Ukraine

• Pres. Putin declared victory over Luhansk – one of two oblasts comprising the Donbas – and told his troops to rest and “increase their combat capabilities” ahead of a likely forthcoming assault on Donetsk, starting with the cities of Bakhmut and Sloviansk. Many residents have already evacuated both Donetsk cities, following warnings from both Pres. Zelensky and Russia (which essentially said it would consider anyone still there to be a fighter and thus a fair target).
• Meanwhile, Kyiv says it’s planning a major counteroffensive in southern Ukraine, where Russian forces are less concentrated now that they’re focusing on the Donbas.
• Pres. Zelensky laid out a $750 billion postwar “recovery plan” to rebuild Ukraine’s war-torn infrastructure and institutions. The multi-stage plan calls for one-third of the funding to come from the private sector, with additional contributions from vague hopes for Russian reparations and the release of frozen Russian assets to Ukraine.

China

• UK lawmakers want to ban Chinese CCTV manufacturers Hikvision and Dahua because of their links to surveillance that leads to human rights abuses in China. The U.S. already bans both companies for the same reason.

Libya

• A UN-appointed mission to Libya is due to submit a report to the UN Human Rights Council this week alleging that there are as many as 100 “probable mass graves” yet to be investigated in Tarhuna, where the Kaniyat militia executed and imprisoned hundreds of people from 2016 to 2020. Hundreds of bodies have already been found in Tarhuna, which led to this investigation that now suspects more are still buried.
• The Kaniyat militia used to have authority in Tarhuna, with the blessing of first the Government of National Accord (GNA) and then Khalifa Haftar’s Libyan National Army (after the militia switched its alignment). Most Kaniyat leaders are believed to have fled to areas under Hafter’s control after losing authority in Tarhuna, so it’s mostly the Tripoli-based GNA pursuing investigations now.

DRC

• DRC declared its latest – and 14^th overall – Ebola outbreak over, after no new cases emerged within two incubation periods. This outbreak killed at least three confirmed cases, as well as one probable case.

Sahel

• Suspected jihadists targeted civilians in two separate attacks in north and northwest Burkina Faso over the weekend, killing at least 27.
• Meanwhile, Niger says it repelled a raid by Boko Haram fighters in the southeast – although one soldier died and one went missing in the attack.

Other News

• U.S. investigators did “not reach a definitive conclusion” regarding who shot the bullet that killed Al Jazeera journalist Shireen Abu Akleh since the bullet the Palestinian Authority handed over for investigation was badly damaged – but said the Israeli military was “likely responsible,” though perhaps unintentionally.
• The Central African Republic (CAR) launched its native cryptocurrency, the Sango, as well as a tax-free trading hub. Analysts have questioned the viability of crypto trading in a country where only 14% of the population has electricity – and fewer still have internet to access trading platforms.
• On a related note, The Economist had a great article on El Salvador’s folly investing in bitcoin as an official currency – see below. CAR doesn’t seem to have taken heed of El Salvador’s example.
• Uzbekistan says 18 people were killed, 243 were wounded, and 516 were detained during last week’s demonstrations against plans to revoke autonomy for the ethnic minority-dominated Karakalpakstan region. Those plans have since been withdrawn and many of those detained have been released, but the incident was a good indication that Pres. Mirziyoyev doesn’t enjoy as much unquestioning support as you’d think based on reporting from his loyal media.

El Salvador’s government is gambling on bitcoin (Economist)

President Nayib Bukele has already lost around $50m in public funds

When a president boasts that he manages the country’s wealth from his smartphone while naked, it hardly inspires confidence. Even less so in a country that has a debt-to-gdp ratio of 84% and least of all when the president is investing in bitcoin, which this week fell to its lowest value in 18 months. Welcome to El Salvador, which became a tech bro’s playground a year ago, when President Nayib Bukele, its social-media-obsessed leader, made the cryptocurrency legal tender.

In June last year, at a cryptocurrency conference in Miami, Mr Bukele announced that the Central American country would be the first to adopt bitcoin as an official currency, alongside the American dollar. In September, a day before passing the so-called bitcoin law, which made it compulsory for businesses to accept the cryptocurrency, Mr Bukele also started to use public funds to invest in bitcoin.

Today passengers arriving at the airport in San Salvador, the capital, are greeted by a blue atm labelled “Chivo” (“Cool”), the name of the country’s digital wallet, at which bitcoin can be bought or converted into cash. Hotels in El Zonte, a beach town that was a testing ground for bitcoin thanks to the arrival of an American crypto advocate there, loudly advertise that they accept the cryptocurrency. The government plans to issue “volcano bonds”, which would be partly backed by bitcoin, to fund the building of “Bitcoin City”, a tax haven powered by geothermal energy from a volcano, in order to attract crypto miners.

But all the hype notwithstanding, introducing bitcoin as legal tender has not been a wild success. For a start, few ordinary folk use it. Most Salvadorean adults downloaded the Chivo wallet, which the government promoted by giving the bitcoin equivalent of $30 to everyone who signed up. But fewer than half of them have continued to use it after spending this gift. Bitcoin, which has lost 70% of its value since November, is far too volatile to be a good store of value, especially in a country where gdp per person is $4,400. (This has not deterred the Central African Republic, which is even poorer, from following El Salvador’s lead and adopting bitcoin in April.) “One day it’s up and one it’s down,” says Efrain García, a construction worker. “I could lose a lot.” Only 1.6% of remittances arrived through crypto wallets in April.

Similarly, only a fifth of businesses follow the requirement that they accept bitcoin. This is despite the central bank’s promise to exchange the cryptocurrency for dollars immediately, to shield them from volatility. In El Zonte food kiosks only accept cash. At a hotel the receptionist says some people do use bitcoin to settle their bills, “but usually Americans”.

It is unclear how much money Mr Bukele has spent on bitcoin, since the government does not make its investments public. Those who track the president’s tweets, and take him at his word, reckon the government has lost about half its investment, or $50m to date (see chart). That is not catastrophic, but a clear indication of what can go wrong. Félix Ulloa, the vice-president, argues that the cryptocurrency is a long-term investment. But there is no guarantee it will be a profitable one, and a poor country like El Salvador cannot afford to gamble.

That such a volatile asset could be made legal tender at all says much about Mr Bukele’s style of leadership. Since taking office the “world’s coolest dictator”, as he calls himself, has ruled the country of 6.5m like a private fief. After winning a majority in elections in 2021, he appointed loyalists to institutions such as the constitutional court. There was no debate on making bitcoin legal tender, notes Claudia Ortiz, an opposition lawmaker.

Many fret that bitcoin will decrease transparency. Some reckon it is a way for officials to evade possible American sanctions. Others fear bitcoin opens the way for money-laundering and corruption. Several ministers were under investigation for misuse of pandemic funds before Mr Bukele fired the attorney-general. Cybersecurity is also an issue. It is unclear if anyone aside from Mr Bukele knows El Salvador’s bitcoin keys, the codes needed to prove ownership and make transactions.

Mr Bukele tweets about bitcoin in English. That suggests his audience is abroad. Indeed the president, who has a team dedicated to monitoring popular opinion, has been talking less about bitcoin of late, having shifted his focus to gangs. Since a spike in killings in March, some 40,000 people have been arrested. Such autocratic policies are popular. Mr Bukele’s approval ratings hover at around 80-90%.

But the economy may yet disillusion voters. After growing by 10.7% in 2021, thanks to the lifting of restrictions related to covid-19, it has slowed sharply. Growth of 2.9% is predicted this year. Foreign direct investment rose by 12% in 2021, but remains a lowly 1% of gdp. It is unlikely that the bitcoin gambit will create many jobs.

El Salvador’s economy was in a dire state long before Mr Bukele came to power in 2019. The country has few productive industries; it is instead dependent on remittances, which amount to more than 20% of gdp. Despite the high public debt (84% of gdp), the government projects a budget deficit this year of 5.7% of gdp. Financing that is proving tricky. Mr Bukele’s penchant for crypto, as well as his authoritarian tendencies, have prompted the imf to stall negotiations on a $1.3bn loan. Rating agencies have downgraded El Salvador’s creditworthiness, making it more expensive for the government to borrow. The volcano bond issue has been delayed. The government’s investments in bitcoin add further uncertainty to the mix.

The government is likely to scrape together the cash to make a bond payment of $800m in January. It will want to avoid default ahead of Mr Bukele’s bid for re-election in 2024. But the strains are showing. Even as the legislature approved expenditure on financial infrastructure to promote the use of bitcoin, it cut spending on education and health. The government has also cut budgets for local councils. A volatile currency and a volatile leader suggest a volatile future for El Salvador.