Recommended Weekend Reads
What Canada’s Critical Mineral Supply Means to the U.S., The Economic Consequences of Dark Oil Shipping, What Does Trump’s Terror Designation for Drug Cartels Mean? and 8 Questions for BRICS Currency Advocates
February 21 - 23, 2025
Please find below our recommended reads from reports and articles we read in the last week. We hope you find these useful and that you have a relaxing weekend. And let us know if you or someone you know wants to be added to our distribution list.
U.S – Canadian Critical Minerals Trade
Mining for Defense: Unlocking the Potential for U.S. – Canada Collaboration on Critical Minerals Christopher Hernandez-Roy/Henry Ziemer/Alejandra Toro - Center for Strategic and International Studies
China’s near monopolistic control of many critical minerals, which are essential for both for consumer products and defense production, represents an unacceptable risk to the national security of the United States at a time of heightened geopolitical tension. Canada, which already supplies the United States with large quantities of certain essential metals, is well positioned as an alternative source for many of the critical minerals controlled by China, thus contributing to North American national and economic security. Bolstering cooperation on critical minerals for the defense industry furthermore offers a way for both countries to find common ground amid frustrations surrounding trade and security.
Implications of the U.S. Designation of Mexican Cartels as Terrorist Organizations
Mexico Eyes Constitutional Reform after U.S. Terrorism Designations Washington Post
Mexican President Claudia Sheinbaum said her party has proposed reforms to the country’s constitution to better protect its sovereignty in response to the United States designating six Mexican organized-crime groups as foreign terrorist organizations. The U.S. State Department on Thursday upgraded the designation of cartels including Mexico’s Sinaloa and Jalisco Nueva Generación, which together dominate fentanyl manufacturing and importation into the United States, according to the Drug Enforcement Administration. “This cannot be an opportunity for the United States to invade our sovereignty,” Sheinbaum said at a news conference Thursday, adding that Mexico would collaborate on combating organized crime but would not accept “subordination.” A “foreign terrorist organization” designation allows the State Department to deploy special sanctions and expands the U.S. government’s ability to prosecute people who provide support to the groups and to collect “military action intelligence,” according to a Wilson Center analysis.
Chinese organized crime networks and Mexican cartels are using Canadian ports to trade highly lucrative fish bladders for the precursor chemicals needed to produce fentanyl, according to a memo from the Canada Border Services Agency (CBSA). It said organized criminal networks transport the fish — called totoaba — from the West Coast to China, while the chemical precursors to make toxic drugs are sent through Canadian ports.
The New War on Drugs Vanda Felab-Brown/Foreign Affairs
Between January 20 and February 1, U.S. President Donald Trump signed several executive orders declaring national emergencies on the U.S. southern and northern borders, thanks, in part, to the “the sustained influx of illicit opioids and other drugs” into the United States. Citing the public health crisis created, in particular, by fentanyl—as well as concerns about undocumented migrants—he then imposed a 25 percent tariff on most imports from Canada and Mexico and a ten percent tariff on Chinese goods. Although Canada and Mexico managed to negotiate a monthlong postponement of their new tariffs, in early February the tariff on Chinese imports went into effect. The threat to apply tariffs and FTO designations did create leverage to pressure the Mexican government to resurrect its own law enforcement efforts and collaborate more closely with U.S. law enforcement, two shifts that were sorely needed. But the actual implementation of the tariffs for a substantial time—and the application of the FTO designation—will harm the U.S.-Mexico relationship as well as the U.S. economy. Resorting to unilateral military strikes against the cartels would constitute a death blow to cooperative law enforcement efforts between the United States and Mexico.
Latin American Organized Crime’s Real Target: Local Government Americas Quarterly
On February 1, President Trump accused Mexico’s government of maintaining an “intolerable alliance” with drug trafficking organizations – an allegation Mexican President Claudia Sheinbaum immediately dismissed as slanderous. But what should most worry Trump, Sheinbaum, and other regional leaders is crime’s growing influence at the local level—the product of crucial shifts over the past 15 years. There is a long and growing list of Mexican governors and mayors convicted for organized crime ties. In the past decade, Mexico has imprisoned five former governors for connections to organized crime, while the U.S. has extradited two others. The list of former mayors jailed on charges of colluding with organized crime is even longer. The focus on local political focus is turn have an increasingly deleterious impact on business and the overall economy.
The Expansion and Diversification of Mexican Cartels: Dynamic New Actors and Markets International Institute for Strategic Studies
Latin America’s transnational criminal landscape is reconfiguring due to the accelerated internationalization and diversification of criminal organizations, which are able to control territory and project influence globally. Traditionally, cartels controlled limited territories and specialized on a single product, usually cocaine. The new criminal elites now traffic multiple products across extensive markets and regions.
The Economic Impact of Russia’s War on Ukraine
The (Un)Intended Consequences of Oil Sanctions Through the Dark Shipping of Sanctioned Oil Jesús Fernández-Villaverde | Xiwen Bai | Yiliang Li | Le Xu | Francesco Zanetti/National Bureau of Economic Research
Abstract: We examine the rise of dark shipping—oil tankers disabling AIS transceivers to evade detection—amid Western sanctions on Iran, Syria, North Korea, Venezuela, and Russia. Using a machine learning-based ship clustering model, we track dark-shipped crude oil trade flows worldwide and detect unauthorized ship-to-ship transfers. From 2017 to 2023, dark ships transported an estimated 7.8 million metric tons of crude oil monthly—43% of global seaborne crude exports—with China absorbing 15%. These sanctioned flows offset recorded declines in global oil exports but create distinct economic shifts. The U.S., a net oil exporter, faces lower oil prices but benefits from cheaper Chinese imports, driving deflationary growth. The EU, a net importer, contends with rising energy costs yet gains from Chinese demand, fueling inflationary expansion. China, leveraging discounted oil, boosts industrial output, propagating global economic shocks. Our findings expose dark shipping’s central role in reshaping oil markets and macroeconomic dynamics.
Russia’s Wartime Economy Isn’t as Weak as it Looks Royal United Services Institute for Defense and Security Studies
Many analysts have seized on what appears to be a rare bright spot: Russia’s faltering ‘war economy’, which – according to some – is ‘Putin’s greatest weakness’. An acute labor shortage, persistent and rising inflation caused by soaring military expenditure, and ever-tightening sanctions will – it is claimed – finally bring about an economic crisis that will force Moscow to abandon its maximalist aims in Ukraine and bring about an end to the war on terms more acceptable to Kyiv and its allies. Sadly, these hopes are likely to prove misplaced. Russia’s economy has confounded expectations throughout the war and, despite suffering several complications, remains well-placed to support the Kremlin’s ambitions in Ukraine and beyond.
Addicted to War: Undermining Russia’s Economy Center for European Policy Analysis
Despite initial predictions that sanctions would cripple it, Russia’s economy has shown unexpected resilience, with a modest contraction in 2022 followed by growth in 2023 and 2024. Nonetheless, sanctions and the war itself have forced Russia’s economic policymakers into a series of Faustian bargains, all of which are undermining midterm economic viability. Russia’s economic resilience has resulted from a combination of increased state spending, authoritarian “friend-shoring” of trade, and import substitution, which together have boosted consumption and investment and kept capital in the country. The departure of more than 1,200 foreign companies, while reducing the options available to Russian consumers and damaging Russia’s image, has increased profits for Russian companies, bolstered demand for Russian-made goods, and given the regime a wellspring of capital to redistribute to politically loyal interests. Russia’s economic growth is heavily tied to military spending, with investments tilted toward war-related industries, import substitution, and infrastructure projects to facilitate trade with China. In the absence of defense spending, Russia’s economy would likely stagnate.
Geoeconomics
Shared BRICS Money: A Basket Currency or a Basket Case? 8 Questions for Proponents of a BRICS Common Currency Gary Smith/OMFIF
Many nations would like to reduce their dependence on the increasingly weaponized dollar, especially for dollar-denominated trade that does not pass through the US. The idea of a shared currency issued by the BRICS nations (Brazil, Russia, India, China, South Africa) made headlines in late 2024 ahead of their conference in Kazan, Russia. Wanting to move away from the dollar is understandable, but making progress will be challenging. Here are eight questions for the proponents of a BRICS currency.
A Common BRICS Currency? Lessons from the Euro The War Room/U.S. Army War College
You might have seen recent proposals for the BRICS+ nations (Brazil, Russia, India, China, South Africa along with a few other recent additions) to create a common currency as an alternative to the dominant U.S. dollar. Proponents of this idea cite the creation of the Euro as proof of the idea's viability. Not so fast, Mark Duckenfield (the Dwight D. Eisenhower Chair of National Security and a Professor of International Economics in the Department of National Security and Strategy at the U.S. Army War College) explains. In his discussion of both cases, Duckenfield shows all that creating a currency to advance a geopolitical vision is easier said than done and requires several critical conditions that the BRICS lack.