02 February 2023

Daily Newsletter

Shell Reports Highest Profits in 115 Years

Facts

  • On Thursday, oil and gas giant Shell reported record annual profits of $39.9B for 2022 after energy prices surged following Russia's invasion of Ukraine. The company's profits were double those from the previous year and its highest in 115 years.
  • Shell reported a profit of $9.8B in Q4, with over 40% of the company's full-year earnings coming from its integrated gas operations, which include liquified natural gas trading.
  • The British company's record 2022 earnings mirror those reported by US rivals earlier this week, including ExxonMobil's $59.1B report and Chevron's $36.5B recorded profit.
  • Shell's latest figures have added pressure on the UK government to impose higher windfall taxes on the energy sector, which were introduced on North Sea operators last year.
  • The Chancellor of the Exchequer, Jeremy Hunt, later announced in November 2022 that the windfall tax would rise from 25% to 35%. The move was expected to raise an additional £14B ($17B) per year for the British government.
  • Despite the introduction of last year's windfall tax — known as the Energy Profits Levy — Shell previously said it wouldn't pay any UK tax in 2023 due to offsets. The company changed its tune, however, saying it now expects to pay about $134M in windfall taxes for 2022 and over $500M for this year.

Spin

Left narrative

Oil giants have gained excess profits due to the war in Ukraine and the rapid rise of energy prices. A more serious and fair windfall tax on energy companies' profits would redress the imbalance between companies' contributions to the state and their earnings and help struggling families pay their rapidly increasing utility bills. Individuals are obligated to contribute to society through taxes and other forms of support, and companies must do so too.

Right narrative

Windfall taxes weren't a good idea in the first place, and increasing them will have serious repercussions. While it may seem like an obvious solution to the UK's growing hole in public finances, in reality, it's a short-term crutch that will lead to a new set of problems down the road It discourages domestic investment and sends the dangerous message to businesses that success must be accompanied by a heavy price.

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US Military Gains Expanded Access to Philippine Bases

Facts

  • The Philippines’ Department of National Defense announced Thursday that the US will be given access to four additional military bases in "strategic areas" of the Southeast Asian country amid persisting tensions with China over Taiwan and the disputed South China Sea.
  • The new deal was sealed under the 2014 US-Philippines Enhanced Defense Cooperation Agreement, which has allowed Washington to rotate troops to a total of nine bases across the Philippines. The Philippines gained independence from the US in 1946.
  • The agreement, unveiled during a visit to Manila by US Defense Secretary Lloyd Austin, reportedly aims to enhance the decades-old security alliance between both countries and ramp up the modernization of combined military capabilities.
  • During a joint press conference, Philippine Pres. Ferdinand Marcos Jr. stated that his country depends on the US and the joint security partnership to prevent regional tensions from escalating into possible military conflict.
  • While it has not been disclosed which new bases the US will gain access to, Washington had reportedly requested entry to sites on the northern Philippine landmass of Luzon close to Taiwan and the Palawan Islands, which are located in the disputed South China Sea.
  • Austin's trip to Washington's oldest Asian treaty ally follows that of US Vice Pres. Kamala Harris in November to improve relations that had declined under Marcos' predecessor, Rodrigo Duterte, and saw Manila deepen relations with China and Russia.

Spin

Anti-China narrative

The Philippines should boost its security ties with Washington as China's expansionism increasingly threatens its national sovereignty and territorial integrity. It's no coincidence that key regional players such as Japan have also opted to join the US in stepping up deterrence against Beijing. Given China's increasingly aggressive stance, the question is no longer if, but when, military escalation will occur.

Pro-China narrative

The US is exploiting the alleged "Chinese threat" to defend its hegemonic claims around the world. Manila must understand that Washington is not concerned with any of Manila's security interests, but that the US seeks to use the Philippines as another tool in a potential conflict with China. The Philippines should therefore pursue a well-balanced foreign policy as a sovereign state and thus avoid becoming a de-facto US colony again.

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Day 344: EU Leaders Arrive For Talks in Kyiv

Facts

  • A delegation of 15 EU officials — including Commission Pres. Ursula von der Leyen and the bloc's top foreign policy chief Josep Borrell — arrived in Kyiv for two days of talks on Thursday. Discussions are set to focus on military aid, reconstruction efforts, and Ukraine's EU accession aspirations.
  • So far, Borrell has announced that the EU plans to double the number of Ukrainian troops that will be trained by the bloc, taking the figure to 30K. A €25M ($27.5M) demining initiative has also been announced.
  • Meanwhile, Ukraine's defense minister Oleksii Reznikov warned of the possibility that new Russian offensives may coincide with the one-year anniversary of the war later this month. He alleged that Russia had mobilized 500K troops — 200K more than had publicly been stated — and that Ukrainian intelligence had observed these newly-mobilized troops massing at the Russia-Ukraine border.
  • Elsewhere, in a wide-ranging TV interview, Russian foreign minister Sergey Lavrov alleged that the US was directly involved in explosions that severely damaged the Nord Stream gas pipelines under the Baltic Sea last year. Lavrov did not provide evidence to substantiate the claims.
  • He further alleged that the West was trying to turn Moldova, Georgia, and former Soviet states against Moscow, adding that Russia wanted to end the conflict but that the nation was responding to the US. He further stated that, if Ukraine were to receive long-range weapons, Russia would "have to push them back from territories which are part of our country.”
  • On the ground, an overnight Russian attack on the Donetsk city of Kramatorsk killed three civilians and injured 22 more — searches under the rubble are continuing. Kramatorsk was again shelled on Thursday, with reports of an unspecified number of additional civilian casualties at this stage. Two civilians were also reportedly killed and two more were injured in Russian attacks on the Kherson region over the past day.

Spin

Pro-establishment narrative

Ukrainians have fought not only for their own country but also for all of Europe, reminding the alliance why it was founded in the first place. It's only right that the EU opens its doors to Ukraine.

Establishment-critical narrative

If Ukraine were to join the EU, it would only further complicate the country's relations Russia and draw the world even nearer to a global conflict. The West should resist being so blindly positive about Kyiv's potential bloc candidacy.

Nerd narrative

There is a 1% chance that Ukraine will join the European Union before 2024, according to the Metaculus prediction community.

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King Charles Won't Appear on Australian $5 Bill

Facts

  • According to an announcement from Australia's central bank on Thursday, King Charles III will not appear on the country's new five-dollar note.
  • An indigenous design will be featured instead of the British monarch, who remains Australia's head of state. A statement from the bank declared that the change would honor "the culture and history of the First Australians," but clarified that the other side of the five-dollar banknote "will continue to feature the Australian parliament."
  • The decision — made following consultation with the Australian federal government, which reportedly supports the new design — comes amid a revival of the debate concerning Australia's status as a constitutional monarchy following Queen Elizabeth II's death.
  • Peter Dutton, leader of the political opposition in Australia, critiqued the government's announcement as "another attack on our systems, on our society and our institutions."
  • However, Australia's republican movement — which supports cutting ties with the British monarchy altogether — celebrated the news, highlighting that Indigenous peoples predated colonial settlement by around 65K years.
  • Per a recent poll, 43% of Australian residents desired the five-dollar bill to feature an Australian. 34% preferred King Charles to remain.

Spin

Pro-establishment narrative

The new King belongs on the five-dollar banknote. The Labor government does not have the mandate to implement a "republic by stealth" and — until the Australian people make the democratic decision otherwise — Australia is still a constitutional monarchy. Charles III possesses the same level of affection for the nation as his late mother — Australia should honor that.

Establishment-critical narrative

King Charles III will still be featured on Australian currency, just not banknotes. It is high time that First Australians — who make up 3.2% of the population — were consulted and recognized through the currency of Australia, rather than the lineage of colonizers.

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Study: Merck COVID Drug May Cause Virus Mutations

Facts

  • In a preprint study from the Francis Crick Institute, Imperial College London, and other UK institutes, researchers found that Merck & Co.'s COVID medication, Lagevrio — also known as molnupiravir — causes new mutations of the virus in patients.
  • Molnupiravir, administered as a pill, was developed to eliminate the virus in infected persons by creating mutations in the viral genome. The data shows that the drug generates novel viruses that are transmissible — causing researchers to be concerned that the mutations could extend and reinvigorate the pandemic.
  • Merck & Co. denies that Lagevrio causes mutations in the virus. Pfizer, who has endured similar claims for its drug Paxlovid, has dismissed these concerns; both companies blame uncontrollable community transmission instead.
  • Merck representatives said that, based on the data the company has collected from research on animals, Lagevrio does not cause mutations.
  • In 2021, Merck & Co.'s antiviral was the first drug to be authorized for the treatment of COVID. Initially authorized in the US and the UK, it is now authorized for use in many countries, netting the pharmaceutical company more than $5B in 2022.
  • While the pharma giant reported $13.8B in sales for the fourth quarter, Merck said it expects a $4.7B decrease in sales for its COVID medicine in 2023.

Spin

Pro-establishment narrative

While this research finding may seem worrying, it has not gone through the rigorous peer review process. While during the pandemic many scientists started publishing their research on “preprint servers” prior to review in an attempt to more quickly share findings, this practice is dangerous — it means that there is less oversight on research and unverified scientific findings may confuse the public. More validation is needed; the processes of scientific research and confirmation must run their due course.

Establishment-critical narrative

While peer review is important, the world of publishing moves dangerously slowly — with some studies taking months or even years to move through the peer review and publication process. Preprints accelerate scientific communication and sharing scientific knowledge in a timely manner far outweighs the risks of sharing un-reviewed work. This is just the beginning of findings about the risks of Merck's product, and the public deserves to be aware of the early findings.

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Italy, Libya Renew Migration Pact; Spark Criticism

Facts

  • The Memorandum of Understanding on Migration between Italy and Libya — originally signed in 2017 to give Libya financial and technical support to "combat illegal immigration" — was automatically renewed for a second time on Thursday, sparking criticisms from humanitarian organizations.
  • In the lead-up to the renewal, Human Rights Watch (HRW) on Wednesday accused Italy and the EU of being complicit in serious human rights violations, citing a June 2022 UN report that claims that migrants sent back to Libya faced "inhumane acts," such as murder, torture, and enslavement.
  • The EU has handed over €57.2M ($62.8M) for integrated border and migration management in Libya since 2017, with its border agency Frontex providing surveillance information. Italy's PM Giorgia Meloni vowed last month to provide Libya's coast guard with five "fully equipped boats."
  • HRW says that Italy and other EU member states are responsible for the return of some 108K people to Libya since 2017, only 9k of which, it says, have been evacuated by the UN High Commissioner for Refugees. Meanwhile, Italy and the EU have maintained that the actions are required to prevent illegal immigration.
  • This comes as the pan-European human rights watchdog Council of Europe has asked Italy to scrap a new decree that orders charity-run ships to request a port and sail to it "without delay" after a rescue rather than remain at sea looking for other migrant boats in distress.
  • Italy is facing a surge in migrant arrivals from North Africa, receiving over 105K people by sea last year – up from some 67K in 2021 and 34K in 2020 – according to official data. The UN estimates that almost 1.4K migrants died while trying to cross the central Mediterranean in 2022.

Spin

Left narrative

Thanks to the anti-immigrant beliefs of Italian leadership, tens of thousands of asylum seekers have been intercepted at sea and forced back to Libya, where they face unimaginable atrocities. If Italy wants to work with Libya, it should amend the agreement to include releasing migrants from detention centers and ensuring they can safely arrive in Europe.

Right narrative

Though some in the EU leadership don't acknowledge it, there are dozens of individual countries within the bloc, each of which has its own right to border protection. If Italy wants to enact stricter illegal immigration laws, it should be allowed to allocate more resources toward that goal. And if other countries wish to open their doors, they should be given the resources to do so. Europe is facing an unprecedented immigration crisis — as not all are refugees — and it calls for real solutions, not empty virtue signaling.

Cynical narrative

While all eyes are now on Italy, the West, with its neocolonial policies and imperial logic, is itself responsible for the ongoing migration and refugee crisis and the rise of populist and right-wing governments in Europe, such as that of Giorgia Meloni in Italy. It must not be ignored that, ultimately, it was NATO's "humanitarian intervention" that destroyed Libya and opened Pandora's box.

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Report: Record $3.8B in Cryptocurrency Stolen in 2022

Facts

  • Cryptocurrency theft was at its worst in 2022, with hackers stealing upwards of $3.8B, according to a report released Wednesday by Chainalysis, a crypto blockchain analytics firm.
  • The stolen amount increased by a half billion dollars from 2021's totals and came as the overall crypto market declined significantly, with Bitcoin falling 60% last year. North Korean hackers allegedly stole a record $1.7B in crypto, up from $429M in 2021.
  • DeFi ["Decentralized Finance"] platforms were reportedly the primary target of hackers, who used cross-chain bridges and blockchain infrastructure as their main methods of theft, accounting for more than 82% ($3.1B) of the crypto stolen.
  • The report also said that hacking "ebbed and flowed," though October was the worst month for crypto theft, recording $775.7M stolen in 32 separate attacks. The combination of the volatile market and rising rates of hacks left investors with large losses and regulators calling for more consumer protection.
  • DeFi platforms, which were created in an attempt to replace traditional banks by allowing users to exchange assets directly via blockchains, are prime targets because they typically hold large reserves of types of crypto coins.
  • As North Korea faces sanctions and monitoring from the likes of the US and UN, it's believed to be using crypto hackers to obtain money for its missile and nuclear weapons program. But beyond state-sponsored hacks, Chainalysis also said 2022 saw a record amount of crypto transactions used for many types of illicit activities, reaching a total of $20.1B.

Spin

Pro-establishment narrative

Although DeFi platforms are popular because of their transparent nature, they’re also vulnerable to major hacks. North Korean hackers have abused these vulnerabilities and have popularized the switch from attacking mainstream crypto platforms to focusing on unguarded decentralized ones. DeFi platforms need to strengthen their security through measures including third-party audits.

Establishment-critical narrative

Governments spying on average citizens is coming disguised as cyber security against threats from US adversaries, including North Korea and Russia. Canada was able to do this when it regulated cryptocurrency during last year’s trucker protests, setting an example for other countries. Financial autonomy is tough in a surveillance state.

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House of Representatives Removes Omar from Foreign Affairs Committee

Facts

  • The GOP-majority House of Representatives voted Thursday to remove Democratic Rep. Ilhan Omar (D-Minn.) from the Foreign Affairs Committee. The vote occurred along party lines, 218 to 211, with David Joyce (R-Ohio) voting “present.”
  • The resolution cites comments Omar made in the past that some have claimed to be anti-Semitic and anti-Israeli, such as a tweet claiming that Israel's relationship with the US is "all about the Benjamins."
  • Speaker Kevin McCarthy (R-Calif.) has already blocked Democrat Reps. Adam Schiff (D-Calif.) and Eric Swalwell (D-Calif.) from rejoining the House Intelligence Committee after Republicans gained a House majority in the 2022 midterms.
  • Omar responded to the move by stating, “My leadership and voice will not be diminished if I am not on this committee for one term. My voice will get louder and stronger.” House Democratic Leader Hakeem Jeffries vowed to seat Omar on the House Budget Committee.
  • McCarthy had promised retribution against the Democrats if they became the minority in the House due to the prior removal of Rep. Majorie Taylor Greene (R-Ga.) from committees in 2021.
  • Several Republicans have also called for a due process system to remove lawmakers from positions such as House Committees — a matter that McCarthy has stated he would work with Democrats on but remains a work in progress.

Spin

Republican narrative

Omar's concerning comments downplaying 9/11 as well as comparing the US to terrorist organizations are solid justifications for her committee removal. Her comments about Israel — a trusted US ally — are also concerning. Former House Speaker Pelosi set the precedent of removing officials from such positions, so McCarthy is well within his rights to make this move.

Democratic narrative

After unfairly blocking Schiff and Swalwell, once again McCarthy is unfairly targeting Democratic representatives. McCarthy lacks the moral compass to make a decision on which Democrats should take part in important committees. This reeks of political revenge and bigotry.

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College Board Revises African American Studies Course

Facts

  • The College Board, which is responsible for developing high school Advanced Placement (AP) courses, announced revisions to the AP class in African American studies on Wednesday, which Florida Gov. Ron DeSantis had threatened to ban in his state.
  • The DeSantis administration had objected to the parts of the course that dealt with “queer theory” and allegedly taught tenets of so-called Critical Race Theory, which — per the Associated Press —"centers on the idea that racism is systemic in the nation’s institutions and that those institutions maintain the dominance of white people."
  • Many of the names of Black writers and scholars were removed from the curriculum, which also no longer studies Black Lives Matter and other political topics.
  • David Coleman, the College Board CEO, issued a written statement calling the curriculum “an unflinching encounter with the facts and evidence of African American history and culture.”
  • A version of the course is available at 60 high schools across the US as part of a pilot program. It will be open to students at hundreds more schools over the next year.
  • The debate over the course comes amid a larger debate in the US over what should be included in public education and who should have the most influence over curriculums.

Spin

Right narrative

Claims that DeSantis is trying to erase Black history are ludicrous, as these revisions were in the works before Florida issued its complaints. Nonetheless, this is a win for DeSantis’s fight against "woke" culture, and a victory for students who can now study Black history without an ideological bent distorting the facts or sowing division by defining people as oppressors and oppressed based simply on race.

Left narrative

It’s hard to accept the College Board's claim that its watering down of the curriculum isn’t a reaction to complaints from DeSantis, whose term as governor has been largely devoted to erasing Black and LGBTQ+ experiences from education. The College Board caved, and sadly students will now be robbed of the educational opportunity to understand how Black history impacts the present world Americans live in.

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Bank of England Raises Interest Rates to 14-Year High

Facts

  • Though it says inflation "is likely to have peaked," the Bank of England (BoE) on Thursday raised interest rates from 3.5% to 4% — a 14-year high — stressing that this hike was needed due to higher-than-expected private sector wage growth.
  • Seven of the nine Monetary Policy Committee members voted to increase the Bank Rate for the tenth consecutive time, with the bank's minutes, however, showing a softer tone after previously suggesting it would respond "forcefully" to inflation.
  • This decision, which is set to increase mortgage costs for millions of UK homeowners, comes in a bid to control inflation after it reached a record 11.1% in October.
  • The BoE also updated its economic forecast, presenting a more optimistic outlook compared to three months ago. The recession in the UK is now expected to be much softer than previously expected thanks to lower gas prices.
  • These predictions are slightly more pessimistic than the recent International Monetary Fund forecast that suggested the UK would be the only major world economy to shrink in 2023, performing worse than Russia. The country is predicted not to reach pre-COVID inflation levels until 2026.
  • Meanwhile, the European Central Bank on Thursday also lifted rates by another half a percentage point, raising its benchmark interest rates to the highest level since 2008. Inflation rates in the 20 nations that use the euro eased in January, but remain well beyond the bank’s 2% benchmark.

Spin

Pro-establishment narrative

Though interest rates have been raised again — and output in Britain is still expected to shrink this year — prospects for the British economy are much better than in the immediate aftermath of Liz Truss's premiership. This measure may be seen as overprotective, but the UK's central bank deserves credit as it has been exceeding expectations while dealing with multiple shocks. Previous fears of a "Great Recession 2.0" should be replaced with hope.

Establishment-critical narrative

The Ukraine war, pandemic, supply chain chaos, and labor shortages have not helped Britain's economy over the past years, but it's inconceivable that the BoE still refuses to take responsibility for its own mistakes. The inflationary spiral affecting the UK was created much earlier than these shocks because interest rates were kept close to zero for too long. Central planners should be honest with the public when their mistakes lead to life-altering cost-of-living crises.

Nerd narrative

There's a 50% chance that UK's annual inflation rate will be at least 6.63% by 2023, according to the Metaculus prediction community.

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