MS Risk Blog

Hyperinflation in Venezuela: recent events and current outlook

December was not a good month for the Venezuelan people. The power political reverberations of former President Hugo Chavez’ death have reached a new climax in the last month of 2016. A widespread financial crisis sparked by governmental mismanagement; runaway hyperinflation and a severe drop in oil prices has ultimately led to major civil unrest and public violence. The current situation led the UK Foreign Office and US State Department to issue travel warnings for a country which has not been in this much turmoil for a long time. The month started on a bad note after Venezuela was expelled from MERCOSUR, the regional trading bloc. Following a decade in which strong growth and leftist policies across South America led the bloc to embrace Venezuela, the suspension now underscores the ideological split in a region struggling with plummeting commodity prices and weakening economies. It further isolates the administration of Venezuelan President Nicolas Maduro, who is accused of exacerbating the political, economic and humanitarian crises battering the country.

Meanwhile Maduro sent his Foreign Minister Delcy Rodriquez to Buenos Aires to attend a bloc meeting. Being expelled, Rodriquez was physically prevented from entering a meeting room, which led to the Minister becoming ‘gravely hurt’, according to Maduro. The removal of MERCOSUR put the Bolivar, the national currency, under increased pressure. Devaluation and soaring inflation led to the issuing of new higher-value notes. A backpack full of cash is often required to pay bills at a restaurant or supermarket. The central bank said that six new bills ranging from 500 to 20,000 bolivars would come into circulation halfway through the month. The largest note used to be 100 bolivars and worth about two US cents. Over the past month, the currency has tumbled by 60% against the dollar on the black market. In order to facilitate the use of higher denominations, Maduro pulled the 100 bolivar note creating a national cash shortage on top of the brutal economic crisis. After two days of unrest over the measure – including one death and dozens of shops ransacked – Maduro postponed the measure until 2 January. That helped stem violence, though there were still reports of more lootings in other parts of the country. The border between Venezuela and Colombia was closed for 72 hours in order to prevent the flow of cash out of the country. The Venezuelan crisis has also strained its relationships with allied countries and businesses.

The Chinese Foreign Ministry spokeswoman Hua Chunying said that it has asked the Venezuelan government to take measures to protect Chinese people and their property. Multiple Chinese-run business have suffered from looting. Ford Motor Company has halted auto production in Venezuela and will not resume it until April: “It is a measure to adjust production to demand in the country.” The pressures on the Venezuelan people and economy are not likely to alleviate soon, although it is a realistic possibility to see an extension of the current rise in oil prices in the coming year, perhaps the country’s only hope amid a folly of bad news.

Hate Attacks on the Rise in the US in Wake of Presidential Election

A United States hate-attack monitoring group has disclosed that it has documented 437 cases of intimidation and abuse towards minorities since the general election, which was held on 8 November.

The Southern Poverty Law Centre (SPLC) has disclosed that it news tracking method had found “on an anecdotal level (the increase in hate attacks) has been obvious,” adding that many of the attacks were linked to supporters of President-elect Donald Trump. The news comes after the FBI reported a 67% rise in anti-Muslim bigotry last year.

The SPLC has also been critical of President-elect Trump’s decision to appoint a right-wing media executive to the role of chief White House strategist. The group has accused Stephen Bannon of being “the main driver behind Breitbart (News) becoming a white ethno-nationalist propaganda mill.”

Senior SPLC fellow Mark Potok has disclosed that the monitoring group has created an online form for victims where they can report hate attacks, adding that it was also monitoring social media and news reports of hate incidents. Across the country, a number of hotlines have also been formed. The Massachusetts Attorney General has set up a hotline for citizens “to report bias-motivated threats, harassment and violence.” New York Governor Andrew Cuomo has also established a state-wide hotline due to an “uptick in recent reports of discrimination, bias-motivated threats, harassment and violence.” In a statement, the governor indicated that “any acts of discrimination or intimidation will be met with the full force of the law.”

Hate Crimes Also Reported North of the Border

Meanwhile across the border in Canada, hate crimes have also been reported however it currently remains unclear if they have anything to do with the US election.

The Toronto Police hate crimes unit has disclosed that it is investigating after signs urging people to join the “alt-right” were posted around town. The posters began “Hey, white person” and directed people to join white nationalist groups. Meanwhile in Ottawa, the capital city, police are investigating after a swastika was spray painted on the door of a local Jewish community centre.

US Intelligence Analysts Conclude Russian Intervention in 2016 Presidential Election

On 9 December, a senior US official disclosed that US intelligence analysts have concluded that Russia intervened in the 2016 election to help President-elect Donald Trump win the White House, and not just to undermine confidence in the US electoral system. President-elect Trump however has rejected this conclusion.

According to a US official familiar with the finding, US intelligence agencies have assessed that as the 2016 presidential campaign progress, Russian government officials devoted increasing attention to assisting Trump’s efforts to win the election. Citing US officials briefed on the matter, the Washington Post reported on Friday that intelligence agencies had identified individuals with connections to the Russian government who provided thousands of hacked emails from the Democratic National Committee and others, including the chairman of Hillary Clinton’s presidential campaign, to WikiLeaks. According to the US official, as summer turned to fall, Russian hackers turned almost all of their attention to the Democrats, and virtually all the emails they released publicly were potentially damaging to Clinton and the Democrats, not Republicans. The official disclosed “that was a major clue to their intent,” adding, “if all they wanted to do was discredit our political system, why publicize the failings of just one party, especially when you have a target like Trump?” Another source familiar with the report disclosed that the intelligence analysts’ conclusion about Russia’s motives does not mean that the intelligence community believes that Moscow’s efforts alerted or significantly affected the outcome of the election.”

US intelligence analysts have assessed “with high confidence” that at some point in the extended presidential campaign, Russian President Vladimir Putin’s government had decided to try to bolster Trump’s chances of winning. According to one official, the Russians appear to have concluded that Trump had a shot at winning and that he would be much friendlier to Russia than Clinton would be, particularly on issues like maintaining economic sanctions and imposing additional ones. The official went on to say that Moscow is launching a similar effort to influence the next German election, following an escalating campaign to promote far-right and nationalist political parties and individuals in Europe that began more than a decade ago. The official added that in both cases, Putin’s campaign in both Europe and the US are intended to disrupt and discredit the Western concept of democracy by promoting extremist candidates, parties and political figures.

Russian official have denied all accusations of interference in the US election. The president-elect meanwhile has stated that the CIA’s assessment is being used by Democrats as “just another excuse” for his surprise election win.

The president-elect’s transition office released a statement that exaggerated his margin of victory and attacked the US intelligence community. The statement however did not address the analysts’ conclusion. In the statement, his transition team disclosed, “These are the same people that said Saddam Hussein has weapons of mass destruction…The election ended a long time ago in one of the biggest Electoral College victories in history. Its now time to move on and ‘Make America Great Again.’”

Democrats and some Republicans in Congress however have called for a full investigation into Russia’s election year activities. In a statement issued on 10 December, the ranking Democrat on the House intelligence committee, Representative Adam Schiff of California, disclosed “protecting the integrity of our elections is hindered when President-elect Trump and his transition team minimize or dismiss the intelligence assessments themselves.”

On Friday, President Barack Obama ordered intelligence agencies to review cyber attacks and foreign intervention into the 2016 election. They have been tasked to deliver a report before he leaves office on 20 January 2017. Speaking to reporters, President Obama’s homeland security adviser, Lisa Monaco, disclosed that the report’s results should be shared with lawmakers and others, adding, “the president has directed the intelligence community to conduct a full review of what happened during the 2016 election process…and to capture lessons learned from that and to report to a range of stakeholders, to include the Congress.”

Europol Warns of Further IS Attacks in Europe

The European Union (EU) police agency Europol warned early this month that the so-called Islamic State (IS) group is likely to launch more attacks in Europe, noting that several dozen militants are already in place and more are possibly arriving as IS continues to face setbacks in Iraq and neighbouring Syria.

In a report on the threat that IS poses to the EU, Europol disclosed that the most probable forms of attack would be those used in recent years – ranging rom the mass shootings and suicide bombings that were seen in Paris and Brussels to stabbings and other assaults carried out by ‘lone wolfs,’ effectively radicals who are acting alone. In the report, Europol officials warn that car bombs and kidnappings, which are common in Syria, could emerge as tactics in Europe. It notes however that protected sites, such as power grids and nuclear power stations, were not seen as being top targets. The agency went on to say that essentially the entire EU is under threat as almost all of its governments back the US-led coalition in Syria, warning that IS was likely to infiltrate Syrian refugee communities in Europe in an attempt to inflame hostility to immigrants that has shaken many EU governments.

In a statement, Europol disclosed “if IS is defeated or severely weakened in Syria/Iraq by the coalition forces, there may be an increased rate in the return of foreign fighters and their families from the region to the EU or to other conflict areas.” It went on to say that IS was also likely to start planning attacks and sending militants to Europe from Libya and that other groups, including al-Qaeda and its affiliates, also continue to pose a threat to the European continent.

While Europol Director Rob Wainwrigth has disclosed hat EU states have increased their security cooperation in the wake of IS attacks in the last couple of years, which in turn has allowed for more plots to be thwarted, he noted that “nevertheless…Today’s report shows that the threat is still high and includes diverse components which can b only tackled by even better collaboration.”

UN Imposes New Sanctions on North Korea

The United Nations Security Council has imposed new sanctions on North Korea over its nuclear programme, with the latest sanctions targeting the secretive nation’s valuable coal exports to China.

Under the new sanctions, which follow North Korea’s fifth and largest nuclear test in September, coal exports will be decreased by about 60% under a strict new sales cap. Coal is North Korea’s to export earner and diplomats have disclosed that the export cap of 7.5 million metric tonnes would cost it US $700 million in lost earnings compared with 2015 sales. Exports of copper, nickel, silver, zinc and the sale of statues will also be banned.   The resolution also blacklists eleven more people and ten entities, who are said to be connected to North Korea’s nuclear and ballistic missile programme, imposing a travel ban and asset freeze.

China, believed to be the only state that purchases North Korean coal, agreed to the sanctions after months of negotiations with the United States and the Council unanimously approved the sanctions resolution. While China is the reclusive country’s primary ally, and has traditionally protected it diplomatically over fears of what may occur if the government were to collapse, it has however grown increasingly impatient with its actions.

UN Secretary General Ban Ki-moon has disclosed that the latest sanctions sent an “unequivocal message that the DPRK must cease all the provocative actions and comply fully with its international obligations,” adding, “sanctions are only as effective as their implementation.” Meanwhile US ambassador to the UN Samantha Power has admitted that “no resolution in New York will likely tomorrow persuade Pyongyang to cease its relentless pursuit of nuclear weapons,” adding however that “unprecedented costs” were being placed on North Korea for defying the international community.

North Korea has been under UN sanctions since 2006 over its nuclear and missile programme.