U.S. bans travel to Cuba

In an effort to prevent island government's enrichment, backing of Maduro in Venezuela
(Photo by AussieActive on Unsplash)

In an effort to prevent island government’s enrichment, backing of Maduro in Venezuela

SAN JUAN — The U.S. State Department said the administration of President Trump took action Tuesday to prevent U.S. travel to Cuba “from enriching the Cuban military, security, and intelligence services” by announcing new restrictions on travel to the island.

Starting Thursday, June 5, when the regulations are published in the Federal Register, U.S. travelers will be indefinitely prohibited from going to Cuba under the educational travel authorization implemented by the Obama administration, and the United States will no longer permit visits to the island via passenger or recreational vessels, including cruiseships and yachts, nor private or corporate aircraft.

According to a State Department release, the Trump administration “holds the Cuban regime accountable for its repression of the Cuban people, its interference in Venezuela, and its direct role in the man-made crisis led by Nicolas Maduro. Despite widespread international condemnation, Maduro continues to undermine his country’s institutions and subvert the Venezuelan people’s right to self-determination. Empowered by Cuba, he has created a humanitarian disaster that destabilizes the region.”

The State Department said the Cuban tourism industry has strong economic ties to the Cuban security, military, and intelligence sectors.

“Veiled tourism has served to line the pockets of the Cuban military, the very same people supporting Nicolas Maduro in Venezuela and repressing the Cuban people on the island. In Cuba, the regime continues to harass, intimidate, and jail Cubans who dare to voice an opinion different from the one the regime wants them to have. The United States calls on the regime to abandon its repression of Cubans, cease its interference in Venezuela, and work toward building a stable, prosperous, and free country for the Cuban people,” the State Department wrote.

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) presented amendments Tuesday to the Cuban Assets Control Regulations (CACR), along with changes to the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) Export Administration Regulations (EAR).

The regulatory changes were announced April 17, and “mark a continued commitment towards implementing the National Security Presidential Memorandum signed by the President on June 16, 2017 titled ‘Strengthening the Policy of the United States Toward Cuba,'” the Commerce Department said in its release.

Among the changes in the revised regulations are:

Ending Group People-to-People Travel

  • In accordance with the newly announced changes to non-family travel to Cuba, OFAC is amending the regulations to remove the authorization for group people-to-people educational travel. OFAC’s regulatory changes include a “grandfathering” provision, which provides that certain group people-to-people educational travel that previously was authorized will continue to be authorized where the traveler had already completed at least one travel-related transaction (such as purchasing a flight or reserving accommodation) prior to June 4, 2019.

Ending Exports of Passenger Vessels, Recreational Vessels, and Private Aircraft

  • BIS, in coordination with OFAC, is amending its EAR to make passenger and recreational vessels and private and corporate aircraft ineligible for license exception and to establish a general policy of denial for license applications involving those vessels and aircraft.




Report: Clean Energy Must Not Rely on Dirty Mining

Pit of Codelco’s Chuquicamata copper mine outside Calama, Chile.

Research exposes extent of mineral demand for clean technologies

SAN JUAN – Earthworks published new research detailing projected minerals demand to build the electric vehicles, solar arrays, wind turbines and other renewable energy infrastructure needed to meet the goals of the Paris Climate Agreement and avert the most disastrous impacts of climate change.

The research, conducted by the University of Technology Sydney’s Institute for Sustainable Futures (ISF), shows that as demand for these minerals skyrockets, “the already significant environmental and human impacts of hardrock mining are likely to rise steeply as well. It shows the need for a broad shift in the clean technologies sector towards more responsible minerals sourcing,” reads a release by Earthworks, a nonprofit dedicated to exposing the health, environmental, economic, social and cultural impacts of mining and energy extraction.

“We have an opportunity, if we act now, to ensure that our emerging clean energy economy is truly clean–as well as just and equitable–and not dependent on dirty mining,” said Payal Sampat, director of Earthworks’ Mining Program. “As we scale up clean energy technologies in pursuit of our necessarily ambitious climate goals, we must protect community health, water, human rights and the environment.”

Research highlights:

  • Under a 100 percent renewable energy scenario, metal requirements could rise dramatically, requiring new primary and recycled sources.
  • Clean technologies rely on a variety of minerals, principally cobalt, nickel, lithium, copper, aluminum, silver and rare earths.
  • Cobalt, lithium and rare earths are the metals of most concern for increasing clean tech demand and supply risks.
  • Batteries for electric vehicles are the most significant driver of accelerated minerals demand.
  • Recycled sources can significantly reduce primary demand, but new mining is likely to take place and new mining developments linked to renewable energy are already underway.
  • Responsible sourcing is needed when supply cannot be met by recycled sources.

Earthworks commissioned the research as part of its new “Making Clean Energy Clean, Just & Equitable” project, “which aims to ensure that the transition to renewable energy is powered by responsibly and equitably sourced minerals, minimizing dependence on new extraction and moving the mining industry toward more responsible practices,” the organization said.

“The responsible materials transition will need to be scaled up just as ambitiously as the 100 percent renewable energy transition,” said Dr. Sven Teske, Research Director at the UTS Institute for Sustainable Futures.

The report found that the transition will require businesses and governments to “dramatically scale up” the use of recycled minerals, use materials more efficiently, require mining operations to “adhere to stringent, independent environmental and human rights standards, and prioritize investments in electric-powered public transit,” Earthworks said.

“The renewable energy transition will only be sustainable if it ensures human rights for the communities where the mining to supply renewable energy and battery technologies takes place,” said Elsa Dominish, Senior Research Consultant at the UTS Institute for Sustainable Futures. “If manufacturers commit to responsible sourcing this will encourage more mines to engage in responsible practices and certification. There is also an urgent need to invest in recycling and reuse schemes to ensure the valuable metals used in these technologies are recovered, so only what is necessary is mined.”

The nonprofit stressed that the extraction of minerals already fuels conflict, human rights violations, water pollution and wildlife and forest destruction.

“Most of the world’s cobalt, used in rechargeable batteries for electric vehicles and phones, is mined in the Democratic Republic of Congo, often by hand in unsafe conditions using child labor,” Earthworks pointed out. “Earlier this year in Brazil, the collapse of two tailings dams at Vale’s Brumadinho iron ore mine killed hundreds of workers and local residents. Independent research that analyzes decades of data on mine waste dam failures reveals that these catastrophic failures are occurring more frequently and are predicted to continue to increase in frequency,” the report’s release reads.

Access the full report here.




National Puerto Rican Chamber of Commerce among entities pushing for passage of North American trade agreement

National Association of Manufacturers, Domino’s Pizza and Dow also join Pass USMCA Coalition

The The Pass USMCA Coalition logo (Screen capture of www.passusmca.org)

SAN JUAN – The Pass USMCA Coalition, an alliance advocating for the passage of the United States-Mexico-Canada Agreement, welcomed the National Association of Manufacturers, Domino’s Pizza, Dow, and the National Puerto Rican Chamber of Commerce as its newest members.

Pass USMCA is an effort led by Democrat Gary Locke, former ambassador to China, secretary of commerce and governor of Washington; and Republican Rick Dearborn, who has served two presidents and six senators.

The deal promotes “U.S. exports, enhances intellectual property protections for U.S. creative industries, and boosts resources for America’s small businesses,” the group group of trade associations and businesses says, stressing that its provisions will “defend American jobs, cultivate innovation, and encourage business development, spurring growth for local, state, and national economies.”

Trade with Canada and Mexico supports 14 million U.S. jobs, the coalition says. “In 2017, the United States exported more than $275 billion in goods to Mexico and nearly $350 billion in goods to Canada.”

In announcing the newly joined entities, the coalition described the National Association of Manufacturers as “the largest manufacturing association in the United States”; Domino’s as the “world’s largest pizza seller, with more than 16,000 stores”; Dow as the “world’s leading materials science company”; and the National Puerto Rican Chamber of Commerce as “a vital advocate for entrepreneurship and innovation within Puerto Rico’s economy.”

Trade with Canada and Mexico “supports two million U.S. manufacturing jobs,” the coalition stressed, adding that “Puerto Rico’s economy and businesses are overwhelmingly dependent on North American trade,” and that “chemical exports to Canada and Mexico have tripled since NAFTA went into effect” in 1994.

“We’re thrilled to add four more well-respected organizations to our coalition,” said Joe Crowley, honorary co-chairman of Pass USMCA and a former congressman from New York. “Our coalition is exceedingly diverse–and that speaks volumes about the widespread support for USMCA.”

Rick Dearborn, Pass USMCA Coalition’s executive director, summarized the need for the agreement’s passage by Congress by stating that “North American trade supports millions of jobs and generates billions in economic output.”

Gary Locke, honorary co-chairman of Pass USMCA, added that it was “terrific to have four more leading businesses and groups making the case for USMCA,” and that “the new trade pact with Mexico and Canada isn’t a partisan issue,” the “deal benefits every American,” and would “improve our trading relationships” with those countries.




EU Council withdraws support for dirty money blacklist

After 27 of 28 EU countries objected, general EC secretariat said it ‘was not established in a transparent and resilient process’

(Screen capture of www.consilium.europa.eu)

Editor’s note: A version of the following was first published in the March 7 – 13, 2019, issue of Caribbean Business.

The executive director of the Fiscal Agency & Financial Advisory Authority of Puerto Rico (Aafaf by its Spanish acronym), Christian Sobrino Vega, and the commissioner of the Financial Institutions Office (OCIF in Spanish), George Joyner, reported that 27 of the 28 countries that comprise the European Union (EU) objected to finalizing the list of high-risk jurisdictions for money laundering, which includes Puerto Rico, and was recently published by the European Commission. The list included several U.S. territories, among them, Guam, Virgin Islands, Puerto Rico and American Samoa.

Immediately after its publication, the list was also rejected by the U.S. Department of the Treasury (UST) due to the lack of rigor in the methodology used by the European Commission in the preparation of the list.

Since its publication at the beginning of February, Puerto Rico government officials have rejected the island’s inclusion, arguing that the island currently has a robust legal and regulatory framework to prevent, detect and combat money laundering and other illegal financial practices. For their part, Aafaf and OCIF expressed they have been communicating and collaborating with the Office of Terrorist Financing & Financial Crimes (TFFC) at the UST.

According to Sobrino Vega, the Government of Puerto Rico has continued to work with the UST in relation to this matter. The executive director of Aafaf and Financial Institutions Commissioner Joyner thanked UST Secretary Steven Mnuchin and his team for supporting the Government of Puerto Rico. Additionally, Gordon Sondland, the U.S. ambassador to the European Union, said it was encouraging to see that common sense of the member states prevailed over the dogmatic posturing of the commission on the issue.

Timeline

The consultation held Feb. 28 resulted in the required majority of EU delegations having declared their intention to object to the list, “in particular on the basis that the act was not established in a sufficiently transparent way,” according to the General Secretariat of the EU Council.

On March 1, following a Financial Attachés Working Party meeting, unanimity on the intention to object was reached and agreed that the Committee of Permanent Representatives invite the council to object, inform the EC and the European Parliament.

In a statement Thursday, the council said it needs “to introduce the list in an orderly process. Therefore, in order to establish a strong and effective instrument, the Council cannot support the current proposal that was not established in a transparent and resilient process that actively incentivises affected countries to take decisive action while also respecting their right to be heard.”

As previously reported by Caribbean Business, early this month, the former director of the Economic Development & Commerce Department (DDEC by its Spanish acronym), Alberto Bacó Bagué, rejected the recent decision to include Puerto Rico on the list of countries with deficiencies in their strategies against money laundering and to combat the financing of terrorist cells, and denounced the fact as an act of bad faith against a jurisdiction such as Puerto Rico, which is going through its most precarious economic period in the past 50 years.

“It’s unjustifiable. For me, that was a political move of very bad faith and we must fight to make them look ridiculous,” Bacó Bagué underlined during an interview with Caribbean Business, insisting that Puerto Rico “has an excellent commissioner of financial institutions, in addition to having a banking system that operates with the highest quality standards.”

Puerto Rico gov’t: European countries reject new inclusions in dirty money list




Puerto Rico gov’t: European countries reject new inclusions in dirty money list

The executive director of the Fiscal Agency and Financial Advisory Authority of Puerto Rico, Christian Sobrino Vega (Courtesy)

SAN JUAN – The executive director of the Fiscal Agency and Financial Advisory Authority of Puerto Rico (Aafaf by its Spanish acronym), Christian Sobrino Vega, and the island’s Financial Institutions (OCIF by its Spanish acronym) commissioner, George Joyner, said Monday that 27 of the 28 member countries of the European Union objected to finalize the list of high-risk jurisdictions for money laundering recently published by the European Commission (EC).

The list included several U.S. territories, among them, Guam, Virgin Islands, Puerto Rico and American Samoa. It was also rejected by the U.S. Treasury Department, which said the EC’s methodology lacked rigor.

“Currently, Puerto Rico has a robust legal and regulatory framework to prevent, detect and combat money laundering and other illegal financial practices,” the Puerto Rico government’s release reads. AAFAF and OCIF stress that their collaboration with the Office of Terrorist Financing and Financial Crimes (TFFC) of the U.S. Treasury is ongoing.

Sobrino and Joyner thanked the U.S. Treasury for supporting the Government of Puerto Rico for voicing its rejection to the EC list.

“It is expected that at its next meeting on March 7, 2019, the European Council of the European Union will ratify the rejection of the list published a few weeks ago by the European Commission,” the commonwealth government said.

The U.S. Treasury had said in a statement that it considers the Financial Action Task Force (FATF) as the entity in charge of developing global standards to combat Anti-Money Laundering and Countering the Financing of Terror (AML/CFT).

It then said the commission’s process contrasts with the FATF’s in that it “did not include a sufficiently in-depth review,” provided the “affected jurisdictions with only a cursory basis for its determination,” notified these they would be included on the list “only days before issuance” and “failed to provide” them ” with any meaningful opportunity to challenge their inclusion or otherwise address issues identified by the Commission.”

Treasury rejected the inclusion of the territories on the list, saying “the commitments and actions of the United States in implementing the FATF standards extend to all U.S. territories, and that the same Anti-Money Laundering and Countering the Financing of Terror (AML/CFT) legal framework that applies to the continental United States also generally applies to U.S. territories.”

The agency concluded its statement saying it “does not expect U.S. financial institutions to take the European Commission’s list into account in their AML/CFT policies and procedures.”

Besides the four U.S. territories, Panama and Saudi Arabia, whose king personally wrote to European Unions in protest, would have been alongside 16 jurisdictions that include Iran, Iraq, Pakistan, Ethiopia and North Korea.

The list warns European banks to closely monitor its transactions with the listed countries.

Local Banking Industry Denounces P.R.’s Inclusion in Laundering Blacklist




Local Banking Industry Denounces P.R.’s Inclusion in Laundering Blacklist

Editor’s note: The following originally appeared in the Feb. 21 -27, 2019, issue of Caribbean Business.

For Alberto Bacó Bagué, the former director of the Economic Development & Commerce Department (DDEC by its Spanish acronym), the European Commission’s (EC) recent decision to include Puerto Rico on the list of countries with deficiencies in their strategies against money laundering and to combat the financing of terrorist cells is an ill-informed action against a jurisdiction such as Puerto Rico, which is going through its most precarious economic period of the past 50 years.

Bacó Bagué, who works in the private sector as founder of the think tank Partnership for Modern Puerto Rico, which promotes change and the modernization of the island through various economic strategies, strongly condemned the decision to include Puerto Rico on the list along with such countries as Panama and Iraq, and said it was unacceptable.

“It’s unjustifiable. For me, that was a political move of very bad faith and we must fight to make them look ridiculous because what they are doing is just that, being ridiculous. Puerto Rico is part of the United States and, like I tell it, we don’t have the IRS [Internal Revenue Service] here but we do have the FBI [Federal Bureau of Investigation]. We also have an excellent commissioner of financial institutions, in addition to having a banking system that operates at the highest quality standards,” Bacó Bagué said in an aside with the press after delivering a speech at the sixth Puerto Rico Investment Summit.

“All states and territories are part of the U.S. banking system. Why do they go after and abuse the smallest?” the former government official questioned, adding he trusted that the governor of Puerto Rico, Ricardo Rosselló, the resident commissioner in Washington, Jenniffer González, and Financial Institutions Commissioner George Joyner will sound the alert in the appropriate forums “because this is an outrage and it does us a lot of damage to compare us with Panama, the Cayman Islands or with Iraq. These are things that I have fought against, to let it be known that we don’t want scoundrels here. What we want here are people who create jobs, who create economic activity and do things well. That is the north and we must defend that until the end.”

Bacó Bagué explained that the inclusion of Puerto Rico on that list constitutes an international warning that indicates that making financial and banking transactions with those countries, including Puerto Rico, could expose the European financial system to money laundering and terrorist financing risks.

In addition to Puerto Rico, Panama and Iraq, the list includes Afghanistan, American Samoa, Bahamas, Botswana, North Korea, Ethiopia, Ghana, Guam, Iran, Libya, Nigeria, Pakistan, Saudi Arabia, Sri Lanka, Syria, Trinidad & Tobago, Tunisia, Yemen and the U.S. Virgin Islands.

However, Bacó Bagué assured that the risk being addressed by the EC is not necessarily linked to the fact that Puerto Rico is one of the U.S. jurisdictions with the lowest tax rates and categorically held that there is no correlation between the rates and money laundering.

“There is no relationship. Money laundering is done by people who are operating illegally in any jurisdiction. If you do not attack them properly, it happens, but that has nothing to do with the tax rates because they earn so much money that the last thing they care about is these low rates,” he said.

“The reason really is how flexible that jurisdiction is in complying with the laws. That kind of practice happened in, for example, Panama, because they were not doing their job legislating and regulating well there. It has nothing to do with how much Panama charged in taxes. So there is no correlation. There are also many jurisdictions with high taxes that do nothing to avoid these criminals,” he added.

Last week, the U.S. Department of the Treasury rejected the EC’s justification to include Puerto Rico on the list and said it “does not expect U.S. financial institutions to take the European Commission’s list into account in their AML/CFT [Anti-Money Laundering & Countering the Financing of Terror] policies and procedures.”

Treasury said the EC’s process “did not include a sufficiently in-depth review,” provided the “affected jurisdictions with only a cursory basis for its determination,” notified them that they would be included on the list “only days before issuance,” and “failed to provide” them “with any meaningful opportunity to challenge their inclusion or otherwise address issues identified by the commission.”

The agency explained that the Financial Action Task Force (FATF) is the entity in charge of developing global standards to combat money laundering and terrorism and proliferation financing, and that the “commitments and actions of the United States in implementing the FATF standards extend to all U.S. territories.” It further stressed that the same AML/CFT “legal framework that applies to the continental United States also generally applies to U.S. territories.”

The executive director of the P.R. Fiscal Agency & Financial Advisory Authority (Aafaf by its Spanish acronym), Christian Sobrino Vega, and Financial Institutions Commissioner George Joyner this week joined the U.S. Department of the Treasury to reject the European Commission’s determination to include several U.S. territories on the list of high-risk jurisdictions for money laundering. According to the officials, the Government of Puerto Rico has a robust legal and regulatory framework to prevent, detect and combat such practices.

The officials said they collaborate with Treasury’s Office of Terrorist Financing & Financial Crimes (TFFC) and that the government of Puerto Rico has a “robust legal and regulatory framework to prevent, detect and combat said practices.”

“The FATF, which includes the United States, the European Commission, 15 EU member states and 20 other jurisdictions, already develops a list of high-risk jurisdictions with AML/CFT deficiencies as part of a careful and comprehensive process,” which the EC lacked, Treasury said in its statement.

For its part, Aafaf and OCIF expressed that they have been communicating and collaborating with the Office of Terrorist Financing & Financial Crimes (TFFC) of the U.S. Department of the Treasury. Both the Aafaf executive director and the OCIF commissioner thanked Treasury for its commitment and support of the Government of Puerto Rico in the implementation of national and global standards to prevent, detect and combat the aforementioned practices.




Puerto Rico, U.S. Treasury reject European Commission list of money laundering risk jurisdictions

Gov. Ricardo Rosselló and U.S. Treasury Secretary Steven Mnuchin (Courtesy)

SAN JUAN – The executive director of the Puerto Rico Fiscal Agency and Financial Advisory Authority (Aafaf by its Spanish acronym), Christian Sobrino Vega, and Puerto Rico Financial Institutions (OCIF by its Spanish acronym) Commissioner George Joyner, joined the U.S. Department of the Treasury Wednesday to reject the European Commission’s determination to include several U.S. territories in the list of high-risk jurisdictions for money laundering.

The list published by the European Commission included American Samoa, Guam, Puerto Rico and the U.S. Virgin Islands.

The Aafaf and OCIF officials said they collaborate with Treasury’s Office of Terrorist Financing and Financial Crimes (TFFC) and that the government of Puerto Rico has a “robust legal and regulatory framework to prevent, detect and combat said practice.”

For its part, the U.S. Treasury said in a statement that it “has significant concerns about the substance of the list and the flawed process by which it was developed.”

The agency explained that the Financial Action Task Force (FATF) is the entity in charge of developing global standards to combat money laundering, and terrorism and proliferation financing.

“The FATF, which includes the United States, the European Commission, 15 EU member states, and 20 other jurisdictions, already develops a list of high-risk jurisdictions with AML/CFT deficiencies as part of a careful and comprehensive process,” Treasury wrote.

It then said the commission’s process contrasts with the FATF’s in that it “did not include a sufficiently in-depth review,” provided the “affected jurisdictions with only a cursory basis for its determination,” notified these they would be included on the list “only days before issuance” and “failed to provide” them ” with any meaningful opportunity to challenge their inclusion or otherwise address issues identified by the Commission.”

Treasury rejected the inclusion of the territories on the list, saying “the commitments and actions of the United States in implementing the FATF standards extend to all U.S. territories, and that the same Anti-Money Laundering and Countering the Financing of Terror (AML/CFT) legal framework that applies to the continental United States also generally applies to U.S. territories.”

The agency concluded its statement saying it “does not expect U.S. financial institutions to take the European Commission’s list into account in their AML/CFT policies and procedures.”




Odds of military coup in Venezuela rise every day Maduro stays in office

By Clayton Besaw, University of Central Florida

It would be reasonable to expect the worst for Nicolás Maduro, Venezuela’s embattled president.

Two weeks after Maduro’s re-inauguration, opposition leader Juan Gauidó has declared himself the country’s rightful president. The power struggle follows a failed military mutiny against Maduro, whose easy re-election in May 2018 during an economic, political and humanitarian crisis has lead many to say Venezuela is a dictatorship.

Analysts worldwide are already debating whether a coup against Maduro – with or without U.S. backing – would be good or bad for Venezuelan democracy.

As a political risk analyst, it is my job to predict when leaders will be overthrown. Surprisingly, the coup forecaster I use, CoupCast, shows Maduro hanging on – at least for now.

Why won’t Maduro be overthrown soon?

Using historic data on the conditions behind every coup and coup attempt since 1950, CoupCast has identified six factors that can suggest a leader is at imminent risk of overthrow.

  1. Tenure of current leader – Longer reign equals higher coup risk.
  2. How long regime has been in power – Young regimes are at most risk of a coup.
  3. Time since last coup attempt – The longer a country goes without a coup, the less its risk of a leader being overthrown.
  4. Incumbent electoral defeat – Recent electoral defeats increase risk. So do long periods of incumbent victories.
  5. Relative precipitation – Extreme drought and excessive rainfall both raise coup risk because they can disrupt agricultural and market dynamics.
  6. Gross domestic product (GDP) per person – This measure of wealth distribution can provide clues into whether a leader can buy off potential rivals within the military.

Beyond Venezuela’s economic crisis, the Maduro regime does not stand out on any CoupCast factors.

Venezuela’s GDP per person is relatively high compared to other countries that have seen coups.
Rulers, Elections, and Irregular Governance Dataset (REIGN)

Maduro has been in office since 2013 – not long enough to be high-risk. Likelihood of a coup begins to rise after 15 years, on average.

The current Socialist Party regime, which began with Hugo Chávez in 1999, has also matured enough to avoid the initial period of vulnerability that young regimes face.

The last coup attempt in Venezuela was a failed plot against Chávez in 2002, a healthy 17-year buffer. The average lapse between coups is five years.

Venezuela’s Socialist regime has not lost a presidential election since Chávez first won, in 1998, which also bodes well for Maduro.

Finally, in 2019, Venezuela is not expected to have droughts, floods or other weather that is out of the norm.

Taken together, these factors do not suggest an imminent coup against Maduro.

Rising coup risk

However, Venezuela’s risk of coup increases the longer Maduro stays in power, as CoupCast’s trove of historic data shows.

Venezuela’s coup risk was highest following the attempted overthrow of Hugo Chávez in 2002. But it rises the longer Maduro stays in power.
Rulers, Elections, and Irregular Governance Dataset (REIGN)

Maduro’s biggest vulnerability is the prospect of further economic decline. Venezuela’s oil-fueled government is going bankrupt due to declining petroleum production, U.S. and EU sanctions and seized assets. Eventually, Maduro’s strategy of paying the military brass for its loyalty will be unsustainable.

Maduro’s position becomes especially precarious over time if he continues to stand for election. Authoritarians who hold elections are at higher risk of being deposed – especially if they lose and stick around anyway. Venezuela’s coup risk increases the longer Maduro continues to “win” elections as well.

However, even the most powerful forecasting models cannot account for everything.

Venezuela’s deep economic crisis, for example, is somewhat misleading. Citizens are hurting badly, but the Maduro government still has enough funds to offer military leaders governmental appointments and economic kickbacks. That make a serious plot against him less likely.

Russia, China, and Turkey have also expressed support for the regime – potentially even military backing – likely depressing coup risk further.

Guaidó’s challenge really hurts Maduro

The recent power struggle most similar to what’s happening in Venezuela occurred in Zimbabwe in 2008.

Opposition leader Morgan Tsvangirai claimed to be the legitimate winner of a flawed election against long-time President Robert Mugabe. Mugabe retaliated with a campaign of violence and intimidation to secure his victory in a dubious runoff.

Juan Guaido has declared himself president of Venezuela.
AP Photo/Rodrigo Abd

Tsvangirai’s power struggle didn’t unseat Mugabe, but it likely hurt his legitimacy internally. Mugabe was overthrown in a military coup in November 2017.

In my assessment, Guaidó’s challenge won’t result in Maduro’s immediate exit – but it will further weaken his base of support, both among the Venezuelan people and within the government.

The longer Maduro stays in power, the more likely he is to be removed by force.The Conversation

Clayton Besaw, Political Science Researcher, University of Central Florida

–This article is republished from The Conversation under a Creative Commons license. Read the original article.

The Conversation is an independent and nonprofit source of news, analysis and commentary from academic experts.




U.S. drops 4 points in corruption perception index; out of top 20

SAN JUAN – The 2018 Corruption Perceptions Index (CPI) released Tuesday “reveals the United States as a key country to watch in a global pattern of stagnating anti-corruption efforts and a worldwide crisis of democracy,” according to Transparency International, the organization that conducts the research in its efforts against corruption.

With a score of 71, the United States dropped four points since last year. This marks the first time since 2011 that it falls outside of the top 20 countries on the CPI.

The CPI measures public sector corruption in 180 countries and territories, “drawing on 13 expert assessments and surveys of business executives to give each country a score from zero (highly corrupt) to 100 (very clean). Five of the nine sources used to compile the score for the US showed a noteworthy drop in score,” the organization said–referring to the country’s rating by the World Economic Forum EOS, IMD World Competitiveness Yearbook, Varieties of Democracy Project, PERC Asia Risk Guide and Bertelsmann Foundation Sustainable Governance Index–adding that other sources showed no improvement.

“A four point drop in the CPI score is a red flag and comes at a time when the US is experiencing threats to its system of checks and balances, as well as an erosion of ethical norms at the highest levels of power,” said Zoe Reiter, acting representative to the United States at Transparency International. “If this trend continues, it would indicate a serious corruption problem in a country that has taken a lead on the issue globally. This is a bipartisan issue that requires a bipartisan solution.”

Transparency International’s cross-analysis–which includes data from the Democracy Index, produced by The Economist Intelligence Unit, and the Freedom in the World Index by Freedom House–reveals a link between corruption and the health of democracies.

“Full democracies score an average of 75 on the CPI, with no full democracy scoring less than 50. In 2016, the United States was downgraded from a full to a flawed democracy in the Democracy Index, a gradual downward trend which started in 2008. In 2018, the US received its lowest Freedom in the World Index score for political rights since 1972, when measurement began.

Denmark and New Zealand top the index with 88 and 87 points, respectively. Somalia, Syria and South Sudan are at the bottom of the index, with 10, 13 and 13 points respectively.

Overall, more than two-thirds of countries score below 50 in the 2018 CPI, with an average score of only 43. Since 2012, only 20 countries have significantly improved their scores, including Côte D’Ivoire, and 16 have significantly declined, including, Australia, Chile and Malta.

“Corruption chips away at democracy to produce a vicious cycle, where corruption undermines democratic institutions, and in turn, weak institutions are less able to control corruption,” said Patricia Moreira, managing director of Transparency International. “Around the world, we need to do more to strengthen checks and balances and protect citizens’ rights, and the US is no exception.”

In 2017, a public opinion survey published by Transparency International showed that the U.S. government is losing citizens’ trust. According to the survey, nearly six in 10 Americans believed that the United States was more corrupt than the previous year, with the White House considered its most corrupt institution.

Transparency International emphasized the following as essential pre-requisites for fighting corruption:

  • A robust system of checks and balances on political power.
  • Effective controls against conflicts of interest and private influence over government decisions.
  • Citizen participation in politics and protections against voter suppression and other forms of disenfranchisement.
  • A free, diverse and pluralistic media with regular and equal access to those in power.

To view the results, visit: www.transparency.org/cpi2018




Financial Action Task Force calls for ‘urgent’ regulation of virtual assets

SAN JUAN – The Financial Action Task Force (FATF), an intergovernmental organization founded on the initiative of the G7 economies–Canada, France, Germany, Italy, Japan, the United Kingdom and the United States–to tackle money laundering, said Friday that although “virtual assets and related financial services have the potential to spur financial innovation and efficiency and improve financial inclusion,” they are creating “opportunities for criminals and terrorists to launder their proceeds or finance their illicit activities.”

The FATF, which was holding its plenary meeting in Paris, had already issued guidance “on a risk-based approach” to virtual currencies in 2015, but stressed Friday that there “is an urgent need for all countries to take coordinated action to prevent the use of virtual assets for crime and terrorism.”

The FATF specified Friday that the Risk-based Approach requires jurisdictions to identify illicit financing risks, such as money laundering and financing of terrorism, and amended the FATF Recommendations and Glossary to “clarify” how guidance applies in the case of financial activities involving virtual assets.

The glossary now includes new definitions of “virtual assets” and “virtual asset service providers”–such as exchanges, certain types of wallet providers and providers of financial services for Initial Coin Offerings (ICOs)–to clarify how Anti-money Laundering/Combating the Financing of Terrorism (AML/CFT) requirements apply in the context of virtual assets.

“The changes make clear that jurisdictions should ensure that virtual asset service providers are subject to AML/CFT regulations, for example conducting customer due diligence including ongoing monitoring, record-keeping, and reporting of suspicious transactions. They should be licensed or registered and subject to monitoring to ensure compliance,” the organization said in a release.

The FATF said countries that do not monitor illicit activities will be put on a “gray list.”

See the organization’s 2015 guidance on virtual currencies here. 

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