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BLACKWATER USA | DAILY BRIEF

Happy Moth

er's Day!




Mexico


*       An American Enterprise Institute fellow penned a great op-ed

advocating for a stronger coronavirus recovery package in Mexico in order to

boost broader North American growth prospects. (Instead of helping key

industries like tourism, manufacturing, and oil & gas; Pres. AMLO's economic

packages fund his pet projects). Article pasted below.




China


*       Pres. Trump says he's "very torn" over whether or not to punish

China for the coronavirus pandemic by ending the Phase 1 trade deal that

took effect in February, though top trade officials are pressing ahead and

implementing the terms of the deal anyway. Trump said he'd make a decision

this week.




Iran


*       Iran-linked hackers targeted COVID-19 researchers at Gilead. They

were likely trying to steal the same sort of information as when they (or

related Iranian groups) hacked the WHO earlier in the pandemic. It's not

clear how far they got into Gilead's systems.

*       There were reports that Iran also hacked Israeli water utilities on

April 24th (Israel says that attempt was quickly thwarted).

*       A WSJ op-ed pasted below-timed for the two-year anniversary of Pres.

Trump's withdrawal from the 2015 nuclear deal-argues that Trump should keep

up pressure on Iran to force it to the negotiating table. It also

highlighted an interesting data point: the U.S. State Dept. estimates Iran

has spent $16 billion on terrorism since 2012.




Afghanistan


*       At least six people were killed when protests broke out at an aid

distribution event in Ghor. The skirmishes started because some people

thought others were unfairly getting more food aid. Police opened fire on

rioters to quell the skirmish.

*       The Taliban released 28 government prisoners in Herat, and the

government said it would release 500 more Taliban prisoners in the next few

days.

*       However, the Taliban also killed four ANSF in an attack in Herat.

*       Responding to calls to free U.S. contractor Mark Frerichs, who

disappeared in Afghanistan in January, the Taliban said that neither it nor

the Haqqani Network has Frerichs...then who does?




Libya


*       Libya's civil war seems to be escalating: the GNA reported that LNA

rockets struck near foreign embassies, and also accused the LNA of targeting

a civilian plane at Mitiga Airport.

*       GNA intelligence chief Abdul Qader al-Tuhami reportedly died of a

heart attack in Tripoli yesterday.




Venezuela


*       Bloomberg says indicted Colombian financier Alex Saab is involved in

helping Venezuela trade its gasoline with Iran for gold, but Saab's lawyer

denies it.

*       Meanwhile, Venezuela found three abandoned Colombian combat boats

loaded with weapons on the Orinoco River. Colombia said the vessels must've

floated away and gotten carried into the river by strong currents, but

Venezuela insists they were part of what it believes was a U.S. /

Colombia-backed coup attempt last week-and plans to make an official

complaint to the UN to that effect.




Sahel


*       Islamic State accused Al Qaeda of starting a "war" in the Sahel in

recent weeks by launching attacks on IS as it was fighting France and

negotiating with the infidel governments in Algeria and Mauritania.




Want to secure North American supply chains after the pandemic? Encourage

Mexico's recovery package (AEI)




Mexico's economy could shrink by an eye-popping 8 percent this year due to

the coronavirus and slumping oil prices. Already accused of underreacting to

the COVID-19 pandemic, President Andrés Manuel López Obrador (universally

known as AMLO) has cut government programs rather than offer a robust

stimulus plan. Mexicans and their US partners may pay dearly if

manufacturing south of the border is slow to recover from AMLO's irresolute

economic stewardship. Any thought of jumpstarting North American supply

chains to replace commerce with China depends on the battered Mexican

industrial sector.




The coronavirus pandemic is pummeling a Mexican economy that had already

slumped into a recession last year. More than 20 million Mexicans may be

forced into poverty, and unemployment will balloon in a country with a

sizeable informal economy. The International Monetary Fund (IMF) predicts a

contraction of 6.6 percent this year - the second worst in Latin America

behind imploding Venezuela. And a double-digit contraction is not out of the

question. Credit ratings agencies already downgraded Mexico's bonds, which

now hover just above junk status.




The coronavirus pandemic threatens the pillars of Mexico's economy - energy

production, tourism, and manufacturing. New energy projects meant to salvage

PEMEX - the most indebted state-owned oil company in the world - have been

shuttered amid the most oversupplied oil market in a century. Tourism

represents nearly 20 percent of Mexico's GDP, yet its sun-kissed beaches

have been deserted. And automobile manufacturing ground to a halt in April.




While other leaders woke up to the prospects of a pandemic, AMLO was slow to

mandate social-distancing measures. Mexico has almost 30,000 confirmed cases

of the coronavirus (as of writing), although its real caseload may be eight

times larger. Most epidemiological models show the country reaching peak

case numbers in mid-May, but others predict a mid-August peak - exacting a

heavy toll in lives and economic productivity.




In Latin America and the Caribbean, only the Bahamas has spent less, as a

percentage of its GDP, than Mexico to support families and businesses during

the pandemic. Even debt-laden Argentina passed a fiscal stimulus aimed at

keeping its economy afloat. Remarkably, narcotraffickers have filled the

void with relief packages across Mexico.




On April 22, AMLO yielded to reality and announced support for a $26 billion

package to buoy the Mexican economy. Even in the face of economic disaster,

however, AMLO insisted on financing the relief package with deep cuts

elsewhere: the abolition of 10 government departments, a hiring freeze, and

25 percent salary cuts for government workers. Worse yet, his plan funnels

much of the spending to his favorite social programs and infrastructure

projects. AMLO will have to be bolder than this to shepherd the Mexican

economy through a withering storm.




Mexico could afford a bigger stimulus package, were it not for the

president's obstinacy. AMLO's pet infrastructure projects - an

environmentally-harmful train traversing the Yucatan Peninsula, an airport

expansion (compensating for a half-built facility he scrapped in Mexico

City), and an oil refinery in his underdeveloped home state of Tabasco -

carry a price tag of around $30 billion but are unlikely to spur economic

growth.




Resuscitating the US economy after the pandemic will depend largely on the

renewed productivity of the massive North American manufacturing supply

chain. But Mexico appears to be the weak link, due largely to AMLO's

malpractice. A recent letter from the National Association of Manufacturers

warns of the dire consequences if Mexico does not move to shore up key

industries. Already, businesses producing food, medical equipment, and other

critical goods face disruptions.




Just before to the pandemic - and as a result of the trade war with China -

Mexico vaulted into the position of the United States' number one trade

partner. At the time, speculation grew that Mexico would be one of the

largest beneficiaries of China's manufacturing slide. Naturally, the North

American market could play a substantial role in substituting China as a

source of critical goods. Alas, those strategic opportunities may be

squandered.




For many US manufacturers struggling to restore good jobs and healthy

productivity, Mexican partners must step up to deliver the goods. AMLO's

economic team and Mexico's private sector must prevail on their president

not to miss the opportunity of a strategic realignment away from Chinese

manufacturing to suppliers literally on the US doorstep. To capitalize on

this opportunity, however, AMLO's government must do a competent job

managing the health crisis and giving the economy the robust stimulus it

needs to get back in the game.






Life After the Iran Nuclear Deal: Measuring successes and failures two years

after withdrawal. (WSJ)




Friday marked two years since President Trump announced America's withdrawal

from the 2015 Iran nuclear deal. The Administration's "maximum pressure"

campaign persists, and the U.S. isn't at war with the Islamic Republic,

which still doesn't possess a nuclear weapon.




For two years the U.S. has imposed unprecedented economic pressure on

Tehran. It is building leverage for a new accord that further limits the

country's nuclear capabilities while addressing its malign regional behavior

and missile program. Mr. Trump also wants a new agreement to prevent Iran

from building a weapon after reaping economic benefits for years, as the

2015 deal allows.




How has the strategy fared? Let's examine Iran's nuclear program, its

economy, and regional behavior.




After largely adhering to the deal's provisions for a year, Tehran began a

series of escalating violations meant to spook European leaders without

pushing them to the U.S. position. The government has increased its

stockpile of heavy water and enriched uranium, though the latter is far

below the concentration needed for a weapon. It also has injected fuel into

centrifuges at the Fordow nuclear facility, which the Obama Administration

failed to get decommissioned. Iranian secrecy has prompted International

Atomic Energy Agency complaints, but the country still allows some

inspections.




These are serious but expected responses to pressure on the Iranian economy,

which Islamic Republic elites have plundered to build personal fortunes and

fund regional imperialism. New sanctions have hit corrupt officials and

important areas of the Iranian economy, and in December Iranian President

Hassan Rouhani said the measures had deprived the country of $200 billion. A

month later the State Department estimated that oil exports had fallen more

than two million barrels a day, costing the regime $50 billion annually.




The Administration has been criticized for maintaining sanctions as Tehran

deals with Covid-19 and the Iranian people suffer. But the 2015 deal's

multibillion-dollar windfall didn't help the public, and the current

sanctions contain exceptions for humanitarian assistance. Meantime, State

believes Iran has spent more than $16 billion on terrorism since 2012.

Antiregime sentiment remains the prevailing theme of protests across the

country.




Critics of the pressure campaign note that even after the January killing of

Iranian Gen. Qasem Soleimani-the architect of Tehran's regional

strategy-Iran still misbehaves across the Middle East. It's true that the

regime continues to support proxy forces like Hezbollah. Yet domestic

economic damage has made this increasingly difficult, and this week Israeli

officials reported that Iranian forces are scaling back commitments in

Syria.




The most difficult questions arise in Iraq, where former intelligence chief

Mustafa al-Kadhimi became prime minister on Thursday. Mr. Kadhimi has deep

ties to Iran and attended Soleimani's funeral, though the U.S. government

welcomed his nomination last month.




Iranian-backed Shiite militias continue to endanger Americans and Iraqis,

and Tehran will pressure Mr. Kadhimi to push the U.S. out of Iraq as

Washington and Baghdad begin talks next month. The U.S. should sell itself

as a better economic partner that actually supports Iraqi sovereignty. Mr.

Trump has been eager to reduce America's commitments to the Middle East, but

a total withdrawal would turn Iraq into an Iranian colony while making a

full-blown resurgence of Islamic State more likely. Iran is likely to step

up attacks through its proxies ahead of the June negotiations.




***


The progress in restraining Iran has come despite opposition in Western

Europe, and a fight over extending the arms embargo on Tehran this fall will

generate more tension. But the idea of former trans-Atlantic allies fully

standing with Tehran against Washington is misleading. In 2019 Europe

imposed sanctions on Iranian intelligence, the first new restrictions since

the implementation of the deal. And in September Germany, France and the

United Kingdom called for a renegotiated accord. A newly independent London

still could move closer toward Mr. Trump's position.




Barack Obama's appeasement of Tehran was a two-term project, and significant

change is unlikely in this election year. Despite some concrete victories

over the past two years, Mr. Trump needs to secure re-election to realize

the goal of maximum pressure-bringing Iran to the table to negotiate a

better deal.

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