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French Interior Minister Gerald Darmanin and UK Home Secretary Suella Braverman sign a joint declaration on migrants in Paris.
Hard Numbers: UK-France migration deal, Amazon layoffs, Gabon's carbon credit mega-sale, North Korean crypto windfall, Lake's loss
8 million: The UK will pay France 8 million pounds ($9.4 million) more per year to beef up patrols to stop migrants on small boats from crossing the English Channel to reach British shores. London and Paris have long tussled over how to combat the human-trafficking gangs that control the route, while tens of thousands of asylum-seekers wait years to get their applications processed.
10,000: Following earlier mass layoffs at Twitter and Meta, now Amazon reportedly plans to cut up to 10,000 workers, the largest job cut in the tech giant's history. The news came out on the same day that Amazon’s billionaire founder Jeff Bezos announced he'll give most of his immense fortune to charity.
90 million: Not everything is doom and gloom at COP27. In the coming weeks, the densely forested West African nation of Gabon plans to sell a whopping 90 million carbon credits, roughly the same amount issued globally in 2021. If oil-rich Gabon makes a killing from its sale, perhaps other developing countries might follow its example of pursuing sustainable growth over fossil fuels.
1 billion: North Korean hackers are estimated to have swiped roughly $1 billion from crypto exchanges in the first three quarters of the year. Where did the money go? No surprise: to fund Kim Jong Un's ballistic missile and nuclear programs.
0.8: Almost a week after the US midterm elections, MAGA icon Kari Lake lost the Arizona gubernatorial race to her Democratic rival, Katie Hobbs. Lake — part of a slate of Trump-backed election deniers running this year — did not immediately concede despite trailing Hobbs by an insurmountable 0.8% of the vote in a battleground state for 2024.
This was featured in Signal, the daily politics newsletter of GZERO Media. For smart coverage of global affairs that normal people can understand, subscribe here.
Representation of Ethereum, with its native cryptocurrency ether.
Hard Numbers: Crypto upgrade, Angolan inauguration, Iran’s SCO bid, soaring US mortgage rates, enthusiasm for omicron boosters
99: Ethereum, the world's no. 2 cryptocurrency after Bitcoin, successfully completed a long-awaited software upgrade that will reduce carbon emissions linked to its mining by 99%. Crypto fans hope “the merge” will help get environmentalists off their backs and end the crypto price slump they’ve suffered since May.
2: Following an unusually competitive election, João Lourenço was inaugurated on Thursday for his second term as Angola’s president. What should we expect? Protests from the opposition, which contested the result as rigged.
9: Iran just inched a step closer to becoming the ninth member of the Shanghai Cooperation Organization by signing a memo to join the Central Asian security bloc. Increasingly isolated on the global stage, Tehran needs all the friends it can get — it also recently applied to join BRICS.
6: Thirty-year fixed mortgages, the most common home loan in America, surpassed 6% for the first time since 2008, double what it was nine months ago. This comes as the consumer price index released this week showed the cost of housing remains stubbornly high despite rising interest rates.
72: Around 72% of Americans say they would get a new COVID booster shot, the first vaccine developed to match developing Omicron variants, according to the Centers for Disease Control and Prevention. Still, this comes amid growing criticism that the public awareness campaign around the new shots has been sluggish.
Crypto fans ignore its ups and downs
In the past few weeks, the value of cryptocurrencies has been slashed by half over fear, uncertainty, and doubt (aka FUD) of US interest rate hikes and new regulation.
That means NYC Mayor Eric Adams, NFL quarterback Aaron Rodgers and basketball star Klay Thompson all face pay cuts because they get their salaries in crypto.
Yet, the crypto bros out there have not lost faith.
El Salvador’s crypto-loving President Nayib Bukele is still going strong, ignoring calls by the IMF to stop using bitcoin as legal tender.
What's the big deal about bitcoin anyway?
Critics say it's a Ponzi scheme for criminals. The online black market does take bitcoin, which is also the go-to payment scheme in rug-pull scams.
But crypto fans insist that the tech is anonymous, secure, and unhackable. Not to mention cutting out the middleman: untrustworthy banks.
In fact, crypto has already gone so mainstream that Goldman Sachs predicts it'll compete with gold, and JP says that blockchain will be the backbone of Web 3.0 — a new, more decentralized internet.
The flip side: it could also go to zero.
Watch the GZERO World episode: Does China's rise have to mean America's decline?
Do cryptocurrencies undermine US sanctions?
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:
Do cryptocurrencies make it harder to enforce foreign policy sanctions?
Well, that is exactly what the Biden administration worries about. As part of growing concerns of whether unregulated currencies undermine a whole host of policies, sanctions and foreign or trade policy should be a priority area. And just like others who wish to evade tracing of their wealth or transactions, the very states or their sanctioned entities should be assumed to resort to all options to evade restrictions while continuing to do business. So having cryptocurrencies undermining the ability to enforce strategic goals logically raises eyebrows in Washington.
Didn't the Biden administration recently sanction a cryptocurrency exchange itself?
Yes, it did. But the sanctions against SUEX were intended to prevent the company or platform from being the clearing house for criminal money. My sense is that there will be plenty more legal updates, regulations and ad hoc steps to ensure that cryptocurrencies do not undermine the ability to make policy, whether it's monetary or foreign policy.
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Is a Huawei ban possible in Brazil? Poly Network cryptocurrency heist
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:
The US warned Brazil about China's Huawei equipment in its 5G telecoms network. Would it be possible to ban Huawei in Brazil?
Now in theory, yes, but in practice, that will be very difficult. If not Huawei, the Brazilian mobile network infrastructure is largely sourced from China, and China is the country's most important trade partner overall. But as always, much depends on political leadership. President Bolsonaro, after all, did go along with President Trump in opposing Huawei while he was facing pushback for that decision at home. So the lesson to learn is that it is easier to prevent risky 5G telecoms equipment to come into the country than to cure when it's already there.
$600 million was stolen in what is being called the largest hack in decentralized finance history. What does this reveal about the security of digital assets?
Now, the answer is kind of in the question. The security is not hacker proof, at least not when it comes to the token swapping platform, Poly Network. But even if around half of the stolen assets have now been returned, the theft is still the largest robbery of its kind, and the hacker stole funds in 12 different cryptocurrencies.
Bitcoin's volatility may dim its appeal; China's crypto crackdown
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:
Should Bitcoin enthusiasts be alarmed at its plunging value?
Well, I can only imagine it makes them a little less enthusiastic, although the value of Bitcoin is still a lot higher than it was a year ago. So I guess the level of concern much depends on when the enthusiasts started to invest in this volatile currency, which is also seeing more and more regulations coming its way. So if people choose to get out now, it further pushes down the value and so on. I'll be watching what happens next.
Why is China cracking down on cryptocurrency trading?
Well, the Chinese government, not unlike central banks and regulators in other parts of the world, is concerned about the monetary policy effects of massive value creation without oversight. So after a period of a hands-off, watch-and-see approach all over the world, calls for regulation or the creation of digital currencies that are tied to central banks are now taking up. The Basel Committee lamented the creation of walled gardens and big tech for working against the public interest and said Bitcoin in particular has few redeeming public interest attributes when also considering its wasteful energy footprint. So regulation of Bitcoin is coming from different angles and there is no escaping it.
Bukele's Bitcoin gamble in El Salvador
Ian Bremmer's Quick Take:
Hi everybody. Ian Bremmer here, kicking off your week with a Quick Take. Hope everyone's doing well. I thought I would talk about El Salvador, a surprising amount of news coming out of this comparatively small country.
First of all, you've got a president who's been in power now for about a year, Nayib Bukele, he's all of 39 years old and 90% approval ratings, pretty consistent over the last year. And in part, that's because there's been massive violence and huge economic problems and extraordinary corruption in the country. And this is a guy who was a former advertising executive, he was a local mayor, and ran with a lot of charisma, with of course, an enormous amount of social media savvy. In fact, if you follow him on social media, he kind of styles himself the Elon Musk of the Northern Triangle, which is not really a great thing I grant you. The Northern Triangle is like El Salvador, Honduras, and Guatemala. And I mean, I guess if there is one such person that has to be Elon Musk, he's the guy.
But the point is he's really into showing himself as being hip, and technology savvy, and in the moment, and not in anybody's pocket, and I can do whatever I want. And indeed, he has been doing pretty much anything he wants. He said he was going to jail people in El Salvador, in his country, that broke the lockdown. The court said you didn't have the right to do it. He did it anyway. And he occupied parliament with military forces. He's removed his top judges, ignoring the legal process that needs to occur to make that happen. I mean, it feels like there are literally no checks and balances legally on Bukele in El Salvador right now. It's kind of like a Hungary Victor Orban type situation, except when there's no real opposition and the entire population is in favor. And by the way, no European Union either.
Now, there is the equivalent of a check and balance on Bukele and that's not a formal international structure, but rather the fact that his economy is really dependent on the United States. They use the US dollar as currency, and they need support from the IMF because their economy continues to deteriorate. He's handled coronavirus relatively well in terms of spread of cases and whatnot, I mean, almost in a Chinese type way, but that hasn't helped them in terms of getting hit with this massive global recession, the way everybody else has. And if you want support from the IMF, he would need to be much more transparent in the way he governs, which he's not prepared to do. In fact, just this weekend, he arrested yet another high-level opposition member on very dubious corruption claims. And at the same time, disbanded an OAS, Organization American States, unit that was meant to engage in anti-corruption oversight in El Salvador, supported by the United States, said, "I'm not doing that."
So clearly, he is indifferent to the fact that the Americans are not going to allow the IMF, and America's the biggest stakeholder there to engage in further lending. So what do you do? Well, I mean, if you're most leaders, you start putting capital controls on and try to have more direct control of your local economy and your currency, which is really hard to do when you're dollarized. But if you're Bukele, you do something completely unique, which is you say that Bitcoin is going to be the legal tender of El Salvador going forward.
He said, he's going to put legislation in front of the Congress. It will certainly be approved. This will be the first country in the world where Bitcoin is legal tender. Now to be clear, he is not going to be able to make the dollar illegal because a lot of people won't be able to use Bitcoin. Also, if you've watched Bitcoin, it's massively volatile, enormous swings, from dizzying highs to staggering lows sometimes over the course of hours and days. And I mean, if you're a relatively poor person, you don't want your currency to have that level of uncertainty. That's like all of these retail investors invested in GameStop and some of them made millions of dollars and a lot of them were wiped out. And that's why you kind of worry about what happens when the average citizen starts treating the marketplace as a casino.
And here, Bukele is basically saying that's going to be forced upon them. He can get away with it because of his extraordinary popularity, but the challenges for the average El Salvador are really significant, not to mention the fact that Bitcoin is itself hard to transact and expensive to transact in. And so, this is a very interesting new way to think about de-dollarizing. And a bunch of smaller economies around the world that don't have great relationships with the United States and are facing enormous financial pressure, especially if inflation starts picking up in the next year, are going to find this to be very worthwhile watching. It's a serious experiment. A lot of Sub-Saharan African countries, other Central American countries, maybe even some Asian countries. Sri Lanka would be an interesting one to watch because they are in a very similar economic position.
And again, capital controls would be hard for them. But ultimately this is not the thing if you are a crypto advocate that makes you say, "Bitcoin to the moon." It is an interesting thing, geopolitically, because it's one more way that the United States, by trying to weaponize its dollar, to use it as a political and economic club to get countries more aligned with the Washington consensus or else. China is a hedge for some of those countries, Bitcoin is increasingly a hedge for at least one of those countries itself. So pretty interesting stuff. Let's watch El Salvador closely.
Final point. Let's keep in mind that one of the reasons El Salvador is important in the United States is because of so many illegal immigrants coming out of El Salvador because they have no opportunity for themselves and their family, through Mexico, into the United States. It was a problem for Trump, is a problem for Biden, for Kamala Harris. The fact that this president is trying to avoid getting leveraged under America's influence by moving to Bitcoin is something that will make Bitcoin more problematic for US regulators. And so if anything, there's probably more likely to be a backlash when you've got a whole bunch of people saying, "Bitcoin uses too much energy. It's not green. It's used by people that want to engage in illegal activities." And now, it's currency for Nayib Bukele, who's a problem for American national security.
So on balance of, I was going to say, is this a good move for Bitcoin or a bad move for Bitcoin? Geo-politically, I would say it's actually a bad move for Bitcoin, but it's an interesting one for the president of El Salvador. 90% approval, who knew? Okay. Take it easy, avoid fewer people. Talk to you soon.
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What is Coinbase, the first major cryptocurrency company to go public?
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:
What is Coinbase and why is it such a big deal that it's going public?
Now, Coinbase runs the US's largest cryptocurrency exchange and holds tens of billions of dollars' worth of bitcoins. When it went public on Wednesday, it was the first major cryptocurrency company to do so.
Are there any privacy issues you see looming around cryptocurrency and digital assets in general?
And I would say trust is a big question with cryptocurrencies and the question that goes beyond matters of privacy protection. Some customers of Coinbase, for example, reported losing their assets through account takeover attacks and were very disappointed with the lack of support the company offered. Digital currency transactions that are impossible to reverse or to be traced to a person, make them an attractive asset to steal. And the security rules that we know for banks do not yet apply equally to digital currency exchanges. And that has clearly had its pluses for some users, but steep downsides for those who lose their savings in the blink of an eye.