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Envisioning the Future in Colombia

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In the sun-scorched desert of La Guajira Peninsula on the northern border of Colombia, a girl walks along the dirt road to her “rancheria”, a handful of makeshift homes that constitute her village. The heat of the parched, barren land is broken only by a brittle tree or a few spiny cacti. She has just returned from the city of Bucaramanga.

“Icetex subsidies helped a lot to make living in the city possible,” she said. “If it weren’t for them, it wouldn’t have been possible for me to join the university. They help me pay for tuition, clothing, transport, and other expenses of my stay in Bucaramanga.”

Icetex itself was the dream of a Colombian student, Gabriel Betancourt, who later became Minister of National Education. In 1950, he supported Icetex’s founding, the first higher education loan program in the world. Today, it is a state-owned enterprise (SOE) that promotes university education through student loans to under-privileged students with good academic performance.

“For an SOE to survive and thrive it needs to raise stable, low-cost financing. The central government plays an essential role in making this happen by issuing guarantees” said Rodrigo Cabral, Senior Financial Officer, World Bank Treasury. “But like any financial underwriting, when a government issues a guarantee for a loan to one of its agencies, it assumes risk as the co-signer, as the agency may not be able to meet its financial obligation, and pay the loan.”

Those risks have not always paid off. As the result of an economic recession in the late 1990s, several government guarantees were triggered, leading to cumulative payments of up to two percent of the Colombian GDP by 2004. The materialization of these contingent liabilities generated a financial shock to an economy already under pressure from the recession.

Following the crisis, Colombia updated its legislative framework to better accommodate the contingent liability issue and to improve the risk management of government guarantees.

Cooperation with the World Bank Treasury

In 2011, the Colombian government partnered with Government Debt and Risk Management (GDRM) Program, a World Bank Treasury initiative sponsored by the Swiss State Secretariat for Economic Affairs (SECO), to fine tune risk assessment and the management of contingent liabilities. The outstanding issue was finding a quantitative risk model to determine the right fees, set aside in a contingency fund, and define the right collateral from public entities that wanted government guarantees so that they could borrow.

The GDRM program supported the Colombian ministry of finance in two primary ways. First, by providing a technical expert who gave on-site consultancy with direct support for research and development of the new methodology. Second, by fostering peer-to-peer dialogue with other countries at each stage of the risk management process. The team of practitioners included Sweden, a developed country with years of experience in issuing guarantees; Turkey, an emerging country with a solid framework for issuing guarantees and managing on-lending practices; South Africa, whose experience in managing government guarantees most closely matched Colombia’s; and Indonesia, a nation just starting down the path of government guarantee risk management.

“The work began with a series of virtual dialogues via WebEx: five half-day sessions in the span of two months, during which each practitioner asked questions specific to their needs and benefited from the shared expertise of the others,” said Alessandro Scipioni, World Bank Treasury resident advisor. The group of countries got the unique opportunity to meet in person and present ideas during a fiscal conference dedicated to their issues that the World Bank Treasury facilitated in Istanbul.

Trifecta for the Colombian Debt Management

Refined Methodology: The Public Credit and Treasury Directorate—the equivalent of a debt management office—improved its methodology to determine the appropriate fees and collateral required for the government to issue guarantees; these fees are set aside in a contingency fund that belongs to the central government.

Revised Legal framework: The national comptroller requested that the ministry of finance produce a written policy on government guarantees for non-financial public sector borrowing. In 2015, the Public Credit and Treasury Directorate approved a ministerial resolution on government guarantees.

Change implemented: The Public Credit and Treasury Directorate has so far applied the new methodology to external loans from multilateral organizations obtained by three public agencies:  Findeter, Icetex, and Bancoldex. . All three loans were covered by central government guarantees.

Colombia and the World Bank Treasury GDRM Program’s partnership resulted in better risk management for issuing guarantees that supports public borrowing and while also protecting the government’s credit rating. Understanding and proactively managing these risks helps to guard against a recurrence of the shocks of early 2000s. These efforts also enable public entities like Icetex to thrive and allow the neediest students to receive continued access to higher education.

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Ron Paul: Biden Administration accept that it has a “Zelensky problem”

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Official White House Photo by Lawrence Jackson

Last week the world stood on the very edge of a nuclear war, as Ukraine’s US-funded president, Vladimir Zelensky, urged NATO military action over a missile that landed on Polish soil.”

This is a comment from the prominent American political leader Ronald Ernest Paul was for many years the member of the U.S. House of Representatives from Texas. Three times he sought the Presidency of the United States: once as the Libertarian Party nominee and twice as a candidate for the Republican Party. He continues in his comment:

“But there was a problem. The missile was fired from Ukraine – likely an accident in the fog of war. Was it actually a Russian missile, of course, that might mean World War III.

‘While Zelensky has been treated as a saint by the US media, the Biden Administration, and both parties in Congress, something unprecedented happened this time: the Biden Administration pushed back. According to press reports, several Zelensky calls to Biden or senior Biden Staff went unanswered.

‘The Biden Administration went on to publicly dispute Zelensky’s continued insistence that Russia shot missiles into NATO-Member Poland. After two days of Washington opposition to his claims, Zelensky finally, sort of, backed down.

‘We’ve heard rumors of President Biden’s frustration over Zelensky’s endless begging and ingratitude for the 60 or so billion dollars doled out to him by the US government, but this is the clearest public example of the Biden Administration’s acceptance that it has a “Zelensky problem.”

‘Zelensky must have understood that Washington and Brussels knew it was not a Russian missile.

‘Considering the vast intelligence capabilities of the US in that war zone, it is likely the US government knew in real time that the missiles were not Russian. For Zelensky to claim otherwise seemed almost unhinged. And for what seems like the first time, Washington noticed.

‘As a result, there has been a minor – but hopefully growing – revolt among conservatives in Washington over this dangerous episode. Georgia Rep. Marjorie Taylor-Greene introduced legislation demanding an audit of the tens of billions of dollars shipped to Ukraine – with perhaps $50 billion more in the pipeline.

‘When the Ukraine war hysteria finally dies down – as the Covid hysteria died down before it – it will become obvious to vastly more Americans what an absolute fiasco this whole thing has been,” writes Ron Paul.

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The G20 is dead. Long live the G20

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The seventeenth G20 Heads of State and Government Summit held in Bali, Indonesia, on 15–16 November stands out as a consequential event from many angles. The international politics is at an inflection point and the transition will not leave unaffected any of the institutions inherited from the past that is drifting away forever. 

However, the G20 can be an exception in bridging time past with time present and time future. The tidings from Bali leave a sense of mixed feelings of hope and despair. The G20 was conceived against the backdrop of the financial crisis in 2007 — quintessentially, a western attempt to burnish the jaded G7 by bringing on board the emerging powers that stood outside it looking in, especially China,  and thereby inject contemporaneity into global discourses. 

The leitmotif was harmony. How far the Bali summit lived up to that expectation is the moot point today. Regrettably, the G7 selectively dragged extraneous issues into the deliberations and its alter ego, North Atlantic Treaty Organisation (NATO), made its maiden appearance in the Asia-Pacific. Arguably, the latter must be counted as a fateful happening during the Bali summit. 

What happened is a negation of the spirit of the G20. If the G7 refuses to discard its bloc mentality, the cohesion of the G20 gets affected. The G7-NATO joint statement could have been issued from Brussels or Washington or London.  Why Bali? 

The Chinese President Xi Jinping was spot on saying in a written speech at the APEC CEO Summit in Bangkok on November 17 that “The Asia-Pacific is no one’s backyard and should not become an arena for big power contest. No attempt to wage a new cold war will ever be allowed by the people or by the times.” 

Xi warned that “Both geopolitical tensions and the evolving economic dynamics have exerted a negative impact on the development environment and cooperation structure of the Asia-Pacific.” Xi said the Asia-Pacific region was once a ground for big power rivalry, had suffered conflicts and war. “History tells us that bloc confrontation cannot solve any problem and that bias will only lead to disaster.”

The golden rule that security issues do not fall within the purview of G20 has been broken. At the G20 summit, the western countries held the rest of the participants at the Bali summit to ransom: ‘Our way or no way’. Unless the intransigent West was appeased on Ukraine issue, there could be no Bali declaration, so, Russia relented. The sordid drama showed that the DNA of the western world hasn’t changed. Bullying remains its distinguishing trait.

But, ironically, at the end of the day, what stood out was that the Bali Declaration failed to denounce Russia on the Ukraine issue. Countries such as Saudi Arabia and Turkey give reason for hope that G20 can regenerate itself. These countries were never western colonies. They are dedicated to multipolarity, which will ultimately compel the West to concede that unilateralism and hegemony is unsustainable. 

This inflection point gave much verve to the meeting between the US President Joe Biden and the Chinese President Xi Jinping at Bali. Washington requested for such a meeting on the sidelines of the G20 summit, and Beijing consented. One striking thing about the meeting has been that Xi was appearing on the world stage after a hugely successful Party Congress. 

The resonance of his voice was unmistakable. Xi underscored that the US has lost the plot, when he told Biden: “A statesman should think about and know where to lead his country. He should also think about and know how to get along with other countries and the wider world.” (here and here)

The White House readouts hinted that Biden was inclined to be conciliatory. The US faces an uphill challenge to isolate China. As things stand, circumstances overall work to China’s advantage. (here , here and here)

The majority of countries have refused to take sides on Ukraine. China’s stance amply reflects it. Xi told Biden that China is ‘highly concerned’ about the current situation in Ukraine and support and look forward to a resumption of peace talks between Russia and China. That said, Xi also expressed the hope that the US, NATO and the EU ‘will conduct comprehensive dialogues’ with Russia.   

The fault lines that appeared at Bali may take new forms by the time the G20 holds its 18th summit in India next year. There is reason to be cautiously optimistic. First and foremost, it is improbable that Europe will go along with the US strategy of weaponising sanctions against China. They cannot afford a decoupling from China, which is the world’s largest trading nation and the principal driver of growth for the world economy. 

Second, much as the battle cries in Ukraine rallied Europe behind the US, a profound rethink is under way. Much agonising is going on about Europe’s commitment to strategic autonomy. The recent visit of German Chancellor Olaf Scholz to China pointed in that direction. It is inevitable that Europe will distance itself from the US’ cold war aspirations. This process is inexorable in a world where the US is not inclined to spend time, money or effort on its European allies.

The point is, in many ways, America’s capacity to provide effective global economic leadership has irreversibly diminished, having lost its pre-eminent status as the world’s largest economy by a wide margin. Besides, the US is no longer willing or capable of investing heavily in shouldering the burden of leadership. Simply put, it still has nothing on offer to match China’s Belt and Road Initiative. This should have had a chastening influence and prompted a change of mindset toward cooperative policy actions, but the American elite are stuck in the old groove.

Fundamentally, therefore, multilateralism has become much harder in the present-day world situation. Nonetheless, the G20 is the only game in town to bring together the G7 and the aspiring developing countries who stands to gain out of a democratised world order. The western alliance system is rooted in the past. The bloc mentality holds little appeal to the developing countries. The gravitation of Turkey, Saudi Arabia and Indonesia toward the BRICS conveys a powerful message that the western strategy in conceiving the G20 — to create a ring of subaltern states around the G7 — has outlived its utility. 

The dissonance that was on display in Bali exposed that the US still clings to its entitlement and is willing to play the spoiler. India has a great opportunity to navigate the G20 in a new direction. But it requires profound shifts on India’s part too –away from its US-centric foreign policies, coupled with far-sightedness and  a bold vision to forge a cooperative relationship with China, jettisoning past phobias and discarding self-serving narratives, and, indeed, at the very least, avoiding any further descent into beggar-thy-neighbour policies.

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President Biden under fire

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Official White House Photo by Adam Schultz

Republicans announced that they are launching an investigation that will focus on President Biden himself and any illicit or unethical financial ties he had to his son Hunter’s overseas dealings, writes “The Daily Mail”.

Now Joe Biden and his family are facing an onslaught of subpoenas from the House majority members, who say they know where the proverbial bodies are buried.

Rep. James Comer led the press conference, where he made clear that the president himself was the target of the House GOP’s probe. He is a ranking member of the House Oversight Committee, will have the power to issue legally-backed demands for documents, information and testimony once the 188th Congress begins on January 3.

The congressman laid out his plans to use that power to go after the Bidens for alleged wire fraud, tax evasion, money laundering, illegal foreign lobbying and defrauding the government.

The evidence Comer is currently combing through, and is seeking to claw via subpoena, could ultimately result in articles of impeachment for the president and prison for the First Son.

Comer is also asking the Treasury for copies of more than 150 suspicious activity reports (SARs) involving the Bidens, filed by banks under anti-financial crime laws, that could be key to tracing the flows of foreign funds to the family’s coffers.

Amid all the shocking messages involving Joe Biden, possibly the most important email of the 154,000 on Hunter’s abandoned laptop is the infamous ‘big guy’ email, suggesting that the president was secretly involved in, and set to profit from, an alleged Chinese influence operation.

In total Joe met with fifteen of Hunter’s business associates according to White House visitor logs and records from the First Son’s laptop.

Emails on Hunter’s abandoned laptop published by DailyMail.com show that Hunter and Joe paid each other’s bills, and Hunter’s business partner Eric Schwerin did Joe’s taxes and visited the then-VP at the White House at least 27 times.

Joe also hosted Hunter’s best friend, business partner and now convicted fraudster Devon Archer at the White House just days before Archer and Hunter were appointed to the Burisma board (Ukraine) in 2014.

Archer was entertained at the West Wing on April 16 2014 according to visitor logs. Joe traveled to Kiev five days later on April 21. The next day, Archer joined the Ukrainian gas company’s board. On April 28, British officials froze $23million in accounts belonging to Burisma owner Mykola Zlochevsky, accusing him of fraud. The following month Hunter also joined the gas firm’s board.

Soon we may see some ugly tricks of Biden’s Ukrainian friends revealed…

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