Low oil prices, economic mismanagement, and political uncertainty have plunged Venezuela into an economic tailspin virtually unknown among countries during peacetime. By the end of this year, Venezuela's economy will have shrunk by 63 percent since the current political crisis erupted in 2016. Here's how that drop compares with other notable economic collapses over the past century.
Over the next decade, Walmart's $350 billion investment in U.S. manufacturing has the potential to:
- Support more than 750,000 new American jobs.
- Avoid more than 100M metric tons of CO2 emissions by working with suppliers to shift to U.S. manufacturing.
- Advance the growth of U.S.-based suppliers.
- Provide opportunities for more than 9,000 entrepreneurs to become Walmart suppliers and sellers through Walmart's annual Open Call.
A few days ago, cyber criminals hacked into one of the largest oil pipelines in the US, which halted operations after its corporate IT network was knocked offline. If the engineers don't fix the system on their own or the owners cough up the ransom that the hackers are demanding, millions of Americans will soon feel the heat of cybercrime in their daily lives, through higher prices at the gas pump.
Who pulled off this attack, and what does it tell us about the vulnerability of critical infrastructure and the rules (or lack thereof) in cyber conflict today?
The culprit. The US government has blamed the Colonial Pipeline cyberattack on DarkSide, a relatively new group of veteran hackers from Eastern Europe famous for bragging about its exploits online, and leaking data dumps from victims who don't pay up. The DarkSiders style themselves as Robin Hoods of the hacker world, donating (a minuscule) part of their profits to global NGOs such as Children International and The Water Project. But this time they may have bitten off a bit more than they can chew.
DarkSide issued on Monday a rare apology for creating "problems" to society, insisting they only want money and are not at all interested in politics, although they do seem to avoid former Soviet bloc nations. That's common for cyber criminals based in these countries, whose governments will look the other way as long as hackers target victims outside their borders.
One of those governments is that of Russia, with a long history of outsourcing its dirty cyber work to unscrupulous hackers. Joe Biden says there's no evidence that the Kremlin was involved this time, but does have "some responsibility."
The problem. The fact that a bunch of geeks armed with laptops shut down a pipeline that serves 45 percent of America's oil refineries shows that US critical infrastructure is a lot more vulnerable to cyber-extortion than we'd like to think. And the Biden administration's $2 trillion plan to upgrade US infrastructure across the board turns cybersecurity into an even more urgent concern.
As always, the pandemic has made everything worse. Ransomware attacks — and cybercrime in general — have boomed in COVID times, largely as a result of IT systems that became more vulnerable when companies rushed to adapt them for remote access. Moreover, hackers are now targeting bigger firms for a lot more money thanks to the rise of cryptocurrencies, which make it easier for them to get paid and harder to trace.
Ransomware attacks are particularly problematic for companies and countries because they are forced to make a tough choice: pay off hackers and risk encouraging further such attacks, or hold out and take the economic or social disruption on the chin.
The response. The Colonial Pipeline hack shows how cyberattacks can do severe damage to a country by disrupting critical infrastructure. But as we've written before, these types of operations are hard to prevent, and even harder to attribute and respond to.
So far, the US government has declared a state of emergency to keep the oil flowing to the Eastern Seaboard. But at this point it can't do much more to stop the hackers, or hold them responsible for a brazen attack that would otherwise be considered an act of war against America. It can't even prevent the corporation from paying the cryptocurrency ransom.What it can do mostly depends on whether a foreign government was involved, or aware of what DarkSide was cooking. If that's confirmed later on, the US may want to hit that country harder than with the usual economic sanctions. There could even be political pressure to respond proportionately in cyberspace — perhaps with a similarly damaging attack. And when the cyber gloves are off, things could get very bad, very fast.
What We’re Watching: Putin to tighten Russian gun laws, Iran-Saudi thaw, new forests vs climate change
Putin orders review of gun laws after school shooting: Details remain sketchy following a shooting at a school in the Russian city of Kazan. At least seven children and one teacher were killed, and a 19-year-old has been arrested, according to local officials. In response to the attack, President Vladimir Putin "gave an order to urgently work out a new provision concerning the types of weapons that can be in civilian hands, taking into account the weapon" used in this shooting, according to a Kremlin spokesman. There's an irony here that extends to the United States, where school shootings are all too common. In 2018, a Russian woman named Maria Butina pleaded guilty to using the National Rifle Association, the gun rights lobbying group, to "establish unofficial lines of communication with Americans having power and influence over American politics." At the time, Putin described Butina's 18-year sentence as an "outrage." The NRA, of course, works hard to prevent Congress and the president from taking precisely the kinds of actions that Putin swiftly ordered following the shooting in Kazan.
Forests growing back: Finally some good news about the environment. According to a new WWF study, an area of forest equivalent to the size of France has regrown across the world in the past 20 years. These "new" forests in places like Brazil, Mongolia, Canada or parts of Africa could possibly trap up to 5.9 gigatons of carbon dioxide annually — more than the US, the world's second largest emitter, puts into the atmosphere annually. The forest regrowth is the result of planting new trees, keeping livestock away, eliminating invasive plants, and, interestingly, not doing anything at all. While this is a welcome development in the global struggle against climate change, unfortunately it's still being offset by alarming rates of deforestation, especially in the Amazon. The experts tell us that for forests to become a true climate solution, we would need to grow new forests at least twice as fast as we're destroying them around the world. So time to plant a lot of trees, or to just leave forests alone.Iran-Saudi talks: Could longtime bitter Middle East rivals Iran and Saudi Arabia be on the cusp of an understanding? Tehran has just confirmed that both sides actually sat down recently for the first time in years to ease tensions — perhaps in part as a consequence of the Biden administration's move to cut support for the Saudis in Yemen, where Saudi Arabia and Iran have been fighting a proxy war since 2014. Washington, which aims to draw back from the region more broadly, also wants the Saudis to go along with any US-Iran deal to resurrect the 2015 Iran nuclear deal. Saudi Crown Prince Mohamed bin Salman recently said he wants to get along with the Iranians, a major change of tone for him. Let's not get carried away of course: there's still a lot of bad blood between both sides, but the mere fact that Iran and Saudi Arabia are talking is progress towards avoiding a major conflict between the region's two main powers.
Hard Numbers: Cash to stop EU migrants, Chinese population growth slows, US gas prices up, Thais arrest Myanmar journalists
13,000: Around 13,000 migrants from North Africa have landed in Italy so far this year, three times as many as in the same period in 2020. Prime Minister Mario Draghi has denied a media report that Italy wanted the European Union to pay Libya to stop those migrants from leaving for the EU from its shores.
0.53: China's population grew at an abysmal 0.53 percent annually over the last decade. That's below replacement levels, and puts more pressure on China to encourage its citizens to make more babies... as long as they're not Uighurs in Xinjiang.
6: US gas prices have risen by an average six cents per gallon so far this week, close to their highest level since 2014. This is due to supply disruptions tied to last Friday's ransomware cyberattack on the Dominion Pipeline, which serves almost half the country and has already been shut down for five days.3: Thailand has arrested three Myanmar journalists for illegally crossing the border to escape the Burmese military's crackdown on pro-democracy forces — including independent media outlets — following a coup earlier this year. Thai authorities are widely expected to deport the reporters back to Myanmar, where they will surely face lengthy jail terms for covering anti-government protests.
In January 2021, after India got its vaccination program underway, Prime Minister Narendra Modi declared victory over "controlling corona" at the World Economic Forum. But within weeks, those words would come back to haunt him. Ian Bremmer asks Delhi-based journalist Barkha Dutt what she thinks went wrong. "I think the complacency set in because, as a percentage of infections, the fatalities seemed to be not as high as the rest of the world… but it doesn't explain to me why we should've got lulled into not needing contingencies." Their discussion about India's COVID crisis is featured on an episode of GZERO World, airing on US public television.
Watch the episode: India's COVID calamity
What We're Watching: Israel-Hamas escalation, Scotland's independence drive, Colombian strike continues
Israel strikes Gaza after Hamas rockets: Things escalated very quickly on Monday in Jerusalem. For weeks, violent clashes between Israeli police and Palestinians over tensions surrounding access to the Old City and Al-Aqsa Mosque, as well as an anticipated verdict in the eviction of several Palestinian families from East Jerusalem's Sheikh Jarrah neighborhood, spread throughout the city. While Israeli police used heavy force to crack down on Palestinians throwing rocks and launching fireworks, the Hamas militant group in the Gaza Strip used the clashes as a pretext to launch a barrage of rockets into Israel. Hamas usually restricts its reach to southern Israel, but this time it launched dozens of rockets into Jerusalem, causing a mass evacuation of the Knesset, Israel's parliament. Israel responded swiftly Monday by bombing the Gaza Strip, resulting in at least 24 Palestinian deaths, including nine children. Since then, Hamas has fired at least 250 rockets into Israel, including several that landed on houses in southern Israel, while Israeli forces have struck 140 targets in the Gaza Strip. For now, both sides appear to be preparing for a massive escalation, raising fears of an outright war.
Scotland's drive for indyref2: The votes are counted from last week's UK elections, and the pro-independence Scottish National Party will again dominate Scotland's parliament. Though the party fell one seat shy of an absolute majority, the pro-independence Green Party will be happy to add its eight votes in support for a second independence referendum. For now, SNP leader and Scotland's First Minister Nicola Sturgeon says COVID recovery is job one. But she also says a new independence vote is a matter of "when not if," setting up a showdown with UK Prime Minister Boris Johnson, whose approval is needed (via a majority vote in the UK Parliament) for a binding vote. Here's where the politics becomes fascinating. Today, polls suggest Scots are about evenly split on the independence issue. If Johnson tries to block them from voting, he might inadvertently increase support for breakaway. But agreeing to a vote as soon as next spring is a high-stakes roll of the dice. The question looks likely to end up in court.
"The strike continues" in Colombia: After a meeting with Colombian President Ivan Duque on Monday evening, the leaders of the protests that have rocked the country for nearly two weeks now had a simple message: "the national strike will continue." Earlier in the day, Duque made a last minute trip to Cali, Colombia's third largest city, which over the weekend was wracked by violence including a lethal flareup between indigenous protest groups and other armed civilians. While there Duque acknowledged the frustrations of Colombia's young people. Across the country, nearly two dozen people have been killed in clashes with the police since protests began over a botched tax reform last month, while strikes and roadblocks have begun to crimp food supplies in major cities. The tax bill was withdrawn, but protest leaders are now demanding broader concessions, including holding police accountable for abuses, reforms to the health and education systems, and more than 100 other specific demands including an array of measures to help Colombia's poor, protect the environment, and advance the country's stalled peace process (source in Spanish). Meetings between the federal government and various groups — local officials, unions, and activists — will continue throughout the week. But for now, protest leaders have called for another nationwide demonstration on Wednesday.
The US federal government is gearing up to spend a lot of money these days. So far, to cushion the blow of the pandemic, Washington has already parted with $5 trillion in the form of direct payments to households, forgivable loans to businesses, and other support including aid to state governments. And more is coming.
President Joe Biden has proposed another $4 trillion in federal funds for physical and "human" infrastructure, some of which would create income support and social spending programs that would last well beyond the pandemic.
While these measures are hugely popular with the public, the government has had to borrow heavily to pay for them. The national debt rose to 100 percent of GDP in 2020, its highest level since 1946, when war and recession drove the debt level to 106 percent of GDP.
Much of the recent borrowing has been from the Federal Reserve, which essentially prints money to purchase government debt.
And that has raised fears of an old enemy: inflation.
The logic of these concerns is straightforward and well accepted by economists: more dollars chasing the same amount of goods bids up prices. That was not much of a problem during the pandemic, when storefronts were closed and most people were stuck at home and unable to spend much money.
But as the pandemic ebbs, jobs are returning, consumers are starting to make delayed purchases, and signs of inflation are starting to appear.
Prices for new cars are up 8.4 percent, while real estate values, energy prices, and stock markets are all surging. Prominent economists such as former Clinton administration Treasury Secretary Larry Summers have warned that the administration's spending may add too much fuel to an economic fire that is starting to burn again as the pandemic recedes.
An inflation surge would be bad news for most people. Rising prices for basic goods would increase hardships in particular for low-income households, which tend to spend more of their income on these kinds of items and who have borne the brunt of the pandemic's economic impact. Higher prices would also put homeownership out of reach for millions of Americans. And they would likely force the Fed to deploy its main inflation-fighting tool — an increase in interest rates — which itself could trigger a recession by raising the cost of borrowing and causing a slowdown in spending.
Inflation hawks often point to the cautionary tale of the "Great Inflation" of the late 1960s and 1970s, which followed a period of Fed-financed borrowing by the federal government. Inflation accelerated from 1 percent in 1964 to 14 percent in 1980, resulting in energy shortages and price and wage controls. It also prompted a series of Fed rate hikes that caused two recessions. Inflation did not start to recede until interest rates reached 20 percent, a level unimaginable today.
But supporters of increased spending to pull the economy out of its pandemic-induced slump say the supply of goods will increase as conditions start to return to normal, alleviating any short-term bottlenecks that are currently causing price spikes. Federal Reserve Chairman Jay Powell and Treasury Secretary Janet Yellen have both said they expect today's emerging inflationary pressures to be transitory and that the Fed can quickly tamp them down if that proves not to be the case. And unlike in the 1970s, there is little evidence of widespread increases in post-pandemic wages, which could increase inflationary pressures by putting more money in consumers' pockets.
Furthermore, the remainder of the Biden economic plan is designed to be largely paid for by tax increases that will take effect over the next fifteen years, rather than by more borrowing. Once the tax increases are fully phased in, the federal government will actually be pulling more money out of the economy than it is pumping in.
So who is right? Only time will tell. For years now, US policymakers have treated inflation as an enemy long since vanquished. These unprecedented levels of spending may put those assumptions to the test. If the administration's supporters are right, the spending will be a historic reshaping and rebuilding of the American economy. If they are wrong, Americans could face a new type of economic disruption just as they put the pandemic behind them.
There's never a great time to impose higher taxes on funeral services — but doing it in the middle of a raging pandemic is an especially bad move. Yet that was one of a number of measures that the Colombian government proposed last week in a controversial new tax bill that has provoked the country's largest and most violent protests in decades.
In the days since, the finance minister has resigned, the tax reform has been pulled, and President Iván Duque has called for fresh dialogue with activists, union leaders, and opposition politicians.
But demonstrations, vandalism, and deadly clashes with police have only intensified. Two dozen people are dead, 40 are missing, and the UN has criticized Colombian police for their heavy-handed response.
How'd we get here? The Colombian government has a common math problem: it spends more money than it raises.
Even before the pandemic, the country's oil exports — a major source of government revenue — were dwindling, and over the past year, the deficit tripled. Now, to pull the country out of its worst economic crisis in decades, it's even more urgent to top up state coffers.
But Colombia has one of the lowest tax hauls of any country in the OECD, and ratings agencies warn that without a tax reform of some kind, a downgrade awaits. That would make it more expensive for Colombia to borrow money abroad, depleting state resources even further.
Duque's proposal would have raised levies on corporations and the rich, while boosting social spending to alleviate poverty. But it also expanded taxes for the middle class and poor, eliminated exemptions for pensions, and added a sales tax to many staple consumer goods and services. Even water would have gotten more expensive. Water!
The math may have been sound but, in a country reeling from the pandemic, the politics were horrific. Over the past year, 3 million more Colombians fell into poverty, raising the poverty rate by 7 points to a staggering 42 percent of the population (source in Spanish.) Thousands of businesses have closed. And the country is now in the throes of a third COVID wave: daily new cases have soared sixfold in the past two months.
Small wonder that when the tax bill was unveiled, three-quarters of Colombians supported a national strike in response.
But these protests are about more than taxes. For several years, a large part of Colombian society has been upset about rising inequality, an epidemic of violence against human rights leaders, rising crime in the cities, and poor healthcare and education.
Just before the COVID crisis started, in late 2019, mass protests over these issues shook Bogotá for days. Today's protests are in part a resurgence of grievances bottled up — and made worse — by the pandemic.
Elections loom. Next year, Colombians will elect a new president. Term limits keep Duque from running again — and with his meager 30 percent approval rating, that's probably just as well. But the social crisis has boosted the fortunes of Senator Gustavo Petro, a leftwing former mayor of Bogotá who got his start in political life as part of the M-19 urban guerrilla movement.
A recent poll showed Petro would get close to 40 percent of the vote if the ballot were held today, an increase of 15 points since last fall (source in Spanish). That a leftwinger should be so popular is a sea change in Colombia, long a center-right country in which decades of war with Marxist-inspired militants — and the recent disaster next door in socialist-led Venezuela — had created a stigma around leftist politics at the national level.
Colombia's crisis is also a broader caution: Many countries are staggering out of the pandemic with weak state finances. The IMF recently found that debt as a percentage of GDP in emerging market economies soared 10 points last year to an average of 65 percent. Meanwhile, poverty and social spending needs have only risen as a result of the economic crisis.
The current upheaval in Colombia is a taste of what could come for many middle-income and poorer countries if they botch the politics of raising revenue.
But no matter how they go about it — not taxing the dead is a smart way to avoid antagonizing the living.