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El Salvador's President Nayib Bukele present the plan of "Bitcoin City."

REUTERS/Jose Cabezas

What We’re Watching: Bukele’s crypto bomb, Somalia needs a president

Has El Salavdor’s crypto experiment bombed?

Mass protests erupted last fall after Nayib Bukele, El Salvador’s youthful, tech-savvy president with an authoritarian streak, announced that the country would begin accepting Bitcoin as legal tender. Many Salvadorans said Bukele’s embrace of the volatile currency would spur inflation and financial instability. Those warnings have proven prescient. In recent days, the crypto world has been caught in a tailspin, in part because global inflation has lowered investors’ tolerance for risk. Bitcoin and Etherium, the biggest cryptocurrencies, have both declined in value by 20-25% this week – and El Salvador is recording losses of about 37% based on what it forked out for crypto in a series of purchases. This has proven to be a disaster for Bukele: two major credit rating agencies predict El Salavdor will default on its loans. San Salvador has an IMF repayment due in January worth a whopping $800 million, and amid ongoing negotiations earlier this year the international lender warned that “Bitcoin should not be used as an official currency with legal tender status.” Still, the enigmatic Bukele continues to double down: this week, he released plans for the Bitcoin city he touted last fall – a smart city based on the use of the flailing currency.

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Sri Lankan workers protest in front of the president's office at Colombo.

Tharaka Basnayaka via Reuters Connect

What We’re Watching: Sri Lanka on strike, trouble in Transnistria, Salvadorans back Bukele

Sri Lankans strike to get president out

Virtually all business activity in Sri Lanka ground to a halt on Thursday, as workers went on a nationwide strike to demand the resignation of President Gotabaya Rajapaksa. For weeks, Sri Lankans have been protesting amid the country’s growing economic and political crisis. Sri Lanka is on the brink of bankruptcy, having already defaulted on its sovereign debt and depleted its foreign currency reserves used for food and fuel purchases. Officials have been trying to get some relief from China and the International Monetary Fund, but Beijing will only refinance, and the IMF requires deep economic reforms. Meanwhile, trade unions say they'll strike permanently if Rajapaksa doesn't step down by May 6. The president is willing to appoint a new interim government and even drop his brother Mahinda as PM, but Mahinda himself has refused to resign. The opposition, which is close to getting a no-confidence vote to remove both Rajapaksas, hopes to appease Sri Lankans who have lost faith in their political leadership.

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Russian President Vladimir Putin and his Brazilian counterpart Jair Bolsonaro attend a news conference following talks in Moscow.

Sputnik/Mikhail Klimentyev/Kremlin via REUTERS

For Latin America, political risks overshadow economic gain from Ukraine crisis

Countries that rely heavily on imported food and energy face the greatest risk of social and economic crises from the disruption caused by Russia’s invasion of Ukraine. Yet even those that are themselves big producers of these essential commodities are suffering fallout from the war. Rising prices for basic goods in many parts of Latin America, for example, are testing governments already struggling to manage elevated public frustration caused by pandemic hardships. We asked Eurasia Group expert Yael Sternberg to explain how this is playing out.

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Ukraine's President Volodymyr Zelensky

REUTERS

What We're Watching: Zelensky's olive branch, dialogue in the desert, emergency in El Salvador

Zelensky’s peace offer is a first step, not a game changer

Ukraine’s President Volodymyr Zelensky says he’s ready to discuss “neutrality” for Ukraine as part of a peace deal with Russia. That’s a positive development. But even as an opening bid, this is no game changer. Here’s why…

First, Zelensky insists that “neutrality” – a promise written into Ukraine’s constitution to never join NATO – can only be approved by popular referendum. That vote, Zelensky says, can’t take place while Russian soldiers remain on Ukrainian soil. Leaving aside disputes over what counts as Ukrainian soil – Crimea? The occupied Donbas region? – Putin is highly unlikely to withdraw all Russian forces without knowing the outcome of the vote.

Second, Zelensky also insists that Ukraine could only agree to neutrality if its security is guaranteed by outside (read Western) powers. Without those security guarantees, Ukraine can’t be confident that Russia won’t just invade again in the future. But a security guarantee from Western powers is the central benefit of NATO membership, and Putin has little reason to agree to that.

Third, an offer not to join NATO in exchange for peace assumes that Putin will allow Ukraine to one day join the European Union and that Ukrainians will retain the right to make their own foreign and trade policy. Putin’s approach toward Ukraine over the past 20 years indicates that would not be acceptable to Moscow.

The Wall Street Journal reported on Monday there may be another obstacle to successful peace talks: Russian oligarch Roman Abramovich has said that he and Ukrainian negotiators suffered symptoms of poisoning after they met in Kyiv to discuss peace recently. Abramovich blames hardliners in Moscow who don’t want to end the war.

Finally, President Joe Biden’s comment in Poland that Putin “cannot remain in power” could persuade Russia’s president that no guarantee of neutrality from Ukraine can allow Moscow to claim victory. Not if the US still intends to cripple Russia’s economy with sanctions – and maybe force Putin out.

Zelensky’s offer might start an important conversation, but it comes nowhere near ensuring a diplomatic breakthrough.

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Concern About Chinese Tennis Star Peng Shuai’s Safety Isn’t Going Away | World In :60 | GZERO Media

Peng Shuai, China's tennis star, appears safe but questions remain

Ian Bremmer shares his insights on global politics this week with a look at Peng Shuai's public appearance, El Salvador's "Bitcoin City," and Americans' Thanksgiving celebrations.

Why has China silenced its famous tennis player, Peng Shuai?

Well, they haven't completely silenced her in the sense that the head of the IOC, the International Olympic Committee with Beijing Olympics coming up, basically told the Chinese government, "hey, what is the absolute minimum that you can do so that we can get Beijing Olympics back on track?" And they did the absolute minimum, which was a half an hour phone call with her that felt like kind of a hostage phone call. But nonetheless, she says that she is fine and is private and doesn't want to talk about the fact that she had accused the former Vice Premier of sexually assaulting her. That is a fairly heady charge. It was clear, going to get a lot of headlines in the run-up to the Olympics. And she wasn't heard from after that. So big problem for the Chinese in the run-up to the Olympics.

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Demonstrators holding placards against the government's Bitcoin law while making gestures, during the protest. Thousands of Salvadorans took to the streets on El Salvador's Bicentennial Independence Day against El Salvador's President Nayib Bukele and his government's policies

Camilo Freedman / SOPA Images/Sipa USA

What We’re Watching: Salvadorans protest Bitcoin, meet Aukus, no COVID pass no job in Italy

Salvadorans protest Bukele, Bitcoin: Thousands of people took to the streets of El Salvador's capital on Wednesday, the 200th anniversary of the country's independence, to protest against President Nayib Bukele's increasingly authoritarian streak and his embrace of risky cryptocurrency. Last May, Bukele ended the Supreme Court's independence; perhaps unsurprisingly, the court then decided to lift the constitutional ban on presidential term limits — presumably so Bukele can run for reelection in 2024. Meanwhile, last week El Salvador became the first country in the world to accept Bitcoin as legal tender, but the rollout was, to put it mildly, messy. The protesters resent Bukele's dictator vibes and warn that Bitcoin could spur inflation and financial instability. The tech-savvy president, for his part, insists that crypto will bring in more cash from remittances and foreign investment, and remains immensely popular among most Salvadorans. Still, Bukele's Bitcoin gamble could erode his support if the experiment fails.

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El Salvador’s Risky Move to Bitcoin | Future of Singapore Patrol Robots | Cyber In :60 | GZERO Media

El Salvador’s risky move to Bitcoin; future of Singapore patrol robots

Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:

El Salvador becomes the first country to adopt Bitcoin as legal tender. Is this a risky move?

Well, it is unclear who ought to benefit most of the President's move to adopt Bitcoin. Poor shopkeepers, wealthy investors, or he himself. With arguments that remittances are expensive and the future is digital, President Bukele leapt forward. But the immediate value drop of Bitcoin was a live reminder of the cryptocurrencies' volatility. One silver lining is that others can learn from the lessons that El Salvador will learn under this new spotlight.

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Can the Taliban’s Non-Inclusive Government Lead a Diverse Country? | World In :60 | GZERO Media

Can the Taliban's non-inclusive government lead a diverse country?

Ian Bremmer shares his insights on global politics this week with a look at the Taliban's interim government, Chinese President Xi's efforts to redistribute wealth, and changes Bitcoin will bring to El Salvador.

A week after the US withdrawal, how is Afghanistan in the transition to Taliban rule?

Well, for now we have the transition government. They said it was going to be inclusive. It's all Pashtuns and it's all men. So it is inclusive of Pashtun men that like the Taliban. But of course, that's not the final government. And the real question is, are they going to have ethnic diversity across the country? And does that in any way forestall the likelihood of a civil war? Does it allow them to govern an incredibly diverse and difficult-to-govern country? And of course, I think we should be quite skeptical about that, but at least for now, the likelihood that the Americans or most advanced industrial economies would open diplomatic relations with them and engage with them in a constructive way still seems very, very limited.

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