Shadow Lobbying in DC on Policy, it’s Dark

Posted on May 2, 2016May 2, 2016 by Denise Simon

There is a certain Senator who generated a mission to Make DC Listen, knowing that individual American voices were drowned out by power, money and influence.

Hat tip to the Sunlight Foundation for this summary.

What is shadow lobbying? How influence peddlers shape policy in the dark

Earlier this year, we asked you to help us find out which Democratic superdelegates are also lobbyists. We didn’t want to limit it to just registered lobbyists, because there’s an increasing number of people in Washington who do what most of us would think of as lobbying activity, but avoid registering — known as “shadow lobbyists.” But that left us, and our readers, with some questions: What exactly is a shadow lobbyist? How do they avoid registering? How did we get here?

What is shadow lobbying?

Shadow lobbying refers to someone who performs advocacy to influence public policy, like meeting legislators or their staff, without registering as a lobbyist — and it’s a big problem for anyone who cares about transparency in Washington. (For further reading on this topic, you can’t do better than to read Lee Fang’s 2014 investigation of shadow lobbying at The Nation.)

If you just looked at the number of federal registered lobbyists, you would think lobbying was a dying profession. Since a peak of 14,829 registered lobbyists in 2007, the number has steadily declined; in 2015, it was 11,504. But it’s not that the lobbyists have packed up their offices and left D.C. According to the Center for Responsive Politics, the amount of money spent on lobbying has remained near its 2009 peak, even as the number of lobbyists has supposedly decreased: In 2015, $3.21 billion was spent on lobbying, down only slightly from $3.5 billion in 2009. (Some estimate that number, which is based on reported spending on lobbying registrations, is actually up to three times higher; we’ll get to that later.)

Shadow lobbying is also sometimes known as the “Daschle Loophole,” named after Tom Daschle. A former senator from South Dakota, Daschle worked as a “policy adviser” at lobbying shops like Alston and Bird and global firms like DLA Piper after leaving the Senate, but never registered as a lobbyist. As The Huffington Post pointed out, that doesn’t mean his clients didn’t “receive the full benefit of his contacts and expertise, and that those assets can’t be used to influence legislation.” Last month, Daschle unexpectedly registered as a lobbyist; however, there are many who followed his blueprint of behind-the-scenes influence.

After years of lobbying, Daschle finally registers as a lobbyist

The pioneer of shadow influencing has put on paper what many have known for years — that he is, in fact, a lobbyist.

So where did all the lobbyists go?

The simple answer is nowhere. They’re still here — they just stopped registering as lobbyists.

The system of lobbying registration has never been ideal. Lee Fang notes that a General Accounting Office study in 1991 revealed more than 10,000 lobbyists who had failed to register, and of those who did register, “94 percent failed to complete their registration forms as required by law.” The 1995 Lobbying Disclosure Act (LDA), while far from perfect, cleaned up the system and clarified the definition of lobbying. In 2007, following the Jack Abramoff scandal, Congress passed the Honest Leadership and Open Government Act (HLOGA), which extended the “cooling off” period — the period of time after a lawmaker or their top staff leaves Congress during which they are forbidden from lobbying.

As the law stands now, lobbyists are required to register if they spend at least 20 percent of their time lobbying on behalf of a client, or if they make at least two contacts with covered government officials (members of the House or Senate, their staff and select members of executive agencies). Firms are also exempt from registration if their total income from an individual client is less than $3,000 per quarter.

The problem is that this threshold is reasonably easy to get around. I spoke to James Hickey, the president of the Association of Government Relations Professionals (AGRP), formerly the American League of Lobbyists. (That’s right: Even the people who represent lobbyists no longer call themselves lobbyists.¹) He believes the 20-percent threshold doesn’t work as a way to measure lobbying activity: “Personally, and it’s not AGRP’s position, it’s mine, I think anybody who lobbies should register” — whether it makes up 20 percent of their time or not.

Hickey said there should be some exceptions — people “that ask their CEO to come in one day of the year for a fly-in to talk to half a dozen members,” for example, shouldn’t register. But “as long as that 20 percent threshold exists,” he said, “there’s no way those who are in charge of enforcement can keep tabs on what are roughly estimated to be 20,000 lobbyists in Washington, D.C.” (Hickey told me that he registers even though he doesn’t hit the 20 percent threshold because of his position as president of the AGRP.) The Government Affairs Yellow Book, for example, includes information for 23,000 “government affairs professionals” in Washington, more than twice the current number of registered lobbyists.

There’s data to back this up, too. According to a 2012 study by the Center for Responsive Politics:

More than 46 percent of the active 2011 lobbyists who did not report any activity in 2012 are still working for the same employers for whom they lobbied in 2011 — supporting the theory that many previously registered lobbyists are not meeting the technical requirement to report or have altered their activities just enough to escape filing.

American University Professor James Thurber, who’s studied lobbying for more than 30 years and served on the American Bar Association’s Lobbying Task Force when it recommended strengthening lobbying laws, said, “Anyone who is paid to influence public policy, we should know about it” — whether it’s Boeing or the Boy Scouts. Thurber thinks there are around 100,000 people working in lobbying and advocacy in Washington.

Another lobbyist I spoke to, Paul Kanitra, agreed that there are those in D.C. who “take advantage” of the “gray area” created by the lobbying disclosure laws. He runs a firm called LobbyIt that focuses on smaller clients, and its ethos is very different to other lobbying firms. Its website claims, “Large corporations and their high priced representation have a stranglehold on the Capitol,” describing the firm as a “new breed of lobbyists [who] know the United States is supposed to be a government of the people and for the people.” Kanitra argued that the obvious value for a lobbying firm of hiring a former lawmaker is their contacts, saying, “I have to imagine they aren’t sitting the members of Congress down and having them do research and write white papers all day long.”

Why would a lobbyist want to avoid registering?

There are a lot of reasons. It’s certainly possible that lobbyists might not want the public to know that their client is lobbying Congress, or how much they’re spending on it, but that wouldn’t explain the big drop in lobbying registrations after 2007. One big explanation is the passage of HLOGA in 2007, which tightened disclosure and penalties for registered lobbyists, which we wrote about in 2014: “Before these changes in the rules, individuals registered under the LDA just in case. There was no downside. Now, being a registered lobbyist subjects people to additional campaign finance disclosure and gift rules, as well as steep civil and criminal penalties for non-compliance. So, political lawyers simply say don’t register.”

Hickey pointed, as many others have, to the Obama administration’s 2009 decision to bar former lobbyists from working on “regulations or contracts directly and substantially related to their prior employer for two years” in his White House, saying it had a big effect on lobbyists: “If by being registered I preclude myself from that opportunity, then I think I’m going to have to look carefully at exactly my threshold and how much I lobby, and if I can justify the fact that I don’t do 20 percent or more, then I’m going to go ahead and deregister.” Thurber thinks that while the 2009 rule did have a big impact, along with the 2007 law, shadow lobbying has been a problem since “well before” those changes. “Basically, there has been no serious enforcement for decades,” Thurber said. “That did not change with the 2007 reform, except there was a surge in de-registrations after 2007.”

He’s right: There is very little enforcement of the Lobbying Disclosure Act. The Department of Justice has never brought criminal charges against anyone for failing to register as a lobbyist. According to Fang, “The Justice Department has largely pursued cases in which a registered lobbyist has failed to update a quarterly statement or fallen delinquent, and the House clerk or Senate secretary has spotted the error.” (I reached out to the Department of Justice to check if any cases had been filed since Fang’s article; they told me that their “office is unaware of any criminal cases brought under the Lobbying Disclosure Act. The U.S. Attorney’s Office for the District of Columbia has not brought a criminal case under the LDA.”). Kanitra pointed out that those who do register actually put themselves more at risk of investigation than those who just circumvent the system entirely, because they’re then open to being penalized for submitting registrations late or putting something incorrect on their registration forms.

Thurber says we could know a lot more about shadow lobbying than we do. The Government Accountability Office (GAO) does an audit of lobbying disclosure, examining how well lobbyists comply with the registration compliance — but it only looks at those who are registered. The audit doesn’t scrutinize “people who are actually lobbying but are not registered, which is what’s going on mainly in town.” He says the GAO has that authority “to look at all kinds of advocacy” under the existing law, but doesn’t.

What can be done to shine a light on shadow lobbying?

Some, like Thurber, advocate for expanding the definition of lobbying activity to include marketing, public relations and advertising costs. He believes if you include “all the ads, all the shadow lobbyist activities, all the marketing,” the money spent on lobbying is more like $9 billion. Many lobbying firms also have in-house strategic communications arms, and those sorts of services aren’t cheap — and neither are TV ad campaigns. The Glover Park Group, which received $7 million in lobbying income in 2015, boasts about its content creation services on its website:

GPG’s creative group melds left-brain and right-brain thinking to create campaigns that drive conversation, educate, persuade, sell and move to action.

It’s the story that matters, whether we tell it through a new website or blog, traditional ads, such as TV, radio, newspaper and magazine ads, billboards or bus wraps, or interactive and native ads across the social, mobile web. We use every tool available: photos and videos, infographics and sharegraphics, informational one-pagers and brochures, chart packs, slide decks, reports and white papers, and more.

Whether it’s a 30-second spot on national TV or an interactive digital ad on a news site, our creative output is stronger and more effective because it’s built on the input that only GPG’s combination of research and experience can provide.

But other lobbyists I spoke to disagreed with Thurber’s proposal. Hickey said, “Public relations is really a different discipline. Sometimes they overlap and sometimes they coordinate, but your goal for public relations is really company brand or product brand than it is for influencing legislation.” He argues: “If there’s no reference to that legislation, then it’d be hard for anyone to say that clearly falls in the realm of lobbying.”

Paul Kelly, a registered lobbyist and member of AGRP, concurred, saying these activities are protected by the First Amendment right to petition one’s government and that “policymakers ought to be very careful about treading into those waters to regulate those activities.”

Even Kanitra, who describes himself as an advocate for transparency and open government, sees problems with this idea. “The problem is, to find a definition that can’t be worked around is so incredibly difficult. I’m open to somebody telling me a specific threshold or a specific approach that would work that would actually wind up having an effect on the people who are abusing it now as opposed to the little guys.”

It’s certainly likely that some, maybe many, lobbyists would continue to find ways around any new regulation on registration. A good start would be enforcement of the existing law; until someone is held accountable for breaking the rules and circumventing the system, the laws have no weight. It’s also clear that there’s no shortage of informed ideas about reforms that could make the system work better, from the ABA Task Force recommendations to Thurber’s modest suggestion that congressional offices keep records of everyone who contacts them.

There will always be lobbying in Washington, and that’s not a bad thing. But it doesn’t have to stay in the shadows.

al Qaeda in Syria, Heavy Recruiting

Posted on April 29, 2016April 29, 2016 by Denise Simon

Al Qaeda-linked cleric leads new recruiting campaign for jihadists in Syria

By Thomas Joscelyn

LWJ: Sheikh Abdallah Muhammad al Muhaysini, one of the most influential jihadist ideologues in Syria, has launched a new recruiting campaign that aims to indoctrinate thousands of young men. The mobilization effort, named “Take Up Arms, Do Not Sit Still,” began online and throughout Syria on Apr. 20.

One of the first propaganda videos released for the effort shows Muhaysini speaking in front of a large crowd at a refugee camp. The Saudi cleric, who is linked to al Qaeda, is treated like a rock star at the event. The rally was supposedly led to between 200 and 300 new recruits joining the jihadists’ cause.

Muhaysini begins his speech by blasting Syrian dictator Bashar al Assad, Iran and Hezbollah. A clip of Hasan Nasrallah, Hezbollah’s leader, is played. “If the battle with those terrorists and takfiris needs me and all Hezbollah to go to Syria, we will go to Syria,” Nasrallah promises.

Muhaysini responds, “We say come, and we swear by Allah we will [introduce] you to the dogs of Sham.”

The jihadist cleric continues by saying that the refugees in the camp had their homes destroyed by Assad and suffered from his barrel bombs. Muhaysini points to an empty tent that he says will be filled with the “new mujahideen,” who “will fill the land of Sham with the blood of the Russians” and the Iranians.

The video, which is just over 10 minutes long and includes English subtitles, is well-choreographed. It appears that a commercial drone was used to shoot footage from overhead. For instance, an aerial shot of the camp (seen on the right) plays as Muhaysini criticizes the youth who live there for failing to join the jihad.

“O you here, know I love you,” Muhaysini says, before imploring the camp’s youth to join the jihadists. He preaches the virtues of martyrdom: “Allah’s religion is awaiting you. What makes you sit? O you hero, are you afraid of martyrdom? Do you know what martyrdom is? It is one bullet in the cause of Allah which makes you leave the life. Then you will become alive in Gardens of Eternity by the Lord of the Worlds.”

Muhaysini calls for all willing males over the age of 15 to make their way to the empty tent. Young men and adolescents then stream in, committing themselves to the jihad against Assad and his allies.

In a second, longer video, Muhaysini is joined by three others and together they explain the purpose of the recruiting drive. The additional men are Abu Namis (a military commander in Liwa al Haq), Sheikh Muslih al Alyani (deputy chair of the Jihad’s Callers Center, which is headed by Muhaysini), and Dr. Ayman Harush (a lecturer at the University of Aleppo).

Muhaysini says the “zeal” of sharia officials in his Jihad’s Callers Center and their comrades in the Scholars League of the Levant, which is another association of sharia officials in Syria, led to the effort. The campaign does not serve any single faction, Muhaysini says, and 200 officials from different groups have spread out across Syria to proselytize.

The Saudi cleric explains how a new recruit is assigned to an organization. Once a young man agrees to join, he is sent to the “central command of the campaign,” which coordinates across the various factions and decides where he goes. They all receive sharia instruction, but only the best are armed. Between 400 and 500 new mujahideen have been selected thus far, according to Muhaysini, who says that they hope to attract 5,000 new jihadists.

Muhaysini says Syrians, including those who fled to Turkey, are being recruited and he hopes that the ideology of jihad takes root throughout the Levant, beyond the immediate call to arms. He adds that the campaign is a response to the Iranian-backed popular mobilization forces fighting in Iraq and Syria, as well as the Shiites’ mobilization throughout the region. Muhaysini criticizes the Sunni scholars who refuse to mobilize the Sunni youth to counter their Shiite adversaries in Iran and Hezbollah.

Harush, the lecturer in Aleppo, justifies the jihad as a defensive one, saying that Iran has brought in fighters from throughout the Middle East to attack the Sunnis. And Abu Namis, the Liwa al Haq official, says that the Sunni factions do not have a surplus of fighters, as some claim. Abu Namis calls on foreign fighters to join their Syrian counterparts.

Muhaysini wears multiple hats inside Syria. In addition to being the chairman of the Jihad’s Callers Center, he is a senior judge in Jaysh al Fath, a rebel coalition that overran the Idlib province in 2015. Jaysh al Fath was co-founded by Al Nusrah Front, which is al Qaeda’s official branch in Syria, and another al Qaeda-linked group, Ahrar al Sham.

Muhaysini and some of his supporters online refer to him as an “independent” jihadist. The Long War Journal assesses that this is unlikely and he is probably a senior al Qaeda sharia official. He has numerous connections to al Qaeda’s international network.

He was a student of Sulayman Al Alwan, a jihadist cleric responsible for indoctrinating some key figures within al Qaeda. The 9/11 Commission found that al Alwan even instructed one of the 9/11 hijackers. Muhaysini has defended and spoken fondly of al Qaeda emir Ayman al Zawahiri. In 2014, Muhaysini even issued a proposal for jihadist reconciliation that was timed to coincide with Zawahiri’s own. The initiative was intended to reconcile the Islamic State with its jihadist rivals in the Al Nusrah Front and Ahrar al Sham. While the latter parties agreed to the plan, the Islamic State rejected it.

Muhaysini works closely with Al Nusrah Front and other al Qaeda groups in Syria, such as the Turkistan Islamic Party (TIP) and similar ethnic jihadist brigades. His work has been featured in Al Masra, an al Qaeda newsletter launched earlier this year, as well as in the Taliban’s literature. Muhaysini’s popular social media sites are regularly littered with references to al Qaeda, including eulogies for senior al Qaeda operatives killed in American airstrikes.

Numerous al Qaeda-affiliated social media accounts are promoting Muhaysini’s new recruiting campaign.

Images and advertisements from the “Take Up Arms, Do Not Sit Still” campaign

The youth answer Muhaysini’s call to arms:

Men and youth enter the recruiting tent set up at a refugee camp:

Another overhead shot, perhaps recorded by drone, from the event at a refugee camp:

New recruits watching an Al Nusrah Front video:

Some of the campaign’s new recruits:

A banner calling for donations:

An attendee at one of the events records Muhaysini on his phone:

Iran Deploys Brigade 65 to Finish Syrian War?

Posted on April 29, 2016April 29, 2016 by Denise Simon

Two men were assigned to coordinate Bashir al Assad’s war operations.

Amir Ali Arasteh

Qassem Suleimani

******

Related: Iran’s Most Dangerous General

Related: The Shadow Commander

alMonitor/TEHRAN, Iran — Earlier this month, Brig. Gen. Ali Arasteh, deputy chief liaison of the Iranian army’s ground force, for the first time publicly spoke about Iran’s military operations against the Islamic State (IS) in Syria. He told Iranian reporters, “Brigade 65 is a part of our army’s ground force and we are dispatching soldiers from Brigade 65, as well as other units, as advisers to Syria. This dispatch is not limited to commandos of Brigade 65, as advisers of Brigade 65 are already there.”

With the exception of the 1980-88 war with Iraq, the army had not conducted foreign operations since Iran’s 1979 Islamic Revolution. Only the Quds Force, the external operations branch of the Islamic Revolutionary Guard Corps (IRGC), and the Fatehin Brigade, made up of Iranian volunteers, had conducted advisory and ground operations in Syria and Iraq. The army is solely responsible for defending Iran’s borders, though if ordered by the commander in chief, Ayatollah Ali Khamenei, it can also undertake assigned foreign missions.

Brigade 65, also known by the abbreviation Nohed, is a special airborne force, and one of Iran’s most elite military units. It was formed prior to the Islamic Revolution, and had a very successful record during the war with Iraq. Its original core was formed in the 1950s, when the army sent 10 senior officers to France. In the ensuing years, two new brigades responsible for hostage rescue missions, irregular warfare, psychological warfare and support were added to the airborne force while Brigade 65 was created. Improved training alongside successful combat experiences — such as at the Manston Dhofar military base in Oman in the 1970s, and reportedly even in the Vietnam War — led this unit to become one of Iran’s best, alongside the Imperial Guard, by the end of the Pahlavi era.

Brigade 65’s participation in operations in Oman was official. This apparently was not the case in Vietnam; however, before his death, Gen. Alireza Sanjabi shared a memory with this author about how he had served as a sniper in Vietnam. Sanjani added, “Before the revolution, most of the training of this brigade was done in the form of joint operations with the British SAS.” Indeed, Brigade 65’s power increased so much that during the early days of the Islamic Revolution, certain members of parliament urged its dissolution since they feared it might attempt a coup. However, it was not dissolved and remains as strong as ever. In the 1990s, there was a mock military operation in Tehran where airborne forces were asked to take hold of all important military and political centers in the capital. Despite fierce resistance put up by the security forces guarding these centers, the powerful “Ghost Forces” were able to occupy the capital in two hours. Ever since, these army green berets have been known as the “Powerful Ghosts.”

Prior to its current deployment, Brigade 65 had not conducted foreign operations since the war with Iraq, as far as is officially known. There are, however, certain unconfirmed reports indicating that members of this brigade conducted reconnaissance missions in Iraq, Pakistan and Afghanistan.

While the IRGC has been in charge of providing support for the Syrian government since the outbreak of the Syrian civil war, the army during the past two years has taken pre-emptive measures in the fight against IS in order to neutralize any possible attack on Tehran. Last year, the commander of the army’s ground force, Brig. Gen. Ahmad Reza Pourdastan, mentioned operations involving the deployment of troops to the Iran-Iraq border and cross-border artillery strikes. He also said that “a rapid response unit as well as specialized sniper training schools have been formed during the past few months.” In addition, advanced military equipment has been delivered to these forces to prepare them to confront any threats.

Iranian classifications put the size of brigades at about 6,000 to 7,000 troops. Thus, it is probable that about 100 to 200 Brigade 65 commandos have been deployed to Syria. News of this deployment was heavily covered by Iranian media outlets. Indeed, only a few days after the deployment, reports of four Brigade 65 fatalities in Aleppo shocked public opinion. Pourdastan quickly described the situation to the press, “During an attack conducted by a few thousand takfiri [militant Salafi] forces and forces of Jabhat al-Nusrah on south Aleppo … four dear members of the [Iranian] ground forces were martyred. In this confrontation, a number of tanks and armored personnel carriers of the terrorist group al-Nusrah were destroyed and 200 terrorists were killed as well.” Based on the latter, it appears likely that the Iranians were the target of a surprise attack.

Following the wave of intense reactions to the deaths of the four Iranian commandos, army commander Maj. Gen. Ataollah Salehi said that the regular forces have no responsibility to render advisory services to Syria, and that there is an organization in Iran that carries out related measures. Salehi said that some volunteers have been dispatched to Syria under the responsibility of that organization and that there may have been some members of Brigade 65 among them. He added that due to the strict rules of the army, it seems very unlikely that its officers would enter Syria on their own and that they had probably done so under the orders of the armed forces’ general staff. This statement conveys Salehi’s dissatisfaction with the presence of army forces in Syria.

The Syrian civil war appears poised to enter a new and more serious phase in the coming months. While Russia is reducing its military presence in Syria, Iran is trying to make up for that by deploying its own special forces. Considering the small number of Iranian troops that have been deployed, this may not be an important development from a military standpoint. However, it clearly shows that Iran is determined not to let the balance of power be disturbed in Syria. In the past few months, Iran has participated in the UN peace negotiations, clearly showing that it is not willing to capitulate to its regional rivals, such as Turkey and Saudi Arabia, after five years of having its soldiers injured and killed and having spent billions of dollars. Thus, it is possible that if the Syrian government is threatened more seriously, even more army forces will be deployed in Syria alongside the IRGC.

Who is in Line to Bailout Venezuela?

Posted on April 29, 2016April 29, 2016 by Denise Simon

Venezuela Doesn’t Have Enough Money to Pay for Its Money

Bloomberg: Venezuela’s epic shortages are nothing new at this point. No diapers or car parts or aspirin — it’s all been well documented. But now the country is at risk of running out of money itself.

In a tale that highlights the chaos of unbridled inflation, Venezuela is scrambling to print new bills fast enough to keep up with the torrid pace of price increases. Most of the cash, like nearly everything else in the oil-exporting country, is imported. And with hard currency reserves sinking to critically low levels, the central bank is doling out payments so slowly to foreign providers that they are foregoing further business.

Venezuela, in other words, is now so broke that it may not have enough money to pay for its money.

This article is based on interviews with a dozen industry executives, diplomats and former officials as well as internal company and central bank documents. All of the companies declined official comment; the central bank did not respond to numerous requests for interviews and comment.

Thronging Banks

The story began last year when the government of President Nicolas Maduro tried to tamp down a growing currency shortfall. Multi-million-dollar orders were placed with a slew of currency makers ahead of December elections and holidays, when Venezuelans throng banks to cash their bonuses.

At one point, instead of a public bidding process, the central bank called an emergency meeting and asked companies to produce as many bills as possible. The companies complied, only to find payments not fully forthcoming.

Last month, De La Rue, the world’s largest currency maker, sent a letter to the central bank complaining that it was owed $71 million and would inform its shareholders if the money were not forthcoming. The letter was leaked to a Venezuelan news website and confirmed by Bloomberg News.

“It’s an unprecedented case in history that a country with such high inflation cannot get new bills,” said Jose Guerra, an opposition law maker and former director of economic research at the central bank. Late last year, the central bank ordered more than 10 billion bank notes, surpassing the 7.6 billion the U.S. Federal Reserve requested this year for an economy many times the size of Venezuela’s.

Related: Venezuela Orders Five-Day Weekends in Bid to Save Power Grid

World’s Highest Inflation

The currency crisis sheds light on the magnitude of the country’s financial woes and its limited ability to remedy them as oil — the mainstay of its economy — continues to flatline. Venezuela’s inflation, the world’s highest, is expected to rise this year to close to 500 percent, according to the International Monetary Fund.

The first signs of the currency shortage date back to 2014 when the government began increasing shipments of bank notes as wallet-busting wads of cash were already needed for simple transactions. Venezuelans spend hours waiting in line for consumer staples, lining up first at banks and cash machines, often carrying the loot in backpacks and gym bags to pay for dinner out.

Ahead of the 2015 congressional elections, the central bank tapped the U.K.’s De La Rue, France’s Oberthur Fiduciaire and Germany’s Giesecke & Devrient to bring in some 2.6 billion notes, according to bank documents and people familiar with the deals. Before the delivery was completed, the bank approached the companies directly for more.

De La Rue took the lion’s share of the 3-billion-note order and enlisted the Ottawa-based Canadian Bank Note Company to ensure it could meet a tight end-of-year deadline.

Sniper Cover

The cash arrived in dozens of 747 jets and chartered planes. Under cover of security forces and snipers, it was transferred to armored caravans where it was spirited to the central bank in dead of night.

While the cash was still arriving — at times, multiple planeloads a day — authorities set their sights on the year ahead. In late 2015, the central bank more than tripled its original order, offering tenders for some 10.2 billion bank notes, according to industry sources.

But currency companies were worried. According to company documents, De La Rue began experiencing delays in payment as early as June. Similarly, the bank was slow to pay Giesecke & Devrient and Oberthur Fiduciaire. So when the tender was offered, the government only received about 3.3 billion in bids, bank documents show.

“Initially, your eyes grow as big as dish plates,” said one person familiar with matter. “An order big enough to fill your factory for a year, but do you want to completely expose yourself to a country as risky as Venezuela?”

Further complicating matters is the sheer amount of bills needed for basic transactions. Venezuela’s largest bill, the 100-bolivar note, today barely pays for a loose cigarette at a street kiosk.

Related: Venezuela acquired 1,800 Russian antiaircraft missiles in ’09

Uncharted Territory

As early as 2013, the central bank commissioned studies for 200 and 500 bolivar notes, former monetary officials say. Despite repeated assurances, no new denominations have been ordered, pushing Venezuela into uncharted territory by its refusal to produce larger bills while not fully paying providers.

Companies are backing away. With its traditional partners now unenthusiastic about taking on new business, the central bank is in negotiations with others, including Russia’s Goznack, and has a contract with Boston-based Crane Currency, according to documents and industry sources.

Steve Hanke, a professor of applied economics at Johns Hopkins University, who has studied hyperinflation for decades, says that to maintain faith in the currency when prices spiral, governments often add zeros to bank notes rather than flood the market.

“It’s a very bad sign to see people running around with wheelbarrows full of money to buy a hot dog,” he said. “Even the cash economy starts breaking down.”

***** Iran missile base in Venezuela, BusinessInsider

In part from Forbes: In Venezuela, Maduro´s government (based on the legacy of the late Hugo Chávez), has continued the policies of the previous administration by strengthening ties with Russia, China, and Iran, in opposition to US influence. An example of this has been Venezuela´s growing oil exports to the Asian giant, going from 50,000 barrels per day in 2006 to roughly 600,000 barrels per day sent to China in 2014. These growing exports have been part of a wider strategy aimed at reducing dependency on exports to the United States, as well as being used to back loans provided by China that now exceed $56 billion. China has also expanded its investments in Venezuela by acquiring and developing a plethora of companies, along with the signing of large military contracts to provide Venezuelan armed forces with aircraft, radars, armored vehicles, and helicopters.

China´s influence has also extended to more moderate governments in the region as in the cases of Ecuador and Argentina. In the case of the latter, Cristina Fernandez de Kirchner´s administration signed a treaty that included the establishing of a “space exploration site” in the Argentine Patagonia with very few public details on the purpose and functioning of these installations, which will be under complete control of Chinese government. Many security experts agree on the fact that not only is the agreement absolutely opaque on the intention of the site, but also that the presence of dual-purpose technologies allow the station to operate as an intelligence gathering platform. Argentina has also become a recipient of Chinese loans, and an important provider of commodities.

Returning to the Panama Summit, it becomes clear it has been successful for Obama´s foreign policy intentions because it achieved not only the “must-have” picture with Castro and the joint press conference, but also because it unveiled a new beginning in US relations with Latin America and the Caribbean. Also because at this juncture of the process it managed to avoid confrontation with Venezuela´s Maduro, just as his Bolivarian government begins to lose regional support. More from Forbes.

Russia China Just Teamed up, Against U.S.

Posted on April 29, 2016April 29, 2016 by Denise Simon

China denies request for Hong Kong visit by U.S. carrier group: Pentagon

Reuters: China has denied a request for a U.S. carrier strike group led by the USS John C. Stennis to visit to Hong Kong, the U.S. Defense Department said on Friday, amid heightened tensions over China’s territorial claims in the South China Sea.

A Pentagon spokesman, Commander Bill Urban, said a U.S. warship, the USS Blue Ridge, was currently in Hong Kong on a port visit and the United States expected that to continue.

The Chinese government and its embassy in Washington did not immediately respond to requests for comment.

Urban said the request for the Hong Kong visit by the carrier and its accompanying vessels, which have been patrolling the South China Sea, was recently denied, despite a “long track record of successful port visits to Hong Kong.”

The Blue Ridge, the command ship of the U.S. Seventh Fleet, arrived in Hong Kong waters at 11:20 a.m. local time (0320 GMT) on Friday, according to the on-line log of the Hong Kong government’s Marine Department.

The nuclear-powered Stennis has been conducting patrols in the South China Sea, which China claims most of and where Beijing has sparked U.S. and regional concerns by building artificial islands to bolster its claims.

U.S. Defense Secretary Ash Carter visited the Stennis while it transited the South China Sea on April 15 to underscore U.S. concerns about the need to maintain freedom of navigation in the South China Sea in the face of Chinese moves.

A wide range of U.S. military vessels and aircraft have long routinely stopped in Hong Kong, a reflection of the “one country, two systems” formula under which Britain handed the global financial hub back to China in 1997.

The visits occasionally have been suspended in periods of heightened tensions, such as after a mid-air collision between a U.S. EP-3 surveillance plane and a Chinese plane off China’s Hainan island in 2001.

The USS Kitty Hawk aircraft carrier also was denied permission to enter Hong Kong over Thanksgiving in 2007 but was cleared to visit five months later.

The United States has stressed the importance of good relations with China’s military to avoid misunderstandings and Chinese military officers are invited routinely aboard U.S. ships during port visits, and are sometimes flown out to land on U.S. carriers at sea.

While there, he dismissed China’s characterization of a more robust U.S. military presence in the region as being the cause of heightened tensions. The United States has in turn accused China of militarizing its outposts in the South China Sea by building airstrips and other facilities.

Carter made a similar stop at the USS Theodore Roosevelt in November as it transited the South China Sea near Malaysia.

The Stennis has been on a routine deployment in the Western Pacific for more than three months, the carrier strike group’s commander, Rear Admiral Ronald Boxall, said earlier this month.

Russia, China in Agreement on North Korea, South China Sea

ABCNews: Denouncing what they see as outside interference in the South China Sea and Korean Peninsula, the foreign ministers of Russia and China voiced mutual support Friday as they seek to counter the influence of Washington and its allies, particularly in Asia.

Following talks in Beijing, Russia’s Sergey Lavrov and China’s Wang Yi expressed opposition to the U.S. deployment of an anti-missile system in South Korea and said non-claimants should not take sides in the dispute over maritime territorial claims in the South China Sea.

Despite endorsing United Nations Security Council sanctions against North Korea over its missile launches and nuclear tests, the two strongly criticized the proposed deployment of the Terminal High-Altitude Area Defense, or THAAD, system.

“Relevant countries shouldn’t use Pyongyang’s acts as a pretext to increase their military presence on the Korean Peninsula,” Lavrov told a joint news conference. “We believe the possible deployment of the THAAD anti-missile system won’t resolve this problem.”

Both Russia and China, North Korea’s now largely estranged ally, see the deployment as exceeding what is necessary to defend against any North Korean threat and would “directly affect strategic security of Russia and China,” Wang said.

That could “add fuel to the fire of an already tense situation and even possibly wreck the regional strategic balance,” Wang said.

Both men called for efforts to restart long-stalled six-nation talks on ending North Korea’s nuclear programs.

Their meeting came amid renewed tension on the Korean Peninsula, with South Korean officials saying the North attempted unsuccessfully to test-fire two suspected powerful intermediate-range missiles on Thursday.

It also comes ahead of a major North Korean ruling party meeting next week at which leader Kim Jong Un is believed to want to place his stamp more forcefully on a government he inherited after his dictator father’s death in late 2011.

On the South China Sea, which China claims almost entirely, Lavrov said outside parties shouldn’t interfere, a reference to the United States, which has challenged Beijing’s claims.

Wang said it was up to those countries directly involved to find a peaceful resolution through negotiations.

“International society, particularly countries from outside the South China Sea, should play a constructive function in maintaining peace and stability and not contribute to the situation becoming more chaotic,” Wang said.

Criticized over its aggressive tactics and construction of new islands with airfields, harbors and radar stations, China has sought to use Russia to bulk up its side of the argument against the U.S. and claimants such as the Philippines, which has brought a suit at the U.N. Court of Arbitration seeking a ruling on ownership over territories it claims.

China has refused to take part in the arbitration or recognize the court’s ruling.

Along with enlisting Russia’s support, China has given heavy publicity to what it calls a new consensus reached with Brunei, Cambodia and Laos — three members of the 10-country Association of Southeast Asian Nations — endorsing its stance that the South China Sea dispute should not be an issue for ASEAN as a whole.

That has renewed criticisms from some that China is applying divide-and-conquer tactics with its smaller neighbors and trying to drive a wedge through the organization. ASEAN members Brunei, Malaysia, Vietnam and the Philippines contest China’s claims, while Taiwan also claims much of the area.

While the U.S. says it takes no position on South China Sea sovereignty claims, it has worked to shore up the military capabilities of the Philippines, a treaty ally. Washington has also called on China to end its island-building projects and the U.S. Navy has repeatedly sailed and flown ships and planes nearby those structures, drawing sharp responses from the Chinese navy.

Wang and Lavrov both hailed two decades of warming ties between Moscow and Beijing, bitter Cold War rivals for a quarter century, who under Russian President Vladimir Putin have found common cause in challenging the West.

Russia has become a leading supplier of imported high-tech weaponry and resources such as oil and gas, while China is a major source of capital investment for projects in Russia.

Putin is scheduled to visit China in June.