly be wrong with it granting funds to an organization in charge of deciding which pharmaceutical products and medical devices reach the market and which don’t? Well, quite a lot, actually.

Blatant Conflict of Interest

Firstly, $3 million may not be a lot of money to the GF but it’s still a substantial sum to the cash-strapped MHRA. Secondly, the Gates Foundation’s roughly $60 billion in assets include, among other things, shares and other forms of investments in some of the world’s largest pharmaceutical companies, whose products the MHRA has to regulate on a regular basis. Those companies include Sanofi, Merck, Eli Lilly and Company and Abbott Laboratories, all of which have developed or are developing covid-19 treatments and/or vaccines that are yet to receive authorisation in the UK. They also include Pfizer and its German partner BioNTech, which together have developed and marketed the most profitable vaccine in history.

This is a blatant conflict of interest. It’s also worth noting that the MHRA’s former CEO, Ian Hudson, now works as a senior advisor at the GF.

When it comes to global healthcare, the GF is anything but a disinterested third party. Its co-founder, Bill Gates, is as committed as ever to intellectual property rights. In January we learned that Gates had played a key role in convincing Oxford University to drop a prior commitment to donate the rights to its vaccine to any global drug maker. The idea was was to provide the vaccine to poorer countries at a low cost or even free of charge. But Gates persuaded the British university to sign a vaccine deal with AstraZeneca instead that gave the pharmaceutical behemoth exclusive rights and no guarantee of low prices.

We have also learnt that Gates was instrumental in blocking attempts by a coalition of countries led by South Africa and India to bring a patent waiver proposal to the World Trade Organization’s TRIPS (Trade Related Aspects of Intellectual Property Rights) Council. A waiver would allow poorer countries to produce the vaccines themselves. And that would massively accelerate global take-up of vaccines, which could help in the global fight against Covid. But Gates argued that poor countries were not prepared to scale up manufacturing. A waiver would also eliminate incentives for future research, he said. His argument won the day and even today the TRIPS waiver is still under discussion at the WTO, going nowhere slowly. 

In an article for Wired magazine Mohit Mookim, a former researcher at the Stanford Center for Ethics in Society, asks whether we should be surprised that a monopolist-turned-philanthropist maintains his commitment to monopoly patent rights as a philanthropist too?

“Throughout the last two decades, Gates has repeatedly advocated for public health policies that bolster companies’ ability to exclude others from producing lifesaving drugs, including allowing the Gates Foundation itself to acquire substantial intellectual property. This continues through the Covid-19 pandemic.”

Now we learn that the foundation, with its vast holdings in pharmaceutical companies and substantial intellectual property interests, has also been helping to fund the MHRA for the past four years. In other words, an organization that has poured billions of dollars into the research and development of vaccines, other novel treatments and medical devices has also been funding the UK agency responsible for approving those vaccines, novel treatments and medical devices. . 

The MHRA is not the only public health agency in the UK to have benefited from the foundation’s largess:

  • Public Health England, a health watchdog set up by the Government in 2013 to protect and improve health and wellbeing and combat health inequalities, has received $7,785,336 from the foundation. The agency is set to close in the coming months and will be replaced by the Orwellian-titled “UK Health Security Agency”.
  • Health Data Research UK has received $3.5 million from the GF since the pandemic began. The organisation has courted controversy in recent months for its role in bringing together the health and biometric data of all 55 million of the NHS’ patients. That data was then supposed to be flogged to any interested third parties, but the plan was scrapped at the last minute due to public opposition.
  • The GF has also partnered with the UK Government’s UK Research and Innovation (UKRI), which began life in 2018 with a budget of £6 billion, ostensibly to support science and research in the UK.

Funding Crisis

As I wrote last week, the UK Government is ramping up its plans to privatise the NHS. This is leaving many parts of the health system starved of funds, which in turn opens up fresh opportunities for private-sector companies, trusts and foundations. The MHRA, like the FDA, is primarily funded by the “user fees” it charges its “customers” (i.e., the companies it regulates).    

In the US, user fees fund account for around 65% of the FDA’s operating budget for regulating prescription drugs. In the case of the MHRA, 100% of its budget for regulating medicines comes from user fees. Its other activities are funded by a combination of private and public sources. The MHRA’s regulation of devices is primarily financed by the Department of Health and Social Care (DHSC), with approximately 10% of its revenue derived from fees. The National Institute for Biological Standards and Control (NIBSC) raises around half of its revenue from fees charged for services.

Nonetheless, the MHRA is facing a funding crisis. And it’s largely a result of Brexit. Before the UK’s departure from the EU, in January this year, the MHRA formed part of the European system of medicines approval. Under that system, national regulators can serve as rapporteur or co-rapporteur for any given pharmaceutical application, providing most of the verification work on behalf of all members. It was an important source of fee-income but now it’s dried up. And the government is not replacing it.

As a consequence, the regulator has announced plans to lay off between a fifth and a quarter of its 1,200-strong workforce as part of cost-cutting measures. According to the FT, the goal is to transform how the MHRA operates by redeploying staff to new areas of regulation and science. Documents leaked to the British Medical Journal reveal that the MHRA is offering early redundancy packages to staff from its divisions on vigilance and risk management of medicines (not exactly comforting), licensing, devices, inspection enforcement and standards (also not comforting), as well as its committee secretariat. The document, marked “official sensitive,” also notes that the MHRA’s income is forecast to fall by 15-20% in the next financial year and beyond.

Despite the drastic downsizing, the MHRA says it wants to still serve as a world-class regulator that delivers positive outcomes for patients while modernizing the services it provides to industry. With 15-20 percent less operating income and 20-25 percent fewer workers, that’s likely to be a tall order.

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Spain’s Supreme Court Rules Against Using Vaccine Passports to Restrict Access to Public Spaces

It’s the first time a high court of a European Member State has challenged the use of vaccine passports domestically. 

Spain’s Supreme Court made waves last week by becoming the first judicial authority in Europe to rule against the use of covid passports to restrict access to public spaces — specifically hospitality businesses (bars, restaurants and nightclubs). It is not the first Spanish court to come out against vaccine passports but it is the most important. So far, only five of Spain’s 17 autonomous regions – the Canary Islands, Ceuta and Melilla, Andalusia, Cantabria and Galicia – have proposed using vaccine passports to restrict access to public spaces. And all have been rejected by local judges.

The EU’s Green Pass is a one-piece QR-code document that can be issued to a traveller in both paper and digital format. It is intended to prove that the holder has either received one of the four vaccines authorised by the European Medicine Agency (BioNTech-Pfizer’s, Moderna’s, AztraZeneca’s and Johnson &Johnson’s), has tested negative for Covid-19 in the last 48 hours or has been infected with Covid in the last six months and therefore has natural immunity. However, some countries such as France have chosen only to allow entry to travellers that are fully vaccinated.

Many government are also using the documents to limit access for unvaccinated citizens to public spaces and services with their own countries. But so far Spanish judges have challenged this trend, on the grounds that it would infringe on certain constitutionally recognised individual rights, such as the right to physical integrity and privacy, while also having limited impact on public health. The Supreme Courts of Andalusia and Ceuta and Melilla said the measures were also discriminatory. When the Supreme Court of Andalusia sided with local hospitality businesses in their appeal against the region’s proposed vaccine passport measures, the regional authority took the case to the national Supreme Court. And lost.

Economic considerations may have also played a part in the courts’ decision. Spain’s hospitality sector generates a huge amount of money and a huge number of jobs, especially during the peak tourist season (i.e., right now). The sector has already been through the grinder of last year’s three-month national lockdown as well as sporadic regional lockdowns. Even with the introduction of vaccine passports, overseas visitors continue to arrive in dribs and drabs. As was the case last year, it’s domestic demand that is keeping many businesses alive. And limiting that demand is likely to create even more economic pain. 

Constitutional Clashes

But this is not the first time that Spain’s government and regional authorities have clashed with the judiciary over the management of the public health crisis. Since Spain ended its state of alarm on May 9th, the high courts in the Valencia region, the Balearic islands, Catalonia, the Canary Islands and other parts of Spain have prevented regional authorities from applying a range of anti-Covid restrictions, including curfews and limits on social gatherings, on the grounds that it’s unconstitutional to breach fundamental rights when there’s no longer a state of alarm.

Then, on July 14, Spain’s top judicial body, the Constitutional Court, delivered another hammer blow, by ruling that Spain’s coronavirus state of alarm had been unconstitutional all along. The government, it said, should instead have called for a state of emergency – which requires prior parliamentary approval – to curtail fundamental rights for the nationwide lockdown.

In its August 18 ruling, against using the Digital Covid Certificate to grant or deny access to nightlife venues, the Supreme Court said there wasn’t enough “substantial justification” for the requirement of a health pass in bars and nightclubs across the entire region of Andalusia, seeing it more as a “preventative measure” rather than a necessary action. Instead, it said the measure “restrictively affects basic elements of freedom of movement and the right of assembly.”

Interestingly, the Supreme Court also said that using vaccine passports to control access to public spaces and services may not even help prevent infections. In fact, it may exacerbate them, given that recent research has shown that people who have been vaccinated or previously infected with Covid-19 can still catch and spread the virus. As such, implementing a vaccine passport system does not protect others from infection, including those who gain access to a public space by presenting a negative result of a PCR test. Such a document, the court said, “only proves that at the time of the test these people were not carrying the active virus”.

By now it is clear, as Yves laid out meticulously on Friday, that the vaccines are not what they were cracked up to be. Their efficacy fades quickly and is particularly depleted against the Delta variant. Research has also shown that the virus loads of the vaccinated and the unvaccinated are almost identical with regard to the Delta variant. As such, if a vaccinated person and an unvaccinated person have roughly the same capacity to carry, shed and transmit the virus, particularly in its Delta form, what difference does implementing a vaccination passport, certificate or ID actually make to the spread of the virus?

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Going, Going, Almost Gone: UK Government Speeds Up Privatisation of National Health System

Operating on the maxim of “never let a good crisis go to waste”, the government is exploiting the pandemic to embed even more private interests across the system.

Like many healthcare systems around the world, the UK’s National Health System (NHS) has been through the grinder over the past year and a half — largely as a result of the perfect storm created by the Covid-19 pandemic but also due to disruptive forces unleashed by Brexit. Yet if anything, the institution enjoys even more public support today than it did before the pandemic.

Drive through any town, village or city neighbourhood and you’ll find homes and businesses displaying tributes to the NHS in the form of rainbows, often drawn by young children back in 2020 when the pandemic threatened to overwhelm the country’s hospitals. Yes, some individuals may bemoan the treatment they receive from their doctor or in hospital, or the NHS’ successive crises of underfunding and the huge numbers of unfilled vacancies across the sector at every level, but for the vast majority of British citizens the NHS, founded in 1948 on the principles of free and equal  access to medical treatment, is sacrosanct.

Unfortunately, the same cannot be said of the Conservative government, or many of the senior managers it has put in charge of the NHS. While continuing to lavish praise on the bravery and sacrifice of the NHS’ frontline workers, the government, operating on the maxim of “never let a good crisis go to waste”, is exploiting the pandemic to embed even more private interests across the system. David King, a former chief scientific adviser, recently told The Guardian that the government is slipping through plans to “effectively privatise the NHS by stealth” in “the name of a pandemic”.

Gradual Hallowing Out

Of course, the NHS will not be sold off in one day, as happened to British Gas or Royal Mail. It will happen bit by bit, as part of a piecemeal hollowing out that has been going on for years. And it will probably happen a lot faster in England, which is the only part of the UK to have created an internal market for the NHS. The ongoing privatisation of NHS services will not result in patients being charged for healthcare at the point of service — apart from for specific services that users already have to pay for, such as eye tests, dental care, prescriptions and aspects of long-term care. Instead, the focus is on outsourcing NHS services — footed exclusively by the State — to private companies, which can then turn a tidy profit.

That process is accelerating sharply. With the proposed Health and Social Care Bill, currently going through parliament, the government plans to grant more authority to the Health and Social Care Secretary, including the right to approve the chair of the new integrated care boards (ICBs), who in turn can choose to appoint representatives from private companies to their boards. There are also concerns that the new bill will enable NHS managers to award contracts to private companies without a tender process. 

It is these two measures that are raising fears about yet more corporate influence over the NHS. The British Medical Association (BMA), which represents doctors in the UK, called it the wrong bill at the wrong time…

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The US Is Losing Power and Influence Even In Its Own Back Yard

Politically, economically and geopolitically, the sands are shifting in Latin America — and not in Washington’s favor!

If you’re trying to win the hearts of minds of millions of people living in countries neighboring your own, many of which your government has not exactly treated well over the decades, it’s probably not a good idea to call them corrupt. Yet that is exactly what the head of US Southern Command, Admiral Craig Faller, did last week. In an interview with Politico on Friday, he accused China of taking advantage of widespread corruption in Latin America to further its own interests (not that this is something the US would ever do or has ever done):

PRC state-owned and private businesses often exploit pervasive corruption in the region to undermine fair contracting practices and circumvent environmental compliance. A common tactic they use is to provide lucrative pay offs to local officials in exchange for favorable deals.

To be sure, there are legitimate aspects of these activities that provide needed investment to a region still recovering from the impact of Covid-19. It’s incumbent on all of us to forge a way ahead that recognizes the important role [China] can play as part of a rules-based international order.

But here is the friction: The PRC does not seek fair competition based on rules. It seeks to create dependencies, not trusted partnerships. Through its deepening economic ties and coercive influence, Beijing is vying for key support from regional partners on U.N. votes and backing for Chinese appointees to multinational institutions. Ultimately, Beijing wants to create a global system in which authoritarian regimes are viewed as legitimate forms of governance. A system where the rule of law, human rights and free speech are stifled. A system where international norms are manipulated for its own benefit, and it’s happening now.

Obviously, the rules-based system of which Faller speaks is the current one in which the US remains top dog and gets to dictate the rules. By gaining more influence within that system by ramping up its public diplomacy — and in return gaining “key support from regional partners” — the Chinese are breaking not only rules but the spirit of the game, especially if they are paying off local officials in exchange for favorable deals (something the US would never dream of doing).

While Faller may bemoan Beijing’s predilection for authoritarian regimes, the reality is that no country has done more to undermine and ultimately topple democratically elected sovereign governments in Latin America (and elsewhere) than the US. In the past 12 years alone Washington has supported two successful military coups in the region, one in Honduras in 2009, the other in Bolivia in 2019.

Unlike the US, China generally does not try to dictate how its trading partners should behave and what sorts of rules, norms, principles and ideology they should adhere to. What China does — or at least has by and large done over the past few decades until now — is to trade with and invest in countries that have goods — particularly commodities — it covets, including, it now seems, Taliban-controlled Afghanistan.

In Latin America and the Caribbean it has worked a treat. China’s rise in the region coincided almost perfectly with the Global War on Terror. As Washington shifted its attention and resources away from its immediate neighborhood to the Middle East, where it frittered away trillions of dollars spreading mayhem and death and breeding new terrorists, China began snapping up Latin American resources. Governments across the region, from Brazil to Venezuela, to Ecuador and Argentina, took a leftward turn and began working together across various fora. The commodity supercycle was born.

China’s trade with the region grew 26-fold between 2000 and 2020, from $12 billion to $315 billion, and is expected to more than double by 2035, to more than $700 billion. In the last 20 years China has moved from an almost negligible position as a source of imports and destination of exports within the region to become its second trade partner, at the expense not just of the US but also Europe and certain Latin American countries such as Brazil whose share of inter-regional trade has fallen. According to the World Economic Forum, “China will approach—and could even surpass—the US as LAC’s top trading partner. In 2000, Chinese participation accounted for less than 2% of LAC’s total trade. In 2035, it could reach 25%.”

A Case in Point: Peru

When Pedro Castillo was finally named president of Peru after almost two months of delaying tactics by his opponent Keiko Fujimori, one of his government’s first acts was to arrange a sit down with the Chinese ambassador and executives of two of China’s largest mining firms, both with multi-billion dollar interests in Peru. Among the topics under discussion was the option of strengthening Peru’s free trade agreement with the East Asian superpower.

“At present, technical teams of Peru and China are working, through virtual means, on the optimization of the FTA between both countries,” said Roberto Sánchez, Peru’s Minister of Trade and Tourism, adding: “Bilateral relations with China are extremely important”.

China is already Peru’s biggest trading partner and has been since 2014. Around 30% of the Andean country’s exports go to the Asian giant. And that number is growing fast: the volume of Peru’s exports to China increased by 38% year on year between January and March.

Chinese companies have poured just over $10 billion into Peru’s mining sector, according to government data. Peru’s new government has talked about raising taxes on the biggest mining companies, including Chinalco and Shougang Hierro Perú. That has not gone down well in Beijing. Hong Kong-based COSCO Shipping Ports Ltd is also building a huge port in Chancay, just north of the capital Lima, with a total investment of $3 billion. There are also ambitious plans for a transcontinental railway linking South America’s Atlantic and Pacific coasts from Brazil to Chile.

Peru is the second largest recipient of Chinese investment in South America, accounting for 21% of the total dispensed over the past 14 years. The only country to have received more is Brazil, accounting for 47% of all the money invested by the Chinese government and companies in the region. That works out at a total of $66 billion, just under half of which went toward financing energy projects.

Reaping the Dividends of Vaccine Diplomacy

A couple of days after his meeting with the Chinese ambassador and mining executives, Peru’s President Pedro Castillo received the first of two doses of China’s Sinopharm vaccine. He called on the Peruvian people to do the same as the country’s public health authorities prepare to ramp up their inoculation program.

It is an example of how China is reaping the dividends of its vaccine diplomacy, including in Washington’s own backyard…

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