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Satchu's Rich Wrap-Up
Tuesday 12th of July 2022

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‘’Voodoo Economics’’
World Of Finance

‘’Voodoo Economics’’
We have reached the point when the curtain was lifted in the Wizard of Oz and the Wizard revealed to be ‘’an ordinary conman from Omaha who has been using elaborate magic tricks and props to make himself seem “great and powerful”’’ 

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An African island at the nexus of global trade: The Comoros island of Nzwani from 750-1889AD @rhaplord

An African island at the nexus of global trade: The Comoros island of Nzwani from 750-1889AD @rhaplord 

In the 17th century, a small island off the coast of East Africa became a cosmopolitan locus of economic and cultural interchanges in the Indian ocean world that stitched together the continents of Africa, Asia, Europe, and the Americas.

the history of Nzwani, from its settlement in the 8th century to its emergence as the busiest port in the western half of the Indian ocean.
During the second half of the 1st millennium, the island of Nzwani was primarily settled by groups from the east African mainland which spoke the shinzwani dialect of the Comorian language (related to Swahili and other Sabaki languages, found within the Bantu languages subgroup). 

Between 750–1000, several nucleated settlements of farming and fishing communities were established all over the Island beginning with the old town of Sima. 

The inhabitants of these communities engaged in long distance maritime trade and constructed houses of wood and daub, which would gradually be replaced with coral stone.

The classical period of Nzwani's history begins in the 15th century with the emergence of centralized institutions, an elaborate social hierarchy and the flourishing of a large agro-pastoral economy supplemented by maritime trade. 

Nzwani was extensively engaged in trade with the Swahili cities and the wider Indian ocean world, mostly as a trans-shipment port rather than from domestic production.

 The merchants of Nzwani used their own sewn ships and sailed to Madagascar for commodities including rice, millet, ambergris and ivory which they included cowries fished near Nzwani, and were then sold to Pate, Lamu, Hadramaut, and India where they received silk fabrics and iron weapons.6
Between the years 1601 and 1834 over 90% of all 400 English ships outbound to India called at Nzwani's harbor at Mutsamudu, and more than 55% of these ships had made a direct sail from England to Nzwani without having stopped over anywhere along the way, attesting to the importance of the Island in the Indian ocean world

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The Queen of Sheba is known as Bilqis, she is the daughter of a Yemeni King, Al Hadhad. @aaolomi

The Queen of Sheba is known as Bilqis, she is the daughter of a Yemeni King, Al Hadhad. @aaolomi
He married the jinn princess known as Baltaqa or Ruwaha. Their daughter is Bilqis, making her part jinn. 

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We need to ask ourselves; how many people can an incumbent shoot stone cold dead in such a situation – 100, 1,000, 10,000?
Law & Politics

We need to ask ourselves; how many people can an incumbent shoot stone cold dead in such a situation – 100, 1,000, 10,000?

This is another point: there is a threshold beyond which the incumbent can’t go. Where that threshold lies will be discovered in the throes of the event. The Event is no longer over the Horizon.

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Paul Virilio Speed and Politics
Law & Politics

Paul Virilio Speed and Politics

“The revolutionary contingent attains its ideal form not in the place of production, but in the street, where for a moment it stops being a cog in the technical machine and itself becomes a motor (machine of attack), in other words, a producer of speed.’’

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Chaos in Colombo Flashes Global Warning Sign
Law & Politics

Chaos in Colombo Flashes Global Warning Sign

In the end, the anger on the streets of Sri Lanka finally breached the security, tear gas and rubber bullets that had helped President Gotabaya Rajapaksa to hold on to power.

The defining images that surrounded his resignation this weekend were of people jumping into the presidential pool, rifling through medicine cabinets, and helping themselves to food and drink — a reminder of the struggle to find basic goods in a country with inflation approaching 70%.

That makes it a cautionary tale for governments worldwide as they emerge from the pandemic and head straight into a global inflation crisis.
Euro-area finance ministers are meeting in Brussels today with the risk of recession growing as the likelihood of natural gas shortages rises and inflation remains at record levels.
In the UK, it’s increasingly clear that the contest to succeed Boris Johnson as prime minister is becoming a tussle over hand-outs for households under severe financial strain.
In both cases, the discomfort is only likely to get more acute as winter approaches, with higher energy bills in tow.
From Asia to Latin America to the US, soaring prices make for angry voters and leaders everywhere are grappling with the challenge.
Sri Lanka shows the risk that inflation upends governments. What’s less clear is the ability to fix things in a hurry. 

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For a while regime change was de rigeur
Law & Politics

For a while regime change was de rigeur 
Muammar Gaddafi was decapitated and the domino effect only stopped when Vladimir Putin decided he was going to put a stop to it and intervened on behalf of Bashar Al-Assad in Syria.

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In the west we no longer do diplomacy - we prefer virtue signalling which achieves nothing but makes us feel good. @shaun_riordan
Law & Politics

In the west we no longer do diplomacy - we prefer virtue signalling which achieves nothing but makes us feel good. @shaun_riordan

Real diplomats keep talking even if they deplore what the other country is doing. Traditionally this is the sacrifice diplomats make for their profession

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SV40, RSV and HIV all came from the same source—primary monkey and chimpanzee kidney cells (and live chimpanzees for testing of polio vaccine strains) used in the 1960s to grow polio for OPV—before people @Daoyu15

To this day, the natural reservoir of Marburg is unknown. Marburg lives somewhere in the shadow of Mt. Elgon. Crisis in the Hot Zone Lessons from an outbreak of Ebola. Richard Preston

The first known emergence of a filovirus happened in August, 1967, in Marburg, Germany. 
A shipment of green monkeys from Uganda had arrived in Frankfurt. 

Green-monkey kidney cells are useful for the production of vaccines, and these monkeys were going to be killed for their kidneys. 
Marburg began with a splitting headache, focussed behind the eyes and temples. 
That was followed by a fever. The characteristic diagnostic sign was a red speckled rash over the body which blistered into a sea of tiny white bubbles. 

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3 April 2003 Aids and the Polio Vaccine Edward Hooper finds new evidence @LRB H/T @Daoyu15

3 April 2003 Aids and the Polio Vaccine Edward Hooper finds new evidence @LRB H/T @Daoyu15 
Four years ago I wrote The River, a book in which I argued for a new theory of how the Aids pandemic began.* 

The book proved very controversial, and provoked what I would consider a defensive response from many in the scientific community, who damned the theory on insubstantial grounds. 

I am returning to this subject now because there is new evidence, both historical and scientific, to demonstrate that the theory was buried prematurely.

After 27 million deaths and the infection of more than 66 million people with HIV, there are now strong indications that human hands – in particular, those of the doctor and the scientist – started the Aids pandemic. 

This is not the theory of origin favoured by most in the medical establishment: the familiar ‘cut hunter’ or natural transfer theory proposes that a single hunter or bushmeat seller became infected with simian immunodeficiency virus (SIV) while skinning or butchering a chimp, and that the pandemic started from that one infection.

The theory of origin that I supported in The River is the OPV (oral polio vaccine) theory, and it requires a little background. 

In the 1950s, OPVs were prepared in primate cells, as most still are today. As a result, each OPV contained not only weakened poliovirus, but also whichever monkey viruses happened to be present in the cell substrate. 

One such virus was SV-40 (the 40th simian virus to be discovered), which was found in 1960 to cause tumours in hamsters. 

By then, tens of millions of people around the world had been given SV-40-contaminated polio vaccines, and over the next two years the producers switched from using Asian monkeys, which are susceptible to infection with SV-40, to African monkeys, which are not. 

Forty years on, it is recognised that exposure to SV-40 leads to a slightly heightened risk of contracting certain cancers such as mesothelioma.

But the OPV theory relates to a different polio vaccine. It proposes that an experimental polio vaccine called CHAT, developed at the Wistar Institute in Philadelphia, initiated the Aids pandemic by introducing simian immunodeficiency virus (SIV) from the common chimpanzee into some of the million Africans who were given the vaccine between 1957 and 1960

Chimpanzee SIV is now widely recognised as the direct ancestor of the strain of HIV (HIV-1 Group M) that has caused approximately 99 per cent of infections to date. 

In Africa, CHAT vaccine was administered only in Belgian-ruled territories: the Belgian Congo (now the Democratic Republic of Congo) and the former UN trusteeship of Ruanda-Urundi (now Rwanda and Burundi). 

These are also the countries that represent the epicentre of Group M-related Aids. The Laboratoire Médical de Stanleyville (LMS), which tested CHAT vaccine for safety and co-ordinated the early African vaccinations, was situated just a few miles from a chimpanzee colony, Lindi camp, which operated between 1956 and 1960. 

During those years, more than five hundred chimps and pygmy chimps (bonobos) were sacrificed there, mostly in the course of the polio research.

Perhaps the most important area of this debate, however, relates to the early epidemiology of Aids. 

We know that CHAT vaccine was administered in at least 27 different places, all in the Democratic Republic of Congo, Rwanda and Burundi. 

I have found that 68 per cent of all the earliest Aids cases in Africa (and therefore, with minor exceptions, the world), and 76 per cent of all the earliest HIV infections in the continent, come from the very same towns and villages where CHAT was administered between 1957 and 1960.† 

Recently, a software programme has been devised to analyse five competing theories for the emergence of Aids in Africa – and found that only the OPV scenario achieved a good fit.

The arguments, denials and protestations will continue for some time, but I believe that over the next few years it will gradually come to be realised that the Aids pandemic was sparked by large-scale field trials of an experimental polio vaccine – trials that employed African ‘volunteers’ as guinea pigs.

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Currency Markets at a Glance WSJ
World Currencies

Currency Markets at a Glance WSJ
Euro 1.002235
Dollar Index 108.373
Japan Yen 137.3780
Swiss Franc 0.98414
Pound 1.186390
Aussie 0.672775
India Rupee 79.6230 
South Korea Won 1312.290
Brazil Real 5.3770000
Egypt Pound 18.885600
South Africa Rand 17.14695 


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Why @GoldmanSachs Is Buying Every Barrel Of Oil It Can Find @zerohedge
Minerals, Oil & Energy

Why @GoldmanSachs  Is Buying Every Barrel Of Oil It Can Find @zerohedge 

With commodity markets suffering a historic rout in the past few weeks, it will not come as a surprise to anyone that recession risks now dominate all macro markets.
Earlier this week, Deutsche Bank economists wrote that the rolling 20-day move in their commodity index is now seeing the third largest decline in 90 years, behind only the GFC, the initial Covid shock, and on a par with that seen in the early days of WWII in 1940. 

In March, we saw the fourth largest 20-day uptick after the Russian invasion of Ukraine. The start of WWII and two occasions in the 1970s were the only bigger moves.

The BCOM and S&P GSCI total return indices respectively shed -18% and -16.5% relative to their YTD peak hit as the sell-off that initially started in industrial metals not only broadened to other sectors but intensified significantly over recent trading days.

As recession fears have gripped risky assets, Goldman's chief commodity strategist Jeffrey Currie writes that "commodities have become positively correlated to equity and bond markets and negatively correlated to the US Dollar, a stark departure from previous months when commodities delivered outstanding diversification benefits to investors"

Currie also writes that "this latest commodity sell-off is completely delinked from physical fundamentals and driven by financial liquidation."

Meanwhile, in the physical realm, inventories of energy and metals continue to fall from already uncomfortably low levels as demand remains above supply in all cyclical commodities, except iron ore. 

Timespreads, the single most accurate measure of underlying fundamentals, trade at unprecedented levels of backwardation, irrespective of the price sell-off.

That's because mobility remains robust globally and continues to recover strongly in China and the oil market is pointing to a 1 million b/d deficit. 

US and European aluminium premia remain historically high, while physical order books for metals remain strong.

As such, Goldman predicts that this micro scarcity paints a fundamentally constructive outlook for commodities despite the rising probability of a US and European recession over the coming 12 months, which commodities stand to weather on China's large-scale counter-cyclical stimulus.
It is in this bifurcated world - one where financial liquidation pressures keep slamming prices even as physical fundamentals point to much higher demand, and thus price spike - that Goldman says "commodities remain the best macro hedge" adding that although the bank expects spot prices to remain vulnerable to spec length liquidations triggered by negative economic news flow, 
"we believe it is premature for commodities to succumb to recession concerns when the global economy is still growing and markets remain in deficit on strong demand."

As a result, Currie writes, he views this price pullback as a longer-term buying opportunity, and barring a large synchronous negative global demand shock that creates a level-shift down in demand, demand rationing will remain the dominant theme for energy and food commodities while an accelerated stimulus program in China should help to create a turnaround in base metals pricing in Q3. 

Thus, Goldman believes the correlation between commodities and other risky assets is set to decline again given that commodities are spot assets while risky assets discount future expectations that have turned more negative. The bank also reminds its clients that with the exception of the GFC, commodities have been a great macro hedge, with all sectors delivering positive returns during large drawdowns in 60/40 portfolios since 1990.
But why have markets failed to understand the powerful upside fundamental case? 

Simple: as Currie explains, while many commodity markets remain remarkably backwardated so is volatility, making them harder to invest in. 

As such "trading frictions have pushed up near-dated volatility and raised initial margins to extreme levels, thus pushing more market participants off-exchange, which has cemented a negative spiral between low liquidity and high volatility." 

As a result, price adjusted AUMs in commodity indices are down 24% YTD! 

On net, Goldman warns that "while current price levels do not seem to reflect current micro conditions nor the full impact of Russian sanctions, long-term investors in commodities will likely have to continue to stomach higher volatility in return for a significant total return pay-off."

As an aside, Goldman also writes that a "mild recession" is not a risk for commodities, and, given the inherent structural supply constraints, should not stand in the way of further physical goods inflation because 

"the current macro demand set-up is very different to 2008/09, when an exogenous credit and deleveraging crisis led to a sharp downturn in demand. We also find that the US share in global commodity markets is now much lower than it was historically, with the share of demand in EMs, particularly China and India, much larger."

Thus, Goldman writes, China and its zero-covid policy is significantly more important to commodities demand, and the bank sees growth and demand accelerating there in a counter-cyclical fashion to the West. 

Underlying physical demand itself remains solid for commodities, underscored by a rebound in oil demand growth, both seasonally and linked to a normalization in international travel, and robust order books for metals. 

Moreover, even in a recession, US demand would likely be supported by tight inventories of commodity-intensive goods (houses and autos).

Turning exclusively to oil, Currie writes that the recent sharp sell-off in crude oil prices has been driven by growing recession fears in the face of low trading liquidity, with technicals exacerbating the sell-off. 

Doing some math, the Goldman commodities team writes that "the declines in prices and refining margins since mid-June are now equivalent to the oil market pricing in a 1.1% downward revision to 2H22-2023 global GDP growth expectations."  

Goldman believes this move has overshot, and while risks of a future recession are growing, the key to Goldman's bullish view is that "the current oil deficit remains unresolved, with demand destruction through high prices the only solver left as still declining inventories approach critically low levels."
Additionally, and as Goldman has explained in the past, the bank continues to see the oil market in a structural deficit that requires still higher prices to rebalance. 

Indeed, the oil market remained tighter than we had expected, reducing global inventories, after a record drawdown of 1350 million bbls to levels that were significantly lower than Goldman had previously expected. 

This more than offset the recent April-May surplus, the first after a record-long 23 months of deficits. 

This shift to surplus was driven by lower Chinese demand, record large SPR releases and a smaller-than-expected decline in Russian exports.
Notably, Goldman calculates that this surplus has now already come to an end, as the rebound in Chinese demand more than offsets the resilience in Russian exports, pushing inventories to historical new record lows. 

This deficit will likely persist at current oil prices given the expected moderate recovery in Chinese demand and declines in Russian exports (amid EU sanctions). 

While Goldman remains cautious on both, it expects the decline in Russian exports to accelerate from 0.3 mb/d to reach 1.5 mb/d by 1Q23 (versus 4Q21) given the logistical difficulties of now having to re-route nearly 5 mb/d of Western exports.

On the demand side, the negative global economic growth impulse remains insufficient to rebalance inventories at current prices while supply remains inelastic to prices – especially for shale – given investor and logistical bottlenecks. 

True, there will be higher core-OPEC supply later this year but this is mostly offset by the lack of progress on returning to the Iran Nuclear deal.

On net, even with Goldman's cautious assumptions on China/Russia, the bank calculates that "oil prices need to rally further to normalize the unsustainably low levels of global oil inventories, as well as OPEC and refining spare capacities."
As such, based on the bank's latest supply and demand expectations, Goldman forecasts that Brent prices will need to average $135/bbl in 2H22-1H23 for inventories to finally normalize by late 2023, "the binding constraint to prices in our view."
For long-only investors, Goldman advocates near-dated positions in Brent crude oil to benefit from the price upside as well as steep backwardation. 

The bank is also bullish Brent crude oil timespreads near-term as refinery runs ramp up by more than the risks to Russian production and Chinese demand. 

Having said that, there is also upside to longer-dated prices, such as Dec-23, as cost inflation and ESG drivers should exert upside pressure on long-dated prices while the multi-year supply response that needs to happen in order to rebuild spare capacity has yet to be triggered.

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Jul 3 One can create inorganic cascade like price moves in the derivatives market and thereby control the physical commodity.

Jul 3 One can create inorganic cascade like price moves in the derivatives market and thereby control the physical commodity.

One can create inorganic cascade like price moves in the derivatives market and thereby control the physical commodity. 

There are plenty of examples of these inorganic price moves. In essence, the Tail wags the dog. 

The challenge is where the Supply/Demand balance is precarious and a small adjustment [reduce Supply or increase Demand] tips the situation into disequilibrium. 

The Tail will no longer wag the Dog and the Dog will simply run amok.

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Historic Cascade of Defaults Is Coming for Emerging Markets @business The Big Take
Emerging Markets

Historic Cascade of Defaults Is Coming for Emerging Markets @business The Big Take 

“With the low-income countries, debt risks and debt crises are not hypothetical,” Reinhart said on Bloomberg Television. “We’re pretty much already there.”

The number of emerging markets with sovereign debt that trades at distressed levels — yields more than 10 percentage points above that of similar-maturity Treasuries, which can indicate investors believe default is a real possibility — has more than doubled in the past six months, according to data compiled from a Bloomberg index. 

Collectively, those 19 nations are home to more than 900 million people, and some — such as Sri Lanka and Lebanon — are already in default.

At stake, then, is $237 billion due to foreign bondholders in notes that are trading in distress. 

That adds up to almost a fifth — or about 17% — of the $1.4 trillion emerging-market sovereigns have outstanding in external debt denominated in dollars, euros or yen, according to data compiled by Bloomberg.
And as crises have shown over and over again in recent decades, the financial collapse of one government can create a domino effect — known as contagion in market parlance — as skittish traders yank money out of countries with similar economic problems and, in so doing, accelerate their crash. 

The worst of those crises was the Latin American debt debacle of the 1980s. 

The current moment, emerging-market watchers say, bears a certain resemblance. 

Like then, the Federal Reserve is suddenly ratcheting up interest rates at a rapid-fire clip in a bid to curb inflation, sparking a surge in the value of the dollar that is making it difficult for developing nations to service their foreign bonds.
Those under the most stress tend to be smaller countries with a shorter track record in international capital markets. 

Bigger developing nations, such as China, India, Mexico and Brazil, can boast of fairly robust external balance sheets and stockpiles of foreign currency reserves.
But in more vulnerable countries, there's widespread concern about what's to come. 

Bouts of political turmoil are arising around the globe tied to soaring food and energy costs, casting a shadow over upcoming bond payments in highly-indebted nations such as Ghana and Egypt, which some say would be better off using the money to help their citizens. 

With the Russia-Ukraine war keeping pressure on commodity prices, global interest rates rising and the US dollar asserting its strength, the burden for some nations is likely to be intolerable. 
“Those are things that are going to continue to resonate in the second half of the year,” she said. 

“There’s a lot of academic literature and historical precedence in terms of social instability that higher food prices can cause, and then that can lead to political change.”

At the Edge
A quarter of the nations tracked in the Bloomberg EM USD Aggregate Sovereign Index are trading in distress. 

Of course, market trading doesn’t determine which countries will actually be able to pay in the end, and not all of them are likely to default.
The gauge has tumbled almost 20% this year, already exceeding the full-year loss it notched during the global financial crisis in 2008. 

Some of that, of course stems from big losses in underlying rate markets, but credit deterioration has been a major driver for the most distressed nations

one of the worst sell-offs for emerging-market debt “arguably in history.” 

“Populations suffering from high food prices and shortages of supplies can be a tinderbox for political instability,” his team wrote in a mid-year report. 

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Debt burden of SSA countries is approaching 60% of region’s GDP. @drmwarsame

Debt burden of SSA countries is approaching 60% of region’s GDP.  @drmwarsame

The composition of the debt has shifted towards commercial debt with higher roll-over risks & rates (Inc Fx); shorter maturities, resulting in higher servicing costs/fiscal revenues burdening macroeconomic stability @drmwarsame

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Tshisekedi calls out Kagame on the M23 militia @Africa_Conf

Tshisekedi calls out Kagame on the M23 militia @Africa_Conf 

The long-running militia rivalries and accusations of foreign depredations in eastern Congo have flared again with dangerous consequences for the region

Trust between the Congolese and Rwandan Presidents Félix Tshisekedi and Paul Kagame has slumped to its lowest ebb for three years. 

Tshisekedi accuses Kagame of backing the M23 militia as a means of looting minerals in eastern Congo, warning the crisis could lead to all-out war. 

A hastily organised summit between the two leaders, hosted by Angola's President João Lourenço, offers little more than a short breathing space.
When Tshisekedi came to power in 2019, his stated priority was to bring to heel the dozens of armed groups that were spawned over decades of conflict in the country's east. 

However, his plan to outsource that task to his neighbours Uganda and Rwanda, both of which have a long history of plundering eastern Congo-K, appears to be one of the principal factors in stoking the return of the Tutsi-led M23 rebellion, previously backed by both countries. 

Diplomats in the region worry that M23's return could unleash prolonged instability, just as Islamic State is also gaining greater influence.
After its defeat in 2013 at the hands of Congo-K's army and UN troops, M23 split into two factions, which were respectively given refuge in Rwandan and Ugandan military camps. 

In the years that followed, the group's current leader Sultani Makenga, then part of the faction based in Uganda, prepared the group's reunification and return to Congo-K, while Kigali and Kampala ignored extradition requests for him and other M23 leaders for alleged war crimes. 

At the end of 2016, Makenga then moved back into Congo-K's North Kivu province and set up a military base in the volcanic tri-border area facing Uganda and Rwanda, from where he recruited new elements, including young Tutsi men from refugee camps in both countries.
M23 advance
In November last year his forces sprang into action, capturing swathes of territory in North Kivu. 

Since March the group has stepped up its operations, raiding a Congolese military base, downing a UN helicopter and teeing itself up for a possible attack on Congo's eastern city of Goma

Kinshasa's government, which has paraded Rwandan soldiers it says it captured during battles with M23, accuses Rwanda of backing the rebels, which Kigali denies. 

Kagame counter-accuses the Congolese army of now working with Hutu rebels of the Forces démocratiques de libération du Rwanda (FDLR), some of whom were involved in the 1994 Rwandan genocide which saw hundreds of thousands of Tutsi slaughtered. 

Angry mobs in Kinshasa and across the east now prowl around looking for Tutsi to lynch, giving the M23 further cause to justify its military campaign.
This all marks a serious deterioration in relations between Kinshasa and Kigali. 

Just a few years ago in 2019, Tshisekedi had invited Rwandan troops to attack the FDLR, which they did, killing a number of its leaders. 

As Rwanda stepped up those operations, its intelligence services briefed diplomats in the region that the security services next door in Uganda were quietly providing support to the FDLR as well as to members of a Tutsi-led Rwandan opposition group, the Rwanda National Congress (RNC), to stymie Kigali's influence in eastern Congo-K (AC Vol 62 No 5, Nowhere to hide). 

By that time, Rwanda had already closed its border crossing with Uganda at Gatuna, with political tensions between the two countries spiralling.
Rwanda's government was further outraged in November 2020, when Kinshasa agreed to a deal giving Ugandan engineering company Dott Services majority shares in a joint venture with Congolese parastatal Société Aurifère et Industrielle du Kivu et du Maniema (Sakima), a company with rights to mine gold in Maniema province

Dott Services is widely believed to be linked to President Yoweri Museveni's brother Salim Saleh (aka Caleb Akandwanaho). 

That deal with Sakima came alongside another agreement giving Dott Services the contracts to rehabilitate more than 220 kilometres of roads connecting North Kivu to Uganda, a direct threat to Kigali's commercial interests and its influence over the illicit economy in trafficked Congolese minerals.
Kigali would subsequently press Kinshasa into signing a contract with Dither Ltd, a firm widely believed to be linked to Rwanda's military, to refine gold produced by Sakima, setting Rwandan and Ugandan interests in Congo-K on a collision course. 

Since M23's rebound, Kinshasa has cancelled Dither's contract, as well as other bilateral agreements.
Following suicide bomb attacks in Kampala last November, attributed to the Islamic State-aligned Allied Democratic Forces (ADF) armed group also present in North Kivu, Tshisekedi acquiesced to thousands of Ugandan forces then deploying into the province, under Operation Shujaa (AC Vol 62 No 24, Kampala bombings linked to Islamic State). 

The deployment irked Kagame, who sees the move as a foil for additional protection for the activities of Dott Services. 

When the M23 attacked the border town of Bunagana in March, Ugandan troops stepped in to protect the staff and assets of Dott Services. 

Meanwhile, Kagame has voiced scepticism over the efficiency of the operations, while his intelligence services say the ADF has started recruiting elements from the Hutu community, including those suspected of FDLR links. 
Diplomats in the region fear the M23's resurgence in Congo-K's North Kivu province could provoke a greater security crisis in the Great Lakes. 

The head of the UN peacekeeping mission in Congo-K, Bintou Keita, says the group has started ramping up its firepower and may surpass the ability of the UN force's 12,000 troops to defend Congolese territory. 

Congo-K's army is also rapidly deploying troops from other zones to contain the M23 threat, leaving security vacuums elsewhere, including in areas where those redeployed troops were once fighting the ADF. 
Security officials in Kigali and Kampala accuse each other of sponsoring elements within the ADF to inflict more terror attacks against each other. 

Rwandan investigations into a foiled ADF bomb plot in Kigali last year revealed that some of the dynamite captured from the alleged perpetrators was sourced from Kyoga Dynamics, a joint venture between the Ugandan military and a Chinese engineering company. 

Investigators researching the ADF also say that its links to Islamic State, which appears to be trying to spread its influence from Congo to Mozambique via East Africa, are tightening.
Congolese officials are starting to believe that Uganda may once again also be providing the M23 some measure of support, rather than seeing the group as being completely pocketed by Kigali. 

After the M23 seized the border town of Bunagana on 13 June, it now gets to tax cross-border trade flowing between Uganda and North Kivu

Some UN officials on the ground in North Kivu say that there is evidence that following a recent attack near Bunagana, some M23 units exfiltrated out of Congolese territory through Uganda on their way to Rwanda.
In the midst of M23's rebound, Kenya's outgoing President, Uhuru Kenyatta, appears to be pushing hard to deploy his country's troops into eastern Congo. 

Sources close to State House in Nairobi tell us that since the Kampala suicide attacks, Kenya's intelligence services have started to play closer attention to security matters in eastern Congo, especially given an increasing reported prevalence of Kenyan recruits who are joining the ADF. 

They suspect some of these men are working with other jihadi groups in Tanzania who have also been sending fighters from East Africa into Mozambique, where authorities have been battling an Islamist insurgency since 2017. 
Since Congo-K's entry into the East African Community in March, Kenyatta has hosted two rounds of consultations involving regional heads of state in Nairobi, the first one in April and the second on 20 June (AC Vol 63 No 10, Kenya sponsors risky anti-militia plan). 

At the June meeting, presidents Kenyatta, Museveni, and Kagame, accompanied by Burundi's President Evariste Ndayishimiye and Salva Kiir of South Sudan, finally agreed that a joint force would enter Congo-K in late July or August and go against all armed groups that refuse to lay down their weapons.
Should the deployments take place, Kenyan forces are likely to deploy in the thick of the action in North Kivu, and come up against not just the M23 and FDLR, but a number of Hutu and other ethnic groups from the Hunde and Nyanga communities. 

Burundi's forces, which, according to UN investigators, already deployed into South Kivu in recent months, will be given the task of neutralising armed groups in that province. 

Operation Shujaa will likely remain in place. Tshisekedi is said to have approved the concept of operations, so long as Rwanda's forces are kept off the battlefield. However, these operations still throw up uncomfortable questions.
Some suspect that if the Kenyan deployment happens, Rwanda and Uganda would allow the exfiltration of the M23 out of North Kivu, letting Kenyan forces focus on fighting other armed groups, including the FDLR. 

'This may well be the plan,' says one African Union diplomat privy to internal discussions. 

Observers in the region dread what Burundian forces might get up to in South Kivu. 

Burundian forces often work hand in glove with ethnic-Hutu Imbonerakure militia, and together are likely to use local Congolese militia allies to target their main enemy, RED-Tabara, a Burundian Tutsi rebel group operating in South Kivu.
In the meantime, Tshisekedi's predilection for using foreign forces to deliver against one of his core political promises is causing internal discord within the army. 

Some of the senior command, we hear, question his reliance on Uganda and Rwanda, and believe the East African initiative will open further Pandora's boxes. 

Meanwhile, Tshisekedi is coming under increasing pressure from Western diplomats to embark on major reforms to Congo-K's army, which by all accounts operates as a criminal cartel whose officers often collaborate with the very same armed groups they are supposed to fight against.

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Europe’s Rush to Buy Africa’s Natural Gas Draws Cries of Hypocrisy @business via @YahooFinance

Europe’s Rush to Buy Africa’s Natural Gas Draws Cries of Hypocrisy @business via @YahooFinance 

Near the tip of Nigeria’s Bonny Island, an arrowhead speck of land where the Atlantic Ocean meets the Niger Delta, a giant plant last year produced enough liquefied natural gas to heat half the UK for the winter. 

Most of it was shipped out of the country, with Spain, France and Portugal the biggest buyers.
Just 17 miles away in the town of Bodo, residents still use black-market kerosene and diesel to light wood stoves and power electricity generators. 

The fuel is manufactured with crude stolen from the foreign energy giants — Shell, Eni and TotalEnergies — that co-own the Bonny Island facility along with the Nigerian government.
“The gas here goes to Bonny and Europe to power homes and industries but we have no benefits from it,” said Pius Dimkpa, chairman of Bodo’s local community development committee. “Nothing comes to us.”
Nigeria has 3% of the world's proven gas reserves, yet has tapped almost none of it. 

Like most African countries, what has been extracted is mostly sent to Europe, which now wants to import even more to make up for supplies lost to Moscow’s invasion of Ukraine. 

Italy in April struck fresh deals to buy gas from Angola and the Republic of Congo, while Germany has been looking to secure supplies from Senegal. 

That’s despite discouraging the use of gas and other fossil fuels around the world in pursuit of global climate goals, a case some European leaders made at the United Nations’ COP26 conference in Glasgow last November.
While African leaders are eager for the millions in revenue that the gas deals are likely to bring in, they're also calling out the sudden interest in their resources as a double standard that perpetuates the West’s exploitation of the region. 

They question why Africa must move away from dirty fuels — thereby delaying access for hundreds of millions of people to electricity — even as its gas is used to keep the lights on in Europe. 

Rich countries have been reluctant to fund pipelines and power plants that would facilitate the use of gas in Africa because of its emissions, yet haven’t delivered on promises to help finance green projects that could be an alternative source of energy.
Europe’s awkward position was on display at the Group of Seven leaders summit last month. 

The world’s most advanced economies walked back a climate commitment to halt financing for overseas fossil fuel projects, but indicated that exceptions would likely apply to projects that would allow for more shipments of LNG to their countries. 

In another climbdown, European Union lawmakers recently voted to classify gas and nuclear energy projects within the bloc as “green investments”, potentially opening up billions of euros in fresh funding.
That approach has irked African leaders who need fuel, any fuel, to lift millions out of poverty. 

“We need long-term partnership, not inconsistency and contradiction on green energy policy from the UK and European Union,” Nigerian President Muhammadu Buhari said in written comments. 

“It does not help their energy security, it does not help Nigeria’s economy, and it does not help the environment. It is a hypocrisy that must end.”
To be sure, sub-Saharan African governments share the blame for their underutilized gas reserves. 

Few countries have seriously invested in or reformed their power or oil and gas sectors, particularly Nigeria, where the Bonny Island plant has run at least 20% below capacity since 2021 because of pipeline theft and vandalism. 

Many African leaders support boosting gas exports to help their cash-strapped governments, but they also want access to financing that would allow them to harness the fuel’s potential to create domestic natural gas markets.
“They cannot just come and say, ‘We need your gas, I’ll buy your gas and we’ll take it to Europe,’” Gabriel Obiang Lima, energy minister of Equatorial Guinea, said at a press conference in May. “They need to give something back to us.”
Gas has long been controversial from a climate perspective: it burns cleaner than other fossil fuels but still generates carbon pollution and tends to leak the super-warming greenhouse gas methane. 

Europe's own stance on the fuel has shifted since the war began. Its top priority now is to buy up as much LNG as it can get its hands on, while countries including Germany, Austria and the Netherlands have turned to coal as a backup.
European politicians argue the fossil fuels are a band-aid needed to get the bloc through the current crisis, so it can avoid shortages and blackouts that could weaken support for sanctions against Russia. 

In theory, concurrent plans to ramp up renewable power much faster than previously targeted will balance the climate scale, resulting in lower emissions overall. 

But the EU has also hesitated to put in place policies that would curb energy consumption right now for fear of political backlash.
While the climate math may end up working out the way EU officials say it will, it’s a more difficult message to sell abroad.
The pathway being pushed by European leaders — that Africa moves straight to clean energy sources — isn’t viable unless rich countries, private investors and development banks help with funding

There’s ample sunshine and wind in Sub-Saharan Africa, which collectively uses less energy than Spain, but little infrastructure to harness it. 

Developing countries also face much higher financing costs for green projects because they’re seen as riskier investments. 

Adding to Africa’s frustration is that rich nations have failed to deliver on a target to provide $100 billion a year in climate finance that was supposed to have been met in 2020.
“The whole of the West developed on the back of fossil fuels — even as we speak some Western nations are deciding to bring coal back into their energy mix because of the war. So when the world wants to transition to zero carbon emissions, who has to do more?” said Matthew Opoku Prempeh, energy minister for Ghana, which has in the past few years made significant oil and gas discoveries. “Is the West saying Africa should remain undeveloped?”
The issue of climate finance will likely dominate this year’s COP27 talks in Egypt, which is set to focus heavily on solutions for Africa. 

The future of gas will also be a key topic given the host nation and many developing countries see it as a way to move away from coal, according to Kwasi Kwarteng, business secretary of the UK, which hosted last year’s summit. 

“For them, gas is part of the transition."
The International Energy Agency, which last year called for an end to new fossil fuel developments, in a recent report argued that Africa should be allowed to exploit its gas resources. 

The continent’s share of historical global emissions would only rise to 3.5% from 3% even if it tapped every molecule of its known gas reserves. 

Universal energy access on the continent could be achieved by 2030 with $25 billion a year in investment — the equivalent of just 1% of the money pouring into the energy sector globally.
A recent spate of major discoveries has led to big private projects with fossil fuel giants including Exxon Mobil, BP and Shell spending tens of billions in Mozambique, Tanzania, Senegal and Mauritania to extract more gas for export. 

There are plans to grow existing LNG facilities in Nigeria and Angola that could help Africa produce 470 billion cubic meters of gas a year by the late 2030s, equal to about 75% of Russian output this year, according to consultants Rystad Energy

Almost all of it will be headed out of the region.
Meanwhile, there’s a dearth of new funding for power plants to burn gas within Africa. 

Governments and businesses have $100 billion in planned projects, including 35 gigawatts of gas-powered electricity, but can’t find the money to build most of them. 

Some countries have negotiated deals for some portion of gas extracted by foreign entities to be used domestically, and all are paid taxes by the companies, but the proceeds often aren’t enough to completely transform electricity grids and build major infrastructure.
Financing from institutions such as the World Bank, International Monetary Fund and European Investment Bank for gas power projects has all but disappeared for climate reasons. 

There’s also a worry from private investors that they could end up as stranded assets as the world tries to reach net-zero emissions in the coming decades.
Projects such as Mozambique’s Central Termica de Temane power station, which secured $652 million of funding in December, have become increasingly difficult to get investment for, according to Mike Scholey, chief executive officer of the plant’s owner Globeleq Inc. The World Bank's International Finance Corp. and the US International Development Finance Corp., two key investors, have both taken steps to halt overseas funding of carbon-intensive projects.
Vicky Ford, the UK's minister for Africa, has suggested that the bar for any development financing to flow to gas proposals would be high. 

“The biggest challenge that the world faces is still climate change,” she said in an interview on May 17. 

“The long-term strategy must continue to be working towards renewables as well.” 

At home, her government is pushing for more exploration of North Sea oil and gas wells.
The turn to Africa for a short-term gas fix is “patronizing” and “hypocritical,” said Carlos Lopes, former head of the UN Economic Commission for Africa.

 It is “absolutely outrageous to say to the Africans that they should basically not look into the options that they have in front of them, and at the same time accelerate the request for gas for Europe because of the Russia-Ukraine war.”
Vijaya Ramachandran, director for energy and development at the Breakthrough Institute, a California-based think tank, was more blunt. 

It’s “green colonialism,” she said, as rich countries exploit poorer nations’ resources while essentially denying them similar access in the name of climate action.
In response to the criticisms, the European Commission said the EU is “investing massively in renewables and energy efficiency” at home and around the world. 

“There is an opportunity for many countries to leapfrog carbon-intensive development and benefit from a greener, more equal economy that provides energy access to millions of people,” Tim McPhie, a spokesperson, said in an e-mail.
The urgency of the climate crisis is hardly lost on Africans. Global warming has already brought devastation across the continent. 

The Horn of Africa is currently experiencing its worst drought in four decades. 

Desertification threatens the arid Sahel while erosion eats away at coastal cities such as Lagos and Accra.
In the coming decades, as the population booms and the Earth warms, it will only get worse. 

A World Bank report released in October projected that the continent will be the hardest hit by climate change, with impacts including mass internal migration and “increased poverty, fragility, conflict, and violence.”
Economic development, some of it driven by fossil fuels, is needed for the region to adapt to extreme weather events that will happen whether or not emissions are cut in time to avoid the most catastrophic global warming outcomes. 

But the hurdles African countries face in transitioning to gas or green energy mean millions of people are burning dirtier fuels such as charcoal instead, breathing in deadly fumes and generating more emissions. 

The IEA estimates that the number of people in sub-Saharan Africa without access to clean cooking fuel will grow by 6% a year from 2020 to 2030.
In Bodo, near Bonny Island, dead power lines hang limply overhead while women cook on firewood. 

“We notice many negative effects — smoke worries our eyes,” said Monica Gboro, who sells beans and corn flour from a makeshift shop. 

“If your kids come near you in the kitchen, you chase them away because of smoke. It shouldn’t be so.”

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Money supply now a trillion dollars As of May 2022 Zimbabwe’s money supply breached $1trillion dollars. 3yrs ago it was $10billion Money supply has gone up by 100X in 3yrs @baba_nyenyedzi

Money supply now a trillion dollars As of May 2022 Zimbabwe’s money supply breached $1trillion dollars. 3yrs ago it was $10billion Money supply has gone up by 100X in 3yrs @baba_nyenyedzi

Money supply now a trillion dollars As of May 2022 Zimbabwe’s money supply breached $1trillion dollars. 3yrs ago it was $10billion when the ZWL was introduced by GOZ, Money supply has gone up by 100X in 3yrs

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Lessons from Sri Lankan collapse @BD_Africa @Watimz
Kenyan Economy

Lessons from Sri Lankan collapse @BD_Africa @Watimz 
Many times when economists say Kenya’s economy is on a trajectory of collapse, the response we always get is that the Kenyan economy is too big to collapse.

I think non-economists imagine an economic collapse to be something close to an Armageddon — a dramatic and catastrophic demolition of the economy. 

Here comes Sri Lanka, espousing all the characters of a collapsing economy amd we can see through what we mean by Kenya’s heading towards that direction.
Sri Lanka has been one of the recent success stories of an economy transitioning a big pool of its working population from agricultural sector into the wage economy, which is always evidence of an industrialising economy. 

Just before the pandemic in 2020, Sri Lanka had officially achieved its upper-middle-income status.
But today millions are struggling to purchase food, medicine and fuel, in a country with a higher economic status than that of Kenya, which is lower-middle-income status.
Sri Lanka is in a crisis where inflation has soared over 50 percent, food prices have risen by more than 80 percent, and the currency has collapsed, making it very expensive for the country to import supplies. 

Its debt unsustainability position has forced it to default on its debt obligations in order for it to hold revenues to buy essential supplies.
Such a country is generally declared bankrupt. This is what an economic collapse means to those who think that the Kenyan economy is too big to collapse.
While what crystallised the impending collapse of Sri Lanka economy may be different, the big lesson is that we are one wrong policy away from being Sri Lanka.
In 2019 when President Rajapaska as elected in office, he found it posh to sell the policy that he will transition farmers from conventional farming of using agro-chemicals to organic farming. 

In 2021, the government banned the import of chemical fertilisers.
Sri Lanka was known to be self-sufficient in rice production but within six months, production fell by 20 percent. And it was forced to import while at the same time domestic prices kept rising.

The tea sector, which accounts for 70 percent of the country’s agricultural exports, and fourth tea exporter in the world faced a huge slump, shrinking the country’s foreign exchange.
When the pandemic happened, that was the last nail. 

Tourism, which accounted for close to half of the country’s foreign exchange, plunged the country into a crisis. 

Sri Lanka found itself in a position where it could no longer service its foreign debt because it had limited foreign earnings.
The foreign exchange problem is worse. The situation is so dire that Sri Lanka doesn’t have enough foreign exchange to even import food to meet its demand.
In 2019, Sri Lankans elected Gotabaya Rajapaksa. Four years later, more than half a million have fallen into poverty and the economy is in tatters. 

A lesson for Kenyans is that they better interrogate policies of presidential candidates because we are just one wrong policy away from economic chaos being experienced in Sri Lanka.
Kenya already has a competitiveness problem — we are not exporting as much as we should whilst imports are increasing. 

We are already debt-vulnerable going by the amount of revenue we use to service debt.
It is also clear to everyone now that we are experiencing an exchange rate problem — dollar shortage. 

We are also experiencing high cost of living, soaring food price and inflation. This economy is slowly running out of wheels.

No Kenyan president has inherited an economy in an economic crisis like the one he will be handed in August. 

A re-run of the election would make it worse because the incoming government would be settling in November.
More than six months on this trajectory — high cost of living together with an exchange rate crisis — would be a nightmare for the next president.

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by Aly Khan Satchu (www.rich.co.ke)
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July 2022

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