Where Black political leadership failed on Ukraine …

Angus Roxburgh recently wrote an honest and insightful piece for The Guardian about how Western nations can bring about a quicker end to the conflict in Eastern Europe. Mr Roxburgh recommends that all interests of each stakeholder be taken into account in order to reach a resolution.  In the article he states the following:

“To get Putin to the negotiating table at all, everything would have to be up for discussion – including Ukraine’s borders, Russia’s age-old security concerns, perhaps even the very logic of basing today’s international frontiers in that part of Europe on what were internal borders in the USSR, drawn up by communist leaders precisely to prevent Soviet republics and regions from being viable independent states. The outcome of the talks does not need to be predetermined. The important thing is to talk rather than fight.”  

I agree with his assessment.  Americans in general and Black Americans in particular have begun and ended their analysis of the conflict with the mantra of Russia’s “unprovoked” attack on Ukraine.  In the world of geopolitics, I doubt there is such a thing as “unprovoked.”  Most Americans, for example, fail to incorporate into their conclusion that the Japanese attack on Pearl Harbor was unprovoked when history demonstrates that United States’ aggression in the Pacific, particularly the restriction of access by Japan to oil supplies, was enough to rile up the Japanese to embark on a plan to push the United States out of the Pacific.  Japan’s attack was not unprovoked. It was a responsive measure.

A similar argument can be made by Russia.  For decades they have been apprehensive about the West, particularly the North Atlantic Treaty Organization’s encroachment on then Union of Soviet Socialist Republics now Russia’s borders.  The fall of the USSR and NATO’s influence on Eastern Europe has been enough to give Vladimir Putin a few nightmares.  I could make the argument that Mr Putin’s 2022 invasion was also a preemptive strike much like Japan’s preventive strike in 1945.

To make this kind of analysis requires stepping outside of the flashing disco ball and looking at all sides of the issue, especially if the issue has some sort of ramifications economically.  Stepping outside of the issue in order to account for as many factors as possible aids in strategic positioning.  For the black community, applying this rule puts it in a position to garner more tangibles from trading in the political markets.

For example, black political leadership has fallen in lock step with the media and political narrative that the Ukrainians are Luke Skywalker and Russia is represented by the evil Darth Vader.  Black leadership never took on the burden of educating the black community on the factors and environment that turned Anakin Skywalker into Darth Vader.  The overnight conversion of a group of Americans, who on 23 February 2022, couldn’t find Ukraine on a map, into flag waving Ukraine supporters on 24 February 2022 is near stunning. 

Black leadership apparently did what it did best: exchanged aggregated black support for a few political campaign finance crumbs from the leadership of the Democratic and Republican parties. 

True black political leadership would have leveraged black community political and demographic clout on a peace campaign.  Imagine black elected leadership getting 20 million blacks to write their representatives and the leadership of NATO expressing their displeasure with military action; recommending and urging a peace settlement; threatening their own domestic and foreign economic embargo as a response to unfair treatment of blacks in Ukraine; and not participating in the 2022 or 2024 U.S. elections if their demands were not met? 

This kind of leadership could have cemented American blacks not only as a domestic political force but as a player on the world stage.

This kind of leadership calls for vision.  Unfortunately, the black community’s current leadership does not have this kind of vision…  

Alton Drew

3 May 2022

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The strategic message behind US-Caribbean relations: Russia and China should not be invited to the Caribbean …

On 29 April 2022, Kamala Harris met with a number of political leaders to discuss the furtherance of relations between the United States and the Caribbean.  Topics in the closed-door meeting supposedly ranged from immigration, trade, and climate change.  The discussion reportedly leads up to next month’s Summit of the Americas, a meeting of Caribbean and Latin American leaders with the reported purpose of addressing economic, political, and these days, climate challenges impacting the region.

I note here that former U.S. senator Christopher Dodd met with the leaders of CARICOM member states reportedly on the issues of climate change, energy security, and disaster preparedness.    

From a narrative perspective, given the economic leverage the United States has in the western hemisphere, last week’s meetings and next month’s forum is about getting the rest of the region “on code” as to the wants and needs of the United States. 

Given the American perception that an emerging People’s Republic of China and an ever-pesky Russian Federation pose economic and political threats to the United States, the United States has to craft and transmit a narrative that the Caribbean can itself adapt and spread among its constituents.   

The most recent example of Chinese threats to United States’ hegemony in the Caribbean region is the new republic of Barbados’ willingness to establish a relationship with China as indicated by Barbados membership in China’s Belt and Road Initiative. 

Barbados recently became a republic, ditching Queen Elizabeth II and installing its own elected president.  This change in the head of state comes with a declining level of United Kingdom investment in Barbados currently pegged at approximately USD 5 billion.

China’s investment in Barbados reportedly exceeds the U.K.’s amount although China has a way to catch up with U.S. investment in Barbados which stands around USD 45 billion.

U.S. concerns with Russia appear to be more along the lines of political and military threats than China’s economic threats.  The U.S. is concerned that Russia is leveraging security deals with Cuba, Nicaragua, and Venezuela in order to straighten its posture in America’s backyard.

Politically, Russia’s support of authoritarian-populist regimes in Latin America poses a challenge to the U.S. political philosophy of democratic elections and private ownership of capital.

I am not privy to what Ms Harris shared with Caribbean leaders in their closed-door session.  I don’t think that Caribbean leaders took Ms Harris’ opening remarks as a pledge of altruism.  Like any holder of monopoly power, where there is a threat of entry, the monopolist offers special services or discounts in order to keep customers loyal while taking steps to kick new entrants out of the market.

If Ms Harris made this kind of appeal behind closed doors, then her strategic messaging was on point.  The goal of strategic messaging is to maintain optimal political positioning.  Optimal political positioning for the United States means maximizing sought after benefits such as a minimally challenged trade position in the Caribbean region and securing firmer support for Ukraine as that country attempts to repel an invasion from Russia. 

The Caribbean reaction from has been mixed,  While the majority of Latin American and Caribbean countries opposed Russia’s invasion, most have been ambivalent about imposing sanctions even though their trade with Russia is overall minimal.

Alton Drew

1 May 2022

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Will isolationism force the U.S. government’s currency to compete with other domestic currencies?

Over the past month, Americans have been moving their attention from the pandemic to the war in eastern Europe.  Not fully appreciated by an American public glued to the media scenes of evacuees, missile fire, and troop advancements is the closer economic alliance of China and Russia.  United States government officials have been prognosticating with unfounded confidence that economic sanctions against Russia in addition to stiff resistance from Ukraine’s military will thwart Vladimir Putin’s plans to pull more of Ukraine into the Russian orbit.

What I am seeing is a greater incentive by Russia, China, and other nations to go their own way by expanding alternative payment systems that move capital that underlies trade between Europe and Asia.  Speculation has increased that sometime in the future, the world may go from pricing oil in dollars to pricing oil in yuan.  With Russia being amongst the world’s top producers of oil, accepting yuan as payment for oil would put Europe in a pickle: dumping the long established petro-dollar for yuan.

As the United States continues to lead from behind on the eastern European portion of the world stage, I don’t hear many Americans contemplating what a new world order would look like where the United States issues a currency that finds itself limited to buying Caribbean vacations.

One currency scenario in a post petro-dollar world could see the greenback sharing legal tender status with alternative currencies.  These currencies could be digital, virtual, or actual (paper & coin).  The issuers, from 30,000 feet down, look like competitors, with potentially hundreds of communities issuing, circulating, and using their own currencies.  Right now, I would classify the issuers in this post petro-dollar world into three main entities.

The first entity is the public corporate body or government.  The government issues a currency in exchange for tax receipts.  The public corporate body’s currency is created by its ability to coerce, by law and force, individuals to pay a tax in exchange for protection of property and person.

The second entity is the private corporate body or corporation.  The corporation issues currency to consumers in exchange for revenues.  The private corporate body’s currency is created by its ability to provide the consumer with goods and services that consumers are willing to exchange their work energy for.  The private corporate body’s currency is backed by goods and services.  The greater the quality of these goods and services, the higher the demand for their attached currency.

Last is the private bank.  The private bank’s currency is created by its ability to store and secure its customer’s commodity wealth.  The currency the private bank issues, the tradeable receipt, allows the bearer of the currency to redeem her tradeable receipt in the form of a commodity.  The currency is commodity-backed.

An isolated U.S. government means that the currency it issues will incur reduced demand and a lowered value.  Domestically, the government issued currency will purchase fewer goods as competing imports diminish in availability.  The currencies of private corporations that provide valuable goods and services and private banks may see an increase in their value.  The taxpaying consumer will want to make a switch.

Under this scenario, government, if it is to survive, may have no choice but to enter agreements with private banks and private corporations to set a domestic exchange rate which in turn allows government to collect taxes via the use of alternative currencies.

The war in eastern Europe may set in motion events leading to competing currencies in America. 

Alton Drew

21.03.2022

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Black social media documents how not to approach global political power …

Commentary

Being a part of the African Diaspora, it is sad to see how Afro people in America and its Caribbean territories have been analyzing the Russian invasion of Ukraine through emotionally tainted lenses. On Facebook, for example, Afros quickly donned digital banners on their feeds expressing support for Ukraine. Some adopted the left-wing media narrative of tying former US president Donald J. Trump to the actions of Vladimir Putin, an easy low-hanging fruit move by Mr Trump’s detractors given his past expressions of admiration for the Russian Federation president.

The media has inundated Afro people in America and its Caribbean territories with plenty of images that stoke emotional responses. Crying children, concerned parents, people trying to leave on trains, bombed out buildings, and a young Ukrainian president in military garb are the content for countless press photos on Twitter and Facebook. Afros in America and its Caribbean territories dutifully share these photos thus aiding the narrative’s virality. What is puzzling is how Afro people in America and its Caribbean territories have not given any mention or included in their analyses similar actions taken by their own country with plenty of those actions based on contrivances just as grievous or more so than those conjured up by Mr Putin. Here are a few:

  1. The American invasion and occupation of Haiti from 1915 to 1934, under the guise of maintaining law and order so as to prevent European foreign influence in the island-nation.
  2. The American designed and supported Bay of Pigs invasion of Cuba in 1961, under the guise of stemming the influence of the Soviet Union and neutralizing Cuba’s new left-wing dictatorship.
  3. The Kennedy Administration’s implied approval of the assassination of South Vietnamese president Ngo Dinh Diem who had shown himself to be ineffective in garnering the people’s support against the North Vietnamese.
  4. The United States invasion in 1983 of the island-nation of Grenada, pursuant to the assertion that an airport under construction on the island-nation was intended to serve as a staging area for Soviet Union military aircraft. Troops from Jamaica and the Organization of Eastern Caribbean States also participated.

Fast forward to today and the Russian Federation is expressing its concern for possible NATO encroachment on Russia’s borders and that invasion of Ukraine is necessary for mitigating such a threat. Afro people in America and its Caribbean territories have not taken into consideration that they have seen this behavior before on the part of the United States and that such behavior, albeit egregious, is par for the course in world politics.

And it’s not like war on the European continent is that unusual, even today. Blood on the European continent was spilled during the Yugoslav Wars from 1991 to 2001, yet none of the concerns we heard back then come close to the amplification we hear today.

Given our marginal political power status, standing on the sideline and and acting like we are at a Dallas Cowboys cheerleader audition brings no dividends. The only question that should be asked about now is, “How do we benefit from this conflict?” In the short and intermediate run, nada, especially since Ukraine is not a major trading partner of the United States or the Caribbean.

The longer run is a different matter. The removal of certain banks from the Society for Worldwide International Financial Transactions, freezing assets in American and European banks, and the suspension of the Russian stock market should not provide the African Diaspora with any reason to do back flips and shake their pom poms. Quite the opposite. It should make you scared. The world is not western Europe. The populations of China, India, and the continent of Africa alone account for over three billion people. Technology is not limited to the United States. These areas can, with a lot of feasible work, create their own regional, integrated political and economic systems and trade among themselves. If that were to happen, then Afros in America, who already, as a collective. are on the bottom rung will suffer as their US dollar loses more value and poor working families are faced with the increasingly daunting task of keeping food on the table.

Rather than sending “prayers up” for (and to) a bunch of people who, when the dust settles, will be doing better than you, it is time for Afro peoples in America and her Caribbean territories to ask themselves, “How do we prepare?”

Alton Drew

04.03.2022

Interbank Market News Scan: Bank of England throws shade on Russian currency listing.

Interbank, Russia, ruble. The Bank of England said on Thursday it would cease publishing the rouble’s exchange rate against sterling and the U.S. dollar with immediate effect after the Russian currency slumped to a record low. See article here. Source: Reuters.

Interbank, Pakistan, rupee. “The Pakistani Rupee (PKR) continued to struggle against the US Dollar (USD) and posted losses in the interbank market today. It lost 21 paisas against the greenback after hitting an intra-day low of Rs. 177.7 against the USD during today’s open market session.” See article here.

EUR/USD=1.1107

GBP/USD=1.33369

USD/CAD=1.26908

USD/MXN=20.6689

USD/NGN=415.562

USD/GHS=6.78353

USD/INR=75.6115

USD/JPY=115.293

USD/CNY=6.3139

USD/BTC=0.00002

Source: OANDA

Dollar Index: 97.79

Source: MarketWatch

Interbank Market News Scan: Higher dollar demand sends Pakistan rupee downward.

Interbank, Russia, commodities. “Currencies of commodity-exporting economies rallied on Wednesday as oil and metal prices soared in the aftermath of stinging sanctions on Russia over its invasion of Ukraine, while the rouble widened its divergence between onshore and offshore trading.” See article here. Source: Reuters.

Interbank, Russia, interest rates. “Bankers and investors are nervously watching Russia’s interbank interest rates for a spike that would foreshadow the start of a banking crisis. While rates have risen in recent days, they are not yet at the levels that would ring alarm bells, Capital Economics’ senior analyst Jason Turvey said in a note on March 2.” See article here. Source: BNE Intellinews.

Interbank, Pakistan, rupee, foreign exchange. “The rupee gave up the previous session’s gain on Wednesday amid higher dollar demand from importers and fears of worsening current account deficit, dealers said.” See article here.

Foreign exchange rates as of 11:20 pm AST

EUR/USD=1.1107

GBP/USD=1.33797

USD/CAD=1.26912

USD/MXN=20.5265

USD/JPY=114.937

USD/CNY=6.31083

USD/INR=75.4949

USD/NGN=415.524

Source: OANDA

Dollar Index=97.53

Source: MarketWatch

Interbank Market News Scan: Fed chairman Jerome Powell to confirm interest rate lift-off this month.

Interbank, Federal Reserve, House Financial Services, Jerome Powell. Federal Reserve Chairman Jerome Powell sees strong labor demand but subdued labor supply. Inflation running above the Fed’s two percent target and continuing supply bottlenecks has set the table for the Fed’s policy rate decision later this month. See testimony here. Source: Board of Governors of the Federal Reserve.

Interbank, SWIFT, CIPS, China, yuan. “Local firms are now talking about how to improve and develop CIPS payment services, which will boost the internationalization of the Chinese yuan and help companies do business overseas. But the SWIFT ban on Russia may boost the development of non-US dollar and non-SWIFT transactions, including CIPS. It may also stimulate e-yuan, China’s official digital currency.” See article here. Source: Shine.cn.

Interbank, Russia, foreign investors. “The Russian stock market has been shut for days and officials are barring any cash going to foreign investors. Funds from London to New York have suspended trading. As President Vladimir Putin steps up the attack on Ukrainian cities and tougher sanctions take effect, the country’s financial ties to the outside world are breaking down.” See article here. Source: Financial Post.

Interbank, Egypt, Ukraine, capital flight. “Egypt has seen hundreds of millions of dollars leave its treasury markets since the Russian invasion of Ukraine last week as investors flee emerging markets for safer pastures, two bankers with knowledge of the matter said.” See article here. Source: Yahoo! Finance.

Foreign exchange rates of interest as of 11:00 am AST

EUR/USD=1.11658

GBP/USD=1.33797

USD/CAD=1.26912

USD/MXN=20.5265

USD/JPY=114.937

USD/CNY=6.31083

USD/INR=75.4949

USD/NGN=415.524

Source: OANDA

Dollar Index=97.70

Source: MarketWatch

Biden’s strategy on Ukraine can push Russia to find an alternative to SWIFT and price oil in yuan …

Elected officials and financial analysts have been expressing concerns that China’s currency, the yuan, could become the world’s reserve currency, replacing the American dollar as the go-to currency when seeking out a safer haven of assets like U.S. Treasurys or American real estate. In response to Russia’s invasion into Ukraine last weekend, the United States and a number of its European allies announced an initiative to remove certain banks from the Society for Worldwide Interbank Financial Telecommunication, a financial communications network used by 11,000 financial institutions in 200 countries for the movement of financial transactions. The United States, as a leader of the effort, hopes to hasten Russia’s withdrawal from Ukraine by making it very expensive for Russia to maintain a military presence in the country.

It’s not like Russia has been opting for staying in reactive mode to such a move. Russia and the rest of the world watched as the United States was able to persuade other SWIFT members to give Iran the boot.

Russia has a number of alternatives, albeit slower in today’s world of digital communications including telex, phone, and email. Russia also has the Structured Financial Messaging Solution, a communications system similar to SWIFT but used inside the country.

But what about cross-border payments? SWIFT connected Russian banks to 11,000 other financial institutions in 200 countries. SFMS is not comparable. But suppose Russia was amenable to pricing and selling its oil in yuan versus rubles? That would facilitate the use of a neighbors cross-border payments system–CIPS.

CIPS, the Cross Border Interbank Payments System, facilitates international payments for the People’s Republic of China. Twenty three Russian banks are already connected to the network, connecting these banks with between 1,189 and 1,253 financial institutions in over 100 countries.

And I should mention that the world’s second largest country, India, is also exploring a cross border financial communications network where Russia could be incentivized to circumvent SWIFT by importing more India goods.

Politically, an aggressive move to implement these alternatives to SWIFT could serve to weaken President Biden’s weaponized finance option. If Russia is able to sell oil priced in yuan and China is able to persuade more countries to use yuan for payment of exports, Mr Biden may have to convince his “coalition of the willing” to put boots on the ground to end Mr Putin’s “war of choice.” Mr Biden would also be the president who governed during the dollar’s fall from reserve currency grace.

Alton Drew

01.03.2022

Interbank Market News Scan: Russian central bank ability to sell roubles Monday implies an unknown market participant; claims internal substitute for SWIFT.

Interbank, Russian, ruble, central bank. “Russia’s central bank more than doubled its key policy rate on Monday and introduced some capital controls as the country faced deepening economic isolation, but its governor said sanctions had stopped it selling foreign currency to prop up the rouble.” See article here. Source: US News and World Report.

Interbank, Russia, rouble. “Russia’s rouble tumbled to trade above 100 a dollar on Monday, as investors fretted about the fallout from biting Western sanctions against the country, but a slew of central bank measures including a large rate hike helped it off record lows.” See article here. Source: Nasdaq.

Interbank, Russia, oil markets. “The heavy new round of sanctions on Russia by the U.S. and its allies are likely to push oil prices — and inflation — even higher.” See article here. Source: CNBC.

Interbank, banks, liquidity. “Banks are an essential part of the financial eco-system. Their collapse can have a cascading effect on the rest of the economy.” See article here. Source: Capital.com.

Interbank, China, overnight rate. “The overnight Shanghai Interbank Offered Rate (Shibor), which measures the borrowing cost of China’s interbank market, edged up 0.3 basis points to 2.234 percent Monday.” See article here. Source: China.org.cn.

Interbank, Pakistan. “The Interbank US dollar (USD) against Pakistani rupee (PKR) Closing exchange rate is Rs175.25 at 8:30 am PST on March 1st, 2022.” See article here. Source: BOL News.

Foreign exchange rates as of 8:54 am AST

EUR/USD=1.11917

GBP/USD=1.33881

USD/CAD=1.27352

USD/MXN=20.5102

USD/JPY=115.336

USD/NGN=415.632

USD/INR=75.3584

USD/CNY=6.3095

Source: OANDA

Dollar Index=97.01

Source: MarketWatch

For consultation on how this political or legal event impacts your foreign exchange trade, request an appointment at altondrew@gmail.com.

Call to action: To support this page, please visit our advertisers. You may also visit the sidebar and make a donation via PayPal.

Disclaimer: The above is provided for informational purposes and should not be construed as financial or legal advice or as creating an agreement to provide financial or legal advice.

Interbank Market News Scan: White House, Treasury focus on economics and finance to neutralize Russia’s military invasion …

Interbank, U.S., White House. The White House provides additional details on how it will impose sanctions on Russia. See press release here. Source: Executive Office of the President.

Interbank, U.S., White House. Joint Statement on restrictive economic measures placed on Russia. See press release here. Source: Executive Office of the President.

Interbank, U.S. Treasury, Russia. U.S. Department of the Treasury announces prohibition on transactions with the Central Bank of Russia. See press release here. Source: U.S. Department of Treasury.

Interbank, U.S., Federal Reserve, consumer survey. The Federal Reserve Board in March will begin a statistical study of household finances, the Survey of Consumer Finances, that will provide policymakers with important insight into the economic condition of a broad cross section of American families. See press release here. Source: Board of Governors of the Federal Reserve System.

Interbank, Bank for International Settlements, view on markets. The BIS released its quarterly view on world markets. In the prior three months, fixed income markets were jolted by shift toward tighter monetary policy; stock markets plummeted; and investor sentiment grew toward Asian economies. See press release and report here. Source: Bank for International Settlements.

Foreign exchange rates of interest and dollar index at 11:08 am AST

EUR/USD=1.12616

GBP/USD=1.34029

USD/CAD=1.27029

USD/MXN=20.3433

Source: OANDA

Dollar Index=96.74

Source: MarketWatch