How Unofficial Capital Controls Stopped a Run on the Banks in Lebanon

Counterpunch

Lebanon’s banks were closed for two weeks due to the mass protests throughout the country. The banks opened last Friday (1 November). There was the expectation of a run on the banks and massive capital flight as Lebanese, expatriate Lebanese and foreigners withdrew their cash. It didn’t happen, but it doesn’t mean that all is well despite the repeated assurances of the banks, the Central Bank, and the Association of Banks in Lebanon. The banks are playing fast and loose with the realities on the ground.

Bank Audi, the largest bank in the country, tried to reassure investors in its weekly report: “Lebanese banks succeeded on Friday the stress test, as they ensured their customers’ needs firmly and promptly. This is also attributed to people’s awareness and sense of responsibility in addition to the high level of cooperation between banks’ employees and clients. This has helped sweep away all fears and rumors that reigned over markets shortly before banks re-opened their doors. In fact, banks’ clients became more aware about Lebanon’s capability to face challenges.”

There was minimal “awareness” or “responsibility” by the banks’ clients. Clients were not allowed to withdraw all their money, palmed off with being able to walk out of the bank with $2,000 to $3,000 a day. Neither were clients allowed to transfer significant amounts of money abroad. In fact, bank sources told me that if clients requested transfers, the bank would look more closely at a client’s accounts to see whether funds were being withdrawn abroad, and could put a stop to such activity (international transfers are not possible online). You can’t have a run on the bank if you can’t withdraw the money.

In fact, bank account holders outside of Lebanon are in a better position than those in Lebanon to withdraw funds in foreign currency, able to take out the maximum daily allowed ($500 to $1000 plus – although paying a transaction fee at the ATM and to the Lebanese bank).

Few, if any, Lebanese banks are allowing ATM withdrawals in US dollars, just in Lebanese Lira (Lebanon is one of the few countries in the world that allows withdrawals in greenbacks as well as the local currency). Lebanese want dollars as while officially the Lira is pegged to the US dollar at LL1,507, on the street the exchange rate is LL1,580, and hit LL1,850 in late October. Without dollars, you can’t import goods. That was a reason why the banks opened again as the protests simmered down. The country was reportedly days away from running out of wheat, fuel and other imported essentials.

The situation is unprecedented. Even during Lebanon’s 16 year civil war (1975-1990), the banks never closed for more than four or five days – militias had to be paid, after all. The joke was that Lebanese banks had survived everything except a nuclear bomb.

During the July 2006 war between Israel and Hizbullah, dollar withdrawals stopped, but the Lira peg stayed the same, in large part due to Saudi Arabia and Kuwait depositing $1.5 billion into the Central Bank to keep Lebanon afloat. Fast forward 13 years, and the Gulf countries have not been so ready to step in, although the UAE is hinting it might. Nonetheless, the situation today is very different.

The debt has spiraled out of control, at 151% to GDP (although some suggest this has been tinkered with as the statistics are produced by private banks, with the debt to GDP ratio much higher, having been 183% in 2006) with the banks holding the majority of the debt, and the economy flat-lining.

The country is between a rock and a hard place: the much needed $11.6 billion loan from the Cedre donor conference (see my Counterpunch article) is up in the air, in part because the conditionalities that come with the loans are austerity measures, the very ones the government tried to introduce that led to two weeks of protests and the resignation of the prime minister. Lebanese are being squeezed left, right and centre, with the cost of living rising while public amenities are floundering: powercuts, water shortages, and creaking infrastructure.

Corruption and elite capture siphoned off billions of dollars over the past few decades – “the top 1% richest adults receives approximately a quarter of the total national income placing Lebanon among the most unequal countries in the world,” according to researcher Lydia Assouad – while leaving the country a wreck. This is what has driven the protests, but the inability of the government to rectify the situation means the country is fiscally on a slippery downward slope, and the banking sector being hit is another nail in the coffin.

It was clear the situation was untenable before the protests occurred. In October 2019, banks started putting unofficial restrictions on foreign transfers. Earlier in the year, the banks also tried to prevent clients from transferring Lira deposits into US dollars, as since mid-2018 there there had been talk of the Lira being unpegged to the dollar and the debt being unsustainable, with the situation so serious that banks were offering 7.5% to 15% interest on the Lira, depending on how much was deposited. Interest on the dollar was 5% plus. Of course, you don’t get such high interest for nothing, it is due to instability. The problem in Lebanon was, as one ex-minister put it to me, “we keep approaching the edge of the cliff, but the cliff’s edge keeps moving.” Every time there was a scare the situation soon reverted back to seemingly normal. As a result, there was no major outflows of cash or Lebanese stuffing mattresses full of dollars and hoarding gold (although there has always been a fair amount of that; in less stable countries it is always wise to have a sizable stash of physical capital, a lesson I learned in July 2006).

The question now is whether the situation will return to normal, and if the banks will allow transfers and have plenty of dollars again. The banks are certainly doing their best to prevent outflows of cash, as the fundamentals indicate it will not be ‘business as usual’ any time soon. As Capital Economics noted in late October: “In the absence of an IMF deal, the uncertainty over the economic outlook would lead to a bout of capital flight. And the central bank has limited resources with which to mount a defence of the dollar peg. A messy devaluation and default could follow. The IMF estimates that the pound is overvalued by around 50% and that investors in Lebanese bonds could face losses of up to 75%. This would be enough to wipe out banks’ capital and result in severe strains in the financial system. Past experience shows that economies which have suffered debt, currency and banking crises simultaneously have, on average, contracted by 8% from peak to trough.” That is a pretty dire forecast, certainly dire enough to consider getting your cash out of Lebanon ASAP – if you can; Lebanon has also reportedly put restrictions on taking cash and bullion out of the country.

In the meantime, Lebanese bank account holders continue to go to ATMs to withdraw cash, and max out credit cards through spending as well as transferring abroad to digital bank accounts (gold dealers in Lebanon are only accepting dollars).

Yet if the situation does stabilize, and clients can actually withdraw funds, where do they transfer their cash? The financial system is very much skewered in favor of the wealthy countries. Digital bank Transferwise for instance, in line with US regulations, only allows dollar transfers from 15 countries into its US account: Europe, Australia and the UAE; Lebanon is not on the list. The same applies to Euros. Lebanese can also not easily open accounts abroad without residency or other legal requirements.

Yet Lebanese and Lebanese bank account holders need not worry if one is to believe the upbeat tone of the final paragraph of Bank Audi’s weekly report: “Lebanese banks have always proved their ability to overcome difficulties and meet customers’ needs firmly, while monetary authorities continued to defend the currency peg. On Friday, Lebanese banks have once again proved their readiness to meet customers’ needs, mainly due to the availability of FC [foreign currency] primary liquidity. This has helped the first working day to go smoothly, and spotted light on banks’ credibility and transparency in addition to their role in safeguarding depositors’ interests.”

Halal, health and healing: Will halalopathy bring hope to patients?

 Middle East Eye

The Healing Simurgh: A Symbol of Holistic Medicine (Wikicommons)

Two years ago, Palestinian scientist Jawad Alzeer was puzzled. Based in Switzerland for 25 years, he had found success as a lecturer and senior researcher at Zurich University, as well as the lead auditor for a Swiss halal certification body.

Throughout his career, Alzeer had worked closely within two growing markets: the $1.1 trillion  pharmaceutical industry; and the certification of halal products.
But he sensed something was missing. First, there was modern medicine’s rejection of integrative healthcare, which includes conventional treatment, self-care and complementary and alternative medicine (CAM).

Then there was a lack of understanding by many in the food industry as to why some ingredients needed to be halal certified for Muslims, something he found himself explaining time and again.

“I was questioning why so many approved pharmaceutical drugs have no added therapeutic value,” he says, “and I’d also written a research paper on halal-certified food and nutraceuticals in the Arab world.”

Then Alzeer had a eureka moment: what if he combined the two industries into one concept that gave some Muslims the extra religious assurances they needed about their medical treatments?

“The combination of bringing together modern medicine, halal food, spirituality and homeopathy crystallised in my mind as halalopathy,” he says.
An idea had been born.

To read more go to: https://middleeasteye.net/discover/halal-health-and-healing-can-halalopathy-appeal-bring-hope-muslims

Can You Spare $11.6 Billion? Lebanon’s Loans and Luxury Car Sales Paradox

 Counterpunch

 A $350,000 Ferrari GTC4 with private United Nations (UNP) license plates, Lebanon (April 2018, Paul Cochrane)

Lebanon managed to borrow $11.6 billion at the Cedre donor conference last year, the majority from the World Bank and Europe. After a nine month wait to form a government, Beirut now has to implement the lenders’ conditionalities: economic reforms.

What do you do as, say, a European institutional lender if Lebanon renegades on its commitments? Stop funding programmes and aid, leaving the poor and the 1.5 million Syrian refugees to suffer? And if Lebanon’s economy collapses – debt has doubled over the past decade to $84 bn, over 150% of GDP – there’d be another failed state on the Mediterranean, within sailing – and capsizing – distance of Europe, so do you just keep on writing out cheques?

We should take a step back first to consider the bigger picture. Lenders have their own reasons for lending, evidenced not just in the interest to be paid, but in the conditionalities that come with the loans and development packages, which are invariably of a neo-liberal bent: privatization, austerity, and economic reforms. The Europe Bank for Reconstruction and Development (EBRD), the World Bank et al have their own agenda to push.

Then there’s aid and philanthropy, what has been called Philanthropic Colonialism, “or barging in as outsiders and forcing their solutions on other people’s problems”.  And as for humanitarian aid, the closer you are to Fortress Europe the more likely you are to get loans or aid, which is why the Syrian refugee crisis gets double the amount Yemen does.

So if one overlooks the lenders’ interests, and believes they actually care about the effectiveness of the loans and genuinely want stability and progress, how can you hold Lebanon accountable? Is the only way to withdraw the funds, as happened following the Paris II donor conference in 2002, when $4.4 billion was pledged but only half delivered as reforms were not implemented? After all, with this fourth round of donor funding since 2001, Lebanon has borrowed roughly $22 bn.

Again, we should take a step back, to before the loans were even agreed upon. Europe, the World Bank and co. knew exactly what they were doing providing loans to keep Lebanon afloat. The question should have been, does Lebanon need to borrow yet more money?

On paper yes it does, but are there not more ‘deserving’ countries? If we use a means-based assessment, Lebanon should not be going go cap in hand to lenders when there are war ravaged countries nearby – Syria, Iraq and Yemen – and plenty of countries with much higher levels of crushing poverty, nearly anywhere in Sub-Saharan Africa for instance. Because also, on paper at least, Lebanon is a middle-income country and likes to perceive itself as such (except at donor conferences). The banking sector has assets in excess of $258 bn (population 5 mn), while by comparison Bangladeshi banks’ assets are $90 bn (pop. 160 mn), and Tanzania’s $12 bn (pop. 59 mn).

How then to gauge whether a country needs loans and, moreover, be provided to corrupt governments? Corruption is a key factor to consider, as loans can be skimmed off, such as through tenders and contracts. But using Transparency International’s Corruption Perceptions Index doesn’t cut it. It is perception, and Lebanon has long had a bad ranking – 138 out of 180 countries (1 being the least corrupt). Corruption has rarely stopped institutional lenders from lending.
Instead a means-based assessment could be based on sales of luxury goods in low/middle income countries, such as the number of fancy watches, yachts, private jets and luxury cars sold each year.

Let us take automotive sales. Out of Lebanon’s $57 billion GDP, over $1 billion is spent on new cars, with 33,012 bought last year, contributing to the country having the same number of vehicles per capita as Japan. While 90% of car sales are below $15,000 there’s still a lot of expensive cars on the roads. Does a country that buys dozens of Mazeratis, Lexuses and Jaguars, hundreds of Porsches, Range Rovers and SUVs, a handful of Bentleys, a couple of Lamborghinis, several hundred BMWs and close to a 1,000 Mercedes every year really need foreign loans?

Lamborghini in Sin el Fil, Beirut (March 2019, Paul Cochrane)

After all, how are such luxury goods sales possible? A mixture of corruption, tax evasion and avoidance, oligopolistic practices, elite capture, and paying lousy wages. As a compliance officer at a bank once put it to me, if anyone has over a few million bucks in the bank, they’ve probably done something unethical, immoral, or downright criminal.

In Lebanon’s case, in addition to the above, the high interest on servicing government debt – averaging 5-7% compared to a global average of 2% – benefits the elite. Lebanese banks hold 39.6% of government debt of $84 bn, while 16,000 accounts (less than 1% of all deposit accounts) hold 50% of total deposits, and 1,600 accounts (0.1%) 20% of total deposits. Politicians own more than 30% of the banking sector. The debt, if you will excuse the pun, is in their interest. It is socialism for the rich subsidized by the Lebanese public with the stamp of approval of the World Bank, EBRD and co.

High inequality levels and luxury goods sales are a clear indicator that the system is unfair, and that money is being squandered. The number of high net worth individuals could therefore be included in the means-based assessment, and Lebanon is not short of billionaires.

If the loans were turned down because of high spending on luxury goods – which extends beyond the segment that can afford it, with personal debt doubling over the past decade– this could cause public outcry, potentially leading to demands for greater accountability and political-economic change. Although, alas, it is more likely the weak suffer what they must – to use the Thucydidean title of Varouflakis’ book– and loans and interest will keep driving luxury car sales.

But maybe I am being unfair. Politicians and the elite need top-of-the-line vehicles to be comfortable in  when they are stuck in Beirut’s gridlocked traffic, as public transport was not considered important and underfunded. They also need high quality air filters to not breathe the pollution generated by their V8 engines, the diesel fumes spewing from generators because the electricity sector is in shambles, and the burning of toxic trash because the government can’t be bothered to enforce laws. Frequent forays abroad are also necessary to cleanse the lungs, as air pollution is shortening the average lifespan of Lebanese citizens by 25%.

It is also hard, of course, to be the poor kid on the block. Lebanese political leaders have to rub shoulders with Gulf billionaires, as well as with well-suited and booted Europeans and North Americans. Although I am sure that some lenders raised eyebrows at the expensive tastes of those asking for Cedre funds – including Prime Minister Saad Hariri, the son of a billionaire.

We should also consider that this means-based assessment could be skewered by the consumption patterns of the humanitarian aid and development industry, being big buyers of champagne and luxury cars (see photo of the privately owned UN Ferrari).

So, after a high level institutional meeting at a five star hotel to discuss whether a means-based assessment could be used as lending criteria – the loans and luxury goods sales paradox – maybe the lenders’ conclusion would be it is not necessary. In a world where government debt levels hit $66 trillion in 2018, roughly 80% of global GDP, why not keep the addiction to lending and borrowing going? As the saying goes, money makes the world go round, although debt makes the world go round would be more apt.

Fortified – the arms trade and AML

Money Laundering Bulletin

(H/T Stidy)

The conventional arms trade has a reputation for using side payment sweeteners to secure multi-million dollar deals, writes Paul Cochrane. Despite allegations of corruption in numerous jurisdictions, defence contracting is not on the Financial Action Task Force’s (FATF) radar. Should it be? After all, illicit arms sales and non-proliferation of weapons of mass destruction have been major focuses of FATF, warranting Recommendations and typologies to address potential money laundering and terrorist financing abuses. 

 

No man’s land

The global AML body’s Recommendations 2 and 7 concern non-proliferation (NP), with FATF issuing guidance on implementation of the financial provisions of UN Security Council Resolutions to counter the proliferation of weapons of mass destruction (WMD) in 2013 (1), and again in February 2018 (2), while the US presidency of FATF this year has made NP a priority.

The US$84 billion-a-year conventional arms sector, however, is not yet on FATF’s radar, according to the Stockholm International Peace Research Institute (SIPRI). “Given the levels of corruption alleged towards the arms sector and the investigations we have had, you’d think it would warrant some kind of attention from an organisation [FATF] with an anti-corruption and AML mandate,” said Ben Hayes, a London-based independent consultant on AML and CFT rules, and fellow of the Transnational Institute.

Asked by MLB at an FATF press conference in September [2018] about regulations on the legal arms trade, Marshall Billingslea, US Department of the Treasury’s assistant secretary, and current FATF president, said that the body’s focus remained on the illicit arms trade, especially related to terrorism, and NP. “We are related to the illicit weapons trade; each country has to address that,” said Billingslea.

The legal arms trade does not feature in FATF’s Recommendations, nor are there any specific typologies to provide guidance to regulators and financial institutions. Neither is the licit arms trade listed under FATF’s ‘designated non-financial businesses and professions’, like casinos, real estate, and dealers in precious stones.

“I don’t think I have ever seen a FATF typology dealing with the arms business per se, or any guidance or red flag indicators on what financial institutions should look for,” said John Cassara, a former US Treasury special agent and board advisor for the Foundation for Defense of Democracies’ Center on Sanctions and Illicit Finance (CSIF).

Strategic position

 

Why not? Activists point to the composition of the founders of FATF – the G7 states – and the UN Security Council: “All the key members are major arms exporters, so they don’t really have an interest in serious international restrictions on the arms trade,” said Sam Perlo-Freeman, programme manager, global arms business and corruption, at the World Peace Foundation.

That is not to say there is no international oversight of the sector.

A Transparency International note to MLB stressed the importance of the EU Common Position on Arms Export Control (3). This set of rules, agreed by the EU Council of Ministers, require the annual reporting of arms exports, and strengthening “the exchange of relevant information with a view to achieving greater transparency”. Transparency International also stressed EU member state national laws on arms export control (which tend to closely mirror the EU Common Position). And TI highlighted the Arms Trade Treaty (4), a UN accord with 99 state parties, which also commits governments to good honest financial practice as regards the arms trade: this includes establishing and implementing national control systems; promoting cooperation, transparency and responsible action by states regarding licit arms trades; abiding by UN Security Council arms embargoes; and ensuring arms sales do not help transnational organised crime.

Arms deals also have to abide by national legislation preventing graft: an arms deal involving bribes would likely generate payments covered by AML laws if corruption constitutes a predicate offence. In the US, for example, there is the Foreign Corrupt Practices Act (FCPA), noted Rachel A Weise, legislative and regulatory affairs specialist at the Pacific Northwest National Laboratory, Seattle, while the UK Bribery Act goes further; it bans facilitation payments.

Top brass

“Almost all licit arms sales are government to government, so if there is corruption, let us call it side payments, it is usually through government channels,” said Jonathan Caverley, associate professor of strategy at the US Naval War College and a research scientist in political science and security studies at the Massachusetts Institute of Technology. “You find an agent that is politically connected and give them a percentage to facilitate a sale, which may involve bribing people.”

To Andrew Feinstein, Executive Director of London-based NGO Corruption Watch, and author of ‘The Shadow World: Inside the Global Arms Trade’, corruption is endemic in the sector. “Corruption goes hand in hand with the trade, not just [on the part of] the buying politicians but also the sellers. There is virtually no scrutiny of the trade, and if we look at intermediaries, bribes and money laundering are often involved, but it’s done in ways that are incredibly difficult to trace,” he said. 

 

The western front

Feinstein added that corruption is more widespread in Europe’s arms trade than in the US, where the regulator (the Department of Justice) has been more active. He gave the example of a 2010 investigation by the UK’s Serious Fraud Office (SFO) into deals made by BAE in South Africa, Tanzania, the Czech Republic and Hungary. The SFO fined BAE GBP30 million for ‘accounting irregularities’ in the Tanzanian transactions, while the other cases were dropped, whereas a US investigation into BAE in the same year resulted in a USD400 million fine. (5) BAE admitted it had used offshore companies to provide covert payments to secure deals in Saudi Arabia, the Czech Republic and Hungary.

The lack of interest in promoting financial transparency in the sector is a “choke point”, said Perlo-Freeman. “The political forces protecting the trade are so strong they are ready to turn a blind eye or obstruct an investigation, as [former UK Prime Minister Tony] Blair did with the Yamamah case,” he said. In 2006, a media investigation alleged that BAE paid over GBP1 billion to Saudi Arabian facilitator Prince Bandar to secure the Yamamah arms deal, which ran from 1985 to 2006, and netted BAE over GBP 45 billion in revenues. The case was dropped by the SFO following government pressure in December 2006.

Resistance

That said, other arms companies have been investigated, for example Italian police and India’s Central Bureau of Investigation and Auditor General, have been probing a case involving the alleged payments of more than Euro 60 million to agents and middlemen to secure sales of AW101 helicopters from Italy to India. According to court documents in Italy and India, invoicing fraud and corruption saw payments made to intermediaries overseen by Anglo-Italian arms firm AgustaWestland’s UK headquarters (the company has since been renamed Leonardo). (6) Airbus is also under investigation in various jurisdictions, including the US, France, Kuwait and Austria, and by the UK’s SFO (7) for alleged corruption by its Saudi-based UK subsidiary, GPT Special Project Management. (8)

Low risk engagement

With deals at the government level and no specific AML regulations to observe, the arms industry has not faced the same de-risking by banks as more risky jurisdictions and sectors like money service businesses and non-profit organisations have in recent years.

“De-risking has not happened to the same extent as other areas, partly because the big name legal arms dealers are significant bodies, like BAE, and from a financial crime perspective they have to be robust to win government contracts. The smaller arms dealer segment is not well serviced in the first place,” said Richard Grint, a financial crime expert at PA Consulting in London.

But Perlo-Freeman stressed that governments do engage in shoddy practice regarding arms deals. Along with use of front companies and offshore tax havens to conceal payments, arms purchases are also paid for through resources like oil, he said. “Resource revenues are a good source of budgetary expenditure for arms purchases, and when there are kick backs it’s a good way for arms purchaser to launder oil revenues into the bank accounts of leading politicians and decision makers. There’s definitely a link with arms and oil and corruption,” said Perlo-Freeman.

Mentions in dispatches

Feinstein thinks the arms trade should fall under the international AML regime: “It would make it more difficult for defence companies to launder money effectively,” he said.

Corruption Watch also wants more focus on arms exports: the NGO has called on governments like the UK to abide by Article 5 of the OECD Anti-Bribery Convention, which prohibits signatories “from taking into account national economic interest and damage to foreign relations when investigating and prosecuting bribery”. The UK, however, has yet to make Article 5 fully binding, and was criticised by the OECD in March 2017 for failing to do so.

The contrast with the approach to restricting the proliferation of WMD, which includes attempting to prevent money flowing into such purchases, especially by sanctioned governments, is stark. “The difference between the conventional arms trade and NP is there is a broader political consensus to prohibit WMD,” said Weise.

As a result, financial institutions have guidance from FATF on NP around WMD. Weise noted that in the USA, non-proliferation finance is not a crime but can be controlled by sanctions or ML regulations. In the meantime, with no political will at the international level to include the legal arms trade in AML regimes, “banks will focus on what regulators focus on. Whether that is fair or not, that is the reality,” said Weise.

Footnotes

1. http://www.fatf-gafi.org/media/fatf/documents/recommendations/Guidance-UNSCRS-Prolif-WMD.pdf
2. www.fatf-gafi.org/media/fatf/documents/reports/Guidance-Countering-Proliferation-Financing.pdf
3. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32008E0944
4. https://www.thearmstradetreaty.org/hyper-images/file/ATT_English/ATT_English.pdf?templateId=137253
5. https://www.justice.gov/opa/pr/bae-systems-plc-pleads-guilty-and-ordered-pay-400-million-criminal-fine
6. https://www.cw-uk.org/angloitalianjob
7. https://www.sfo.gov.uk/2016/08/08/airbus-group-investigation/
8. https://www.cw-uk.org/gpt

On the Ground in Venezuela vs. the Media Spectacle

 Counterpunch

British photojournalist Alan Gignoux and Venezuelan journalist-filmmaker Carolina Graterol, both based in London, went to Venezuela for a month to shoot a documentary for a major global TV channel. They talked with journalist Paul Cochrane about the mainstream media’s portrayal of Venezuela compared to their experiences on the ground.

Paul Cochrane (PC): What were you doing in Venezuela, how long were you there and where did you go?

Alan Gignoux (AG): We went in June 2018 for a month to shoot a documentary; I can’t disclose what channels it will be on right now, but it should be on air soon. We visited the capital Caracas, Mérida (in the Andes), Cumaná (on the coast), and Ciudad Guayana (near the mouth of the Orinoco river).

PC: How did being in Venezuela compare to what you were seeing in Western media?

Carolina Graterol (CG): I am a journalist, I have family in Venezuela, and I knew the reality was very different from what the media is portraying, but still I was surprised. The first thing we noticed was the lack of poverty. Alan wanted to film homeless and poor people on the streets. I saw three people sleeping rough just this morning in London, but in Venezuela, we couldn’t find any, in big cities or towns. We wanted to interview them, but we couldn’t find them. It is because of multi disciplinary programmes run by the government, with social services working to get children off the streets, or returned to their families. The programme has been going on for a long time but I hadn’t realized how effective it was.

PC: Alan, what surprised you?

AG: We have to be realistic. Things look worn down and tired. There is food, there are private restaurants and cafes open, and you could feel the economic crisis kicking in but poverty is not as bad as what I’ve seen in Brazil or Colombia, where there are lots of street children. Venezuela doesn’t seem to have a homeless problem, and the favelas have running water and electricity. The extreme poverty didn’t seem as bad as in other South American countries. People told me before going I should be worried about crime, but we worked with a lady from El Salvador, and she said Venezuela was easy compared to her country, where there are security guards with machine guns outside coffee shops. They also say a lot of Venezuelan criminals left as there’s not that much to rob, with better pickings in Argentina, Chile or wherever.

PC: How have the US sanctions impacted Venezuelans?

CG: Food is expensive, but people are buying things, even at ten times their salary. Due to inflation, you have to make multiple card payments as the machine wouldn’t take such a high transaction all at once. The government has created a system, Local Committees for Production and Supply (known by its Spanish acronym CLAP) that feeds people, 6 million families, every month via a box of food. The idea of the government was to bypass private distribution networks, hoarding and scarcity. Our assistant was from a middle class area in Caracas, and she was the only Chavista there, but people got together and created a CLAP system, with the box containing 19 products. Unless you have a huge salary, or money from outside, you have to use other ways to feed yourself. People’s larders were full, as they started building up supplies for emergencies. People have lost weight, I reckon many adults 10 to 15 kilos. Last time I was in Venezuela three years ago, I found a lot of obese people, like in the US, due to excessive eating, but this time people were a good size, and nobody is dying from hunger or malnutrition.

PC: So what are Venezuelans eating?

CG: A vegetarian diet. People apologized as they couldn’t offer us meat, instead vegetables, lentils, and black beans. So everyone has been forced to have a vegetarian diet, and maybe the main complaint was that people couldn’t eat meat like they used to do. The situation is not that serious. Before Hugo Chavez came to power, Venezuela had 40% critical poverty out of 80% poverty, but that rate went down to 27%, and before the crisis was just 6 or 7% critical poverty. Everyone is receiving help from the government.

To read more go to Counterpunch

Europe’s Strategic Humanitarian Aid: Yemen vs. Syria

Drawing by Nathaniel St. Clair

Europe has provided double the aid for the Syria conflict than for Yemen, despite selling $86.9 bn in arms to Saudi Arabia and the UAE. Geography is a major reason for less aid: to stop migrants.

The Syrian conflict will soon be into its ninth year, and the Yemen conflict into its fifth year. Both are major humanitarian disasters, with millions displaced amid unimaginable suffering. An estimated half a million have been killed in Syria, and over 100,000 in Yemen.
The West is deeply involved in both conflicts – supporting the opposition in Syria and the Kurdish areas, and providing arms and political support for the Saudi Arabian and Emirati led war on Yemen.
The humanitarian aid provided to both crises is indicative of where priorities, Europe’s in particular, lie.
From 2015 to 2018, the European Union (EU) and European countries have provided some $1.56 bn in aid to the UN Yemen Humanitarian Response Plan (YHRP), while providing roughly fifty percent more for Syria during the same period, $3.2 bn.
In 2018, $4.03 bn was pledged (globally) to the UN’s YHRP. This is less than half the amount pledged to the UN’s Syria Humanitarian Response Plan, $8.96 bn. Furthermore, the Syria campaign received more funding for 2018 than the entirety of the Yemen conflict, some $8.6 bn (2015-2018). Over the same period, $12.6 bn was pledged for Syria. This is a huge difference, despite the number of people affected in both conflicts being similar.

Read the rest at Counterpunch.org