Monthly Archives: November 2022

Brazil and Argentina Just Agreed to Use Local Currencies for Bilateral Energy Trade, In Yet Another Snub for US Dollar

When two of the largest countries on the American continent, Brazil and Argentina, agree to establish a bilateral payment system in local currencies, it is worth taking note.

As NC readers are well aware (in large part thanks to Michael Hudson’s comprehensive coverage of the topic), the world is gradually dedollarizing. The US government’s decision to weaponize its own currency in its escalating tête-à-tête with Russia has merely served to intensify the race among countries in the global south to find alternative payment arrangements that do not include the greenback. But as Yves recently pointed out, with input from payments systems expert Clive, replacing the dollar as global reserve currency is likely to be a long, painstaking process, “with a ton of moving parts”:

Right now, key countries are starting to do large bi-lateral transactions involving non-dollar currencies. That’s a start but a long way from a new system. Remember it took two world wars and a Great Depression for the dollar to dethrone sterling, and that was merely replacing one dominant trade currency with another, and not potentially devising a new system that does not depend on the control and backing of a single central bank.

That all said, when two of the largest countries on the American continent, Brazil and Argentina, sign an agreement to establish a bilateral payment system in local currencies for the purchase and sale of electricity, it is worth taking note.

Said agreement formed part of an extension to the Energy Exchange Memorandum signed by the governments of the two countries last week. The memorandum, which regulates the supply of electricity and gas between the two countries, was first signed in 2019 and was set to expire at the end of this year. The new agreement extends the memorandum until 2025, after which it will be automatically renewed every four years.

The document was signed by Argentina’s Secretary of Energy, Flavia Royon, the Argentine Ambassador to Brazil, Daniel Scioli and the Brazilian Deputy Minister of Mines and Energy under outgoing President Jair Bolsonaro, Hailton Madureira de Almeida.

If anything, one can expect Lula’s incoming government to be even more enthusiastic about bilateral currency agreements in Latin America. Lula himself has called for the creation of a single currency for Latin America called the “sur”, based on the Bancor international currency union proposed by Keynes. According to the proposal, first floated by Fernando Haddad, a former mayor of Sao Paulo and ex-presidential candidate of the left-wing Workers’ Party (PT), the sur would function as a wholesale central bank digital currency linking up the region’s national currencies.

The project is still very much in its infancy and would probably face insurmountable technical, political and economic obstacles. It is also highly questionable whether a CBDC is even desirable, as I have argued in numerous articles (starting with this one). But the idea has nonetheless gained the approval of Venezuelan President Nicolás Maduro, so the political momentum is growing.

The bilateral currency arrangement between Brazil and Argentina has been on the cards for some time. In 2008, both countries agreed to stop requiring bilateral trade to be paid for in dollars, albeit with limited impact. Then, at an event in Sao Paolo in July this year, the respective heads of the Industrial Organization of Argentina (UIA) and the Federation of Industries of the State of São Paulo (FIESP) endorsed a proposal to pay for electricity in local currencies. At the event, Argentine Minister of Productive Development, Daniel Scioli, said the use of local currencies for bilateral energy trade was part of a raft of policies designed to reduce dependence on the dollar.

Dead Cow Bounce?

Argentina’s production of energy has been on the decline in recent years. In fact, the country is expected to rack up a whopping $5 billion deficit in its energy trade this year. But the recent discovery of massive unconventional oil and gas deposits at Vaca Muerta (literally meaning “Dead Cow”), in the rugged environs of a remote Patagonian town called Neuquén, is expected to change all that.

And Brazil is expected to become a major customer of the resulting fracked gas. If the governments of both countries get their way and the technical challenges can be overcome, including each country’s currency risks, particularly Argentina’s, much of the electricity generated by that gas will be paid for in local currency.

In 2021, Argentina exported roughly $1 billion of electricity to Brazil, which suffered an acute shortage of hydroelectric power in the summer. It has also shipped roughly $350 million of gas to its neighbor so far this year. For its part, Brazil has provided Argentina with $250 million of electricity this year to date. But the trade in energy between the two countries is likely to increase in the coming years as the gas from Vaca Muerta begins coming on line.

Buenos Aires is already in negotiations with Brazil to obtain financing for construction of the Presidente Néstor Kirchner gas pipeline. According to Argentina’s presidential office, talks are under way between the state-owned company Energía Argentina (Enarsa), the economy and foreign ministries of both countries, the Argentine embassy in Brazil and the Brazil’s National Bank for Economic and Social Development (BNDES ) to finalize the financing of the later stages of the gas pipeline.

Argentina sees developing Vaca Muerta as essential to becoming energy self-sufficient and establishing itself as a global energy supplier, with Brazil likely to become its biggest customer. It would also bring in desperately needed hard currency. To that end, Argentina’s state oil company YPF recently signed a preliminary deal with Malaysian behemoth Petronas to build a major liquefied natural gas (LNG) plant with the capacity and produce 25 million tonnes of natural gas per year.

The first section of the Néstor Kirchner project, which involves connecting Vaca Muerta with the Saturno compression plant in Buenos Aires province, is expected to be finished by mid-2023. The second section would extend it all the way to the cities of Buenos Aires and Rosario.

Another country that has expressed an interest in investing in the pipeline is China. In 2021, the Chinese companies Powerchina and Shanghai Electric Power Construction signed a memorandum of understanding with the Argentine government to study the technical feasibility of building and financing parts of the gas pipeline system. The entire project is expected to require investment of around US$3.5 billion.

The US government and energy companies are also gushing over the prospects offered by Vaca Muerta. During his first visit to the site in August, the US Ambassador to Argentina, Marc Stanley, said: “Argentina has the energy to supply the world, the country has what the world needs.”

Cozying Up to China

As readers may recall, Argentina is one of more than a dozen countries (including fellow the Central American nations of Nicaragua and El Salvador) that have applied to join the BRICS. The BRICS already accounts for over 40% of the world’s population and over 25% of global GDP. But it is about to get a lot bigger…

Read the full article on Naked Capitalism

The Good News and Bad News About the World’s Most Systemic Lender, Credit Suisse

Credit Suisse may have taken an “important step” in its turnaround process, as its unfortunately named chairman, Alex Lehmann, said this week. But it is also suffering a gathering run on deposits and losing clients to its biggest rival. 

For the world’s most troubled too big to fail lender, Credit Suisse, this week was punctuated by a small slice of good news and a shed load of bad. Let’s begin with the good: on Wednesday an overwhelming majority of its shareholders green-lighted the bank’s capital expansion plan, despite the fact it will heavily dilute the value of their own holdings. The first part of the plan, which was supported by 92% of shareholders, grants 462 million new shares to qualified investors including the Saudi National Bank (SNB) via a private placement. From CNBC:

The new share offering will see the SNB take a 9.9% stake, making it the bank’s biggest shareholder.

SNB Chairman Ammar Al-Khudairy told CNBC in late October that the stake in Credit Suisse had been acquired at “floor price” and urged the Swiss lender “not to blink” on its radical restructuring plans. 

The second part of the plan involves Credit Suisse offering 889 million new shares to existing shareholders at a price of 2.52 Swiss francs ($2.67) per share. If it is able to unload all of those shares at that price, it will have completed its 4 billion franc ($4.24 billion) capital expansion, which is the first part of its turnaround plan.

This may give the loss-plagued, scandal-tarnished lender just enough of a financial cushion to overcome what is almost certainly the biggest existential crisis of its 166-year existence. CS’ unfortunately named chairman, Alex Lehmann, said the vote marked “an important step” in the creation of the “new Credit Suisse”.

The SNB has said it will hold its stake in Credit Suisse,, currently worth around $1.5 billion, for at least two years (presuming the bank is still around then). Majority controlled by the House of Saud, the SNB (not to be confused with the Swiss National Bank) has also expressed an interest in participating in future capital measures of Credit Suisse to support the establishment of an independent investment bank in Saudi Arabia.

As NC regular Colonel Smithers posited, the Kingdom may be trying to replicate what UBS did for Singapore, by partnering with local firms, training locals and setting up wealth management systems. But the shareholders of SNB are not quite so thrilled at the prospect of becoming the largest shareholder of the world’s most troubled too-big-to-fail lender. Since disclosing its interest in taking a stake in CS in late October, SNB’s shares have fallen by 17%.

One other relative strong point for CS is that its capitalisation ratio remains at 13.5%, which is well above the requirement of 10%. But that number will fall markedly once CS confirms its entire net loss for this year.

And that is pretty much where the good news ends and the bad news begins…

Read the full article on Naked Capitalism

Something Just Cracked in Spain’s Mortgage Market

Spain already witnessed one of the most spectacular housing bubbles and busts so far this century. As pressures in the mortgage market begin to grow, the government and banks are desperately trying to avoid a rerun. 

Following weeks of negotiations with bank associations and the Bank of Spain, Spain’s government has authorized a package of relief measures for the country’s most vulnerable mortgage holders. On Tuesday, the Sanchez government approved measures it said would cushion the blow of rising mortgage costs for more than 1 million households. The measures are subject to final negotiations with banking associations, which have a month to sign up ahead of their scheduled implementation next year.

As the FT pointed out Tuesday, Spain is one of the first European countries to introduce emergency measures to blunt the impact of rapidly rising interest rates on families already struggling with soaring inflation:

Spain is especially vulnerable to the ECB’s rate rises because about three-quarters of its mortgage holders have variable rate loan contracts linked to its monetary policy, although they are generally adjusted only once a year.

As data from Spain’s National Institute of Statistics shows, 72% of newly signed mortgages in August were fixed rate while 28% were variable rate. But this is a relatively new trend. In 2020, the ratio was roughly 50/50. In 2016, 90% of all new mortgages were variable rate and in 2009 it was a staggering 96%.

In other words, Spanish homeowners have been making the most of the ECB’s low, zero and ultimately negative interest rate policies while giving little thought to the potential risk of a sudden reversal. But it’s not just the borrowers who were reckless; so too were the lenders. As I reported for WOLF STREET in 2017, the biggest beneficiaries of the ECB’s ZIRP and NIRP were Spanish banks, which made sure to insert so-called “floor clauses” in their variable-rate mortgage contracts. These set a minimum rate, typically of between 3% and 4.5% but in some cases as high as 5.5%, for variable-rate mortgages, even when the Euribor dropped below zero.

As a result, most Spanish banks were able to enjoy all the benefits of virtually free money while avoiding one of the biggest drawbacks: having to offer customers dirt-cheap interest rates on their variable-rate mortgages.

While this was not strictly illegal, most banks failed to properly inform their customers that the mortgage contract included such a clause. In 2016, the European Court of Justice deemed the clauses abusive. At one point it looked as if the ECJ was going to demand that all of the Spanish banks that used the floor clauses would have to reimburse clients all the money they had surreptitiously overcharged them. In the end, that didn’t happen though the floor clauses have since been banned.

Now, Spain has roughly 5.5 million mortgage holders, roughly four million of whom have variable rate mortgages. Of those just over one million of them will qualify for the relief package.

The most vulnerable families, defined as those with annual income of less than €25,200, will be able to reduce their interest rates to Euribor minus 0.1 percentage points under the proposed measures. Many mortgage holders are paying 1 percentage point higher than Euribor, an interbank rate that anticipates ECB moves.

The pact also includes a new code of practice for struggling middle class families. This raft of measures, which will be in force for two years, is meant to help families adapt more gradually to the new interest rate environment. To qualify for the relief, a household must have annual income of less than €29,400. Their mortgage burden must also represent more than 30% of their income and their monthly installments must have increased by at least 20% due to the ECB’s recent rate hikes.

Those hikes have propelled the ECB’s deposit rate from -0.5% in July to 1.5% in late October, its highest level since 2011. The Euro Area’s 12-month benchmark, the Euribor, upon which many Spanish mortgages are based, stood at 2.84% on November 22, its highest level since January 2009. And the ECB is expected to continue hiking rates over the coming months.

For holders of variable-rate mortgages in the Euro Area’s 19 Member States, this has meant having to pay significantly more in monthly instalments, just as prices for the most basic of goods, including energy and food, are also soaring. In the case of an average 25-year Spanish mortgage of €150,000 with a 1% differential over the Euribor, the monthly installment would jump from around €535 to €750 — an increase of around 215 euros per month, or €2,580 per year.

The new relief package will mean that a family with a mortgage of €120,000 and a monthly repayment of €524 tied to recent ECB increases would see their the repayment halved to €246, says Spain’s economy minister Nadia Calviño. Eligible borrowers will also be able to extend the duration of their loan by up to seven years. However, as Spanish consumer protection agency ADICAE warns, that would lead to borrowers having to pay more interest in total — even though their monthly payments fall — as well as, in many cases, having to pay off their mortgage well into their retirement.

For Spanish banks, extending the duration of loans while maintaining the monthly repayment amounts for struggling borrowers will have a significant short-term benefit. It means they will not have to register — and thus provision for — loan delinquencies on their balance sheets.

There is also another major issue at stake: an average income of €29,400 might be enough to qualify someone for a 25- or 30-year mortgage in one of the more impoverished parts of Spain, such as Extremadura, parts of Andalusia, Castilla la Mancha, Murcia, Ceuta and Melilla, but it will not get you a mortgage in the main centers of economic activity such as Madrid, Barcelona, Bilbao, Valencia, Palma de Mallorca and San Sebastian. Many mortgage holders in these cities are also struggling with rising costs but they will not qualify for the mortgage relief — unless, of course, the relief package is expanded.

Of course, all of this defies all logic. The European Central Bank is rapidly hiking rates right now in a (most probably futile) bid to tame surging inflation, despite the fact that surging prices are largely the result of supply side-factors. They include European governments’ ongoing support for sanctions on their biggest provider of energy and other vital commodities, which has led to a massive surge in energy prices and overall inflation. In other words, European governments are largely to blame for the surging costs in Europe.

The ECB’s response has been to compound the emerging economic crisis. The more it hikes rates, the more economic pain it creates. And as that pain grows, European governments and commercial banks have begun scrambling to insulate borrowers from the effects of those rising rates. And those effects are only going to grow as the rates climb higher…

Read the full article on Naked Capitalism

“Inverse” Migration: Why Are So Many US Citizens Moving to Mexico?

As life gets prohibitively expensive for many people living in the US (and other rich countries), relatively cheaper countries like Mexico are becoming increasingly attractive. But for local people the costs are growing.

Between January and September of 2022, Mexico issued 8,412 Temporary Resident Cards (TRT) to US residents, 85% more than in the first three quarters of 2019, according to a Mexican government migration report. Many are choosing to live in Mexico City. Such rapid growth rates have not been seen since comparable data became available in 2010. The number of Americans receiving permanent residency during that period has also risen sharply (48%), to 5,418.

But this may be just a fraction of the real number of American expats choosing to settle in Mexico. As the Mexican government has said for years, the number of Americans moving to its shores is likely far greater than the official figures suggest. According to data from the Ministry of Tourism (Sectur), over 10 million US citizens arrived as visitors through September this year, 24% more than in the same period of 2019. However, the Mexican authorities do not know exactly how many of those chose to stay.

A Growing Trend

In 2020, the US State Department estimated that 1.5 million USians were living in Mexico, more than double the number a decade earlier. That was before Usians began moving to Mexico at an even faster pace.

But why are so many choosing to move across the Southern border in the first place?

One reason is that it is remarkably easy. Mexico is at most a four- or five-hour flight away from most US cities. It has also been one of the most welcoming countries since the COVID-19 pandemic began, having implemented fewer COVID-19 travel restrictions than just about any other country on the American continent. Nor has it introduced vaccine passports. This has made it particularly attractive to digital nomads looking for affordable destinations with few COVID-19 restrictions.

Mexico is also remarkably cheap, as long as you are earning dollars, euros or some other hardish currency.

“Obviously, if you can earn in dollars and spend in pesos, you can triple your income,” Marko Ayling, a content creator and writer living in Mexico City told El País. “And that is very attractive to a lot of people who have the luxury of being able to work remotely.”

Unlike Mexicans in the United States, Americans can work in Mexico for up to six consecutive months on their tourist visas as long as they are paid from overseas. And, although technically not allowed, many choose to return to the US for a short period, then return to Mexico and renew their six-month period in the country, and that way continue working.

But it is not just Americans that are opting to live in Mexico. In fact, Mexico is apparently now the preferred destination for those moving abroad, beating off the likes of Indonesia, Vietnam, and even the popular expat hub Thailand. That’s according to this year’s edition of Expat Insider, an annual report published by InterNations, an expat community founded in 2007 that has been gathering data on expat/rich migrant flows and experiences for more than a decade.

Among the biggest draws highlighted by the survey are ‘the ease of settling in’ and ‘finances’. Of vital import to many people choosing to move abroad are how acccessible visas are to live and work in the countries, safety, and how expensive daily life is. Mexico may have not topped the ranking in all aspects, but it still came out on top with a higher average score.

The country also placed third on International Living‘s list of the best places to retire, just behind Panama (#1) and Costa Rica (#2). The accompanying report highlighted one of the key attractions for many retiring Americans: affordable heathcare:

A big part of the lower cost of living in Mexico is the healthcare. There are two government-run programs, including one (INSABI) that is basically free to Mexican citizens and foreigners with residence (there can sometimes be some small out-of-pocket expenses). This system is designed for those without the means to pay for any other healthcare and has facilities all around the country. Another government option is called IMSS, which costs about $500 per year per person. However, with IMSS pre-existing conditions are not covered.

There is also private healthcare, with clinics and hospitals with all the modern equipment and technology, and doctors of every specialty trained in the latest techniques and procedures. In fact, Mexico is a major medical and dental tourism destination for that reason. You can pay cash at a private facility (costs are a fraction of the U.S.—try $50 to $70 for a specialist visit, $300 for an MRI) or use local or international insurance.

Of course, Mexico has been a popular retirement destination for USians for decades, with places like San Miguel de Allende, Puerto Vallarta, Oaxaca, Cabo San Lucas and Chapala/Ajijic particularly in demand. But as life grows more expensive and more precarious for working- and middle-class USians, this trend is likely to intensify.

As a Brit living in Barcelona and married to a Mexican woman, I can understand the lure that draws people to Mexico. It is a beautiful, vibrant, exotic country with a bewitching color scheme, a rich culture and a diverse geography. The food is delectable and the people by and large warm, welcoming and supportive (in Spanish we would use the word “solidario,” meaning they have solidarity with others). The weather in the Valley of Mexico is temperate all year round. The biggest concern I personally would have about living in Mexico, which is something my wife and I are seriously considering, is its escalating water crisis.

The decision to switch one’s country of residence is usually a deeply personal one and is often triggered by both pull and push factors. Not only are you moving to somewhere new but you are also moving away from somewhere established and familiar, where many of your friends and family live. Speaking as someone who has spent the best part of his adult life living abroad, it is a huge step. I would be very interested to know from US readers who, like Yves, are thinking of leaving the US what their main motives are for doing so.

Security Concerns

Ironically, this gathering exodus to Mexico is happening at the same time that the US Federal Government is issuing blanket travel warnings for many Mexican states. In August the State Department issued alerts for 30 of Mexico’s 32 states, six of which (Colima, Guerrero, Michoacán, Sinaloa, Tamaulipas and Zacatecas) it warned US travelers against visiting altogether, due to the high risk of being kidnapped or attacked.

There is no doubt that security remains the primordial issue in Mexico, as it does in many other Latin American countries. Although the number of people dying in the war on and for drugs has ebbed slightly in the past two years, the country still boasts some of the highest homicide rates on the planet, with Zamora de Hidalgo at 196 per 100,000 people, Zacatecas at 107, and Tijuana at 103. Also, regions that were traditionally relatively safe, such as Puebla or Quintana Roo, have recently been caught up in the spiral of violence…

Read the full article on Naked Capitalism

The G20 Just Agreed to “Build on the Success” (sic) of Digital COVID-19 Certificates for Future Pandemics

Even as divisions rise in the world, the governments of the world’s largest economies appear to be on a strikingly similar page when it comes to rolling out digital health certificates, digital identity schemes and central bank digital currencies.

On Wednesday, (Nov.16) the Group of Twenty, or G-20, brought their annual meeting, this time in Bali, to an end. In customary style, the leaders of the world’s 19 largest national economies (Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan,  Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, and the United States) and the EU released a Leaders’ Declaration, which this year included 52 statements of intent.

The twenty-third of those 52 statements includes the following text (emphasis mine):

We acknowledge the importance of shared technical standards and verification methods, under the framework of the IHR (2005), to facilitate seamless international travel, interoperability, and recognizing digital solutions and non-digital solutions, including proof of vaccinations. We support continued international dialogue and collaboration on the establishment of trusted global digital health networks as part of the efforts to strengthen prevention and response to future pandemics, that should capitalize and build on the success of the existing standards and digital COVID-19 certificates.

When it comes to the COVID-19 certificates, particularly the vaccine passports used across most Western countries, it is hard to imagine what exactly the G-20 means by the word “success”. Perhaps it’s a reference to the massive profits the vaccine passports helped to fuel for the vaccine developers, particularly Pfizer and Moderna, by strongly coercing people into taking the vaccine.

However, as a means of reducing transmission of COVID-19, the vaccine passports used in Europe, North America and Australia did precious little, for the simple reason that the vaccines to which they are tied are non-sterilizing. As a Pfizer executive recently admitted to a European Parliament special commission, Pfizer never tested its product for preventing transmission.

Indeed, COVID-19 vaccine passports may have actually exacerbated the spread of the disease by creating a false sense of security among vaccine recipients. How else to explain the fact that by the end of 2021 the European Union, whose 27 member states had been using vaccine passports to one degree or another for half a year, was once again ground zero for the COVID-19 pandemic?

Yet the governments of all G-20 economies have just acknowledged the importance of “recognizing digital and non-digital solutions, including proof of vaccinations,” in combating COVID-19 and future pandemics. They are also calling for the establishment of “trusted global digital health networks.”

In a preliminary meeting of G20 health ministers, on Oct. 27-28, the ministers agreed that they would “endeavor to move towards interoperability of systems including mechanisms that validate proof of vaccination, whilst respecting the sovereignty of national health policies, and relevant national regulations such as personal data protection and data-sharing.”

Private Sector in the Driving Seat

Creating national and regional systems interoperable is a major obstacle to building a global digital health or vaccine certificate system. And it is the private sector that is largely driving this process. There are a number of private partnerships working to harmonize vaccine passport standards and systems at a global level. They include:

  • The Vaccine Credential Initiative (VCI™), whose partners include U.S. government contractor MITRE Corporation, Amazon Web Services, Microsoft, Oracle, Sales Force and Mayo Clinic. According to its own website, the VCI™ has helped to implement SMART health cards in 15 jurisdictions: the United States, the United Kingdom, Canada, the United Arab Emirates, Japan, Hong Kong, Israel, the Cayman Islands, Puerto Rico, Singapore, Senegal, Qatar, Rwanda, North Macedonia and Aruba. It has also helped to “quietly” roll out digital vaccine certificates across 21 US states
  • The Commons Project Foundation (CPJ), which was founded by the Rockefeller Foundation and is supported by the World Economic Forum.
  • The Good Health Pass Collaborative, which was founded last year by Mastercard, IBM, Grameen Foundation and the International Chamber of Commerce. The organization is the brainchild of the world’s largest digital identity advocacy group, the New York-based ID2020 Alliance, which itself was set up in 2016 with seed money from Microsoft, Accenture, PwC, the Rockefeller Foundation, Cisco and Gavi, the Vaccine Alliance. The ID2020 Alliance’s goal is to “enable access to digital identity for every person on the planet.”

Prior to the Group of Twenty (G20) Summit on November 15-16, the Business 20 (B20) held its own summit in Bali, Indonesia from November 13-14, which was attended by more than 3,300 delegates including 2,000 CEOs from 65 countries and several heads of state. Calls were also made to roll out a global health certificate.

The B20 is the official G20 dialogue forum with the global business community, and it is tasked with formulating policy recommendations on designated issues. In other words, its recommendations influence the content of the G20 Leaders’ Declaration. Before looking at some of those recommendations, let’s take a look at some of the event’s sponsors:

  • Accenture
  • Deloitte
  • Global Business Coalition (GBC), which, like the World Economic Forum, is heavily involved in promoting public private partnerships. Its members include the U.S. Chamber of Commerce, BusinessEurope, the Confederation of Indian Industry and others
  • Boston Consulting Group (BCG)
  • International Chamber of Commerce, which bills itself as the “largest, most representative busines organization in the world”
  • McKinsey & Company
  • Institute of Internal Auditors
  • International Organization of Employers, which describes itself as the “largest network of the private sector in the world”
  • International Federation of Accountants (IFAC)
  • World Bank Group
  • World Economic Forum, which has arguably done more than any other business organization to privatize the United Nations
  • World Resources Institute (WRI)

The B20 also has a small group of what it calls “Knowledge Partners,” all of whom are Western consultancy firms (Accenture, BCG, Deloitte, EY, Mckinsey, and PwC). Many of them are also sponsors of the event. The B20 also has what it calls “Network Partners,” who include the WRI, the Basel Institute on Governance, the Asian Development Bank, Business OECD, GBC, IIA, IOE, the World Bank, UN Women and WEF. Again, almost all of these organizations are based either in the US or Europe.

On the first day of the B20 Summit, Indonesia’s Minister of Health Budi Gunadi Sadikin called on G20 countries to adopt a “digital health certificate using WHO standards.” He also said they were looking to incorporate this type of vaccine passport into the “international health regulations” during the next World Health Assembly in Geneva.

When we have another pandemic, we understand that to stop the spread of the virus we have to limit, not stop, the movement of people… So let’s have a digital health certificate acknowledged by the WHO. If you have been vaccinated or tested properly then you can move around. So for the next pandemic, instead of stopping the movement of people and the global economy 100%, you can still allow some movement of people.

As readers may recall from my March 1 post, Are Vaccine Passports About to Go Totally Global?, the World Health Organization seems poised to lend its endorsement to a global health certificate after publicly opposing vaccine passports for more than a year. In February, T-Systems, the IT services arm of Deutsche Telekom, announced in a press release that it had been chosen by the WHO as an “industry partner” to help introduce digital vaccine passports as a standard procedure not only for COVID-19 vaccines but also “other vaccinations such as polio or yellow fever, across 193 countries” as well as presumably other vaccines that come on line in the future.

As I noted in that post, the timing of the WHO’s purported policy reversal was curious given that back in April 2021 the organization had refused to endorse vaccine passports because it was not yet clear whether the vaccines actually prevented transmission of the virus:

We at WHO are saying at this stage we would not like to see the vaccination passport as a requirement for entry or exit because we are not certain at this stage that the vaccine prevents transmission,” WHO spokeswoman Margaret Harris said at a UN news briefing. “There are all those other questions, apart from the question of discrimination against the people who are not able to have the vaccine for one reason or another.”

Now that we know for sure that the COVID-19 vaccines do not prevent transmission of COVID-19 in the Omicron era…, the WHO apparently feels that now is an ideal time to endorse vaccine passports for global travel. This is happening less than two months after the region of the world with the highest per-capita take up of vaccine passports, Europe, was the epicenter of the Omicron wave. It’s also happening as concerns are quickly growing about the safety of the mRNA vaccines for COVID-19.

There are plenty of other reasons why we should worry about the mandatory application of vaccine passports for global travel, including:

  • The threat they pose to our privacy;
  • The additional abilities and powers they grant to governments and corporations to track, trace and control the population;
  • The not insignificant risk that our most personal data, including our health information and biometric identifiers, could be hacked, leaked or simply shared with third parties;
  • The polarizing, discriminatory and segregational effects vaccine passports are already having across societies, affecting marginalized groups the most;
  • The threat they pose to many of our most basic rights and freedoms, including long-standing bioethical principles such as bodily autonomy, bodily integrity, and the informed consent of the patient ended.

As I contend in my book, Scanned: Why Vaccine Passports and Digital Identity Will Mean the End of Privacy and Personal Freedom, a digital vaccine passport or health certificate is “nothing more and nothing less than a digital ID.” Their mass roll out over the past year and a half has served as a perfect opportunity not only to embed some of the necessary infrastructure for digital identity systems but also to normalize the idea among large segments of the population that digital certification is needed to access the most basic of services and venues…

Read the full article on Naked Capitalism

China Is Making More Big Moves in Latin America

What happens when one of Latin America’s smaller economies, on the US doorstep, decides to throw its lot in with China? It looks like we are about to see. 

Two big things happened this past week in El Salvador, one of Latin America’s smallest countries. First, on Nov 7, the country’s Vice President Félix Ulloa announced that China had offered to buy up all $21 billion of El Salvador’s distressed sovereign debt.

“China has offered to buy all our debt, but we have to be careful,” Ulloa told Bloomberg on the sidelines of an event in Madrid. “We are not going to sell to the first bidder, we have to see what the conditions are like first.”

If China were to actually do this, it would represent a watershed moment for the region. As Bloomberg noted, “anything close to that by a leading sovereign creditor hasn’t happened since the late 1980s, when the US moved to bail out Latin America,” along with, as Bloomberg failed to note, many of Wall Street’s finest.*

However, shortly after Ulloa made those remarks in Madrid, they were rapidly rebutted by other Salvadorian government officials. Ulloa himself later said that his comments had been taken out of context.

But then three days later, on Nov. 10, the second big thing happened: Salvadoran President Nayib Bukele announced on Twitter that his country “will sign a free-trade agreement with China” after meeting with Beijing’s ambassador. Before making that announcement, his government cancelled a pre-existing free trade agreement with Taiwan. Shortly following the announcement, China’s Commerce Ministry said the two countries plan to conclude the agreement as swiftly as possible.

“Since the establishment of bilateral ties, the two sides have reached important consensus at the head-of-state level to promote deepening all areas of trade and the economy and obtain rich results,” said China’s Commerce Ministry on Thursday. “On this basis, to delve further into the potential of two-way cooperation … China and El Salvador wish to start processes related to free-trade talks as soon as possible and make our utmost effort to finish those processes as soon as possible.”

Close to Default

The announcement comes as El Salvador is looking to restructure its external debt to avoid falling into default. The Salvadorian government has around $670 million in bonds due on January 24. That debt is currently rated CCC+ by S&P Global Ratings, seven notches below investment grade. Fitch has already warned investors to expect some form of default in January.

The country is nursing significant losses from the government’s madcap bet on bitcoin late last year when the cryptocurrency was close to its record top. Bukele made bitcoin legal tender in September 2021, just two months before the collapse began, and invested an undisclosed sum of public funds in the cryptocurrency. Since then bitcoins have lost 67% of their value. Perhaps it’s no coincidence that Bukele announced the free trade agreement with China on the same day that FTX declared insolvency. From El País:

It is not known with certainty how much Bukele has invested in bitcoin, but based on the announcements he has made on social networks, it is estimated that the loss for public finances so far is around $70 million, says Ricardo Castaneda, economist at the Institute Central American Fiscal Studies (ICEFI). “This has a very high opportunity cost for a country like El Salvador, because it represents, for example, almost the total budget of the Ministry of Agriculture in a country where half the population suffers from food insecurity,” the economist points out, on the phone. from San Salvador. The smallest country in Central America, El Salvador, has a poverty rate of 26%, according to the World Bank.

It is against this backdrop that China has decided to enter the fray. The move will almost certainly raise hackles in the US, which is currently El Salvador’s largest trading partner and is already leery about China’s growing influence in its own “backyard”. El Salvador may be a relatively small fish, with a population of 6.5 million and a GDP of just over $30 billion, but its decision to cosy up to China could be hugely significant, for two key reasons.

First, precisely because El Salvador is such a small country.

And what’s more, it is in the US’ direct neighborhood and its economy is totally dollarized. Yet the Bukele government still felt emboldened enough to scrap its established trade agreement with Taiwan — the US’ strategic outpost in East Asia — in order to sign a trade agreement with the US’s biggest geopolitical rival, China. There are now four countries in Central America that have scrapped their trade agreements with Taiwan in recent years, the other three being Costa Rica, Panama and Nicaragua.

Bukele may feel that he can get away with such a provocative step since he is far and away the most popular national leader on the American continent, consistently earning approval ratings of around 90%. In his fourth year in office, Bukele recently announced plans to seek reelection in 2024, despite the country’s constitution barring presidents from having consecutive terms.

Bukele’s overwhelming popularity is largely due to his government’s relentless, often brutal crackdown on the 18th Street and Mara Salvatrucha streets gangs that have made life insufferable for everyday Salvadorians and the country more or less ungovernable. Since Nayib Bukele became president in 2019, the number of homicides has more or less halved, though an explosion of violence in March this year forced the government to double down on the crackdown.

Bukele’s decision to stand for reelection set him on collision course with Washington, which already sanctioned several government officials last year. The announced free trade agreement with China is almost certain to escalate tensions. 

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US Farmers and Big Ag Corps Press Panic Button on Mexico’s Upcoming GMO Ban

As Mexico’s GMO ban looms ever larger, the US National Corn Growers Association is calling for the U.S. Trade Representative to intervene, “before it is too late”.

Thanks to NAFTA and US agricultural subsidies, Mexico has become a major importer of US-produced staples such as corn, rice and beans. In 2021, the country, once the birthplace of modern maize, became the world’s second largest importer of corn. Mexico’s President Andrés Manuel Lopéz Obrador (or AMLO as he’s commonly known) is determined to reverse this trend. Since coming into office in late 2018, AMLO has made food security and self-sufficiency one of the main priorities of his government.

“We have to aim for self sufficiency in food, just as we have done with energy,” said AMLO in his regular morning press conference this Wednesday. “Producing what we consume in Mexico is the best strategy for tackling the problem of inflation.”

US Biotech Corn’s No.1 Export Market

These words were deemed so important by the Mexican government that it shared them on its official twitter account. But they will not have gone down quite so well among corn growers and Big Ag corporations on the other side of the Rio Grande. Nor will the recent announcement that Mexico plans to cut the cost of 24 basic goods by curbing food exports, including white corn and beans, in a big to tackle raging food inflation.

All the while the Jan 31, 2024 deadline for the Mexican government’s ban on all imports of the “probably” carcinogenic weedkiller glyphosate and prohibition of the cultivation and importation of genetically modified (GM) foodstuffs looms ever larger. For US corn farmers and Big Ag corps, the threat could not be greater: 90% of the yellow corn they produce is genetically modified, and Mexico represents 25% of their entire export market.

On Wednesday (Nov. 9,) the Wall Street Journal published a three-paragraph letter from Jon Doggett, the CEO of the US National Corn Growers Association, calling on Washington to “halt Mexico’s trade war before it’s too late”:

The US is a leading corn supplier for Mexico, and 90% of corn grown in this country is biotech, which empowers farmers to conserve the soil and reduce insecticide use. Given these facts, it goes without saying that Mr López’s decree would be devastating for the Mexican people and U.S. farmers. Thousands of growers are busy right now booking seed for spring 2021 planing, meaning that what is purchased this fall be in grain channels as late as 2025. Much of that seed is and will continue to be biotech corn.

Biotech corn isn’t the only crop targeted by Mexican officials. Biotech soybeans, cotton and canola import approvals have also been rejected by Mexico’s regulatory agency over the past year.

And here comes the kicker:

There is a way to resolve this situation before it is too late. The U.S. Trade Representative must intervene and file a dispute with Mexico under the U.S.-Mexico-Canada Agreement. Given all that is at stake, we would encourage USTR to act sooner rather than later.

A Decade-Long Struggle for Control of Mexican Corn

The world’s GMO giants have been trying to crack the Mexican market for a long time. But in 2013, a judge by the name of Manuel Zaleta ruled in favor of a motion brought by a grassroots coalition seeking to safeguard Mexico’s diversity and common ownership of corn. In doing so, Zelata suspended the granting of licenses for GMO field trials sought by Monsanto, Syngenta, Dow, Pionner-Dupont and Mexico’s Environment and Natural Resources Ministry. Since then the cultivation of GM corn in Mexico, even in field trials, has been banned.

In his ruling Zaleta cited the potential risks GMOs posed to more than 7,000 years of indigenous maize cultivation in Mexico, which has given rise to a staggeringly rich biodiversity. That biodiversity is vitally important not just for Mexico but for the world as a whole, as argued a 2018 article in Scientific American:

Commercial corn farmers in Mexico planted around 3.2 million acres during the rainy season; the rest—more than 11.5 million acres—was planted by campesinos, the researchers reported in August in Proceedings of the Royal Society. Using previous estimates, [the research team was] able to calculate that in 2010 alone family farmers in Mexico grew approximately 138 billion genetically different maize plants. The domestication of native maize across a wide range of temperatures, altitudes and slopes has allowed rare mutations to take hold that would otherwise disappear, Bellon notes. “Campesinos are generating an evolutionary service that is essential for them, for the country and, given the global importance of maize, for the world,” he says.

Scientists say this type of farming, fueled by traditional practices such as saving or sharing seeds from one season to the next, has resulted in Mexico’s 59 native maize varieties: a cornucopia of husks and cobs of all sizes and colors, from deep purple to creamy-white to pink to glowing orange. This diversity is rarely seen in the U.S.—the world’s largest producer of corn. “You go to a farm in Iowa and there may be three million plants, but they’re all genetically identical,” says Jeffrey Ross-Ibarra, a plant geneticist who studies the evolutionary genomics of maize at the University of California, Davis, and did not participate in the research. Because American farmers buy their seeds instead of cultivating their own, “there’s no chance for evolution to do its thing,” he adds.

Another Trade Dispute?

Mexico is already largely self-sufficient in its production of white corn, which is largely used for direct human consumption, and beans. But it depends on the US for 75% of its yellow corn, which is almost exclusively used to feed stock.

But according to Mexico’s deputy minister of agriculture, Victor Suarez, the country is ready to halve its imports of US-produced yellow corn by the time the GMO ban comes into effect, on Jan 31 2024, and is considering negotiating direct agreements with US farmers to ensure the corn imported is non-transgenic. If true, it confirms Doggett’s worst fears that US corporate interests are indeed under threat.

The US is already locked in a trade dispute with Mexico over the AMLO government’s energy policies, which are primarily geared at bolstering Mexico’s energy security. Now, the US is considering opening another one, this time over Mexico’s agricultural policies.

Last Friday, the US Trade Representative, Katherine Tai, held her first (virtual) meeting with Mexico’s newly appointed Economy Minister Raquel Buenrostro. In her previous role as head of Mexico’s SAT tax authority, Buenrostro spearheaded the AMLO government’s crackdown on decades-old corporate tax dodging, causing uproar among Mexican business lobbies, the American Bar Association and ambassadors from the US, Canada and Europe.

Now, Buenrostro is heading Mexico’s Economy Ministry. After her first meeting with Tai, the US Trade Representative Office reported that Tai had “underlined the importance of making expeditious progress in addressing the issues in Mexico’s energy sector”. She also “highlighted the importance of avoiding a disruption in U.S. corn exports and returning to a science- and risk-based regulatory approval process for all agricultural biotechnology products in Mexico.”

In other words, Mexico’s government needs to quickly abandon its quest for energy security and food safety and self-sufficiency. If it doesn’t, US exports of GM corn to Mexico could suffer disrupted, which could have devastating effects on food inflation in Mexico.

This not-too-subtle threat from the world’s declining hegemony, which happens to be Mexico’s largest trading partner, needs to be taken seriously. The US has shown all too clearly that it is willing to use economic reprisals against any country that threatens its financial interests. And few countries are as dependent on the US economy as Mexico, to which it is more or less joined at the hip.

The US accounts for a staggering 86% of all purchases of Mexican exports. And trade between the two countries has been on the rise in recent years. The ever-growing remittance payments that flow from Mexican migrant workers living in the US to their families back in Mexico are also a vital life-line for Mexico’s economy.

In other words, if it wanted to, the US could inflict crippling economic pain on its southern neighbor. If the consultation process over AMLO’s energy policies does not produce a resolution and the US then wins the subsequent international arbitration process, which it invariably tends to, Mexico could end up facing the imposition of potentially tens of billions of dollars of duties on some of its key export industries…

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NHS to Use US “Spy-Tech” Firm Palantir’s Platform to Extract Patient Data Without Patient Consent

Palantir, with intimate ties to defense, intelligence and security industries around the world, seems set to play an even larger role in the UK’s crisis-ridden National Health System (NHS).

Last summer, as readers may recall, executives at NHS England — the non-departmental government body that runs the National Health Service in England — came up with an ingenious plan to digitally scrape the general practice data of up to 55 million patients and share it with any private third parties willing to pay for it. NHS England allowed patients to opt out of the scheme; they just didn’t bother telling them about it until three weeks before the deadline, presumably because if they had, millions of patients would have opted out.

When the FT finally broke the story, a scandal erupted. NHS England officials responded by shelving the scheme, saying they needed to focus on reaching out to patients and reassuring them their data is safe. But that hasn’t happened. Instead, they have waited for the scandal to die down before embarking on an even more egregious scheme.

This time it is patient data from UK hospitals that is up for grabs. And patients will have no opt-out option. In fact, without even consulting patients, NHS England has instructed NHS Digital — which will soon be merged with NHS England as part of the UK’s governments accelerated reforms to the NHS’ “tech agenda” — to gather patient data from NHS hospitals and extract it to its data platform, which is based on Palantir’s Foundry enterprise data management platform.

The pretext for taking such a step is that researching and analyzing patients’ hospital data will help the NHS better understand and tackle the crisis in treatment waiting times resulting from the COVID-19 pandemic. But the result will be yet more private-sector involvement in essential NHS processes. And in this case, the company being involved in those processes is one of the darkest in the tech universe.

A Highly Coveted Prize

The NHS is the world’s seventh largest employer. And it is home to one of the richest repositories of patient data on the planet. “One of the great requirements for health tech is a single health database,” Damindu Jayaweera, head of technology research at UK investment bank Peel Hunt told Investors’ Chronicle. “There are only two places as far as I know that digitise the data of the whole population from birth to death… China and the UK.”

As the FT reported earlier this year, Palantir aspires to become the underlying data operating system for the NHS. To that end, it has already lured two senior NHS managers to its executive suites, including the former chief of artificial intelligence. It now has its sights set on the ultimate prize: a five-year, £360 million contract to manage the personal health data of millions of patients…

Palantir’s latest encroachment into NHS operations came to light thanks to the publication of board paper’s just hours before NHS Digital’s latest board meeting, on November 1. Those papers no longer seem to be accessible so I am relying on a report published on Friday 4 by The Register, a British technology news website, as well as a heavily detailed twitter thread by Phil Booth of MedConfidential, a group campaigning for confidentiality and consent in health and social care.

According to Booth, on page 158 of the board papers NHS England instructs NHS Digital to use Palantir Tech’s Foundry platform to “collect patient-level identifiable [hospital] data pertaining to admission, inpatient, discharge and outpatient activity from acute care settings on a daily basis.”

Following previous data debacles, both the NHS and UK government ministers had pledged that in future any patient data shared for research and analysis purposes would be anonymized. But now they are talking about using “pseudonymized” data, which is completely different…

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One Year In, The First Ever Large-Economy CBDC, Nigeria’s eNaira, Is a Gigantic Flop

The Central Bank of Nigeria is undeterred. To deepen its drive to “entrench a cashless economy” and boost take-up of the eNaira, it is launching a demonetization process not too dissimilar from India’s.

This is, in essence, an update of a story first covered on Naked Capitalism back in July. As I remarked in that piece, Sub-Saharan Africa has proven to be a fertile testing group for live experiments in both cashless economics and digital identity, which essentially go hand in hand with one another. As part of that general trend, Nigeria, with the help of the IMF, became the first large country on planet Earth to launch a central bank digital currency (CBDC), the so-called eNaira. That was in October 2021. And central banks and financial institutions around the world have been watching developments closely ever since.

The launch of the eNaira had many ostensibly laudable objectives — at least according to the Washington-based think tank Atlantic Council. They include (remarks in brackets my own): enhancing the availability and access to central bank money; encouraging financial inclusion (by extending exploitative and abusive financial services to those previously excluded (h/t Jomo Kwame Sundaram)); facilitating direct welfare disbursement to Nigerian citizens; boosting the government’s revenue and tax collections; facilitating diaspora remittances and reducing the cost of cross-border payments. It was also supposed to take the shine off cryptocurrencies, which are widely used in Nigeria.

But CBDCs also have a very sinister side. They would grant yet more centralized power to central banks — institutions that are already dangerously unaccountable, conflicted and opaque, and which have played a leading role in stoking the financial bubbles and resulting crises of recent times. They could be used to track our spending or even “program” our spending behavior, as the Bank of England has already hinted at. They could be used to prevent people from even being able to transact. They could also deliver the final death knell on physical cash, one of the last remaining vestiges of privacy and anonymity.

At the same time, CBDCs are wholly unnecessary, a solution in search of a problem. At a recent bash in Miami, even central bank officials failed to reach a consensus on whether there was an actual need for them.

“Everybody’s trying to identify concepts. There’s still not a clear business happening,” said a central banker. We’re in a stage of figuring out ‘what is what’,” they said.

Disappointing Results

In Nigeria, both the central bank and government have pulled out all the stops to boost the eNaira’s chances, including banning financial institutions from enabling cryptocurrency transactions seven months before its roll out. The Central Bank of Nigeria (CBN) also received technical assistance and policy support from the IMF, one of the main driving forces behind the roll out of CBDCs globally.

Yet the results of the project, now in its second year, have been dismal. The eNaira recorded just 700,000 transactions worth ₦8 billion ($18 million) in its first year. By August only 905,588 people had downloaded an eNaira wallet — a thoroughly underwhelming number in a country with an estimated population of 225 million people. Worse still, only 282,600 of those accounts were currently active. Meanwhile interest in cryptocurrencies has continued to rise despite the ban, as Bloomberg reports.

While the eNaira uses similar distributed ledger technology to Bitcoin or Ethereum and can be saved in digital wallets, Nigerians’ passion for cryptocurrencies doesn’t extend to the central bank offering.

Virtual currencies have lured residents of Africa’s top oil producer as a hedge against inflation and currency depreciation, but eNaira is seen as a proxy for the challenges facing the continent’s biggest economy and a symbol of distrust in the ruling elite.

Educating Nigerians about the digital currency is a key task for both the central bank and the government. As the largest economy to fully launch, it’s also being scrutinized by the more than 100 nations considering their own CBDCs, according to Josh Lipsky, senior director of the Atlantic Council’s GeoEconomics Center.

“Nigeria’s project is hugely important to the world,” he said. “My bottom line on Nigeria is the jury is still out, but the world is paying close attention to what they’re doing.”

Lipsky’s definition of the word “world” is extremely narrow. It includes central bankers and other influential stakeholders (governments, tech giants, fintechs, private wealth foundations and think tanks like the Atlantic Council) that would like to see CBDCs take root. This is the world that matters. Most other people in the world are not even aware what CBDCs are, or how their imminent roll out could transform their lives, for a simple reason: there is no public debate on the matter…

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Is Venezuela’s US-Appointed “Interim” President Juan Guaidó On His Way Out?

Gauidó has long outlived his usefulness. Now, he and the “interim” government he fronts are an obstacle in the way of reopening Venezuela’s oil market to US oil majors.

The foreign policy establishment in Washington is in the process of redrawing the lines of its relationship with Venezuela, whose economy it has been trying to systematically destroy for the past seven or eight years, with devastating consequences. In 2019, the Centre for Economic and Policy Research (CEPR) published a report alleging that U.S. sanctions on Venezuela had killed tens of thousands of people by crippling its ability to produce its number-one export commodity, oil, or import basic goods.

Venezuela boasts the largest oil reserves on the planet, estimated at more than 300 billion barrels, as well as 201 trillion cubic feet (Tcf) of proven gas reserves. And the US economy desperately needs to tap new energy sources to cushion the impact of the Biden Administration’s backfiring sanctions on Russia. To that end, Washington is considering loosening sanctions on Venezuela so Chevron Corp and other US oil companies can once again begin pumping oil in the country.

The End of a Painful Farce

The price Washington appears to be willing to pay is the head of Juan Guaidó, the man it helped propel from near-obscurity to become the so-called “interim” president of Venezuela. Of course, when Guaidó proclaimed himself president of Venezuela from a city square in downtown Caracas in January 2019, he had — and still has — zero democratic legitimacy. But that didn’t stop the governments of dozens of countries around the world from recognizing him as Venezuela’s legitimate leader. Ambassadors were appointed in his name, assets were seized (stolen), and military interventions were requested.

As the Argentinean journalist Bruno Sgarzini notes, the story could have been lifted straight out of a Gabriel Garcia Marquez novel. But the saga now appears to be reaching its closing act. Gauidó has long outlived his usefulness, apart from to himself and his entourage. Now, he and the parallel government he fronts are an obstacle in the way of re-normalizing economic relations between the US and Venezuela and reopening Venezuela’s oil market to US oil majors. That is what matters to Washington right now.

For the Maduro government in Caracas, putting an end to the sanctions regime that has crippled Venezuela’s economy is also a priority. During a visit to a petrochemical complex in the north of Venezuela in September, Maduro offered to provide Venezuela’s energy resources to Europe and the US, claiming that a shortage of gas and oil supplies in winter could be “tragic”:

“Now winter is coming in the north, there is a crisis in the supply of gas, oil, a crisis that could be tragic and I say to Europe and to the president of the United States, Joe Biden, Venezuela is here”.

A White House official recently told The Miami Herald that the Biden administration would not interfere if Venezuela’s opposition movement decided to oust Guaidó. “The United States continues to recognize Juan Guaidó as the interim government of Venezuela,” a U.S. national security official said. But if the Venezuelan opposition decides to call an end to the interim government, “it is their decision.”

Roughly translated, Washington is giving Venezuela’s opposition parties permission to cast Gaudó aside, which has not gone down well among Republican senators like Marco Rubio and Ted Cruz. According to two separate reports from Reuters and the Financial Times, three of Venezuela’s four opposition parties are unwilling to back Guaidó’s Washington-selected interim government as of next year. Reuters cited “four people familiar with the matter” while the FT quoted “a senior figure in the opposition alliance.”

Members of the Venezuelan opposition closest to Washington were also excluded from the recent direct negotiations between the White House and Miraflores. Those negotiations have produced important advances including a prisoner swap between the two countries as well as a slight relaxation in the sanctions regime. The Biden Administration has also called for a resumption in talks in Mexico between Venezuela’s government and opposition aimed at resolving the country’s political crisis.

Again, it’s a sign that Guaidó’s interim government is increasingly being sidelined by Washington…

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