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Cryptocurrencies: The price that President Bukele is ready to pay to turn El Salvador into a bitcoin nation | USA

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Nayib Bukele, the president of El Salvador, is taking his public persona of a millennial disruptor to new heights and to a place where no one can predict the consequences. The Central American country is going to be the first in the world to adopt bitcoin as an official currency, a decision that has been announced in English and fast-tracked by a parliament that is controlled by his party, and without offering much explanation to citizens. The move couldn’t come at a more delicate time. All over the world, ransomware attacks – malicious programs used by cybercriminals to block access to an IT system or seize data – are on the rise, paralyzing entire economic sectors, and are based on hackers’ preferred currency: bitcoin.

“This will generate jobs and will help to provide financial inclusion to thousands of people who are outside the formal economy,” Bukele explained to applause last Saturday when he announced the proposal, via a video that was presented at a cryptocurrency conference being held in Miami. The message, which was broadcast in English, was aimed at an audience of technology and cryptocurrency fans. But this was also the first time that a large section of El Salvador’s people had heard about the new currency, which will soon be in their lives. Bukele was presented by Jack Mallers, the director of the payment platform Strike. The 27-year-old spent three months in El Salvador.

In the video of the event, Mallers is seen explaining that during his journey he met Yusef, one of the president’s younger brothers. “If you sort out the problem of money, you can sort out the problems of the world,” says the young man, before pointing to the fact that Salvadoreans who live in the United States will be able to send money to their families without having to pay expensive commissions.

Mallers then makes way for the president, who appears on a screen: “In the medium and long term we are hoping that this small decision will help us to push humanity, at least a little bit, in the right direction,” said Bukele, to huge applause from the audience, but without specifying how. Shortly afterward, the 39-year-old president took to Twitter to respond to questions, and estimated that if 1% of the current capitalization of bitcoin were invested in his country, it could boost gross domestic product (GDP) by 25%.

“People were applauding him like he were a televangelist,” El Faro journalist Nelson Rauda told EL PAÍS. Rauda has been covering the legislative approval of this measure. “He started there and didn’t stop. He even put that laser-eyes thing [on his Twitter photo, a symbol used by fans of bitcoin] and many public servants imitated him; he started tweeting in English and went back to being that Nayib Bukele who seduced international people at the start of his term of office.” Three days after that megaevent in Miami, on Tuesday, the law arrived at the Legislative Assembly. There, the president’s party, Nuevas Ideas (New Ideas), which has a majority, ignored all the usual procedures to see it pass. The legislation was fast-tracked in just five hours and with barely any debate.

‘Cool’ once more

Despite the fact that bitcoins will be an official currency in El Salvador in fewer than 90 days, Rauda says that Bukele has not yet explained the decision at any kind of press conference, only resorting to social media and speaking about the plan mostly in English. What’s more, while parliamentarians dealt with the legislation in the Legislative Assembly, the president was using the audio debate forum on Twitter, called Spaces, to explain the law to an English-speaking audience, accompanied by his brother Karim.

“I started to listen and I said, ‘It makes no sense to continue listening to the proposed law, which is two pages, and the deputies are talking about things that have no relevance,” Rauda explains. “On Spaces, they were giving out many details about the law that they weren’t giving during the parliamentary session. There were absurd things, like in the Assembly they were saying that the use of bitcoin was not going to be obligatory, but the president was asked the same thing and he said it would be.”

This decision to implement the use of bitcoin in his country and focus on the international public has been interpreted by the director of the NGO Acción Ciudadana (Citizen Action), Eduardo Escobar, as being a “smokescreen” to distract from the problems that have seen his government called into question, as well as a way to “change his image on an international level” at a time when the country is moving away from the United States and international bodies and getting closer to China.

“There was a coup, on May 1, managed by Bukele and supported by the Legislative Assembly, where they removed the judges and the public prosecutor,” explains Escobar. “Last week we found out that the government was expelling the CICIES [the International Commission against the Impunity of El Salvador] because it was investigating 12 corruption cases against the current government.” Escobar compares the adoption of the cryptocurrency to the adoption of the US dollar in the country in 2001, which was carried out “without consultation, behind the back of the public and from one day to the next.”

“We are coming off the back of a series of things that have damaged his image and with this, he’s returned to being the cool Nayib, the admired Nayib, someone who is audacious, revolutionary,” Rauda adds. “It’s like a return to the ‘back to basics’ for him.” While Bukele is enjoying levels of popularity above 70% at home, the decision to adopt bitcoin and the subsequent order to generate a plan so that the cryptocurrency can be mined using energy harnessed from the country’s volcanoes has also seen him win new followers among the fans of this technology.

A virtual ‘Wild West’

Beyond the world of geeks, doubts and uncertainty dominate the analysis of this decision by experts and the most critical sectors in his country. “The cybersecurity risks associated with the integration of cryptocurrency into the nation’s financial system are innumerable,” says Steven Silberstein, the general director of FS-ISAC, a global organization that exchanges cyber-intelligence and that focuses on financial institutions. Governments have been working for decades to ensure that banks and financial institutions are secure, given that these days they are considered to be “crucial infrastructure,” the specialist explains. “Substantial resources have been invested to guarantee that the billions of people who depend on a stable financial system can spend their days without worrying about a catastrophic financial collapse derived from a large-scale cyberattack.”

Silberstein points to a devastating episode in 2014, when a cryptocurrency exchange in Japan called Mt Gox was hacked and hundreds of thousands of bitcoins were stolen. Today, each bitcoin is worth around $36,000 (€29,000) each, meaning that the value of the damage today runs into the billions. What was stolen was never recovered, in part because it is very difficult to track who possesses cryptocurrencies, unlike with money that has been deposited into an account. This type of currency is not backed by people, organizations or the trust of a bank, but rather by a secret mathematical language called cryptography.

A small restaurant at El Zonte beach in Chiltiupan (El Salvador), now accepting payment in bitcoin.
A small restaurant at El Zonte beach in Chiltiupan (El Salvador), now accepting payment in bitcoin.JOSE CABEZAS / Reuters

A month ago, United States President Joe Biden made a special televised appearance to speak about a cyberattack that paralyzed a gas pipeline, which saw hackers extort the company and demand that they pay them in bitcoin in exchange for unlocking the IT system. This was the first time that a leader of that country had spoken about the problem of ransomware, a type of cyberattack that usually sees criminals demand something in exchange for freeing a computer system. Senator Elizabeth Warren published a message last week in which she referred to cryptocurrencies as the “new Wild West” and called for strict regulations aimed at protecting investors and weakening cybercrime.

“The use of cryptocurrencies has certainly allowed for ransomware attacks,” Silberstein explains. According to Chainalysis, a company that analyzes these issues, the practice caused $350 million (€288 million) of losses last year, a rise of 311% on 2019 – this coincides with an exponential rise in the demand and the price of cryptocurrencies on a global scale. From the US to Ukraine, attacks of this type have paralyzed financial markets, government ministries and even nuclear power plants.

In the case of El Salvador, the fact that bitcoin will be used alongside the US dollar as an official currency makes the proposal even riskier, given that the legalization of bitcoin as a national means of payment will facilitate the conversion of ill-gotten gains – such as the spoils from ransomware attacks – into clean funds. “Given that El Salvador uses the dollar, will this turn the country into an alternative reference point for turning income from ransomware and other types of digital extorsion into cash?” asks Silberstein.

Bitcoin is a massively volatile currency and the way that banks take care of a currency’s volatility is via interest rates. As such, it’s possible that there could be a rise in interest rates

Ricardo Castaneda, economist at the Central American Institute of Fiscal Studies

“President Bukele likes to put on a good show and this proposal raises his image as a disruptive millennial who is shaking things up in El Salvador,” says Risa Grais-Targow, a Central America analyst at Eurasia Group. “He is making the proposal as a way to create dynamism in the economy, but on studying the context, where there are accusations of corruption aimed at people close to him, the economic policy feels very improvised,” she explains, speaking by phone from New York.

In May, the US State Department published a list of 17 corrupt Central American officials, including Bukele’s Cabinet chief Carolina Recinos, the former security minister Rogelio Rivas, and legislator Guillermo Gallegos, the leader of the Grand Alliance for National Unity (GANA) party, which took the president to power in 2019. While this list has not had any immediate effect, this month the Enel List is expected to be published, which may include specific sanctions for bank accounts in the US, on international transactions, and visa restrictions for those who are targeted.

“In this context, doing anything that creates more concern about transparency, or possible money laundering, feels like adding to the confrontation or perhaps moving away from the road toward a constructive relationship with the US,” Grais-Targow argues. If Bukele forces citizens to use bitcoin, this could drive a wedge into the use of the dollar, in a way that could undermine the future of the country’s dollarization. As such, this proposal could be interpreted as a step toward “dedollarization,” without strictly being a plan to get rid of the currency altogether.

The United States is the country with the greatest weight over the decisions taken by the International Monetary Fund (IMF), with whom Bukele is negotiating a loan that could be as big as $1.3 billion (€1.07 million), and which would be used to drive the economic recovery from the coronavirus crisis. On Thursday, an IMF spokesperson said that the fund’s authorities would meet with Bukele to discuss the issue, and warned that the “adoption of bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis.”

Legal and obligatory

The new law approved by the Legislative Assembly in El Salvador will force all businesses to offer bitcoin as a payment method, meaning that Salvadoreans will have to invest in the necessary technology for their businesses. The president said on social media that the use of the Strike application will be prioritized. The system works like a digital wallet, and will allow citizens to pay their taxes in bitcoin. As such, the public finances will be exposed to the sudden devaluations of this cryptocurrency, which has fallen up to 22% in a single day.

The law also establishes that any debt can be converted into bitcoin. “This puts the risk in the banking system, because banks are obliged to take payment in bitcoin, bringing all the complexities that has with it,” explains Ricardo Castaneda, an economist at the Central American Institute of Fiscal Studies (ICEFI) in San Salvador. “Bitcoin is a massively volatile currency and the way that banks take care of a currency’s volatility is via interest rates. As such, it’s possible that there could be a rise in interest rates,” something that would see Salvadoreans pay more to service their debts.

The government claims that it will absorb this risk, which Castaneda argues “is a fallacy, because the government is funded by taxes, right? In reality, it will be the poorest people who will have to assume this risk, because in the end all of it is going to be paid as taxes.”

“It’s worrying that they might touch the pensions, that they could convert them into bitcoin,” says Escobar from Acción Ciudadana. “The adjective that describes us is uncertainty, a lack of knowledge and uncertainty about what the government is going to do and the implications it could have,” he complains. “We don’t have any information, nor do we know what the objective is.”

When you consider that 70% of the country’s economy is informal, it’s difficult to imagine that so many citizens could be incorporated into the banking and taxation system, simply because they can now use bitcoin, Castaneda adds. And those who can, would be exposed to fluctuations in price and cybersecurity risks.

“We can assume that many consumers will be relatively or completely new to cryptocurrencies and the platforms used to sell and store them,” says Silberstein from the FS-ISAC. “Without a mass campaign of cybernetic education, consumers could be easy prey for sophisticated cybercriminals who use phishing and other fraud to obtain access to their accounts. There is no support for cryptocurrency like there is for currencies backed by the central bank,” he adds.

For Nelson Ruada, the impression is that in El Salvador, the debate about bitcoin is one for people with money, something that “the majority of the country doesn’t have.” That’s why he believes that at the megaevent in Miami, at which there was talk for the first time about making the cryptocurrency official, the hook for citizens was the fact that they could send currency without paying commissions. The money sent home by citizens residing abroad represents more than 20% of the country’s GDP. However, the journalist warns that this is a “sales promise. There is no public document that refers to that.”

With the popularity of Bukele, says Escobar, the president – a publicist by profession – could sell anything he wanted to. “People are not bothered that no one has told them anything about bitcoin. What he says, in general, is the blessed word. That’s how people take it. What he has managed to build is not a government, but rather a sect that worships his personality.”

English version by Simon Hunter.



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UK Pharmacists Warn Medicine Shortages Put Patients at Risk

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The issue first came to the fore in April, when shortages of hormone replacement therapy (HRT) drugs resulted in an outcry, with doctors warning that some women will resort to unorthodox methods to get the medication they need.

British pharmacists have expressed concern over medicine shortages in the UK, which they believe put patients at risk, a new poll has revealed.

A survey of 1,562 UK pharmacists for the Pharmaceutical Journal found that more than 54% of respondents said that patients had been put at risk in the last six months due to drug shortages.

The outlet cited an unnamed pharmacist from a children’s hospital in England as saying that problems pertaining to variable supply of nutritional products may pose threat to patients’ health.

“We had to ration it, and this has potentially put patients at risk of vitamin deficiencies,” the pharmacist pointed out.

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They were echoed by another hospital pharmacist, who voiced alarm about drugs being unavailable at the end of a patient’s life.

“There was no alternative for one patient who had to deal with an additional symptom in his last days of life due to lack of available treatment,” the source told the Pharmaceutical Journal.

The same tone was struck by Mike Dent, director of pharmacy funding at the Pharmaceutical Services Negotiating Committee, who said in an interview with the journal that they are “becoming increasingly concerned about medicine supply issues and the very serious impact this is having on both community pharmacy teams and their patients.”

A spokesperson for the UK Department of Health and Social Care, in turn, stressed that they “take patient safety extremely seriously, and […] routinely share information about medicine supply issues directly with the NHS [National Health Service] so they can put plans in place to reduce the risk of any shortage impacting patients, including offering alternative medication.”

“We have well-established procedures to deal with medicine shortages and work closely with industry, the NHS and others to prevent shortages and resolve any issues as soon as possible,” the spokesperson added.

The remarks followed the UK government issuing a number of “medicine supply notifications,” which highlight shortages of a whole array of key drugs, including live­-saving ones such as antibiotics, insulin and antidepressants.

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The issue first came to light at the end of April 2022, when a shortage of hormone replacement therapy (HRT) medication left some women in the UK sharing prescriptions and feeling suicidal. HRT is used to relieve most symptoms of menopause and it works by replacing hormones that are at a lower level.

According to the UK newspaper Express, drug shortages “are being caused by a shortage of raw ingredients used to manufacture medicines. These are often supplied by countries in the Far East. There are also rising costs set by pharmaceutical manufacturers and wholesalers.”



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Cannabis: Canada to spend $200 million on medical marijuana for veterans | International

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The Canadian government is on track to spend CA$200 million (around $154 million) on medical marijuana for veterans, an increase of 30% compared to 2021 and 135% compared to 2019. Since 2008, Canada’s Veteran Affairs has been reimbursing former military personnel for what they spend on medically prescribed marijuana.

Canada legalized recreational cannabis in October 2018 (the second country to make such a regulatory change after Uruguay). The government of Justin Trudeau justified the measure as a move to fight organized crime and ensure the safety of consumers. Marijuana for medicinal use, however, has been legal in Canada since 2001. The Canadian Health Ministry backed its decision on the grounds that studies show it can be beneficial for patients who suffer from problems such as anxiety, post-traumatic stress disorder and chronic pain.

In 2008, after overcoming various legal disputes, Veteran Affairs approved a measure to reimburse war veterans for the cost of medicinal marijuana, although reimbursements were to be decided on a case-by-case basis. In 2011, the authorities simplified the procedure to make it accessible to more candidates. That year, 37 people were reimbursed for a total amount of CA$103,400 (81,000). In November 2016, the ministry modified its compensation rules, reducing the daily limit from 10 grams a day to three. The current maximum rate for refunds is $8.50 per gram.

Veteran Affairs stated that medical cannabis is “a developing area of treatment,” and it will continue to review information and “adjust the policy as necessary to guarantee the welfare of veterans and their families.” A Canadian Senate commission called for such a review in 2019, emphasizing the positive results of cannabis for therapeutic purposes, in particular as an effective substitute for highly addictive opioids against chronic pain. Senators also said that the maximum price needs to be constantly evaluated, as costs may exceed what some veterans can afford.

According to the latest data, some 18,000 ex-combatants were reimbursed for medicinal marijuana in 2021, which equated to CA$153 million ($118 million) in federal spending. While experts largely support the plan for veterans, they say it should be accompanied by psychosocial support, especially in cases of anxiety and post-traumatic stress disorder.

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Campaigners call on UN Women to pull out of BlackRock partnership | Women’s rights and gender equality

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The UN agency responsible for promoting gender equality is being urged to pull out of a partnership with BlackRock, the world’s biggest investment fund manager, over the company’s “record of prioritising profits over human rights or environmental integrity”.

Hundreds of women’s organisations and activists have written to UN Women demanding it rescind the partnership.

The letter, sent on Tuesday to Sima Sami Bahous, UN Women’s executive director, and her two deputies, Åsa Regnér and Anita Bhatia, said the partnership “gives BlackRock a veneer of feminist approval that it clearly does not merit”.

While details of the collaboration have not been made public, BlackRock published a statement on its website in May saying it had signed “a memorandum of understanding” with the UN agency “agreeing to cooperate in promoting the growth of gender lens investing”.

BlackRock has faced pressure from environmental activists to improve its climate action policies, given its vast holdings in fossil fuel companies, and wide global reach.

The asset manager has investments in some of the world’s largest weapons sales companies, the letter said, noting that BlackRock is “consistently” ranked among the worst performers on corporate accountability by civil society watchdogs.

From left to right: Pam Chan of BlackRock, UN Women representative Anita Bhatia and Isabelle Mateos y Lago of BlackRock at Davos this year.
From left to right: Pam Chan of BlackRock, UN Women representative Anita Bhatia and Isabelle Mateos y Lago of BlackRock at Davos this year. Photograph: UN Photo

The letter, signed by almost 600 groups and individuals, said BlackRock also holds large amounts of debt in Zambia and Sri Lanka. It was among the private sector lenders that refused to delay debt interest payments to prevent Zambia’s finances from collapsing. The country has had to cut health and social care spending by a fifth in the past two years to balance its budget, cuts that have disproportionately affected women and marginalised groups.

Sanam Amin, a Bangladeshi academic and activist, said: “We want this agreement to be rescinded. This will not have a positive outcome for UN Women or the feminist organisations it is working with.”

She said BlackRock was using UN Women for bluewashing and pinkwashing purposes, and that it was “a fantasy” to imagine that “gender-impact investment can keep investment bankers rich and also save the world”.

“This is an illusion and relies on the labour and resources of marginalised communities in a gendered fashion, in the global south and across global supply chains.”

This is not the first time UN Women has been criticised for partnering with the private sector. In 2015, after pressure from women’s groups, the organisation backed out of a deal with Uber to encourage 1 million women to sign up as drivers.

Emilia Reyes, a feminist activist, said a lack of money was driving the UN into partnerships with the private sector. “We are calling for member states to fulfil their commitments on funding for UN departments as a whole,” she said. “In the search for extra funding, [UN bodies] are undermining their mandate and pushing conflicts of interest inside the UN.”

A spokesperson for UN Women said it “understands the concerns of its civil society partners”, which “merit consideration”. They said the partnership had been “put on hold”.

BlackRock said the money it managed belonged to its clients, many of whom made their own investment decisions. It added: “We highly value UN Women’s leadership in advancing women’s empowerment around the world and respect their decision to put the agreement on hold while they review their strategy for private sector partnerships.”

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