Day: September 3, 2018

President Nicolas Maduro said he is investing part of his personal savings in a gold-backed certificate as part of a much-questioned plan to crush hyperinflation and reactivate Venezuela’s moribund economy.

Maduro and First Lady Cilia Flores were the first in line at the central bank in downtown Caracas on Monday as it began selling the certificates.

He said he spent 350 bolivars — or about $6 at the recently devalued official exchange rate — acquiring the certificate, which functions like a fixed-term deposit that matures in a year and is supposedly backed by a 1.5 gram piece of gold held with the monetary authority.

“If I had a little more savings in bolivars I would have invested more,” Maduro said as cameras were rolling during his televised visit to the central bank. “Cilia had a little more than me, so she bought her certificate for a little ingot of 2.5 grams.”

In a country where five-digit inflation has all but destroyed savings it remains unclear how many Venezuelans will take up the government’s offer.

A few hours after Maduro left, the central bank’s main atrium — the only place where the certificates are being sold for now — was desolate, with only a handful of prospective buyers inquiring about the documentation required to make a purchase.

However, just around the block tensions were running high outside a state-owned bank as elderly pensioners waited in hours-long lines to withdraw the first part of a huge payment increase promised as part of Maduro’s monetary overhaul last month.

“This is a joke. How am I going to buy gold when my pension isn’t even enough to live on?” said Juan Vera, 71, sweating in the midday heat after waiting four hours for the bank to open.

Many in line, some of whom had arrived before dawn, said they were hoping to withdraw the pension in cash so they could resell the bills for a huge markup to wealthier Venezuelans looking to get their hands on cash that has gone scarce as the economy’s troubles have mounted. But many doubted the bank had enough bills on hand to satisfy the demand.

The gold savings plan is part of an economic overhaul slowly taking effect seeking to dismantle decade-old currency and price controls, boost government revenues and jump start private investment in the fast-decaying oil industry — the source of nearly all of Venezuela’s foreign currency earnings.

It’s the socialist revolution’s most far-reaching attempt to embrace the free market since Maduro took over as president from the late Hugo Chavez in 2013.

But many economists predict it’ll collapse almost immediately, as the government continues to print bolivars with abandon to fund a deficit estimated at over 20 percent of gross domestic product. Moreover, they say the deficit will widen, and inflation accelerate even further, as a result of the government’s decision to raise wages and pensions by over 3,000 percent to the equivalent of around $30 per month.

Maduro’s processor Chavez was also a gold bug, once famously repatriating from vaults in Europe the nation’s bullion reserves. But as the economy has spun further out of control Maduro’s cash-strapped government has had to offer up the declining gold reserves in exchange for loans to pay its mounting debts.
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More than $1 billion in fresh aid will likely be pledged at a conference of donors to the drought-plagued region around Lake Chad, U.N. humanitarian chief Mark Lowcock said on Monday.

A famine was averted in the region last year largely thanks to international aid, but millions of people in Nigeria, Niger, Chad and Cameroon were still in dire need of help, Lowcock told reporters on the sidelines of the Berlin conference.

“The crisis is not over. There are still 10 million people who need lifesaving assistance,” he said. “A quarter of the people we are trying to reach are displaced from their homes and the only means of staying alive they have is what is provided by humanitarian organizations.”

Lowcock said last year’s donor conference in Oslo, Norway had raised $672 million in funds for the region, and he expected to double that amount this year, which will allow more work to be done addressing underlying problems in the region.

Detailed pledges were not immediately available. Over 50 delegations are attending the conference.

Germany, a key destination for migrants fleeing Africa and non-permanent member of the U.N. Security Council from 2019, is co-hosting a two-day conference with Norway, Nigeria and the United Nations to drum up support for the region.

Chancellor Angela Merkel’s ruling coalition had vowed to help African nations improve conditions to keep people from embarking on treacherous journeys to try to reach Europe.

German Development Minister Gerd Mueller, just back from a visit to Chad, said 2.4 million people have already fled the region due to climate change and violence blamed on the Boko Haram insurgent movement and Islamic State.

“We need a joint European solution. And the international community must get far more engaged for the overall region to give these people a chance for survival and undercut a breeding ground for terrorism,” Mueller said in a statement.

He said it was vital that donors actually provided the funds they pledged, noting that only third of the needs identified by international organizations had been covered to date.

Achim Steiner, head of the U.N. Development Program, warned that more people could flee the region unless the international community stepped in to provide long-term perspectives for people in the region. 

“We should remember that we made a mistake eight years ago when the Syria crisis began and many people were forced to flee,” he told Reuters in an interview, noting that U.N. agencies were forced in that case to close hospitals and schools and halve food rations due to a shortage of funds.
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When President Donald Trump pulled the plug on an upcoming trip to North Korea by his secretary of state, he pointed a finger of blame at China and the global superpower’s trade practices.

In his recent trade breakthrough with Mexico, Trump praised the country’s outgoing president for his help on border security and agriculture.

Both developments offered fresh evidence of how Trump has made trade policy the connective tissue that ties together different elements of his “America First” foreign policy and syncs up them with his political strategy for the 2020 presidential election.

Trump’s 2016 triumph was paved in part by his support among blue-collar voters in Midwestern manufacturing states that narrowly supported him over Democrat Hillary Clinton, including Michigan, Wisconsin, Ohio and Pennsylvania.

His aggressive trade tactics, epitomized by tariffs and standoffs with longtime economic partners and allies, are aimed at reversing what he has long viewed as unfair trade deals while maintaining support among largely white, working-class voters who have been hurt by the loss of manufacturing jobs.

“Trump understands that economic policy is foreign policy and vice versa,” said Stephen Moore, a former Trump campaign adviser and visiting fellow at The Heritage Foundation. “The most important element of foreign policy is to not just keep the world safe but to also promote America’s economic interest. That’s what Trump does — this is America First.”

It’s also good politics, in Trump’s view.

“It’s a populist position. But it’s also a popular position with a lot of Americans,” Moore said.

As he puts a high premium on trade gains, Trump is intertwining the issue with a host of top foreign policy concerns.

Trump, asked by reporters last week about North Korea living up to its commitments to denuclearize, said “part of the North Korean problem is caused by our trade disputes with China,” pointing to the U.S. trade imbalance with China.

“We have to straighten out our trade relationship because too much money is being lost by us,” Trump said. “And as you know, China is the route to North Korea.”

Trade has been a common refrain at the president’s rallies, where he has vowed to pursue “fair and reciprocal trade.”

“We don’t want stupid trade like we had for so long,” Trump said during a rally in Duluth, Minnesota, in June.

Trump’s second year as president has been marked by a number of trade disputes with traditional U.S. allies and global rivals alike, an approach cemented by his tweet that “trade wars are good.”

He imposed tariffs on steel and aluminum imports in March, prompting retaliation from the European Union and other American allies. Later in the month, Trump announced tariffs on China to combat what he called the theft of U.S. technology from a wide range of goods and services.

China struck back with its own sanctions on a variety of U.S. products, including Midwest farm-produced soybeans in a way to hit hard against the president’s base of voters. The two sides have clashed during the spring and summer, raising the stakes in their trade fight.

In late July, Trump and European Commission President Jean-Claude Juncker reached a temporary deal at the White House to avert tariffs on automobile imports and a ramping up of their trade dispute — although the threat still remains.

After a breakthrough with Mexico, Trump’s team has been engaged in talks with Canada aimed at creating a new version of the 24-year-old North American Free Trade Agreement.

While previous administrations have often used a carrot-and-stick approach to trade as a way to forge agreements, before Trump’s arrival trade agendas had emphasized multi-lateral and bilateral deals aimed at maintaining U.S. leadership around the world, promoting American values and improving human rights.

This administration, by contrast, “is leveraging foreign policy tools to achieve its trade goals,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

Critics say Trump’s insistence on trade concessions could hamper his ability to move forward in other areas.

On North Korea, for example, Trump has sought to turn his meeting with Kim Jong Un into a vivid example of how his unconventional style can bring longstanding U.S. adversaries to the bargaining table.

But by raising China’s trade practices as essential to any progress to ensuring North Korea gets rid of its nuclear weapons, Trump runs the risk of getting bogged down in both areas — and having little to show for it.

Mixing foreign policy and trade policy introduces so many variables it’s “virtually impossible to close on a precise policy decision,” said Daniel Ujczo, a trade attorney with Dickinson Wright PLLC in Columbus, Ohio. “You’re constantly chasing after the next issue as opposed to having a very targeted approach to the objective.”
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Tanned and wearing a swimsuit, So Myong Il walks to the barbecue pit and throws on some clams.

He obviously loves the beach he’s on as well as the rugged, emerald Chilbo mountains that rise abruptly behind it. He loves them enough to forget, for a moment at least, that he is a senior official sent to deliver an ideology-soaked pitch singing their praises and instead lets the natural beauty surrounding him speak for itself.

Comrade So sees great things for North Korean attractions like this.

Hotels, big and small. Tourists from all over the country, maybe the world. “As long as we have the leadership of our respected Marshal,” he says, referring to leader Kim Jong Un, “our future will be bright indeed.”

So wouldn’t think of questioning the leader, but there is a hint of apprehension in his voice. And he isn’t alone.

North Korea is pushing ahead with a new strategy of economic development and the intensified diplomacy with China, South Korea and the United States that such a move requires. But hopes for a better future are mixed with concern over potential downsides of political or social volatility, and something that’s harder to articulate: a fear of the unknown – even if it appears far more promising than the arduous path the country has been on for decades.

Even before announcing in January that he had sufficiently perfected his nuclear arsenal and could start to focus on other things, Kim has held economic development to be his primary long-term concern.

He has allowed markets and entrepreneurialism to flourish and, since succeeding his father as leader seven years ago, has dramatically transformed the skyline of the capital, Pyongyang, with several high-rise districts. The transformation in the east coast city of Wonsan, where Kim has a summer villa, has been almost as spectacular.

As Kim prepares for the 70th anniversary of North Korea’s founding on Sept. 9, his ambitious development plan is being implemented, from the small-time renovation of town halls to the almost biblical-scale mobilization of “soldier-builders,” who are working around the clock to turn the remote northern city of Samjiyon into yet another showcase of Pyongyang-style socialism.

Economic development – and how U.S. capital and know-how could speed it along – was President Donald Trump’s big carrot when he met with Kim in Singapore three months ago to try to negotiate a denuclearization deal.

But Kim’s diplomatic overtures aren’t intended to open the door to American capitalists, a scenario that would make any good party cadre shudder. They are aimed at breaking down support for sanctions and getting the U.S. to step out of the way. Kim’s game is to play China and the U.S. off each other, grab whatever concessions he can along the way and adjust his position as the situation evolves.

In the meantime, lest anyone get the wrong idea, the ruling Workers’ Party of Korea has begun churning out paeans to socialism in its daily newspaper along with anti-capitalism, anti-imperialism screeds that underscore North Korea’s official opposition to essentially anything that might be considered the American way of life. Or, as it’s known in the jargon of North Korea’s propaganda machine, “the imperialists’ bourgeois ideological and cultural poisoning.”

The past few months have been tense in Pyongyang.

Restrictions on some of the movements of foreign diplomats have been tightened, for example, and even requests by The Associated Press to interview government officials or to speak with regular citizens have mostly been denied.

Uncertain of where it might all end up, state-run media have provided only limited coverage of Kim’s meetings with Trump in June and his multiple summits with Chinese President Xi Jinping and South Korean President Moon Jae-in. Reports have portrayed Kim as the consummate statesman, firmly in charge of a carefully considered strategy to make his country safer and more prosperous.

Kim is ardently wooing South Korean investment to help him build the very things Trump was offering: infrastructure, particularly roads and railways, and the development of selected tourism zones. After a high-profile chill last year, he is also actively courting Beijing, which continues to be an essential source of fuel, a key market for North Korea’s coal and other natural resources and a fairly reliable check on U.S. power in the region.

Pyongyang’s explanation for the shift in its foreign policy has been consistent: Having successfully built a credible nuclear deterrent to U.S. aggression, Kim is reaching out to Seoul to join hands in a “for Koreans, by Koreans” effort to secure a lasting peace on the Korean Peninsula, unhindered by the meddling of foreign powers.

Undoubtedly, images of the leader smiling and shaking hands with Trump, whose face had never been on the front pages of their newspapers before, signaled a major and bewildering change to many North Koreans.

But officials have made sure they don’t have much time to ruminate on it.

Normal routines of work and study have been put on hold for large segments of the populace who have been mobilized for the development projects. Tens of thousands of people in Pyongyang, meanwhile, have spent the past several months feverishly preparing for mass rallies and mass games to mark the anniversary.

Mount Chilbo, a collection of rocky peaks and a stretch of largely untouched seashore on the country’s northeastern fringe, is one of North Korea’s most cherished natural wonders.

The first hotel for non-Korean visitors opened in the 1980s, followed in 2004 by homestay-style lodgings near the beach, said So, a North Hamgyong Province People’s Committee official. Together they have a capacity of fewer than 100 guests and only operate from April until early November.

Many North Koreans bring tents and sleep on the beach.

But even in this rustic corner of the country, the pressure to contribute to Kim’s grand development scheme is keenly felt.

So said he would soon travel to China to discuss possible areas of cooperation.

As an indicator of Kim’s success with Beijing, tourism from China is already on the rise. Pyongyang’s longer-term goal, however, is to tap the South Korean market. The idea is that, if handled properly, South Korean tourism would present a chance to promote the North in a positive light and boost its image within South Korea.

That’s a gamble too.

Back in the late 1990s and early 2000s, South Koreans were allowed to visit in a highly regulated and controlled manner, and massive investment from South Korean businesses helped the North fund infrastructure projects in the same Wonsan-Mount Kumgang area that Kim is focusing on now. But it ended badly in 2008 when a South Korean woman who entered a restricted area was shot to death by a North Korean soldier.

So said he believes Chilbo, like Kim’s pet projects in Wonsan, could be a big draw for tourists. But he worries about where the money will come from and what might be lost.

“Whatever we do, we need to protect the natural beauty of this place,” he said.”I think there will be many changes in the coming years. Plans are being discussed. But nothing is decided.”

 
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