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 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.”
The funeral of a Roma man killed while in Czech police custody was held over the weekend. Stanislav Tomáš died after a Czech police officer kneeled on his neck, in scenes reminiscent of the murder of George Floyd by a US police officer in Minneapolis. Tomáš passed away 19 June, while being rushed to the hospital. The police have denied wrongdoing.
US House Speaker Nancy Pelosi (D-CA) confirmed on Sunday that Rep. Adam Kinzinger (R-IL) has been appointed to serve on the US House-approved select committee probing the January 6 attack on the US Capitol building. This move comes days after Pelosi rejected two out of five GOP recommendations from House Minority Leader Kevin McCarthy (R-CA).
“Some Republicans have been saying … that the GOP should play ball on this committee. You could get the three,” a reporter asked in reference to Reps. Rodney Davis (R-IL), Kelly Armstrong (R-ND) and Troy Nehls (R-TX).
All three lawmakers received Pelosi’s approval for appointment, but they were ultimately held back by McCarthy, who demanded the House Speaker also appoint Reps. Jim Jordan (R-OH) and Jim Banks (R-IN). Pelosi has asserted that Jordan and Banks would endanger the probe’s “integrity.”
McCarthy brushed the reporter’s suggestion aside, arguing that Cheney and Kinzinger are the only House Republicans who would “play ball” in an effort for the commission to have a bipartisan quorum.
“Who is that, Adam [Kinzinger] and Liz [Cheney]?” he floated. “Arent they kinda, like, Pelosi Republicans?”
“We’ve got very serious business here. We have important work to do,” she asserted to reporters on Monday.
Both Cheney and Kinzinger are slated to meet up with their Democratic colleagues for their first select committee meeting on Tuesday. The group’s first witness is also expected to make an appearance.
Presently, Democrats on the 13-member group include Rep. Bennie Thompson (D-MS), chairman of the select committee, Zoe Lofgren (D-CA), Adam Schiff (D-CA), Pete Aguilar (D-CA), Stephanie Murphy (D-FL), Jamie Raskin (D-MD) and Elaine Luria (D-VA). Kinzinger and Cheney are the sole GOP lawmakers assigned to the committee.
McCarthy has maintained that Pelosi is pursuing a “sham process” by rejecting Jordan and Banks from the select committee.
U.S. House Minority Leader Kevin McCarthy (R-CA) announces the withdrawal of his nominees to serve on the special committee probing the Jan. 6 attack on the Capitol, as two of the Republican nominees, Reps’ Jim Jordan (R-OH) and Jim Banks (R-IN), standby during a news conference on Capitol Hill in Washington, U.S., July 21, 2021
“Speaker Pelosi’s rejection of the Republican nominees to serve on the committee and self-appointment of members who share her preconceived narrative will not yield a serious investigation,” McCarthy wrote on Sunday, shortly after Pelosi announced Kinzinger’s appointment. “The Speaker has structured this select committee to satisfy her political objectives. She had months to work with Republicans on a reasonable and fair approach to get answers on the events and security failures surrounding January 6.”
Republicans have also argued that the investigation should focus on why the US Capitol was not properly secured on January 6, despite reports claiming law enforcement had information leading up to the attack.
“The U.S. Capitol and the men and women who protect it suffered a massive leadership failure. We must make sure that never happens again,” the House Minority Leader noted on Sunday, claiming the GOP will carry out its own probe on the deadly riot.
On the wide, flat plain of the Sinjar district of northern Iraq, Naif Khalaf Qassim lets his dog, an eight-year-old Belgian shepherd, range across the dry earth on a 30-metre leash until Branco stops and sits, tail wagging, looking towards his handler with enthusiasm.
Branco has detected something underground and, when the mine-clearing team is brought in to investigate, they find an improvised explosive device (IED), known locally as a VS500.
It is about 30cm (1ft) wide, with a plastic casing and a central pressure pad. The VS500 is not the name Islamic State give the device; no one knows that. All that is certain is that it is one of thousands produced when the terror group held sway over this part of Iraq and commandeered plastics factories in their Mosul base, forcing the workers to make souped-up versions of the Italian-made VS50 landmine.
A VS50 could fit on the palm of your hand, and contains about 100g of explosives. The deminers call this type of mine the VS500 because it is 10 times the size and packed with up to 15kg (33lb) of explosives. The pressure pad is sensitive enough for a child to activate, even through 30cm of packed earth. The explosion can take out an armoured vehicle.
Branco is trained to sniff ahead in a controlled manner and stop if he gets a scent – so he doesn’t tread on the mine. Belgian and German shepherds are used because they are most adept at distinguishing scents.
“I knew Branco would find the IED,” says Naif proudly. “I believe in him and his abilities; I know him and what he can do. He is more of a friend to me than a dog.”
Four years ago, Iraqi forces managed to take the last stronghold that Isis had left in the country, the city and surroundings of Tal Afar. The Iraqi flag was raised on the historic Ottoman citadel at the heart of the city, and the militia was pushed into Syria.
The war might have appeared over by late August 2017, but retreating Isis forces seeded the towns, villages and countryside in that area of Sinjar with IEDs, and the job of clearing them is still far from done.
But it is moving at a much faster pace, thanks to the introduction of the small sniffer dog team, including Branco, and his handler, Naif, 35.
Mine-detection dogs are not new – the British-based Mines Advisory Group (MAG) has been working across northern Iraq for three decades. In the year from June 2020 to June 2021 the Iraqi dog team has found and destroyed 3,540 landmines and explosive remnants of war, including 670 improvised mines and 148 other improvised devices.
Now MAG has embarked on a specific programme to better detect the explosives used by Isis and other non-state groups.
Dogs are usually trained to sniff out explosives, mainly TNT, but the IED dogs take this a step further. Trained in Bosnia-Herzegovina, their noses are attuned to rubber, metal and batteries as well.
This is key where explosives are often improvised from domestic items such as pots and kettles, with detonators and batteries. Training dogs to focus on a wider range of scents allows for more opportunities to detect anomalies below the surface.
The new four-strong dog team (with two more on their way from Bosnia-Herzegovina) is currently working on 8sq km of land near Tal Afar that was used as a barrier minefield by retreating Isis fighters in 2017. While people armed with mine detectors painstakingly scour a known mined corridor, the dogs range across the areas either side, deemed low or medium risk, to seek out any randomly planted devices.
The programme for the “super-detector” dogs was curtailed until now by Covid and by difficulties negotiating with the administration in Sinjar – divided between the Iraqi federal government and the Kurdistan regional government.
The dogs start work at 5am, so that they can finish before the sun is too high – last week temperatures there hit 49C (120F). The handlers are from the Yazidi community.
Vian Khaider Khalaf, 26, was a student before starting work with the dogs in 2017. She works to support her family in Sinuni, but like everyone on the team, her driving motivation is to clear the mines so that families can return to their farms.
“We always had dogs at home, as my family are farmers and shepherds,” says Khalaf. “I fled with my family in 2014 when Daesh [Isis] came. I still have family in an IDP [internally displaced people] camp in Kurdistan. My family are afraid for me, of course. But they are proud of me and see me working hard and bravely, and that makes me want to take on more challenges.”
Khalaf has worked with her dog, X-Lang, since she started with MAG. He was originally a mine-detector dog, but was selected for the IED upgrade training. She says: “The relationship between me and my dog is not really that of a human and an animal. He is my dear friend. If I could take him home with me at the weekend, or live on the base with him, I would.”
After their shifts out in the fields, handlers and dogs spend the rest of the day together, often around the pool on the base.
The team supervisor is Salam Rasho, a former noncommissioned officer with the Kurdistan military, the peshmerga. He is also a Yazidi and has seen the devastation of his community. “Our aim is to return the people to their land, to get people farming the land again,” he says.
It’s impossible to estimate how much unexploded ordnance there is in Iraq – one of the most mined countries in the world, according to some estimates. There is little information about where mines were laid over the past 40 years, from the Iran-Iraq war in the 1980s, to Saddam Hussein’s assaults on his own people, the Gulf War, and finally Isis. It is thought that in federal Iraq alone there are some 3,000 sq km of mined land yet to be cleared, with 8.5 million people living in close proximity.
The real benefit of the dogs, says Salam, is that they can cover a huge area much quicker than humans – about 1,500 sq metres a day. The success of the Iraq deployment means that MAG is stepping up its IED dog training and even going to the next level – finessing the programme so that dogs can also be used to help clear booby-trapped homes.
Clearing Iraq of unexploded mines is a task that will take many more years, but at least now the land is being freed from the lingering grip of Isis at a faster pace than before thanks to Branco, X-Lang and the other dogs of war.