The arrest of Barakat, a major financial operator of group, was made possible thanks to the partnership of Argentina, Paraguay and Brazil.
In January 2018 the Trump Administration reconstituted a research unit on Hezbollah and in October labeled group a transnational criminal organization
The arrival to the presidency of Abdo Benítez in Asunción and Jair Bolsonaro in Brasilia has activated action against drug trafficking, money laundering and smuggling in the country. area
Assad Ahmad Barakat and some 15 members of his clan were arrested throughout 2018, in a "significant milestone" in the action against Hezbollah in Latin America
Friendship Bridge, linking the Paraguayan city of Ciudad del Este with the Brazilian city of Foz de Iguazú [BienvenidoaParaguay.com].
report SRA 2019 / Lisa Cubías[PDF Version].
Pressure on Hezbollah has increased significantly in the Western Hemisphere in the last year. Both the United States and the countries of the Triple Border - border area between Argentina, Brazil and Paraguay, which shelters a dense network of financing of the organization - have taken some measures that, with different Degree of governmental commitment, have led to the arrest of several people and the disruption of their money laundering Structures .
In the case of the US, the change in the Administration entailed a change in policy. Some testimonies of Obama-era officials have suggested that the previous presidency had a soft attention regarding the activities in the continent by Hezbollah, a Lebanese Shiite organization with a double political and military facet. The purpose of this would have been to avoid inconveniences in the denuclearization negotiation with Iran, one of the most notorious pillars of support of the organization. Thus, the Obama Administration would have hindered efforts to implement the "project Cassandra", developed by the DEA, the US anti-narcotics agency, to discover the sources of financing that Hezbollah obtains in Latin America for its illicit activities.
The "project Cassandra", widely exposed by Politico in late 2017, bore some fruit despite that alleged interference, denied by other Obama Administration officials. In March 2017, Kassim Tajideen, a major financier of the terrorist organization, was captured and pleaded guilty in December 2018. In June 2017, Paraguayan national, Ali Issa Chamas, was extradited to the U.S. to face charges of conspiracy to traffic drugs.
The change in the White House, in any case, led to the fact that after the dismantling of some research teams that had taken place the Trump Administration reinstated the effort against Hezbollah. Thus, in January 2018 the department of Justice announced the creation of a specific research unit called the Hezbollah Financing and Narcoterrorism Team, and later, in October, it designated Hezbollah as a transnational criminal organization, considering its drug trafficking and money laundering activities, beyond the label of terrorist organization that the US already granted it.
For its part, throughout 2018 the Treasury department proceeded with the inclusion of 31 individuals and entities related to Hezbollah on its sanctions list, including Lebanese financier Adham Tabaja, while the State department designated Jawad Nasrallah, son of Hezbollah leader Hassan Nasrallah, as a terrorist in November and imposed sanctions on several Iraqi members of the organization.
These actions have basically affected operatives residing in the Middle East, but have had little impact on Hezbollah's structure in the Triple Frontier or in Venezuela, places indicated by the Administration as sites of implantation of that organization. Thus, the Under Secretary of the Treasury for Terrorist Financing, Marshall Billingslea, spoke in late October of a "deep and substantial footprint" of Hezbollah in the Western Hemisphere, with a "very robust presence" in the TBA, while Secretary of State Mike Pompeo has repeatedly stressed the relationship between the regime of Nicolás Maduro and Hezbollah, stating in February 2019 that in Venezuela there are "active cells" of that group.
Action in the Triple Frontier
However, the efforts of both the Trump Administration and the governments of Argentina, Brazil and Paraguay, to different extents, led to a major operation in 2018 in the TBA, the most significant in a long time: the arrest of Assad Ahmad Barakat, considered one of Hezbollah's main operatives in the area, who had already been sanctioned by the U.S. Treasury in 2004. For expert Joseph Humire, this constituted "a significant milestone in the regional effort against terrorism and transnational crimes practiced by Hezbollah in Latin America".
According to experts Emanuelle Ottolenghi and José Luis Stein, three factors have led to this new emphasis on the risk posed by Hezbollah. Firstly, there are indications that the funds that the group obtains from its financing networks in Latin America have grown notably, both because its needs have increased and because US sanctions on Iran may be restricting the economic support provided by the Iranian regime. Second, Washington is acting on the increased use of its financial system by the amounts generated for Hezbollah in Latin America. And thirdly, the greater reaction of Brasilia, Asunción and Paraguay is due to the changes of government that have taken place: April 2018 Abdo Benítez was elected president of Paraguay and in October Jair Bolsonaro won the Brazilian elections (previously Mauricio Macri had already replaced Cristina Fernández de Kirchner in the Casa Rosada).
The beginnings of Hezbollah in Latin America are directly related to the civil war in Lebanon, which in the 1980s caused a wave of migration to the American continent, particularly South America and especially in areas of easy trade, such as the Triple Border, where one of the largest free trade zones of the continent is located. Family and origin connections were used by group, through infiltrated elements, to develop recruitment, fundraising and money laundering activities.
It was not until 1994, however, that Hezbollah's presence in Latin America became notorious. That year saw the attack on the headquarters of the association Mutual Israelita Argentina (AMIA) in Buenos Aires, in which 85 people were killed. Although it was initially claimed by an unknown Islamic group , investigations soon led to the Triple Frontier and pointed to Hezbollah. It was also then suspected that this organization may have been behind the attack two years earlier against the Israeli embassy in the Argentine capital, where 22 people were killed. Everything indicates that in both cases the Triple Border was used for the logistics of the attacks and as a shelter for the perpetrators.
Hence, the latest security operations carried out in that area are of particular importance. At the request of the US, Paraguayan police arrested in May 2018 Nader Mohamad Fahrat and a month later Mahmoud Ali Barakat, both for drug trafficking and money laundering, in what would be a year especially focused on the clan led by Assad Ahmad Barakat. In July, the Financial Information Unit of Argentina froze the assets of 14 Lebanese (eleven with residency program in Brazil and three in Paraguay), all of them belonging to the clan. That network would have laundered money and evaded foreign currency to the value of US$10 million in a casino in the Argentine border city of Puerto Iguazú. In August, Paraguay's Public Prosecutor's Office issued an arrest warrant for the head of the clan, alleging the use of a false Paraguayan passport. Assad Ahmad Barakat was arrested in September by Brazilian police. In Paraguay and Argentina members of the clan were arrested, tried and convicted for crimes of money laundering, smuggling, product evasion and drug trafficking.
The struggle for power has already started in the Islamic Republic in the midst of US sanctions and ahead a new electoral cycle.
▲ Ayatollah Ali Khamenei speaking to Iranian Air Force personnel, in 2016 [Wikipedia].
ANALYSIS / Rossina Funes and Maeve Gladin
The failing health of Supreme Leader Sayyid Ali Hosseini Khamenei, 89, brings into question the political aftermath of his approaching death or possible step-down. Khamenei's health has been a point of query since 2007, when he temporarily disappeared from the public eye. News later came out that he had a routine procedure which had no need to cause any suspicions in regards to his health. However, the question remains as to whether his well-being is a fantasy or a reality. Regardless of the truth of his health, many suspect that he has been suffering prostate cancer all this time. Khamenei is 89 years old -he turns 80 in July- and the odds of him continuing as active Supreme Leader are slim to none. His death or resignation will not only reshape but could also greatly polarize the successive politics at play and create more instability for Iran.
The next possible successor must meet certain requirements in order to be within the bounds of possible appointees. This political figure must comply and follow Khamenei's revolutionary ideology by being anti-Western, mainly anti-American. The prospective leader would also need to meet religious statues and adherence to clerical rule. Regardless of who that cleric may be, Iran is likely to be ruled by another religious figure who is far less powerful than Khamenei and more beholden to the Islamic Revolutionary Guard Corps (IRGC). Additionally, Khamenei's successor should be young enough to undermine the current opposition to clerical rule prevalent among many of Iran's youth, which accounts for the majority of Iran's population.
In analyzing who will head Iranian politics, two streams have been identified. These are constrained by whether the current Supreme Leader Khamenei appoints his successor or not, and within that there are best and worst case scenarios.
Mahmoud Hashemi Shahroudi
Mahmoud Hashemi Shahroudi had been mentioned as the foremost contender to stand in lieu of Iranian Supreme Leader Khamenei. Shahroudi was a Khamenei loyalist who rose to the highest ranks of the Islamic Republic's political clerical elite under the supreme leader's patronage and was considered his most likely successor. A former judiciary chief, Shahroudi was, like his patron, a staunch defender of the Islamic Revolution and its founding principle, velayat-e-faqih (rule of the jurisprudence). Iran's domestic unrest and regime longevity, progressively aroused by impromptu protests around the country over the past year, is contingent on the political class collectively agreeing on a supreme leader competent of building consensus and balancing competing interests. Shahroudi's exceptional faculty to bridge the separated Iranian political and clerical establishment was the reason his name was frequently highlighted as Khamenei's eventual successor. Also, he was both theologically and managerially qualified and among the few relatively nonelderly clerics viewed as politically trustworthy by Iran's ruling establishment. However, he passed away in late December 2018, opening once again the question of who was most likely to take Khamenei's place as Supreme Leader of Iran.
However, even with Shahroudi's early death, there are still a few possibilities. One is Sadeq Larijani, the head of the judiciary, who, like Shahroudi, is Iraqi born. Another prospect is Ebrahim Raisi, a former 2017 presidential candidate and the custodian of the holiest shrine in Iran, Imam Reza. Raisi is a student and loyalist of Khamenei, whereas Larijani, also a hard-liner, is more independent.
1. MOST LIKELY SCENARIO, REGARDLESS OF APPOINTMENT
1.1 Ebrahim Raisi
In a more likely scenario, Ebrahim Raisi would rise as Iran's next Supreme Leader. He meets the aforementioned requirements with regards to the religious status and the revolutionary ideology. Fifty-eight-years-old, Raisi is a student and loyal follower of the current Supreme Leader Ayatollah Khamenei. Like his teacher, he is from Mashhad and belongs to its famous seminary. He is married to the daughter of Ayatollah Alamolhoda, a hardline cleric who serves as Khamenei's representative of in the eastern Razavi Khorasan province, home of the Imam Reza shrine.
Together with his various senior judicial positions, in 2016 Raisi was appointed the chairman of Astan Quds Razavi, the wealthy and influential charitable foundation which manages the Imam Reza shrine. Through this appointment, Raisi developed a very close relationship with the Islamic Revolutionary Guard Corps (IRGC), which is a known ideological and economic partner of the foundation. In 2017, he moved into the political sphere by running for president, stating it was his "religious and revolutionary responsibility". He managed to secure a respectable 38 percent of the vote; however, his contender, Rouhani, won with 57 percent of the vote. At first, this outcome was perceived as an indicator of Raisi's relative unpopularity, but he has proven his detractors wrong. After his electoral defeat, he remained in the public eye and became an even more prominent political figure by criticizing Rouhani's policies and pushing for hard-line policies in both domestic and foreign affairs. Also, given to Astan Quds Foundation's extensive budget, Raisi has been able to secure alliances with other clerics and build a broad network that has the ability to mobilize advocates countrywide.
Once he takes on the role of Supreme Leader, he will continue his domestic and regional policies. On the domestic front, he will further Iran's Islamisation and regionally he will push to strengthen the "axis of resistance", which is the anti-Western and anti-Israeli alliance between Iran, Syria, Hezbollah, Shia Iraq and Hamas. Nevertheless, if this happens, Iran would live on under the leadership of yet another hardliner and the political scene would not change much. Regardless of who succeeds Khamenei, a political crisis is assured during this transition, triggered by a cycle of arbitrary rule, chaos, violence and social unrest in Iran. It will be a period of uncertainty given that a great share of the population seems unsatisfied with the clerical establishment, which was also enhanced by the current economic crisis ensued by the American sanctions.
1.2 Sadeq Larijani
Sadeq Larijani, who is fifty-eight years old, is known for his conservative politics and his closeness to the supreme guide of the Iranian regime Ali Khamenei and one of his potential successors. He is Shahroudi's successor as head of the judiciary and currently chairs the Expediency Council. Additionally, the Larijani family occupies a number of important positions in government and shares strong ties with the Supreme Leader by being among the most powerful families in Iran since Khamenei became Supreme Leader thirty years ago. Sadeq Larijani is also a member of the Guardian Council, which vetos laws and candidates for elected office for conformance to Iran's Islamic system.
Formally, the Expediency Council is an advisory body for the Supreme Leader and is intended to resolve disputes between parliament and a scrutineer body, therefore Larijani is well informed on the way Khamenei deals with governmental affairs and the domestic politics of Iran. Therefore, he meets the requirement of being aligned with Khamenei's revolutionary and anti-Western ideology, and he is also a conservative cleric, thus he complies with the religious figure requirement. Nonetheless, he is less likely to be appointed as Iran's next Supreme Leader given his poor reputation outside Iran. The U.S. sanctioned Larijani on the grounds of human rights violations, in addition to "arbitrary arrests of political prisoners, human rights defenders and minorities" which "increased markedly" since he took office, according to the EU who also sanctioned Larijani in 2012. His appointment would not be a strategic decision amidst the newly U.S. imposed sanctions and the trouble it has brought upon Iran. Nowadays, the last thing Iran wants is that the EU also turn their back to them, which would happen if Larijani rises to power. However it is still highly plausible that Larijani would be the second one on the list of prospective leaders, only preceded by Raisi.
2. LEAST LIKELY SCENARIO: SUCCESSOR NOT APPOINTED
2.1 Islamic Revolutionary Guard Corps
The IRGC's purpose is to preserve the Islamic system from foreign interference and protect from coups. As their priority is the protection of national security, the IRGC necessarily will take action once Khamenei passes away and the political sphere becomes chaotic. In carrying out their role of protecting national security, the IRGC will act as a support for the new Supreme Leader. Moreover, the IRGC will work to stabilize the unrest which will inevitably occur, regardless of who comes to power. It is our estimate that the new Supreme Leader will have been appointed by Khamenei before death, and thus the IRGC will do everything in their power to protect him. In the unlikely case that Khamenei does not appoint a successor, we believe that there are two unlikely options of ruling that could arise.
The first, and least likely, being that the IRGC takes rule. Moreover, it is highly unlikely that the IRGC takes power. This would violate the Iranian constitution and is not in the interest to rule the state. What they are interested in is having a puppet figure who will satisfy their interests. As the IRGC's main role is national security, in the event that Khamenei does not appoint a successor and the country goes into political and social turmoil, the IRGC will without a doubt step in. This military intervention will be one of transitory nature, as the IRGC does not pretend to want direct political power. Once the Supreme Leader is secured, the IRGC will go back to a relatively low profile.
In the very unlikely event that a Supreme Leader is not predetermined, the IRGC may take over the political regime of Iran, creating a military dictatorship. If this were to happen, there would certainly be protests, riots and coups. It would be very difficult for an opposition group to challenge and defeat the IRGC, but there would be attempts to overcome it. This would be a regime of temporary nature, however, the new Supreme Leader would arise from the scene that the IRGC had been protecting.
2.2 Mohsen Kadivar
In addition, political dissident and moderate cleric Mohsen Kadivar is a plausible candidate for the next Supreme Leader. Kadivar's rise to political power in Iran would be a black swan, as it is extremely unlikely, however, the possibility should not be dismissed. His election would be highly unlikely due to the fact that he is a board member critic of clerical rule and has been a public opponent of the Iranian government. He has served time in prison for speaking out in favor of democracy and liberal reform as well as publicly criticizing the Islamic political system. Moreover, he has been a university professor of Islamic religious and legal studies throughout the United States. As Kadivar goes against all requirements to become successor, he is highly unlikely to become Supreme Leader. It is also important to keep in mind that Khamenei will most likely appoint a successor, and in that scenario, he will appoint someone who meets the requirements and of course is in line with what he believes. In the rare case that Khamenei does not appoint a successor or dies before he gets the chance to, a political uprising is inevitable. The question will be whether the country uprises to the point of voting a popular leader or settling with someone who will maintain the status quo.
In the situation that Mohsen Kadivar is voted into power, the Iranian political system would change drastically. For starters, he would not call himself Supreme Leader, and would instill a democratic and liberal political system. Kadivar and other scholars which condemn supreme clerical rule are anti-despotism and advocate for its abolishment. He would most likely establish a western-style democracy and work towards stabilizing the political situation of Iran. This would take more years than he will allow himself to remain in power, however, he will probably stay active in the political sphere both domestically as well as internationally. He may be secretary of state after stepping down, and work as both a close friend and advisor of the next leader of Iran as well as work for cultivating ties with other democratic countries.
2.3 Sayyid Mojtaba Hosseini Khamenei
Khamenei's son, Sayyid Mojtaba Hosseini Khamenei is also rumored to be a possible designated successor. His religious and military experience and dedication, along with being the son of Khamenei gives strong reason to believe that he may be appointed Supreme Leader by his father. However, Mojtaba is lacking the required religious status. The requirements of commitment to the IRGC as well as anti-American ideology are not questioned, as Mojtaba has a well-known strong relationship with the Islamic Revolutionary Guard Corps. Mojtaba studied theology and is currently a professor at Qom Seminary in Iran. Nonetheless, it is unclear as to whether Mojtaba's religious and political status is enough to have him considered to be the next Supreme Leader. In the unlikely case that Khamenei names his son to be his successor, it would be possible for his son to further commit to the religious and political facets of his life and align them with the requirements of being Supreme Leader.
This scenario is highly unlikely, especially considering that in the 1979 Revolution, monarchical hereditary succession was abolished. Mojtaba has already shown loyalty to Iran when taking control of the Basij militia during the uproar of the 2009 elections to halt protests. While Mojtaba is currently not fit for the position, he is clearly capable of gaining the needed credentials to live up to the job. Despite his potential, all signs point to another candidate becoming the successor before Mojtaba.
3. PATH TO DEMOCRACY
Albeit the current regime is supposedly overturned by an uprising or new appointment by the current Supreme Leader Khamenei, it is expected that any transition to democracy or to Western-like regime will take a longer and more arduous process. If this was the case, it will be probably preceded by a turmoil analogous to the Arab Springs of 2011. However, even if there was a scream for democracy coming from the Iranian population, the probability that it ends up in success like it did in Tunisia is slim to none. Changing the president or the Supreme Leader does not mean that the regime will also change, but there are more intertwined factors that lead to a massive change in the political sphere, like it is the path to democracy in a Muslim state.
Panamanian authorities recorded the transit of 2,100 people of "interest" to Washington in 2018.
Of the 8,445 illegal migrants located in Darien (an increase of 20% in two years), 91% were from Asia and Africa, with goal mostly from reaching the US.
The US Southern Command deployed helicopters in January and February 2019 to improve surveillance capabilities in the dense jungle area.
Washington's awareness of the presence of AIS in the Central American migrant caravans last autumn prompts it to focus on the Darien Gap.
report SRA 2019 / Alex Puigrefagut[PDF version].
One of the best-known icons on the American continent is the Pan-American Highway: network of roads that runs from Argentina to the United States and even goes as far as Alaska. Between one end and the other, there is only one point where you have to get out of your car: 130 kilometres of dense vegetation between Panama and Colombia, which is truly impassable, even difficult to cross on foot. It is the Darién jungle, which is known as the Darién Gap.
Precisely because it blocks land transit between South America and Central America, it has traditionally been a area with little surveillance of migratory flows. This lack of monitoring, however, has led in recent years to a call effect of illegal immigration, mainly from Asia and Africa, which is of concern to the United States. Many of these immigrants are classified by Washington as Special Interest Aliens (SIAs), as they come from countries that, according to the US, show a tendency to promote, produce or protect criminal organisations, mostly terrorist organisations. If they emerge in Panama, they can easily use Central American migratory routes to the US, as has been denounced in the recent crisis of the caravans that departed from Honduras.
Panama' s National Migration Service recorded the passage through Darién of 8,445 illegal immigrants in 2018 (with December still to be counted), of which 5,400 were from Asia and 2,287 from Africa, which together accounted for 91 per cent of the entire contingent. This is an increase of 20 per cent in two years. Of these, 2,123 were nationals from countries the US sees as a potential terrorist threat: most were from Bangladesh (1,440), but also from Eritrea (418), Pakistan (151), Yemen (34), Somalia (32), Afghanistan (10), Iraq (10), Mauritania (10), Syria (7) and Egypt (2). At the end of 2017, the Panamanian National Border Service detained 26 Yemeni nationals with suspected links to terrorist groups.
This migration flow of people labelled as SIAs by Washington was already alerted in 2016 by the US Homeland Securitydepartment , which sent a memo to US border authorities to be vigilant.
With a focus on Darién, in June 2018 the US and Panama agreed to establish a Joint Migration Task Force (JMTF), goal to ensure more effective and comprehensive coordination to address illegal and uncontrolled immigration in the region. Security authorities from both administrations prioritised action against drug trafficking and other types of organised crime that could pose a threat to the security of both Panama and the US, as well as the region as a whole. In January and February 2019, the US Southern Command used helicopters for transports to improve surveillance facilities in Darién.
USA and Colombia
The main purpose of the JMTF created between the two States is that there can be exchange of information and resources to establish strategic border points and thus combat all subject of organised crime on the southern border of Panama, such as drug trafficking, arms trafficking, human trafficking and above all for the comprehensive monitoring of the possible penetration of illegal migrants considered CIS that may be effectively related to international terrorist organisations. In addition, for the proper functioning of the JMTF, the two governments agreed to meet bilaterally twice a year to effectively supervise and coordinate the border security groups.
Already in 2016, the governments of Panama and Colombia implemented further measures in the Binational Border Security Commission (COMBIFRON) to strengthen the fight against drug trafficking and organised crime, as well as illegal migration. These measures included the creation of two shared surveillance points between the two navies in order to control migratory flows along the border of both countries, especially in the Darién region. The area had historically been a place of influence for Colombian cartels and a rearguard for guerrilla forces, so the peace process with the FARC was an opportunity to seek greater state control.
The main problem in the Darién challenge in recent decades, according to some observers, was the passivity shown by Colombia, which gradually decreased patrolling and land control of its part of the border, leaving Panama with limited resources in the face of criminal groups, which led to a considerable increase in the illegal trafficking of drugs, arms and people along the border. This Colombian passivity was mainly due to the fact that the transit of illegal migrants did not create migratory pressure on Colombia, as the flows were towards the northern part of the continent. Although today both countries pay attention to the Darién, control of the area is still deficient, partly because maritime security is prioritised over land security, especially in the case of Colombia.
Central American caravans
The illegal passage through the Darién of people Washington considers "of interest" because they come from countries that may foment terrorism is part of international routes to the southern border of the United States. Ample evidence sample that the Darién Gap has become a strategic point for regional and US security.
The presence of individuals labelled as SIAs was at the centre of the discussion on the various migrant caravans that in autumn 2018 departed from Central America - emerging in Honduras and increasing in size as they passed through El Salvador and Guatemala - and headed for the US-Mexico border. According to the US think-tank Center for a Secure and Free Society (SFS), these caravans involved individuals from outside Central America, from the Middle East, Asia and Africa, some of whom entered the label of SIA. According to agreement with SFS, these individuals had a privileged attention in the development of the convoys, which could even indicate collusion between SIA networks and certain Central American migration channels. The same centre found that Guatemalan officials detected no less than 157 irregular migrants from other continents, at least 17 of whom were of "special interest" to the US because they came from countries such as Pakistan, Bangladesh and Eritrea.
It is difficult to establish how many people with profile SIAs actually transit through Central America to the US, as their identities are falsified in order to go unnoticed during their journey. On the other hand, the US president exaggerated the state of alarm over the large Central American caravans, because even if there were grounds for the alert, it should not be forgotten that the vast majority of Special Interest Aliens who enter the US and who are highly dangerous because of their direct connections to terrorism arrive by air and not by land. According to an explanatorystatement of the US Homeland Security department , average of ten people on the "terrorist watch list" are apprehended every day (3,700 in the last fiscal year), although few of them enter through the US-Mexico border.
After a record production of opium poppies in Mexico and overdose deaths in the US the problem has stopped growing
Less amount of heroin is reaching the US market: Mexican authorites eradicated 29,207 hectares of poppy crops in 2017, and 17,288 hectares in the first half of 2018
US President Trump signed in October 2018 the Opioid Crisis Response Act; a National Drug Control Strategy was published in January 2019.
Mexico is the main transit route into the US for fentanyl originating from China; Mexican anti-narcotics operations try to exert more control over this trade
▲ Cultivation of opium poppies (Papaver somniferum), the variety of poppies (Papaver) with the highest concentration of narcotics [DEA].
ARS 2019 Report / Marcelina Kropiwnicka[PDF version] [PDF version].
The severe opioid crisis experienced by the United States in recent years, with a record number of deaths by drug overdoses in 2017, apparently began to remit in 2018, according to the first available data. Both the efforts of the United States to confront the epidemic and of Mexico in eradicating opium poppy crops seem to be bearing fruit.
The dramatic increase in opium cultivation and heroin production in Mexico in the last years triggered drug consumption in the US. Besides, Mexico is the main route into the US for fentanyl, an opioid narcotic which is behind the US opioid epidemic as well.
After four years of sharp increase, the number of deaths in the United States due to opioid overdose rise in 2017 to 47,600, twice as many as in 2010. The main part of those deaths was due to the consumption of prescription opioids (17,029), followed by overdose deaths involving heroin (15,482). In both cases, the increase was mainly due to the use of synthetic narcotics, basically fentanyl, as prescription drug or mixed with heroin.
The first data referring to 2018 provided by the US health authorities seem to reflect a stabilization in the number of deaths due to opioid overdoses, which would at least indicate that the problem has stopped growing. Along with the efforts of the US administration to put in place a stricter regulation for the prescription of certain medicines, especially affecting synthetic opiates, there is a greater eradication of illicit crops in Mexico, with special emphasis on the cultivation of opioid poppies.
In 2017 the Mexican authorities proceeded to eradicate 29,207 hectares of this crop, thus limiting the heroin that in 2018 could reach the US domestic market. In 2018 eradication accelerated: in the first half of the year, the crop of 17,288 hectares was eliminated. This is a progress highlighted by the latest International Narcotics Control Strategy Report (INCSR), published in Mach 2019 by the US Department of State.
Illicit heroin and fentanyl have been infecting US neighborhoods for years. Initially, the source for almost all heroin found in the US was from Southern Asia. Over the past few decades, however, the trade for heroin has changed drastically. Most of the heroin found in US communities comes from South America, and namely Mexico. This has been fueled by a number of factors, including increased production and trafficking by criminal organizations. These current trends in drug trafficking lead to opioid abuse, and represent a considerable shift in outcomes. This has obliged the governments in both countries to instill and coordinate new law enforcement responses.
The United States is home to the largest heroin market in the Americas. Created from the milky sap scraped from the seedpod of an opium poppy, heroin can be transformed into multiple forms. These include powder, viscous tar, pills, a rock-like black substance and more. In addition to this, the substance has different degrees of purity, with white powder heroin being the purest and black tar-like heroin being the most impure. Heroin can also be administered through a number of means, but most commonly is smoked, injected or snorted.
According to the United Nations Office on Drugs and Crime (UNODC), most of the heroin trafficked into the US comes from Mexico. Along with this, Mexican poppy cultivation and heroin production have been on the rise, especially over the past decade, contributing to the ever-increasing threat to the United States. In fact, 2017 was the year Mexican poppy cultivation and heroin production reached a record high, as the Office of National Drug Control Policy of the White House reaffirmed in August 2018: poppy cultivation in Mexico rose 38 percent, from 32,000 hectares in 2016 to 44,100 hectares in 2017; it went from 685 tons to 944 tons of potential opium production, and from 81 tons to 111 tons of potential pure heroin elaboration, almost five times 2012 levels.
Evaluations carried out by the US Drug Enforcement Agency (DEA) in its October 2018 report National Drug Threat Assessment (NDTA) stated that Mexico accounts for 91 percent (by weight) of heroin found in the US. A similar figure is given by the World Drug Report (WDR) published by the UNODC in June 2018: "Analysis of heroin samples in the United States over the past decade shows the increasing predominance of Mexico (90 percent of samples analysed in 2015) as a source country of the drug". According to the INCSR, the Department of State report already mentioned, Mexico is especially focused on producing heroin, marijuana, and methamphetamine that is destined for the US; it is also a main transit route- originating from China-for another important triger of the opioid crisis in the US: fentanyl.
Fentanyl's availability is widespread and surging. While there are licit forms of the opioid, such as painkillers and anaesthetics, illicit production and trafficking of it are on the rise. The new trend is rooted toward mixing synthetic opiate fentanyl in Mexico's tarry black heroin, without the consumer's knowledge. Fentanyl is a synthetic opioid that is approximately 50 times more potent than heroin and 100 times stronger than morphine. The opioid is much cheaper when it comes to production, mainly because rather than being grown on a farm it is manufactured in a laboratory. The decreased cost for the traffickers and increased high for users signifies that drug producers have begun to cut their heroin with fentanyl.
The DEA warns that Mexican cartels present an intense threat to US neighborhoods mainly given their dominance in heroin and fentanyl exports). It also noted that a majority of the samples that were seized and analyzed involved fentanyl in its powder form. The concern arising from this is that fentanyl could be pressed into counterfeit pills, mainly because most drug abusers use prescription pain pills rather than heroin. This means that the creation of such counterfeit pills could ultimately affect a larger population of individuals.
The increase in heroin related deaths has been primarily linked to heroin being combined with fentanyl. The counterfeit pills could increase deaths due to fentanyl and white powder heroin looking alike. Consequently, users are unaware that the heroin they have purchased contains fentanyl, thus removing the user's ability to know the potency of the drug and preventing them from correctly dosing in respect to their tolerance level.
Solving the problem
The opioid epidemic suffered by the US in the last years was confronted in 2018 by the Trump administration with some special measures. In October 2018 President Trump signed the Opioid Crisis Response Act, which gave more powers to the US health authorities to monitor the situation and extended the controls on patient access to some specific drugs. In January 2019 a National Drug Control Strategy was published by the White House in order to take extra steps to protecting the public through effective drug abuse prevention, addiction treatment and use of law enforcement actions.
Apart from these new tools, the US relies on a long-standing relationship with Mexico regarding anti-narcotic matters. Both countries set up in 2008 the Merida Initiative, which allows the US to assist the Mexican authorities in different fields. It includes several measures in order to improve law enforcement operations: training and equipment to dismantle covert drug labs, cutting-edge airport security training, advanced inspection tools equipped along border crossings and checkpoints, and so forth in order to improve law enforcement operations, among others. Results have already been seen, as Mexican units trained by US officials have seized more than 300 illicit laboratories since 2015. In addition to this, canines donated by the initiative have helped detect a significant amount of illicit drugs attempting to pass the border.
Venezuela's worsening crisis reduces vigilance at sea, increases official corruption and pushes coastal villages to seek subsistence
April 2018 saw the attack with the highest death toll in recent years issue : 15 Guyanese fishermen died in Surinamese waters
Increased attacks prompted Trinidad and Tobago authorities to create an elite air unit to fight piracy
Coast-wide alert as news broke in 2018 that the previous year's incidents had risen from 27 to 71, up 167 percent
▲ Coast of Guyana, whose fishermen have been affected by increased piracy.
report SRA 2019 / Manuel Lamela[PDF Version].
The significant increase in piracy in the Atlantic waters between Colombia and Suriname, with Venezuela at the center of this criminal activity, has fueled media headlines about "the new pirates of the Caribbean".
Although far from the scale of piracy recorded in and around the Gulf of Aden between 2008 and 2012, and then in the Gulf of Guinea, the issue of attacks in these other waters increased markedly in 2017, and 2018 saw the highest issue casualty attack.
The deterioration of maritime security, which mainly harms local fishermen and some pleasure boats, from which pirates steal gasoline, engines, fish and whatever valuables they can find on board, has gone hand in hand with the worsening of the Venezuelan status and also affects neighboring countries.
Suriname and Guyana
The attack on four boats on which twenty Guyanese fishermen were fishing, which occurred between April 27-28, 2018, turned out to be the piracy incident with the highest issue death toll in recent years. Suriname authorities recovered five bodies and reported ten fishermen missing, whose bodies were possibly left at the bottom of the sea, as the perpetrators of the attack forced the crew members to throw themselves into the water with the anchor or other weights attached to their feet, from agreement with the official report. Only five occupants of the fishing boats were able to save themselves, with at least one of them freeing himself from the ballast to which he was tied, according to his own testimony. Subsequently, a thirty-man group was arrested for these events.
Despite the fact that the status is not unknown to Guyana or Suriname the increase in both issue and violence of this subject of incidents in the last year is remarkable. At the beginning of 2018, a report published by the NGO One Earth Future, within its Oceans Beyond Piracy program, indicated that the issue of attacks recorded in Latin American waters increased in 2017 from 27 in the previous year to 71, an increase of 167%. Most of them (64) occurred in territorial waters, without affecting international routes as was the case with Somali pirates or happens in the Gulf of Guinea. While on these routes the main targets were merchant ships or large fishing vessel owners, including the hijacking of vessels and crews, in the case of what is occurring mainly in the waters of Venezuela, Trinidad and Tobago, Guyana and Suriname it affects small boat owners.
Gulf of Paria, Trinidad and Tobago
Particularly thorny is status in the Gulf of Paria, located between the coasts of the Venezuelan state of Sucre and the island of Trinidad, separated by only 10 nautical miles at their closest point. The geographical peculiarity of the area is a perfect scenario for illicit activities. The area was already known for the existence of several gangs dedicated to smuggling and trafficking of basic necessities, such as diapers and other items in high demand among the Venezuelan population. Given the shortage suffered by Venezuela, this is a relief for the demand of certain products and injects dollars to the already large Economics submerged. To the ineffectiveness and passivity of the governments of both countries when it comes to combating piracy, as reflected in their failed bilateral negotiations in 2017, is joined by a more than presumable cooperative relationship between officials and criminal gangs, as pointed out by the Venezuelan NGO association civil de Gente de Mar.
Other areas of Trinidad and Tobago's territorial waters, in addition to those of the Gulf of Paria, are affected by piracy, which is contributed to by local gangs fed by the arrival of Venezuelans who find it difficult to find a job employment. In the last few years some 40,000 Venezuelans have migrated to the neighboring country, destabilizing the already precarious working conditions of Trinidadian society. With a population of just 1.3 million, the archipelago has a relatively high crime rate, which in 2018 manifested itself in the commission of close to 500 murders. These figures are starting to hurt tourism, which is one of the main economic assets. Trinidad and Tobago is at risk of being perceived as a successor to the infamous Tortuga Island, a haven for 17th century Caribbean pirates.
Faced with this status, the island authorities announced at the end of January 2019 the creation of an elite air unit within the Police to act against illegal migration, piracy, kidnapping and smuggling of weapons and drugs. The advertisement came immediately after six fishermen from Trinidad were kidnapped and taken to Venezuela by their kidnappers, who demanded a ransom of $200,000.
Venezuela: Sucre and Anzoátegui
The economic and social crisis in Venezuela is one of the main causes of the increase in piracy. This is carried out especially from the state of Sucre, which has already been mentioned, and from the coastal state of Anzoátegui.
The criminals operating in the area can be divided into two types. On the one hand, there are well-trained, well-armed attackers who are part of a criminal organization and related to the drug trafficking that controls the Paria peninsula (the eastern end of Sucre). Specifically, there are two different criminal gangs fighting for control of the area. These drug trafficking groups are based in the towns of San Juan de Unare and San Juan de las Galdonas, in the municipality of Arismendi. Through violence and extortion, they have managed to take over the most important maritime routes, driving away all fishermen who might witness their actions. Their activity is mainly focused on drug and arms trafficking. written request Regarding the former, the merchandise is obtained from Colombia and after crossing Venezuela is shipped to the coasts of Trinidad and Tobago to be transported to the European market, sometimes with a stopover in West Africa. As for the arms, the shipments are obtained in Venezuela itself, coming from theft and smuggling (corruption and lack of security also affect the national factories that produce armament; in 2019 it is foreseen the entrance operation of a factory with capacity to produce 25,000 AK 103 rifles per year).
On the other hand, piracy activity is also carried out by simple thugs, of a lesser criminal profile and with less equipment and resources. Despite this, they are the ones that create the greatest alarm, given their proliferation among a population with hardly any sources of income and coordinates of action that are less specific than those of organized crime, which makes their attacks more unpredictable.
Chavista mismanagement in the fishing industry is another of the main factors that have generated this increase of criminals coming from the local population, mostly dedicated to fishing. With the arrival of Hugo Chavez to power in 1999, a great process of nationalization of this sector was carried out, with the expropriation of shipyards, boats, ports... Following this process of reforms and further strengthening its relationship with Cuba, in 2008 a binational public business called business Joint Socialist Joint Industrial Fisheries of the Bolivarian Alliance (PESCALBA) was created with the goal to make the product more accessible to the social strata with less purchasing power. All this contributed to the fact that between Chávez's ascension to the presidency and 2017, the catch decreased by 60%, with a flight of ships to other countries, such as Panama or Ecuador, the cessation of activity of processing plants, the mooring of ships due to lack of maintenance and the increase of unemployment. As a result, the state of Sucre has result with a broken society, with no means of subsistence, which finds in crime its only way to survive.
[Francis Fukuyama, Identity. The demand for dignity and the politics of resentment. Deusto, Barcelona, 2019. 208 p.]
review / Emili J. Blasco
The democratic deterioration we are seeing in the world today is generating a literature of its own, like that which, on the opposite phenomenon, arose with the democratic springtime experienced after the fall of the Berlin Wall (what Huntington called the third wave of democratization). In that moment of optimism, Francis Fukuyama popularized the idea of the "end of history" -democracy as the final written request in the evolution of human institutions-; today, in this democratic autumn, Fukuyama warns in a new essay of the risk that identity, stripped of liberal safeguards, will phagocytize other values if it remains in the hands of resurgent populist nationalism.
The warning is not new. Huntington, who in 1996 published his Clash of Civilizations, highlighted the driving power of nationalism, was not moved by it; then, in recent years, various authors have referred to the recession of the democratic tide. Fukuyama quotation the expression of Larry Diamond "democratic recession", noting that compared to the leap made between 1970 and the beginning of the new millennium (from 35 to 120 electoral democracies), today the issue has decreased.
The last famous theorist of the International Office to write about this was John Mearsheimer, who in The Great Delusion notes how the world today realizes the naivety of thinking that the liberal architecture was going to dominate the domestic and foreign policy of nations. For Mearsheimer, nationalism is once again emerging strongly as an alternative. This had already been observed just after the decomposition of the Eastern Bloc and the USSR, with the Balkan war as a paradigmatic example, but the democratization of Central and Eastern Europe and its rapid entry into NATO led todelusion.
It has been the personality and policies of the current inhabitant of the White House that has put some American thinkers, including Fukuyama, on alert. "This book would not have been written if Donald J. Trump had not been elected president in November 2016," warns the Stanford University professor, director of his Center on Democracy, development and the Rule of Law. In his view, Trump "is both a product and a contributor to democratic decline" and is an exponent of the broader phenomenon of populist nationalism.
Fukuyama defines populism in terms of its leaders: "Populist leaders seek to use the legitimacy conferred by democratic elections to consolidate their power. They claim a direct and charismatic connection with the people, who are often defined in narrow ethnic terms that exclude important parts of the population. They dislike institutions and seek to undermine the checks and balances that limit a leader's power staff in a modern liberal democracy: courts, parliament, independent media and a non-partisan bureaucracy."
It is probably unfair to hold against Fukuyama some conclusions of The End of History and the Last Man (1992), a book often misinterpreted and taken out of his theoretical core topic . The author has then further concretized his thinking on the institutional development of social organization, especially in his titles Origins of Political Order (2011) and Political Order and Political Decay: From the Industrial Revolution to the Present Day (2014). Already in the latter he pointed to the risk of regression, particularly in view of the polarization and lack of consensus in American politics.
In Identity, Fukuyama considers that non-ethnic nationalism has been a positive force in societies whenever it has been based on the construction of identities around liberal and democratic political values (he gives the example of India, France, Canada and the United States). This is because identity, which facilitates a sense of community and belonging, can contribute to six functions: physical security, quality of government, promotion of economic development , increase in the radius of trust, maintenance of social protection that mitigates economic inequalities, and facilitation of liberal democracy itself.
However -and this may be the book's intended warning-, at a time of recession of liberal and democratic values, these are going to accompany the identity phenomenon less and less, so that in many cases it may change from integrating to excluding.
The Belgian city, the world's capital of diamonds, has applied more regulations, sanctions and scrutiny on the industry, but still there are some bad practices
▲ The diamond industry has its main world centre in the Belgian city of Antwerp
ANALYSIS / Jokin de Carlos Sola
The diamond trade moves hundreds of millions of euros every year around the globe. Most of them come from third world countries where the diamonds are extracted by very hard means. Even today, diamonds coming from conflict zones and used to finance conflicts and violence are a significant part of the market. Nowadays the production is mainly sold in cities of the United States and Europe and most of those diamonds in some way or another end up passing through the city of Antwerp in Belgium, showing that the Dutch and Belgians still have certain control over the industry.
This text will explore the origins of the city of Antwerp as a centre in the diamond market and of the control by Dutch and Belgians of this particular business; then it will analyse this industry in the new globalised era, and finally explain the relation of the city of Antwerp and the trade of blood diamonds.
Low Lands, a land of diamonds
Until the 19th century most diamonds came to Europe from India through the ports of Bruges, Antwerp and Amsterdam. The origins of the Low Countries as a centre of diamond craft and trade comes from the 15th century. In 1475 a Flemish jeweller, named Lodewyck van Bercken, invented the scaif, a polishing wheel infused with diamond dust and olive oil. This made easier the cutting of a diamond and revolutionised the industry. Bercken was a protégée of Duke Charles de Bold and his techniques were spread all around the Low Countries. For the next years Antwerp and Amsterdam became big competitors in the diamond trade.
In the 17th century Amsterdam was the most important city in Europe concerning diamonds. Because of the religious tolerance of the Netherlands, many Sephardic Jews established themselves in the city moving from Antwerp. There they had acquired knowledge working with diamond due to the guild-system, for the only industry that they were allowed to work in was the diamond industry.
In 1725 diamonds were discovered in Brazil and most of them went through Amsterdam. During the 19th century over 90% of rough diamonds sold in Europe passed through the Dutch city. Due to the colonial power of the Netherlands, the Dutch diamond trade extended over the world, especially to New Amsterdam (New York) and Cape Town, which would become vital instructions of the international diamond trade in the 20th and the 21st century. However, after the mines in Brazil started to dry up and the power of the Netherlands began to fade Amsterdam started to lose importance in favour of Antwerp, its biggest rival on the diamond industry, also a culturally Dutch city that would become the diamond's capital of the world. During its golden age Amsterdam developed a high-quality craft industry, but Antwerp managed to be as effective and cheaper as well as more permissive regarding taxes.
In 1866 diamonds were discovered in South Africa, in the Transvaal region, an area mainly populated by Dutch settlers. At the same time the British magnate Cecil Rhodes created the diamond company De Beers, based in Johannesburg. Massive amounts of rough diamonds started then to arrive to Europe, through Cape Town and Antwerp.
By the beginning of the 20th century De Beers controlled over 90% of the diamond industry in the world. In 1927 the company passed from the hands of Cecil Rhodes to the ones of Ernst Oppenheimer, a white South African entrepreneur, whose family still controls the diamond trade around the world.
During the Second World War most Jews from both Amsterdam and Antwerp were either forced to flee or were sent to extermination camps. This had hard consequences on an industry that was mainly controlled by the Jewish community. After the war, Antwerp quickly rebuilt its diamond business.
In 1948, De Beers established a new marketing strategy: it presented diamonds as a symbol of love and marriage, with the motto "a diamond is forever". A ring with a diamond became the perfect wedding present and it was advertised extensively. This new strategy increased the demand of diamonds, especially in the United States, where not just the economic elite was buying them, but it was also the aspiration of the high-middle class and even of the middle class. As a result, De Beers experienced it biggest growth in history turning Antwerp the indisputable capital of the diamond industry.
In 1973 the Antwerp Diamond World Centre (ADWC) was established. It is a public/private corporation, founded by the Belgian government and the most important diamond companies in the city. The Diamond Office, an ADWC's subsidiary, facilitates the import and export of diamonds in and out of Antwerp.
Antwerp's diamond industry
The Antwerp's diamond industry is concentrated in a part of the city called the diamond district or Diamantkwartier, which covers a complete square mile. According to the ADWC, 84% of the rough diamonds and 50% of the polished ones pass through Antwerp. In 2012 the turnover of the Diamantkwartier was 54 billion euros. Over 16 billion dollars in polished diamonds pass through the district's exchanges each year. There are 380 workshops that serve 1,500 companies. There are also 3,500 brokers, merchants and diamond cutters. The main actions taken in Antwerp are both the trade of rough and cut diamonds and the cut of rough diamonds with modern machinery. They also perform other jobs like applying colour and crafting jewellery. There is even a bank consecrated to the diamond industry, the Antwerp Diamond Bank, which is owned by the KBC Bank.
Traditionally the Jewish community had almost complete control over the diamond business in Antwerp. More than 80% of Antwerp's Jewish population works in the diamond trade. In fact for many years the Yiddish was considered the main language of the diamond exchange. No business is conducted on Saturdays. However, since the late 20th century many Indian, Arminian and Lebanese dealers have increased importance in Antwerp's diamond trade.
For Belgium, the importance of Antwerp as the diamond capital of the world has been a source of economic incomes and great prestige. The diamond trade counts for 5% of Belgium's exports to the EU and 15% of its exports outside the EU; it is the 5th largest industry in the country. It also has been the reason for a lot of foreign investment.
During the last decade several other cities outside Western Europe have invested on their diamond industry, like Tel Aviv, Tokyo, Hong Kong, Chicago and several cities in South Africa. However, Antwerp still is the most important trade centre in Europe, being Amsterdam its biggest competitor.
In 2017 Antwerp traded 46 billion dollars in diamonds, with a total of 233.6 million of carats. This figures meant a slight improvement, aided by the approval of the Diamond Regime by the Belgian Parliament. This law changed the way of taxation and ended up benefiting the diamond companies of Belgium.
Diamonds and political corruption
Because of its size and the profits it generates, the diamond industry has a lot of influence in Belgian politics, especially in Flanders. It acts as a lobby in favour of specific bills and policies and tries to avoid an increase of regulations. An example of this is when in 1986 an investigation was opened on the business of Abraham Kirschen, who reportedly sold diamonds in the black market to avoid taxation. According to the average, some conservative politicians were linked to the scheme and some 170 diamond traders were investigated for evading a billion dollars in taxes through a bank account in Geneva. The case ended up implicating the second largest diamond company after De Beers, Omega Diamond, and most of the Belgian political establishment. The AWDC rapidly distanced itself from the scandal at the beginning of the controversy, which was to closed without having much negative impact in the industry.
Following this and other scandals, the Belgian government managed to impose more regulations, in order to rule a business that traditionally has shown a lack of transparency and has been prone to tax evasion. But the diamond lobby has been very active and through its political influence has scored some victories. In 2011 it achieved its main goal: the change of the Belgian criminal law.
In 2008 the biggest fraud of a diamond company was discovered by Belgian authorities. The company was Omega Diamonds, established only in 1994 by the Belgian Sylvian Goldberg. The company became the second biggest diamond company after De Beers and had for many years the monopoly of the diamond exports from Angola. An investigation started in 2006 concluded that the company had created a tax fraud scheme. Omega Diamonds imported diamonds from Angola and the Democratic Republic of Congo through Dubai into Antwerp. During the transfer, documents were manipulated allowing the company to conceal the origin of the diamonds. It ordered the shipment of diamonds purchased in Angola and the DRC to be delivered to entities located in Dubai. Upon arrival in Dubai the diamonds were repacked and exported to Antwerp. The new shipment, marked "diamonds of mixed origin", was issued with an invoice addressed to Omega Diamonds wherein the value of the diamonds was artificially increased. In so doing, the company was able to hide its additional profit from Belgian tax authorities.
In October 2008, Belgian federal police raided the premises of Antwerp-based Omega Diamonds. The raids resulted in a record seizure of 150 million dollars worth diamonds. Companies in Antwerp started to fear similar scrutiny from Belgian courts and the federal police. Because of this, the AWDC asked for political support, and it got help from some politicians, who accused law enforcement of "damaging the reputation" of the diamond industry. A bill meant to block law enforcement from confiscating illegal diamonds, written by AWDC's lawyers, was introduced by members of the most important political parties of the Belgian establishment.
In December 2010, the sponsors of the 2008 bill became members of a secretive group, "The Diamond Club", in order to push this legislation, which passed in 2011. According to the law, diamond companies investigated by fraud could avoid prison by paying a sum of money to the public prosecutor, as well as fight back the judicial backlog, and prevent, in many cases, a deeper investigation.
In application of the law, Omega Diamonds agreed in 2013 to pay a settlement of 160 million euros to avoid being prosecuted for tax evasion and money laundering, all that for a fraud that is calculated to have been of over 2 billion euros. The settlement cleared Omega Diamonds of all charges.
The law was controversial, to say the least, and it became very unpopular in Belgium, mainly because almost all parties were involved in it. In 2016 the Federal Constitutional Court of Belgium declared unconstitutional most parts of it. In 2017, the Belgian Parliament set up an inquiry commission to investigate the relation between the law of 2011 and the diamond industry. The commission stated that the blueprint of the law was written by lawyers for the AWDC, but at the moment it hasn't investigated the relations of various politicians with the diamond industry.
A blood diamond is the one that is extracted from conflict zones and used for financing wars or violent actions. They have been a very common threat to the image of the diamond industry and nowadays there is a big effort by various diamond companies of tracking the origin of the stones, in order to avoid scandals. However, during the 1980s and 1990s blood diamonds worth millions of dollars flooded from Angola and Sierra Leone to Antwerp, something that still happens today.
Diamonds have a very big value, that's common knowledge, but in fact a big reason for this value comes from a strategy started by De Beers and followed by other diamond companies. This strategy consists of acquiring the monopoly of diamonds in a certain region and putting them in the market in a way that prices will always remain high. This was firstly done by Cecil Rhodes, and the diamonds in South Africa. If all the diamonds were put in the market at the same time their price will decrease. With this the company always got a big revenue.
Before the Angolan Civil War (1975-2002) there was not much concern on what was the origin of the stones. However, during this war the UNITA group started to use the diamonds extracted in their territory to fund its war against the government. This made diamonds a reason for instability and provided violent groups with weaponry. Because of this there was a big international pressure for the ending of the trading of the Angolan diamonds in 1998, by the UN Security Council resolution 1173.
A similar situation happened in Sierra Leone with RUF group and its war against government (1991-2002). It is calculated that the RUF extracted yearly a total of 125 million dollars every year. This money was used to fund a war were the RUF committed a series of crimes such as rape, mass killings or mutilations. In the year 2000 the UN Security Council imposed sanctions on diamonds from Sierra Leone.
Even though these sanctions were harmful for both rebel movements a report written by Robert Fowler, chairman of the Security Council committee investigating violations of sanctions on Angola, informed the UN that blood diamonds were still being exported from these countries, most of them arriving to Antwerp, where they were sold in the international market.
The 2017 African Diamond Conference organised by the Antwerp Diamond World Centre [ADWC].
The Fowler Report
The Fowler report was very critical with the role of Antwerp as the end stage of all blood diamonds. "The unwillingness or inability of the diamond industry, particularly in Antwerp, to police its own ranks is a matter of special concern to the panel,'" said the report.
The report also stated that the willingness to traffic the diamonds provided by UNITA or RUF "results from the often-expressed fear that stricter regulation would simply cause traders to take their business elsewhere". It also said that he Belgian authorities had failed to establish a credible system for identifying rough diamonds coming from conflict zones, while making "no serious effort" to keep track of diamond traders known to deal with the rebels. A prominent Antwerp diamond trader trained the diamond experts who work for UNITA, the report said.
The system for concealing the bad practices consisted on transporting the diamonds to third countries that were willing to act as a bridge between the diamond exporter and Antwerp. Two examples of this are Liberia for the Sierra Leone diamonds and Rwanda for the stones from Angola. In fact, Rwanda had a key role in the war in Angola: UNITA transported diamonds to Rwanda which were bought by Antwerp diamond traders and then the money was used to buy guns from Eastern Europe that were transported to Rwanda.
The Fowler report, together with another research made by the international NGO Global Witness, also pointed De Beers to have bought Angolan blood diamonds to maintain its monopoly on diamond sells. De Beers admitted to have done this before the sanctions of the UN, but Global Witness still accuse De Beers of trading with blood diamonds even after the sanctions. According to this report the company bought blood diamonds through its huge network of buying offices in Africa and the company's cartel-like Central Selling Organization, which sets world diamond prices (although it is based in London, many of its diamond traders work in Antwerp).
This severely harmed De Beers' name. Because of this Anthony Oppenheimer, CEO of the company, stopped buying Angolan diamonds except the ones provided directly by the Angolan government. Due to the fall of prestige of diamond industry after the scandals involving blood diamonds De Beers and other diamond companies started to establish more transparent roots of diamond trading to avoid new scandals.
The Kimberly Process
After the effects of the Fowler report the Kimberly Process of Certification Scheme was established to guarantee a fair and clean trade of diamonds. Established in 2003 following a meeting in Kimberly, South Africa, and by the UN General Assembly Resolution 55/56. Belgium took an active role in the establishment of the process. The first step of these process was the system of warranties created by World Diamond Council, all these warranties were incorporated in the Kimberly Process and all its members must follow them:
-Trade only with companies that include warranty declarations on their invoices.
-Do not buy diamonds from suspect sources or unknown suppliers, or which originate in countries that have not implemented the Kimberley Process Certification Scheme.
-Not buy diamonds from any sources that, after a legally binding due process system, have been found to have violated government regulations restricting the trade in conflict diamonds.
-Do not buy diamonds in or from any region that is subject to an advisory by a governmental authority indicating that conflict diamonds are emanating from or available for sale in such region, unless diamonds have been exported from such region in compliance with the Kimberley Process Certification Scheme.
-Not knowingly buy or sell or assist others to buy or sell conflict diamonds.
-Ensure that all company employees that buy or sell diamonds within the diamond trade are well informed regarding trade resolutions and government regulations restricting the trade in conflict diamonds.
Members like the Democratic Republic of Congo have been expelled after being unable to ensure the origins of the stones. Organizations such as Global Witness have criticized the ineffectiveness of the process and its inability to end with the continuing trade of blood diamonds: "Rough and uncut diamonds can easily be smuggled over porous borders from places like the Ivory Coast and can obtain a Kimberley Process certificate from another country before being shipped to Europe". Other critics accuse the Kimberly process of making the diamond trade too complicated and too bureaucratized and therefore harming developing countries which heavily depend on the diamond trade such as Botswana or South Africa. They underscore that only 0.2% of diamonds in the industry are considered conflict diamonds and during both Angola and Sierra Leone civil war the number never increased over 15%, as it was addressed by the publication Foreign Policy.
The Belgian connection
Despite the efforts of the Kimberly Process and the Belgian government blood diamond still pass through Antwerp, mainly using companies and bank accounts in Switzerland. An example of this was when in March of 2017 Belgian authorities seized 14 million euros worth of diamonds believed to be from the Ivory Coast from a major diamond smuggling ring based in Antwerp. The investigation also led to several Geneva-based firms that used fake certificates to import raw diamonds worth 370 million euros from countries outside the Kimberley Process before selling them to Belgian traders.
Antwerp dealers routinely settle multi-million-dollar transactions in cash and rarely offer receipts, according to a study on diamonds and conflict in Sierra Leone by the NGO Partnership Africa Canada. While illegal operations have a hand in keeping the trade alive in Europe, even legitimate enterprises could be unwittingly involved.
Another case was when in 2015 the Belgian businessman Michael Desaedeleer was arrested in Spain, accused of enslavement and pillaging blood diamonds during Sierra Leone's civil war. His arrest was a "landmark" because it was the first time an individual resulted detained on international charges related to the exploitation of the war in Sierra Leone to market blood diamonds.
Recently, Zimbabwe has gained recognition as an exporter of blood diamonds and a 2017 report by Global Witness relates these diamonds with the Antwerp diamond industry. Like most of its neighbours, Zimbabwe has diamond mines in its territory. However, in 2006 in the area of Marenga the richest diamond deposits were found -the so called Marenga diamond field. Since its discovery, the extraction of these diamonds has been done either by the government or by companies related to the regime. According to Global Witness these stones are being used to strength the regime and keep the political repression. Because of that most countries and organizations consider it blood diamonds. Since its discovery, there has been an embargo of these diamonds, but the Antwerp industry has tried to make the trade flow between Zimbabwe and the city, sometimes violating the EU sanctions.
The report mentions confidential government papers that talk about deals between Belgian diamond traders with the Zimbabwean Consolidation Diamond Company (ZCDC), as well as with two other companies in Marenga: Anjin and Jinan, both related to the state-owned military company Zimbabwean Defence Industries (ZDI). Since 2008, the EU imposed sanctions on ZCDC as well as on Anjin and Jinan. However, in 2013 the EU decided to withdrew all sanctions against ZMDC following increasing pressure from state members, especially from Belgium (pressed by the AWDC). The decision was very criticised by human rights groups, and finally the sanctions against the ZDI were kept.
Since 2010 Zimbabwe has officially exported over 2.5 billion dollars in diamonds according to official figures from the Kimberley Process. According to the limited available government reporting, only around 300 million dollars can clearly been identified in public accounts.
The diamond trade is definitely part of the Belgian trade tradition and part of the Belgian economy. As a part of a country with very few natural resources, Antwerp has done around history a big effort to maintain its position as a diamond centre. Bringing money, jobs and prestige to the city. However, it has also brought corruption to the political system and has served as a place for money laundry, tax evasion and financing of violent groups in Africa. With corruption, with money, with prestige and by work and schemes, without question Antwerp is the diamond of Belgian crown.
Evolving US space strategy in the face of growing rivalry with China and Russia
The prospect of battles in space, as an extension of wars that may be fought on Earth, seeking to interfere with the capabilities provided by satellites, has led the Trump Administration to promote a specific division of the US Armed Forces dedicated to this domain, the US Space Force. Although its constitution has yet to be approved by the congress, the new Pentagon component will already have its own budget.
▲ The X-37B orbital vehicle in operations at test in 2017, at Kennedy Space [US Air Force].
article / Ane Gil
More than 1,300 active satellites encircle the globe today, providing global communications, GPS navigation, weather forecasting and planetary surveillance. The need to protect them from attack, which could seriously disrupt countries' national security, has become a priority for major powers.
Since he arrived at the White House, Donald Trump has insisted on his idea of creating a Space Force, giving it the same rank as the five existing branches of the Armed Forces (Army, Navy, Marines, Air Force, Coast Guard). Trump signed the directive for the creation of the US Space Force on 19 February, the final approval of which has yet to be given at congress. It would be the first military branch to be created in the United States since 1947, when the Air Force was launched. The Pentagon expects it to be operational by 2020.
As US Vice President Mike Pence announced almost a year ago, this new Space Force will have its own facilities, although for the time being it will draw on the support and resources of the Air Force. According to Pence, the Space Force's goal is intended to deal with alleged threats from Russia, China, North Korea and Iran in space. Although its ultimate aim is specifically to contain Russia and China, who for some years now have been developing their own methods of conquering space.
Obama-era strategy reports
The Trump Administration has called for such a military specialization in space in the face of China and Russia's skill in the same domain, which during the Obama Administration was still embryonic. However, while during Barack Obama's presidency the White House placed less emphasis on military developments in space capabilities, it also sought to promote the US presence in space.
In the 2010 National Space Policy of 2010, in a rather inclusive essay , the United States defended the right of all nations to explore space and called for all countries to be able to work together to ensure respectful space activity manager in an framework of international cooperation. The policy that was then being set looked primarily to the commercial and civilian dimension of space, where the US aspired to strengthen its leadership.
The document did, however, include a section on security. Thus, it made reference letter the need to develop and operate information systems and networks that provide national security coverage, facilitating defence and intelligence operations both in times of peace and in times of crisis and conflict. In addition, it called for the development and implementation of plans, procedures, techniques and capabilities to ensure critical national security missions, using space assets while taking advantage of non-space capabilities of allied countries or private companies.
What was presented there in a more generic way, the Obama Administration fleshed out in a subsequent strategy document, the 2011 National Security Space Strategy of 2011, in which space was presented as a vital area for US national security. The text warned that space is "increasingly congested, contested and competitive", which urged the US to try to maintain its leadership, but without neglecting the international partnership to make space a safe, stable and secure place.
The document then set out strategic objectives and approaches. Specifically, the US aimed to "provide enhanced space capabilities" in order to improve system procurement, reduce the risk of mission failure, increase launch success and system operability, and train national security professionals to support all these space activities.
Another stated objective was to "prevent and deter aggression against the space infrastructure that supports US national security", which at its core included denying adversaries the significant benefits of an attack by strengthening the resilience of their systems architecture. However, the document specified that the US retains the right to respond in self-defence if deterrence fails.
Precisely in the latter case, the strategic text called for preparing one's capabilities to "defeat attacks and operations in a degraded environment". It indicated that military and intelligence capabilities must be prepared to "combat" and defeat attacks on their space systems and support infrastructure.
China and Russia's rivalry in the Trump era
Donald Trump became US president with his motto "America First", which he has also applied to space strategy, prioritising US interests in a context of increased rivalry with Beijing and Moscow. His space policy emphasises the dynamic and cooperative interaction between the military, civilian and commercial interests, respectively, of the Pentagon, NASA and private companies interested in extra-atmospheric spaceflight.
The first national security strategy document of the Trump era is the National Security Strategy (NSS) of December 2017. National Security Strategy (NSS) of December 2017. reference letter Although report barely mentions space, the text declares China and Russia to be "rivals", giving the US an opportunity to confront the opposing interests of these countries, also outside the Earth. The NSS proclaims that the US must maintain its "leadership and freedom of action in space", and warns of the risk of "other actors" achieving the capability to attack US space assets and thus gaining an "asymmetric advantage". "Any harmful interference or attack against critical components of our space architecture that directly affects this vital US interest will be met with a deliberate response in a time, place, manner and domain of our choosing," the document warns.
Some of these military issues are further elaborated in the Pentagon's report . In the April 2018 Space Operations document, the military leadership notes that several nations are making significant advances in offensive space control capabilities, with the intention of challenging the use of space by the US and its allies by threatening their space assets. It therefore advocates the importance of off-ground operations, which have the goal purpose of securing and defending space capabilities against the aggressive activities of others.
"Our adversaries' progress in space technology," notes report, "not only threatens the space environment and our space assets, but may also deny us an advantage if we lose space superiority". To mitigate these risks and threats, the US is committed to "planning and conducting defensive and offensive operations".
The broad outlines of Trump's space policy are set out in the March 2018 National Space Strategy document. National Space Strategy of March 2018. It is a policy based on four pillars: reinforcing space architectures; strengthening deterrence and warfighting options; improving foundational capabilities, Structures and processes; and fostering enabling domestic and international environments.
Directives and budget
In addition to the security aspects already noted, the Trump Administration has also expressed a desire to "promote space commerce" by "simplifying and updating regulations for commercial space activity to strengthen competitiveness".
To oversee these activities, which open up the space business to US private companies and at the same time set a horizon for mineral exploitation of asteroids and planets, Trump revived the White House's National Space committee in June 2017, 24 years after it was disbanded. In December 2017 Trump signed Space Police Directive-1, which ordered NASA to send US astronauts to the Moon once again, and in June 2018 he signed a directive on the management of traffic in space (Space Policy Directive-3). The fourth directive is the one signed in February 2019 for the creation of the Space Force.
Trump's new policy has not been immune to criticism, as it is argued that erecting the Space Force as an additional division of the Armed Forces could weaken the resources of other divisions, putting the country at risk in the event of an attack or emergency on Earth. In fact, General James Mattis, secretary of defence during 2017 and 2018, publicly expressed some reluctance at first, although he later began to implement the president's plans.
agreement According to data provided at the recent presentation of the budgets for the next fiscal year, the Space Force could have a staff of 830 people (divided between the Headquarters, the Space Agency development and the Space Command, which will require 300 million dollars for its installation) and a budget of about 2 billion during the first five years. At the end of those five years it could have a payroll of 15,000 people.
Panama's place on the Silk Road and the break with Taiwan of new countries on area place Chinese interests on the doorstep of the United States.
U.S. alert for the Chinese management of terminals on both sides of the Panama Canal, of a possible port in El Salvador and of the space station opened in Patagonia.
Beijing maintains its support for Maduro with a new US$5 billion credit , the implementation of the Carnet de la Patria for social control and the sending of a hospital ship.
Chinese financial financial aid to Latin America exceeds $140 billion since 2005; some 150 infrastructure projects have been signed, half are underway in 2018
project Chinese port terminal at one of the mouths of the Panama Canal
report SRA 2019 / Jimena Villacorta[PDF Version].
The People's Republic of China strengthened its relationship with Latin America in 2018, especially with Central America. While its level of official lending decreased in the last two years, Beijing developed other actions in the region and especially improved its strategic position in Central America, to the concern of the United States.
Throughout 2018 two new countries ceased their diplomatic recognition of Taiwan to move to full relations with China. The Dominican Republic, a country integrated into some of the Central American agreements, did so in May, and El Salvador did so in August. Panama took the step the previous year, in June 2017 (and Costa Rica in 2007). While this leaves Taiwan still with four partners in Central America (of the 18 countries that continue to recognize Taiwan worldwide, four are in the American isthmus-Guatemala, Honduras, Nicaragua, and Belize; and four others are in the Caribbean: Haiti and three micro-states), China already has sufficient space for its logistical operations.
Panama has become an interesting goal for Beijing. At the beginning of 2018 Panama received the designation of most favored nation by China, and in December Xi Jinping made the first visit of a Chinese president to the country. In the framework of that visit, Beijing announced that there are 20 Chinese companies carrying out operations in Panamanian territory, such as the construction of maritime terminals on both sides of the interoceanic canal, of which China is the world's second largest customer (30.7% of all traffic), after the United States. There are also another 70 companies installed in the Colon Free Zone, of which China is the main provider. Panama is a fundamental piece for the purpose suggested by the Chinese authorities to extend to Latin America the maritime route of the New Silk Road, for which both countries signed a memorandum, the first for that purpose in the region.
Beijing's influence in Panama has generated suspicions in Washington. In February 2018, Admiral Kurt Tidd, head of the US Southern Command, already indicated in his appearance before the Senate the concern about the Chinese positioning in the Canal environment. In September, the US called for consultations with the chargé d'affaires of its Panamanian embassy to analyze that activity, and in October the US Secretary of State, Mike Pompeo, expressed his concern in a visit to the country. In February 2019, Admiral Craig Faller, the new head of the Southern Command, insisted before the Senate on how "particularly worrisome" is "China's effort to exercise control over infrastructures core topic associated with the Panama Canal". Faller also warned about China's construction of ports on the Latin American coast. "In the future," the admiral said, "China could use its control of deepwater ports in the Western Hemisphere to enhance its global operational position."
Precisely one of the ports that China could take control of was the subject of discussion political in El Salvador, where the government of the Farabundo Marti National Liberation Front (FMLN) promoted in July 2018 a law to designate the area around the port of La Union, in the Gulf of Fonseca, as a special economic zone. The US ambassador in El Salvador welcomed the initiative, warning that the interest shown by China towards La Unión, recognized by the Salvadoran authorities, could result in the use of the facilities as a Chinese military base.
The increase in China's activity in Latin America in 2018 was matched, as can be seen, with a parallel increase in alerts from the US. Another such signal was regarding the space tracking and observation station built and managed by China in Argentine Patagonia, to which in February the head of the Southern Command referred to in the framework of his visit to Capitol Hill. The fear is that, being managed by a business under the Chinese Army, the station could have a military use, although the Argentine government has requested Beijing's commitment that this will not happen.
Loans and Venezuela
In the financial chapter, China granted a total of 7.7 billion dollars in credits to the region in 2018, which represented a slight increase compared to 2017, after two years of decreases, although far from the amount of the exercises with the highest volume, from agreement with the China-Latin America financialdatabase of Inter-American Dialogue. Since 2005, Chinese direct investment has amounted to $141 billion, most of it coming from the development Bank of China (CDB) and almost half of it destined for Venezuela ($67.2 billion). Of the 7.7 billion granted in 2018, 5 billion corresponded to Venezuela, which thus obtained a attendance that since 2007 began it only lacked in 2008 and 2017.
If initially the investment was more aimed at the extractive industry, over time China has also been entering the infrastructure sector. Some 150 transport infrastructure projects have been signed since 2002, of which almost half had been started by 2018.
The special financial linkage with Caracas, basically in exchange for oil in the future, has led Beijing to act in defense of the government of Nicolás Maduro. In addition to denying recognition of the designation of Juan Guaidó as president in charge of the country, China denied in March 2019 the visa to the representative appointed by Guaidó in the directory of the Inter-American Bank of development (IDB), an entity that for the first time was going to hold its annual meeting on Chinese territory. This was seen as China's first intervention in American regional politics, using the growing weight of its credits and investments in various countries.
China has expressed its support to Maduro in different ways. In 2018, details of the technological financial aid provided by the Chinese telecommunications giant ZTE to develop the Carnet de la Patria promoted by the Venezuelan government, in an implementation that seeks social control, became known.
There was also support for the Chavista regime with the dispatch of a hospital ship to Venezuela in September 2018. The Peace Ark spent a week in Venezuelan waters, a month after the Pentagon announced that it was scheduling to send the Comfort, a ship with several operating rooms and other medical facilities, to Colombia to treat Venezuelans who had fled the humanitarian crisis in the neighboring country.
The positive consequences of the free trade agreement will derive more from the end of uncertainty than from the new provisions introduced.
After a year and a half of negotiations, the new treaty between the United States, Canada and Mexico (this country has named it T-MEC, the other two speak of USMCA) is still pending approval by the legislative chambers of each country. In Washington, the political discussion should begin shortly; it will be important what effects are foreseen for the US Economics and that of its two neighbors. The first programs of study disagree on some aspects, although they agree that the changes introduced in the renegotiation of the agreement that existed since 1994 will not have a special impact.
▲ signature of the U.S.-Mexico-Canada free trade agreement at framework of the G-20 in November 2018 [Shealah Craighead-White House].
article / Ramón Barba
The renegotiation of the formerly North American Free Trade Agreement (NAFTA, or NAFTA for its acronym in English) and now baptized as the Treaty of the United States, Mexico and Canada (T-MEC or, in its Anglo-Saxon version, USMCA), has been one of the main points on the Trump Administration's diary . C by the three negotiating parties at the end of 2018, now the treaty is pending ratification by the legislative chambers of each country.
Launched in 1994, the agreement had been described by Trump as "the worst trade agreement in history". From the beginning of his presidency, Trump set out to modify some aspects of agreement to reduce the large trade deficit with Mexico (some $80 billion, double the deficit the US has with Canada), and at the same time refund activity and jobs to the US Rust Belt, where the echo of his promises had been decisive for his electoral victory.
What has each country gained and what has each country lost in the renegotiation of the treaty? And, above all, what effects will it have on each country's Economics ? Will the United States improve its trade balance? Will Mexico or Canada be negatively affected by some of the modifications introduced? We will first examine how the claims of each of the partners were left at the end of the negotiations, and then we will look at the possible economic effect of the new version of the treaty in the light of two recent reports programs of study, one by an independent body of the U.S. Administration and the other by the IMF.
Tug of war
In the negotiations, which dragged on for nearly a year and a half, Mexico and Canada managed to "maintain the status quo in many important areas," but while the actual changes were modest, as analyzed by the Brookings Institution, they "went almost uniformly in the direction of what the United States wanted." "Trump's aggressive and threatening approach ," which challenged with breaking the treaty for good, "succeeded in obtaining modest concessions from his partners."
In the automotive industry core topic , the US managed to increase from 62.5% to 75% the proportion of the production of a car that must be made within the free trade area , to force 30% of the work needed to manufacture a car to have a wage of $16/hour (40% as of 2023) -a measure aimed at appeasing the US unions, since in Mexico the average wage of an automotive worker today is $4/hour-, and to set a tariff of 25% for cars coming from outside the country.
Mexico and Canada were granted their demand that an autonomous termination clause not be introduced after five years if there was no prior consensus for the renewal of the agreement, put on the table by Washington. Finally, the T-MEC will last for 16 years, renewable, with a review in the sixth year.
Justin Trudeau's government had to make some concessions to the U.S. dairy sector, but preserved what had been its main red line from the beginning: the validity of Chapter 19, concerning the settlement of disputes through independent binational arbitration.
Mexico, for its part, gained the peace of mind that comes with the survival of the agreement, avoiding future uncertainty and guaranteeing close trade relations with the large U.S. market. However, the labor conditions of Mexican workers can work as a double-edged sword for the Aztec Economics , since on the one hand it can favor an improvement in the standard of living and encourage consumption, but on the other hand it can affect the location of companies due to less competitive salaries.
Regardless of these changes in one direction or another, the update of the treaty was necessary after 25 years of a agreement that was signed before the Internet revolution and the digital Economics that it has brought. On the other hand, the change of name of the treaty was a "gimmick" devised by Trump to sell to his electorate the renewal of a agreement whose previous name was associated with criticisms made over the last two decades.
The discussion on the text will take place in the fall at the US congress , where Democrats will insist on strengthening assurances that Mexico will implement the committed labor measures. Prior to the vote the US must apply a exemption to Canada and Mexico of the steel and aluminum tariffs that the Trump Administration has imposed internationally.
The United States International Trade Commission (USITC), an independent body that has the status of a government agency, considers that the T-MEC will have a limited but positive impact on the US Economics . Thus, in a report published in April, it estimates that the entrance in force of the reformulated agreement will increase US production by 0.35%, with an increase in employment of 0.12%, figures somewhat lower than those predicted when NAFTA came into force in 1994, when the US expected a 0.5% increase in its Economics and a 1% rise in employment.
In any case, this timid impact would not be so much due to the content of the agreed text, but to its mere existence, since it eliminates uncertainties about US trade relations with its two neighbors.
The report believes that the T-MEC will lead to an increase in the production of automotive accessories in the US, dragging up the employment in that country, but making the products more expensive and, therefore, negatively affecting exports. The report also foresees that maintaining the current arbitration system, as demanded by Mexico and Canada, will discourage US investments in the Mexican market and boost them in the US.
These conclusions do not coincide with the assessment of the International Monetary Fund, although both bodies agree with agreement in ruling out major effects of agreement. Thus, an IMF study published in March believes that, at the aggregate level, the effects of the new wording "are relatively small". The new provisions "could lead to less economic integration of North America, reducing trade among the three North American partners by more than $4 billion (0.4%), while giving their members combined gains of $538 million". It adds that the real GDP effects of the free trade area are "negligible," and qualifies that many of the benefits "would come from trade facilitation measures that modernize and integrate customs procedures to further reduce trade costs and border inefficiencies."
The result of the study sample that the more demanding rules of origin in the automotive sector and labor value content requirements, issues that especially concern the US-Mexico relationship, "would not achieve their desired consequences". According to the IMF, "the new rules lead to a decline in vehicle and parts production in the three North American countries, with shifts toward increased sourcing of vehicles and parts from outside the region. Consumers will find higher vehicle prices and will respond with lower quantity demand".
As for Canada's dairy market, an issue of particular relevance in the US-Canada trade relationship, the effects of increased US access "would be very small and macroeconomically insignificant".
This disparity in forecasts between the USITC and the IMF is due to the fact that several variables are undetermined, such as the future of the trans-Pacific agreement , in which Canada and Mexico are involved, or the ongoing trade discussions between the US and China. One sample where the ground is especially shaky is the data that in January and February 2019 Mexico became the first trade partner of the US (a exchange of $97.4 billion), ahead of Canada ($92.4 billion) and China ($90.4 billion). That raised the US trade deficit with Mexico by $3 billion, just in the opposite direction of the Trump Administration's claims.