Finance Desk

France has been mired in political turmoil since Macron dissolved the National Assembly in June 2024 – and on Friday, Paris was effectively sidelined at a turning point moment for the European Union, as it failed to stop the Mercosur agreement.

After weeks of farmers’ protests and under the threat of a no-confidence vote at home, Macron chose to oppose a deal negotiated by the European Commission over 25 years with Mercosur countries Argentina, Brazil, Paraguay and Uruguay.

If implemented, the agreement would create a 700 million-strong free-trade area, opening new markets for EU companies at a time when the bloc’s largest trading partner, the US, is becoming more inward-looking.

The countries who backed the deal, led by Germany, Spain and the Commission itself, proved determined to confront mounting global economic tensions by diversifying trade ties beyond the US and China despite protests from farmers, who for years have warned the deal could expose them to unfair competition from Latin American imports.

France in particular amplified those concerns, piling pressure on the Commission, which holds exclusive EU competence over trade policy.

According to one EU diplomat who spoke to Euronews on condition of anonymity, France on Friday thanked the Commission for the concessions it had made to farmers over the past year but ultimately justified its continued opposition to the deal with a reference to political reasons.

The signature ceremony between the EU and the Mercosur countries will take place on January 17 in Asunción, Paraguay, sources familiar with the matter told Euronews.

As expected, Italy – whose support France needed to secure a blocking minority of four member states representing 35% of the EU population – backed the agreement.

But Italy also emerged with tangible gains for its farmers, securing all the guarantees France had pushed for, including early access to €45 billion from the Common Agricultural Policy and a retroactive freeze of the EU carbon border tax on fertilisers.

For von der Leyen, the outcome marks a victory too.

The Commission aggressively pushed the deal for a year, jumping hurdles to reach a technical and political agreement. Von der Leyen was relentless despite the opposition from Paris, which in the past would have been enough to make the Commission back down facing the ire of the French government.

Former Commission President Jean-Claude Junker famously used to say, “La France…C’est la France!”, referring to Paris’ habit of getting its way under the EU’s indulgence. Those days now appear to be coming to an end.

Von der Leyen capitalises on Macron’s weakness

Macron’s shock decision to dissolve the National Assembly in June 2024 stunned European partners and altered the balance in Brussels. Von der Leyen, now heading the EU executive for a second term, has moved to sideline the French president despite his decisive backing for her appointment in 2019.

Just three months after the dissolution, she capitalised on Macron’s weakened position to push out Thierry Breton, a powerful French commissioner seen as too dominant.

Breton was the architect of two landmark EU digital laws, the Digital Markets Act and the Digital Services Act, and a relentless defender of French interests in Brussels as well as a critical voice within von der Leyen’s College of Commissioners where disagreements with the chief are not often tolerated.

Still, Macron agreed to replace him with one of his oldest allies, Stéphane Séjourné, a former Renew leader in the European Parliament who served as French foreign minister from January to September 2024.

In Brussels, Séjourné is viewed as less influential his predecessor. Where Breton’s former portfolio also covered digital policy, defence and space, Séjourné now holds a far narrower portfolio focused on industrial strategy and the single market.

France’s waning influence has not gone unnoticed among diplomats from other countries, who have grown accustomed to seeing the bloc’s second-largest member paralysed by political fragmentation and partisan infighting.

The government’s painful efforts to rein in soaring debt and deficits have prompted diplomats to joke that France has become “the most frugal member state” – a major break from its traditional embrace of heavy public spending.

Good ideas, bad timing for Emmanuel Macron

The French president now finds himself in an awkward position.

Paris still retains enough clout to sway key discussions, most notably when it comes to the “Made In Europe” preference, long advocated by Macron and now widely endorsed by other leaders as a counterweight against foreign competition.

On foreign policy, Macron has continued to shape Europe’s key debates. He made headlines as the first European leader to raise the prospect of deploying national forces to Ukraine; initially dismissed as unrealistic, the idea gained new traction after Donald Trump returned to the White House and upended US policy toward Russia.

The notion of an on-the-ground deployment was soon picked up by British Prime Minister Keir Starmer, since when the two leaders have co-led the “Coalition of the Willing” to design security guarantees for Ukraine.

Earlier this week, both Starmer and Macron signed a declaration of intent with Ukrainian President Volodymyr Zelenskyy to establish a multinational force in the event of a ceasefire.

Still, the Mercosur deal exposes his weaknesses where it hurts him the most – at home.

Jorge Liboreiro contributed reporting.

Venezuela has long been a country of dilemmas, defined less by decisions than by the consequences of postponing them. For more than two decades, its politics have revolved around choices with no clean exits: negotiate or resist, reconcile or repress, participate or abstain, sanction or relieve. None of these debates ever really end, they just get deferred.

The last few days have reinforced that pattern. There have been signals, rumors, half-measures, and a noticeable effort to avoid clear moves. If the Maduro era ended with spectacle, what followed has been quieter and harder to read. Not resolution, but something closer to managed uncertainty.

Those dilemmas do not look the same from every vantage point. They look one way from inside the arrangement now led by Delcy Rodríguez, another from an opposition that gained recognition but little control, and another still from Washington, where the Trump administration is trying to recalibrate pressure without fully owning the consequences. The common thread is simple enough. Everyone wants leverage, but no one has very much of it.

A managed opening under Delcy ?

For Delcy Rodríguez, the central question is not whether to open the economy, but how far she can go without touching the political core of the system. Economic normalization is safer terrain. It can be adjusted, slowed, or reversed. It reassures business actors, eases currency pressure, and creates the impression of movement without challenging the security apparatus that ultimately sustains power.

Nothing announced in the arrangements with the United States alters the centrally planned nature of the regime. At most, they shift the locus of external influence, moving it from Beijing to Washington, without changing who makes the decisions at home.

As stability is increasingly purchased through economic relief and diplomatic accommodation, rather than fear alone, Cabello’s role becomes less structural and more transactional.

Rodríguez and her brother Jorge may believe that selective compliance with Washington strengthens their hand against the opposition. Releasing a handful of high-profile political prisoners could be presented as progress, while house arrest can be easily revoked. But that calculation only goes so far. Colectivos are still active, police checkpoints remain, and the revolving-door logic of repression has not disappeared, it has simply become less strident.

Political reform is a different problem. Whatever broader strategy is being attempted, removing figures like Diosdado Cabello or Vladimir Padrino López too early would be costly. Their role is not symbolic. It is structural. They sit at the intersection of civilian authority and coercive power. Moving against them risks fragmentation and instability, outcomes no “transitional” figure wants to test.

The result is familiar. Economic flexibility paired with political stasis. Markets are easier to manage than men with guns. The opening exists, but it remains narrow.

Diosdado Cabello and the logic of repression

Diosdado Cabello remains central to that arrangement. He is still a key pillar of the repressive structure and an enforcer of internal discipline. Without figures like him, maintaining order during any attempt at reshuffling would be far more difficult.

That same visibility, however, makes him vulnerable. As the government looks outward, seeking normalization and legitimacy, Cabello’s profile becomes a liability. He is an obvious candidate for scapegoating or bargaining, a way to signal change without altering the underlying balance of power.

For now, collaboration makes sense. A premature break would require fractures within the elite and firm backing from the security forces, conditions that do not yet seem to exist, and he would be crazy not to explore. But waiting has its own risks. Each step toward economic normalization changes the political economy of repression. As stability is increasingly purchased through economic relief and diplomatic accommodation, rather than fear alone, Cabello’s role becomes less structural and more transactional. Still powerful, but easier to sideline, trade, or sacrifice when the balance shifts.

His dilemma is less about ambition than risk and timing. Wait too long and become expendable. Move too soon and stand alone.

An opposition without leverage

If the government’s problem is how much to concede, the opposition’s is how to act when it cannot force concessions at all.

The old debate about whether to participate in elections has faded, at least for now. The more pressing question is how to push for outcomes without alienating the Trump administration, while also avoiding being sidelined from a process largely run by others.

This is a less comfortable position than the clarity of boycott politics. The opposition retains international recognition and moral legitimacy, but little control over sequencing, guarantees, or enforcement. Its leverage is mostly external, and even that is constrained by how limited Venezuelan political capital has become in the United States.

For the opposition, every week of managed calm narrows the space in which democratic demands can still be enforced rather than negotiated away.

María Corina Machado’s influence depends in part on US backing, and that backing is not unconditional. Public confrontations, whether in Washington or Caracas, would likely benefit the Rodríguez camp, which has positioned itself as cooperative and pragmatic. An opposition better at public gestures than quiet lobbying now relies on a shrinking circle of intermediaries with access to decision-makers.

Migration fatigue, shifting priorities, and domestic politics in the United States all limit how long Venezuela can command attention. As the adage goes “no one is ever out with Trump” but at this point Zelenky’s position after his first visit to the White House probably seems enviable to Machado and Gonzalez right now.

Washington’s shrinking margin for error

For the Trump administration, Venezuela has become a problem of rising cost and narrowing options. Sanctions, diplomatic isolation, and conditional engagement are still on the table, but their effectiveness has been weakened by the political fallout from the operation to arrest Nicolás Maduro.

The Senate’s advance of a War Powers resolution signals discomfort with further unilateral action. Even if ultimately blocked, it exposes real limits. In an election year, threats of escalation carry less weight when Congress is signaling restraint.

Energy policy only adds to the tension. A push to keep oil prices below $50 makes Venezuelan crude less appealing to US firms, even with better terms. Heavy oil requires investment and time, and neither is attractive if companies fear policy reversals. At a moment when the administration is already paying a political price for its actions, the economic upside looks increasingly thin.

For now, the country sits between openings that do not transform and pressures that do not resolve.

Pressure also brings secondary effects. Migration, regional instability, and bureaucratic strain all factor into the calculation. Reopening the US embassy in Caracas reflects this shift. It lowers the temperature, but it also makes the threat of renewed escalation harder to sell.

The trap of managed drift

What this produces is not paralysis, but a carefully managed drift. It is quiet enough to be mistaken for stability. But the drift feels bloodless, and its costs are being deferred, accumulated, and quietly transferred. Venezuelan democracy is the one paying them.

Delcy Rodríguez can offer economic relief without altering the political core of the system. Washington can sustain pressure without fully committing to escalation. Even the opposition, trapped in its weakest position in years, can remain present without being decisive. In a configuration where no one secures what they want, everyone convinces themselves they have avoided catastrophe.

That is the danger. Drift rewards those who can wait, those who control force, those who can absorb time. It punishes those whose leverage depends on urgency, legitimacy, and momentum. For the opposition, every week of managed calm narrows the space in which democratic demands can still be enforced rather than negotiated away.

Venezuela has lived through this logic before. What makes the current moment distinct is not the structure of the dilemmas, but their accumulation. Each unresolved choice makes the next one harder. Each postponement raises the political price of action while lowering the expectations attached to it.

For now, the country sits between openings that do not transform and pressures that do not resolve. Not because options are exhausted, but because every option carries a cost someone else is being asked to bear. And in this version of stability, it is not the regime, nor Washington, that pays first. It is the possibility of Venezuelan democracy itself.

Published on 08/01/2026 – 20:28 GMT+1
•Updated
20:33

France is set to reject the Mercosur deal in a vote among EU member states, after months of efforts by Paris to build a blocking minority against the contentious accord.

If, as signals suggest, Italy backs the agreement, it would represent a severe diplomatic defeat for Macron, whose strategy to derail the deal would collapse.

“France has decided to vote against the signing of the agreement between the European Union and the Mercosur countries,” Macron posted on X.

He said the “EU-Mercosur agreement is a deal from another era, negotiated for too long on outdated foundations,” adding that the economic benefits “would be limited for French and European growth.”

“It does not justify exposing sensitive agricultural sectors that are essential to our food sovereignty,” he wrote.

Paris failure to build a blocking minority

The Mercosur agreement was clinched in December 2024 by Commission President Ursula von der Leyen with Argentina, Brazil, Paraguay and Uruguay, aiming to create a free-trade area of about 700 million people across the Atlantic after more than 25 years of negotiations.

France has opposed the deal at every phase, citing concerns about unfair competition from Latin American imports and under pressure domestically from its farmers.

Amid rising geoeconomic tensions, supporters led by Germany and Spain have pushed for a swift signing to open new export markets.

The signature was postponed following an EU summit last month after Italy and France expressed reservations. The Commission suggested these issues could be addressed and the signature would go ahead in January.

Paris intensified efforts in recent weeks to assemble a blocking minority, securing backing from Poland, Hungary, Ireland and possibly Austria. But Italy’s position remained decisive in the run-up to Friday’s vote at a meeting of EU ambassadors in Brussels.

After a series of concessions from the European Commission, including strengthened safeguards to monitor market disruptions and early cash payments for farmers, Italy appears to have shifted toward the deal’s supporters.

If a qualified majority backs the agreement, it would mark the first time France has been outvoted at the Council, which represents member states in Brussels – another blow for Macron as he grapples with a deep political crisis at home.

Calls for new elections in Venezuela often assume the existence of basic democratic conditions. In reality, those conditions do not exist. Venezuela cannot hold credible, free, or fair elections today because the country lacks the most fundamental prerequisite of democracy: the rule of law. Without a restoration of institutional independence and a genuine separation of powers, elections would serve only to legitimize an authoritarian system rather than offer Venezuelans a real choice.

Although Venezuela formally maintains the appearance of a constitutional democracy—with a constitution, courts, and a National Assembly—real power is concentrated in the hands of a small group of individuals aligned with the ruling party. Institutions that should act as checks on executive authority instead function as extensions of it.

A clear example is the swearing in of the interim president, Delcy Rodríguez, done by her brother, Jorge Rodríguez, who is the president of the National Assembly.

This concentration of power is not accidental. Over many years, first under Hugo Chávez and later under Nicolás Maduro, the government systematically dismantled institutional independence. A majority of judges were replaced with loyalists, transforming the judiciary into a political tool rather than an impartial arbiter of the law. As a result, courts no longer protect constitutional rights or limit executive overreach; they enforce political decisions.

The definitive rupture of constitutional order occurred after Venezuelans elected an opposition-majority National Assembly in 2015 (following the 2014–2015 political cycle). This democratic outcome represented a clear mandate to challenge executive power, oversee government actions, and restore institutional balance.

After the elections held in July of 2024, despite clear and convincing evidence that the opposition had won, not one Venezuelan institution recognized the result and instead awarded the presidency to Maduro once again.

Rather than accept this result, the Maduro government moved to neutralize the Assembly. Through rulings issued by a politically controlled Supreme Court, the Assembly was declared in contempt, its powers were stripped, and its legislative authority rendered meaningless. To fully sideline the opposition-controlled legislature, the government went further by creating a so-called “Constituent Assembly,” purportedly to reform the constitution. This body was neither elected under fair conditions nor authorized through a legitimate democratic process. Instead, it functioned as a parallel legislature designed to replace the National Assembly altogether. This marked the end of any meaningful separation of powers in Venezuela.

From that point on, Venezuela ceased to operate under its own constitutional framework. There has been no genuine transfer of power, no institutional accountability, and no respect for electoral outcomes that challenge the ruling group’s control.

In this context, calling for new elections without first restoring the rule of law is fundamentally flawed. Elections held under a system where courts, electoral authorities, security forces, and media are controlled by one political faction cannot be free or fair. They do not reflect the will of the people; they merely reproduce the existing power structure.

True elections require an independent judiciary; a neutral and credible electoral authority; respect for the separation of powers; and guarantees of political rights, free speech, and fair competition. None of these conditions currently exist in Venezuela. After the elections held in July of 2024, despite clear and convincing evidence that the opposition had won, not one Venezuelan institution recognized the result and instead awarded the presidency to Maduro once again.

Depolitize the guys with guns

For Venezuela, the path forward is not immediate elections, but a democratic transition. Such a transition must focus first on restoring the rule of law, reestablishing independent institutions, and guaranteeing basic political freedoms. More importantly, making sure that the nation’s security forces are once again impartial and can align with the mandate granted by the people.  

The Venezuelan armed forces have become one of the most decisive instruments of authoritarian control. Far from acting as a neutral guarantor of constitutional order, they operate as an extension of the ruling party. This loyalty is maintained through a combination of political patronage, economic privileges, and legal impunity, ensuring that the military remains aligned with the regime rather than the nation.

Can Venezuela simply declare that everything passed over the last ten years never existed? While morally appealing, such an approach would be legally and practically unworkable.

For any genuine democratic transition to succeed, this dynamic must change. The armed forces must be depoliticized and restored to their constitutional role: defending the sovereignty of the country, not a political faction. Their impartiality is essential to guarantee that electoral outcomes are respected and that citizens can exercise their rights without fear of coercion or intimidation. Without this shift, even well-designed electoral reforms risk collapse under the weight of military interference.

Without this transition, elections risk becoming another instrument of authoritarian control. With it, they can become the foundation for rebuilding Venezuela’s democracy. Only then can elections serve their true purpose: allowing Venezuelans to decide their future freely and without coercion.

The problem of legal continuity

If the diagnosis is clear—that Venezuela cannot hold credible elections under current conditions—the path forward is far less certain. The country faces a fundamental and unavoidable question: how does a society undo more than a decade of institutional erosion without creating legal chaos or collective paralysis?

One of the most difficult challenges of a democratic transition is determining what to do with the body of laws, decrees, and decisions enacted under an illegitimate system. Can Venezuela simply declare that everything passed over the last ten years never existed? While morally appealing, such an approach would be legally and practically unworkable.

Millions of Venezuelans have lived, worked, signed contracts, owned property, and made daily decisions under this framework. Entire economic and social relationships—even distorted ones—have been shaped by these rules. Declaring all of them null and void overnight would risk replacing authoritarianism with legal uncertainty.

A transition must therefore strike a careful balance: recognizing legal reality without legitimizing the system that produced it.

This dilemma is especially acute when it comes to contracts issued by the regime. Some were instruments of corruption or political patronage; others were ordinary commercial or administrative acts necessary for the country to function.

Above all, a transitional process will require political restraint: a recognition that the goal is not to replace one concentration of power with another, but to restore limits on power itself.

Take Chevron for example. Their current operations in the country are legally questionable; many lawyers in the country will tell you that the legal framework under which they are operating has no legal foundation. This will probably make it difficult for other oil companies to go into the country and invest until there is a clear legal framework that they can trust.

A future democratic government will need a principled framework to distinguish between contracts that are inherently illegitimate due to corruption, coercion, or constitutional violations; and contracts that, while issued under an authoritarian regime, involve good-faith third parties and essential services.

This is not a problem unique to Venezuela, but it requires transparent mechanisms—such as independent review bodies or transitional courts—to prevent arbitrariness while restoring public trust.

The constitutional question

Another central issue is whether Venezuela should return to a prior constitutional framework as a foundation for democratic restoration. Some argue that the 1999 Constitution—despite its flaws—remains the last broadly legitimate constitutional document approved by popular vote and could serve as a starting point.

If so, the question becomes procedural: how does the country re-legitimize institutions that still formally exist but have lost all independence?

One possible path is a general referendum authorizing a limited, clearly defined transitional process. Such a referendum could enable the appointment of a new, independent National Electoral Council; establish a transparent mechanism to select new Supreme Court justices; and define the temporary scope and duration of transitional authorities.

This would allow change to occur within an explicit democratic mandate, rather than through ad hoc or purely political decisions.

Importantly, Venezuela does not lack institutions on paper. Courts, electoral bodies, ministries, and legislative frameworks already exist. The challenge is not rebuilding the state from scratch, but cleaning and depoliticizing institutions so they can function independently.

That process will require clear legal standards for independence and accountability. International technical support and observation would help to prevent permanent transitional arrangements by enforcing time-bound mandates. Above all, it will require political restraint: a recognition that the goal is not to replace one concentration of power with another, but to restore limits on power itself.

There are no simple solutions. Any transition will involve compromises, uncertainty, and difficult decisions. But postponing these questions—or pretending elections alone can resolve them—only delays Venezuela’s recovery.

The task ahead is not merely electoral. It is constitutional, institutional, and moral. Reestablishing democratic rule of law will require confronting the past honestly, managing the present responsibly, and designing a future in which no individual or group can again place itself above the law.

A few weeks ago, I wondered whether Nicolás Maduro was a Juan Vicente Gómez 2.0, that other dictator who held power in Venezuela for almost three decades at the beginning of the 20th century. We now know that wasn’t the case. Gómez, from the very beginning, exercised terror within the country, but he forged an alliance with American oil companies that allowed him to perpetuate the regime until his death 90 years ago. Maduro also practiced that terror, but failed to consolidate all the internal and external support he needed. When he wanted to fully surrender to the United States, the playing field had already shifted. As the saying goes, “too little, too late.”

In the conclusion of that other article, I wondered if Venezuela was on the verge of a new 1936, the year the country inaugurated a new era after the dictator’s death. It was then that the masses burst onto the public scene, modern political parties emerged, unions were organized, and solutions to the country’s serious problems began to be discussed. Today, after the US military intervention and Maduro’s capture on January 3, 2026, history is being rewritten minute by minute.

Now, as this year begins, we can break down the situation into three levels.

First, there are the celebrations. Venezuelans abroad are filled with euphoria, while within the country the reaction is more silent and private. The dictator is gone, but the dictatorship persists. The torturers remain in power. But seeing a tyrant fall, one who mocked the country with ironic brutality is a poetic justice many of us hoped for, and there remains the hope that he will also be tried for his crimes against humanity, a record that ranges from extrajudicial executions and state terrorism to the material and emotional destruction of an entire country.

Maduro, perhaps, never imagined this end, trusting that 20th century international law would protect his tyranny. But times have changed. Each power guards what it considers its own backyard, and the law of the strongest has returned, without euphemism. Herein lies the second level. It is fine to question all foreign intervention and its legality, but after the mega-fraud of July 28, 2024, regional diplomacy proved insufficient, and too many turned a blind eye. The half-hearted diplomatic attempts of Brazil, Colombia, and Mexico proved useless in achieving the transition.

The return of exiles, the demolition of the old La Rotunda prison—a symbol of political oppression like El Helicoide today—and still fragile guarantees of political participation generated new expectations during the López Contreras regime.

The region is also responsible for this outcome. Nor can we forget that it was during the Hugo Chávez era that we fell into this geopolitical trap, losing the independence and sovereignty we had achieved during the democratic years. Ideological factions, authoritarian tendencies, and an international rebellion contrary to national interests placed us in a vulnerable position in a much larger game that is not our own.

And the third level is the possibility, amidst the evident contradictions, of rebuilding Venezuelan democracy. There are many possible scenarios, and we know that we are now at the mercy of external decisions where, for the United States, the priority is not so much restoring democracy as securing its interests. With a game of musical chairs within chavismo-madurismo, Delcy Rodríguez now becomes the figure ruling from Miraflores Palace. As president, she will try to prolong her interim term and cling to power, continuing the lobbying she has been doing for some time, as a reliable ally for the United States and who could be the proconsul they need beyond an interim period. The country also faces the feudal structures left behind by chavismo, where military, regional, and economic factions that continue to control everything could engage in a power struggle of coups and counter-coups.

However, there is also the possibility that Venezuelan democratic society (which carries in its DNA the struggles of the past and present) can begin to reconstitute itself. For this to happen, it is essential to demand the release of all political prisoners, the return of exiles, an end to censorship, and a profound and peaceful institutional change that allows for the dismantling of the regime from within, by its own figures. This is a dynamic already observed in other transition processes, capable of laying the foundations for lasting social transformations, with reconciliation, but also with justice.

In this phase of the process, the main leadership of María Corina Machado and the legitimacy of Edmundo González Urrutia are recognized, but it is also the moment to convene the entire democratic leadership to build the agreements that will make future governance possible. The coming months constitute a true critical path, a fragile bridge where both the best and worst scenarios can materialize.

History does not repeat itself, but there are logics and precedents that help us better understand the processes of change. In 1936, the transformation did not occur due to foreign intervention, but rather due to the death of Gómez. The then Minister of War and Navy, Eleazar López Contreras, assumed the acting presidency. In the last weeks of December 1935, some looting and disturbances occurred, which were quickly controlled, and the new leader managed to retain power.

Venezuelans can do their part: To demand change step by step and navigate this minefield with caution, where everything, once again, could go very wrong.

The regime seemed immovable: the same ministers, the same lawmakers, the same system, sustained by consolidated power groups that demanded mere continuity. However, a timid opening began. The return of exiles, the demolition of the old La Rotunda prison (a symbol of political oppression), and still fragile guarantees of political participation generated new expectations.

On February 14, 1936, after attempts to reinstate censorship and prolong the suspension of constitutional guarantees, the people of Caracas took to the streets and, in a defiant gesture, demanded that the government go beyond minimal concessions. Overwhelmed by pressure from students, unions, and the press, López Contreras presented the February Plan a few days later, abandoning half-measures and initiating what would be a true political opening, Venezuela-style.

The situation today is more complex than in 1936. The main actors have shown no qualms, and Venezuelan society remains wounded and shackled by the cumulative repression of all these years. But the demands cannot be abandoned, nor can the future be left to external tutelage or the continuation of oppression. A new horizon is possible, and although there are external factors beyond our control, Venezuelans can do their part: To demand change step by step and navigate this minefield with caution, where everything, once again, could go very wrong. It has been achieved before, and today, with greater awareness and determination (because we have learned something), it is possible to build and consolidate a shared vision for our country.

Italy called on Wednesday in a letter to EU’s Agriculture Commissioner ChristopheHansen to lift the bloc’s carbon border tax in order to ease pressure on fertilizer prices for European farmers. The date for the Mercosur signature is still not clear.

Expectations for Rome to greenlight the trade deal had risen in Brussels after European Commission President Ursula von der Leyen pledged on Tuesday to unlock additional funding for farmers to the tune of €45 billion as soon as 2028 in a designed to sway the pivotal support of the Italian government in favour of the deal.

“If in today’s meeting these conditions are certified by the Commission, Italy will support the deal (Mercosur),” Meloni’s agriculture minister Francesco Lollobrigida told reporters in Brussels.

Italy’s request comes as the Commission convened EU agriculture ministers in Brussels on Wednesday for talks on the future Common Agricultural Policy funding -a key piece of the common budget and highly sensitive to domestic politics – and reciprocity in production standards between Latin America and Europe, a key French demand.

France still opposes the Mercosur deal.

Farmers furious as Mercosur enters final stretch

The Mercosur agreement would create a free-trade area between Latin America, including heavyweight economy Brazil and the EU, cutting tariffs across sectors the board for European companies but also opening market access to Latin America.

Italian farmers, alongside France, Poland and Ireland, fear the deal with Argentina, Brazil, Paraguay and Uruguay will expose them to unfair competition.

Italy’s backing of the deal is essential to reach a qualified majority of member states needed to support it, or a blocking minority as a tiebreaker.

This is a developing story.

Morgan Stanley plans to launch ETFs tied to the price of Bitcoin and Solana, the first and sixth-largest crypto assets by market capitalisation respectively, according to a Form S-1 filed with the US Securities and Exchange Commission (SEC).

This is the first time one of the ten largest US banks by total assets has formally moved to offer crypto ETFs.

An exchange-traded fund (ETF) is a basket of assets that trades on a stock exchange like a share, giving investors easy exposure to an index, sector or commodity without owning it directly.

Many investors favour gaining crypto exposure via ETFs because they are low-cost and convenient. They can also offer greater liquidity while removing the regulatory and logistical complications of holding and safeguarding the underlying assets directly.

However, in the two years since the SEC approved the first US-listed Bitcoin ETF, it has largely been asset managers rather than banks that have launched these products.

BlackRock, the world’s largest asset manager, said last December that its Bitcoin ETF suite had become the firm’s top revenue source, with allocations nearing $100 billion (€85bn) and generating more than $245 million (€210mn) in annual fees.

US banks, which have only acted as custodians of client funds until now, seem ready and eager to evolve as providers of crypto services in 2026.

Regulatory push under Trump

The current US administration has been notably favourable towards the crypto asset industry. President Donald Trump’s family launched a crypto platform, World Liberty Financial, just 50 days before the 2024 presidential election.

The company is managed by Trump’s two eldest sons, Donald Jr and Eric Trump, and alongside another firm, Trump Media and Technology Group, it has expanded the US President’s personal crypto ventures.

In parallel to these private interests, the current US administration has made a major regulatory push encouraging Wall Street to fully embrace crypto assets.

In July 2025, Trump signed the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS Act) into law, creating a comprehensive regulatory framework for stablecoins. These are crypto assets designed to maintain a stable value by pegging their worth to a real-world asset, typically a fiat currency such as the US dollar.

That same month, the Crypto Legal Accountability, Registration and Transparency for Investors Act (CLARITY Act) was approved in the US Congress. It is now moving through the US Senate and is expected to pass on 15 January 2026.

The CLARITY Act is a landmark legislation intended to end the long-standing era of “regulation by enforcement” that has weighed on US crypto firms for years.

In September 2025, the SEC also revamped listing rules for new commodities ETFs, including those tied to crypto assets, clearing the way for firms to bring more financial products to market.

The shift helped spur Morgan Stanley to broaden client access to crypto investments in October 2025, and it has now filed with the SEC to offer crypto ETFs directly.

At the start of 2026, Bank of America also began allowing its wealth advisers to recommend crypto allocations in client portfolios, another sign of growing adoption of crypto assets among major US banks.

What this means for the EU

This development in the US banking sector and the crypto industry is not only significant for Wall Street, but also has direct implications for European investors.

US-listed ETFs are typically not available to European retail investors because they do not meet EU requirements under the Undertakings for Collective Investment in Transferable Securities (UCITS) regime.

Morgan Stanley has been expanding its footprint in the European ETF market since entering the space in 2023, and has been building the infrastructure needed to launch EU-compliant versions of these funds.

While Europe has yet to see a UCITS-compliant spot crypto ETF, major platforms such as Coinbase, one of the world’s largest crypto asset exchanges, are partnering with financial institutions, including Morgan Stanley, to enable crypto ETF trading in Europe this year.

Together, they aim to comply not only with UCITS, but also with the EU’s Markets in Crypto-Assets (MiCA) rules, which require firms to hold a Crypto-Asset Service Provider (CASP) licence.

Morgan Stanley’s leap indicates that for Wall Street, crypto is no longer a reputational risk to avoid, but a revenue stream they can no longer afford to ignore.

Maduro is out, Delcy Rodríguez is in, and yet Venezuela feels no more democratic than it did three days ago, when the former president was still boasting about air defenses and bunker walls.

The change itself was not entirely unexpected. In recent months, reporting had increasingly pointed to Rodríguez as the most viable figure to ensure continuity after Maduro, alongside speculation about negotiations involving her and her brother Jorge Rodríguez, including meetings in Doha facilitated by the Qatari government, that would have secured Maduro a negotiated exit and a prolonged, carefully managed transition.

In the end, that golden exile proved unnecessary. What followed was not a rupture, but an acceleration: the same transition logic, executed without the need for Maduro’s consent—or his presence. Still, calling this a “transition” rather than a decapitation feels increasingly strained when several of the figures flanking Rodríguez as she signaled her willingness to step in, should the Supreme Court so demand, carry the same international bounties Maduro once did, and in some cases appear in the very same indictments, now sharing docket space with far more famous recent arrivals.

If this were a democratic transition, power would be moving outward, toward institutions, parties, and voters. We would have seen the unconditional release of political prisoners. The winners of the July 28 election would not be calling for international protests demanding that their victory be respected. Instead, power has moved sideways and downward. The most visible winners of the post-Maduro moment are not opposition leaders, but many of Maduro’s former allies.

Even more telling is that while the armed forces appear to have retreated to their barracks, colectivos have rapidly expanded their role in Caracas from tolerated enforcers to de facto authorities. They patrol neighborhoods, gather intelligence, intimidate opponents, and perform basic law-enforcement functions with a confidence that suggests not stabilization, but delegation. Where, exactly, the United States is exerting the control President Trump claims to hold over Venezuela’s transition remains unclear, and, for now, largely the stuff of rumor.

Rodríguez may offer a fresher, more professional face at the head of the regime, but the internal knife-fighting, the power jockeying, and the coercive architecture remain firmly in place

This is not state collapse. It is state outsourcing. The arrested transition has reproduced Venezuela’s familiar condition of managed chaos, governed by actors who require neither legal mandates nor democratic legitimacy, only loyalty and force. For ordinary Venezuelans, the result is a familiar but sharpened experience of power: surveillance that feels more granular, coercion that feels more localized, and accountability that feels even more elusive.

The irony is that this consolidation is unfolding under the language of moderation and normalization. Rodríguez’s elevation has been framed as a stabilizing move, a technocratic turn after years of bombast and paranoia. Her record as economic vice president and minister is now being repackaged as evidence of competence, pragmatism, even reform. After denouncing Maduro’s “abduction” by U.S. forces on January 3, the very next day saw a remarkable pivot in the regime’s propaganda apparatus: Rodríguez was suddenly celebrated as Venezuela’s first female president, with a speed matched only by her plane’s return from Russia and landing in Venezuelan airspace, despite official claims that the skies were under U.S. control.

If colectivos are serious about rooting out traitors, they may find better luck checking phones in Miraflores and the Capitol than stopping cars on the highways of Caracas.

That speed matters. It reveals how thin chavismo’s ideological commitments have become, and how central narrative management now is to regime survival. Maduro was not the project; he was a vehicle. Once removed, the system adapted almost instantly, swapping revolutionary mythology for managerial language without altering the underlying mechanics of control.

For Washington, this appears, so far, to have been good enough. With Maduro gone, the Trump administration’s priorities seem to have shifted from political transformation to stabilization and risk management. A loud, autonomous opposition, once instrumental to regime pressure, is now framed less as a democratic partner than as a short-term liability. The result has not been repression, but marginalization: opposition figures are tolerated, even encouraged to remain visible, while being excluded from meaningful decision-making.

Meanwhile, the regime has solved a different problem, at least temporarily: how to continue governing under legal siege. Rodríguez’s inner circle overlaps heavily with the same network of officials who defined the Maduro years, many of whom face international indictments and bounties of their own. This is not fertile ground for the trust or guarantees required to sustain a regime as complex as Venezuela’s.

Whether Rodríguez’s presidency is a durable settlement or a trial arrangement remains unclear. So does the question many within chavismo are surely asking themselves: faced with continued pressure from Washington to “deliver,” will Rodríguez lean into the combative instincts that defined her domestic record, or will Maduro and Cilia Flores soon find themselves joined by more former comrades at MDC?

Transitions are meant to reset political and legal time. What has happened in Venezuela has merely rearranged it. Rodríguez may offer a fresher, more professional face at the head of the regime, but the internal knife-fighting, the power jockeying, and the coercive architecture remain firmly in place.

What emerges, then, is not a failed transition, but an arrested one. Politics has been paused in the name of order. Democracy has been deferred in the name of stability. Venezuela is governed as if perpetually on the verge of change, never quite authoritarian enough to provoke rupture, never democratic enough to allow arrival. Maduro is gone. Democracy, once again, is told to wait.

For the past four years, I’ve taught a course called Environment and Sustainable Development at a university in Chile. Because the class is taught in English, it tends to attract exchange students, mostly from Europe, North America, and occasionally other parts of Latin America. 

The syllabus covers poverty, economic growth, environmental protection, the Sustainable Development Goals, public policy. In general, big themes where the discussions are often intense, idealistic, and deeply moral. They are also revealing, not only of what students believe, but of what kinds of explanations are considered legitimate, and which ones are quietly ruled out.

Certain patterns repeat themselves every year.

When we discuss the root causes of poverty, European students almost invariably point to colonization. Chilean students, understandably, emphasize dictatorship. When we talk about development and environmental protection, activism is framed as the primary solution, corporations as the main villains. When I ask what makes them angry about sustainability, the answers tend to cluster around the same targets: multinational companies, billionaires, “the rich,” or the latest celebrity caught flying a private jet.

What rarely makes the list are authoritarianism, institutional collapse, censorship, human trafficking, organized crime, or forced migration. Human rights violations in countries like China or Russia are mentioned cautiously, if at all. The destruction of economic institutions is treated as a technical detail rather than a political choice. And when Venezuela comes up, it exists less as a lived reality and more as an ideological case study.

I’ve had the privilege of teaching remarkably bright students. Many have gone on to pursue master’s degrees at some of the most prestigious universities in the world. Yet explaining Venezuela to them remains one of the most challenging parts of my job.

The problem is not lack of interest. It’s the dominance of explanations that leave no room for Venezuelans to speak for themselves.

Not because the country is incomprehensible, but because the narrative space around it is so crowded.

I first encountered this problem more than a decade ago. In 2012, I attended a summer school at the London School of Economics on conflict and democracy. One session focused on Venezuela. The discussion portrayed the Hugo Chávez government as a democratic success story: a country that voted frequently, reduced poverty, and empowered the poor. There was no mention of inflation, no discussion of institutional erosion, no reference to restrictions on the press or early signs of authoritarianism.

I remember arguing, armed with data, reports, and personal experience, while several European classmates passionately defended the “Bolivarian Revolution” as one of the best things that had happened in Latin America. Venezuela, to them, was not a country but an idea. A symbol. A rebuttal to US foreign policy.

More than ten years later, that framework has proven remarkably resilient.

In my classroom today, Venezuela still raises an extraordinary number of questions. Once I open the subject, it’s like Pandora’s box, there’s no closing it back. When I share data on media censorship, students ask how people inform themselves. When we discuss the food crisis, they genuinely worry about how families ate during the worst years, particularly around 2017. They ask how daily life functions in a country with hyperinflation, collapsing public services, and mass migration.

These questions are genuine. They come from empathy, not ideology. And they point to something important: there is a real appetite to understand Venezuela better. The problem is not lack of interest. It’s the dominance of explanations that leave no room for Venezuelans to speak for themselves.

There comes a point when constantly defending one’s lived reality against people who have never visited the country, never read Venezuelan sources, and never spoken to those who endured the collapse becomes exhausting.

Venezuela is often discussed through frameworks imported from elsewhere, dependency theory, anti-imperialism, critiques of neoliberalism, while the data produced by Venezuelans is dismissed as biased, exaggerated, or politically motivated. Inflation figures that reached 1,00,000% are questioned. Hunger surveys that show 90% of poverty in the country are treated with suspicion. Migration numbers are downplayed. Reports on institutional collapse are framed as opposition propaganda. 

But Venezuela is not a country lacking data. It is a country whose data has been systematically silenced with the regime’s propaganda even echoed in the most prestigious universities around the world. 

For years, independent universities, NGOs, and research centers stepped in to document what the state refused to measure: poverty levels, food insecurity, public health outcomes, migration flows. Much of what we know today about Venezuela comes not from international institutions, but from Venezuelans collecting, analyzing, and publishing data under conditions of censorship and intimidation.

This is the data that rarely makes it into global debates.

Instead, Venezuela is often reduced to a morality play: a noble project sabotaged from abroad, or a cautionary tale stripped of agency. In both cases, Venezuelans themselves disappear. We are either victims of external forces or footnotes in someone else’s ideological argument.

There comes a point when constantly defending one’s lived reality against people who have never visited the country, never read Venezuelan sources, and never spoken to those who endured the collapse becomes exhausting. Ignorance, after all, is not always innocent—it can be a choice.

But there is also a responsibility. For those of us who have migrated, who now teach, research, or work abroad, there is a duty to keep explaining Venezuela, not as an abstraction, but as a country shaped by deliberate political decisions. The elimination of central bank independence was not an accident. Expropriations were not symbolic gestures. The pursuit of total state control over the economy was not an unfortunate side effect of good intentions. These choices produced hunger, poverty, and mass migration.

Explaining this does not require abandoning concern for the international rules-based system. It requires intellectual honesty.

But many others are willing to listen. They ask questions. They want to understand how a country with immense natural wealth ended up with one of the largest displacement crises in the world.

Recent events have shown what happens when Venezuelans reclaim the tools of documentation and accountability. When María Corina Machado and others insisted on preserving electoral records, the act itself became political, not because it was partisan, but because it challenged the monopoly over truth. Data, in authoritarian contexts, is never neutral.

Not everyone will be willing to reconsider their views. Some people remain deeply attached to narratives shaped primarily by hostility toward the United States, projecting that conflict onto Venezuela regardless of evidence. For them, the country serves a symbolic function, and symbols are rarely surrendered easily.

But many others are willing to listen. They ask questions. They want to understand how a country with immense natural wealth ended up with one of the largest displacement crises in the world. They are capable of seeing Venezuelans not as ideological placeholders, but as millions of people who have resisted, adapted, protested, voted, migrated, and survived in pursuit of something very simple: the ability to live freely in their own country.

Venezuela matters not only because it is our history, but because its future challenges a narrative that has gone largely unquestioned for too long, the idea that anything framed as anti-US is automatically virtuous, and anything aligned with self determination and power to the people is in our best interest. This binary leaves no space for critical thinking, and even less for evidence.

In defending old ideological frameworks from the comfort of distant classrooms and safe democracies, some fail to reckon what they are actually defending: mass human rights violations, institutional destruction, and prolonged human suffering. Whether through ignorance or willful blindness, the cost of that defense is paid by Venezuelans.In his book Animal Farm, George Orwell’s final chapters tells the story of how the new animals in charge end up proclaiming “all animals are equal, but some are more equal than others”.  In the global conversation about Venezuela, some voices are still treated as more legitimate than those who lived through the collapse. Reclaiming Venezuelan data, and Venezuelan narratives, is not about winning an argument. It is about restoring the basic right to explain our own reality.

Venezuela holds the world’s largest proven oil reserves—303 billion barrels, about 17% of the global total and more than Saudi Arabia’s 267 billion. Yet Venezuela produces fewer than 1 million barrels per day, less than 1% of global output. That’s less than a third of what it pumped in the late 1990s and early 2000s, when production topped 3.5 million barrels daily.

So what happened? It’s the result of political decisions, economic sanctions, and the sheer difficulty of extracting Venezuela’s heavy crude.

Proven Reserves, Unproven Output

Having oil reserves doesn’t mean you can easily produce it for the world’s markets. Most of Venezuela’s crude is extra-heavy oil, closer in consistency to asphalt than gasoline. To produce it at scale, companies need the following:

• Specialized drilling equipment
• Upgraders to turn thick crude into exportable oil
• Constant maintenance to keep wells from clogging
• Special chemicals (often imported) to thin the oil so it can flow

Thus, while Venezuela still has massive amounts of proven reserves, it lacks a functioning system to extract, process and ship it. Over the past two decades, that system has all but fallen apart, based on decisions inside and outside the country:

The Expertise Exodus

In 2002–2003, a strike at the state oil company PDVSA led to the firing of almost 20,000 workers, about 40% of its personnel. These were the engineers and managers who knew how to handle Venezuela’s notoriously difficult crude.

According to the U.S. Energy Information Administration, that purge, “combined with a reported tendency to hire based on government loyalty rather than technical skill, continues to affect operations, resulting in a lack of high-level expertise.”

The Sanctions Squeeze

U.S. restrictions on Venezuela began in 2005, when the U.S. State Department determined Venezuela was failing to cooperate on anti-drug and counterterrorism efforts. President Barack Obama imposed further sanctions in 2015, targeting officials said to be involved in human rights abuses, corruption, and undermining democratic institutions.

The sanctions with the biggest bite came in 2017, when President Donald Trump cut off the Venezuelan government and PDVSA from U.S. financial markets. The restrictions removed access to capital markets, scared away potential investors, and forced Venezuela to sell through “shadow fleets” to China at steep discounts.

A 2021 Government Accountability Office report found Venezuelan oil production had already declined 47% from 2010 levels before the 2019 sanctions, then dropped another 59% in the 18 months after. China now receives about 80% of Venezuela’s exports and has lent close to $50 billion over the past decade in exchange for crude deliveries.

Industry Nationalization

Starting in 2006, former Venezuelan President Hugo Chávez forced foreign operators into minority positions or seized assets outright. Exxon Mobil Corporation (XOM) and ConocoPhillips (COP) withdrew entirely in 2007.

Only Chevron Corporation (CVX) maintained significant operations, and today it accounts for about a quarter of Venezuelan production.

Infrastructure Decay

The above factors have led to a long-term decline in the quality of Venezuela’s pipelines, many of which are more than 50 years old. PDVSA has estimated that updating pipeline infrastructure alone would require $8 billion just to return to late-1990s production levels.

Its Paraguana Refining Center—one of the world’s largest—was running at just 10% of its 940,000-barrel-per-day capacity as of late 2023. Overall, Venezuela’s refineries are functioning at about one-fifth of their capacity.

What Rebuilding Venezuela’s Oil Infrastructure Would Take

The future of Venezuela’s oil industry depends on political developments. After the U.S. military captured President Nicolás Maduro on Jan. 3, President Trump announced that the U.S. would “run” Venezuela and that American oil companies would “spend billions of dollars” to rebuild the country’s energy infrastructure. But it’s unclear what that means in practice or whether Venezuela’s current government will cooperate. Vice President Delcy Rodríguez, whom Venezuela’s high court named interim president, has publicly rejected U.S. control, declaring: “We will never again be slaves… we will never again be a colony of any empire.”

Given that uncertainty, analysts see a range of scenarios:

With a stable government and lifting of sanctions: This would mean that foreign companies would be far more willing to invest. JPMorgan analysts estimate Venezuela could boost production to 1.3 billion–1.4 million barrels per day within two years, a 50% increase from today. Over a decade, output could reach 2.5 million barrels per day, far more than 2025 levels. Columbia University’s Center on Global Energy Policy notes that international operators already in the country—Chevron, Italy’s Eni, and Spain’s Repsol—could ramp up production relatively quickly since they’re operating well below capacity.

If things in Venezuela remain tumultuous: A U.S.-led transition could make things worse in the short-to-medium term. JPMorgan analysts warn that political turmoil could temporarily cut production by half, given potential disruptions at PDVSA facilities.

The Bottom Line

No matter what happens politically, RBC Capital Markets and others argue there’s no easy path to returning Venezuelan production to the 1990 level of 3 million barrels a day. Even under the most optimistic scenarios, according to the Center on Global Energy Policy, a daily boost in oil production of 500,000 to 1 million barrels is the most plausible over the next couple of years. Returning to 1990 levels would take another seven to 10 years.

Oil industry mismanagement, old infrastructure, crippling U.S. sanctions and difficult geology have throttled Venezuela’s oil output, which often must be sent through back channels at discounted prices to reach the world market.

Even in the most optimistic scenario—with political stability, sanctions relief, and tens of billions in new investment—a return to 3 million barrels per day would add only about 2% to global oil supply.

Published on
05/01/2026 – 17:33 GMT+1

It’s another crucial week for the contentious Mercosur deal. European Union agriculture ministers will meet on Wednesday for key political talks that could lead to a vote on the agreement on Friday.

An EU diplomat told Euronews that the meeting, which is being organised by the European Commission, will be attended by EU Trade Commissioner Maroš Šefčovič, Agriculture Commissioner Christophe Hansen, and Commissioner for Health and Animal Welfare Olivér Várhelyi.

Together, they are expected to give “clarifications” on the continued support for farmers’ income in the next budget of the Common Agricultural Policy.

The deal, which aims to create a free-trade area with Argentina, Brazil, Paraguay and Uruguay, was at the centre of heated discussions at December’s EU summit.

Its supporters – lead by Germany and Spain – have been pushing for a quick endorsement in order to access new markets at a time of geoeconomic tensions, while Italy and France succeeded in postponing a crucial vote in order to protect their farmers, who fear they will be unable to compete with imports coming from Latin America.

Depending on the outcome of this week’s talks, the EU farm ministers’ meeting could open the door to a vote on the Mercosur agreement on Friday. To be implemented, the deal needs the backing of a qualified majority of EU member states.

Decision day looms again

Among the items on Wednesday’s agenda will be limits on pesticides that can be contained in products imported into the EU, with France demanding that the deal include reciprocity in production standards.

France has been facing an agricultural crisis for several weeks, with farmers protesting against both the Mercosur agreement and the government’s handling of lumpy skin disease, a contagious virus affecting cattle.

In a letter sent on Sunday, French Prime Minister Sébastien Lecornu called on the EU to tighten border controls on products that do not respect EU sanitary and phytosanitary standards.

The French government also announced it would issue an order to suspend imports from Latin America containing residues of pesticides banned in the EU.

That measure, however, would require clearance from the European Commission. Pressure from Paris has already led the Commission to propose a safeguard to strengthen the monitoring of the European market to avoid unexpected disruptions.

That legislation was the subject of a deal between the European Parliament and the EU Council, and is expected to be endorsed by the 27 member states on Friday during a meeting of EU ambassadors.

In Caracas, in early January, explosions are a common sound in the morning hours. To be honest, it’s not unusual for some irresponsible person, after a few too many drinks, to decide to disrupt the sleep of the entire neighborhood by launching firecrackers or fireworks. We’re quite used to it. That distinctive whistling sound, a couple of seconds of silence, and an explosion that makes dogs bark and babies cry.

That’s why, perhaps, the explosions that sounded shortly before 2:00 a.m. in the early morning of January 3, 2026, didn’t seem strange, until they were accompanied by the vibration of a cell phone. Since I have most of its contacts on silent mode and I don’t care much about what might be happening in the world outside my four walls when I’m asleep, I was about to turn it off. But when one of those WhatsApp calls came in from a group chat, my wife, who already had her phone in her hand, worriedly asked me not to. Something was happening. She had just heard a loud bang.

“I think something exploded in Caracas.”

As soon as she said that, we started receiving videos that quickly went viral on social media. The first one we saw was a convoy of planes and helicopters heading west of the capital, leaving a trail of explosions across the valley. The only thing missing was the classic “Fortunate Son” by Creedence Clearwater Revival as its soundtrack, typical of any Vietnam War movie.

“They’re bombing the city,” my wife added.

Is it true? That’s the first question in times when artificial intelligence can create any kind of video. So, seeing is believing, as the apostle Thomas said. Like many skeptics, I went outside to look at the sky and listen. The roar of aircraft flying over the city at that hour was enough to confirm that it wasn’t just rumors.

Indeed, they weren’t fireworks, nor was it a false alarm. I had just gotten up, and, amidst the confusion, stunned, I went out onto the terrace to listen to the explosions of the bombs, as well as to see the sky light up in different places on the horizon, despite the dense night fog that usually shrouds the mountains around the antennas of El Volcán in its whitish mantle.

“We’re safe here,” I thought naively, very casually. I went back to the room to tell my wife, exuding all the confidence in the world, that we had nothing to fear, since all the impact reports were in the area of Fuerte Tiuna and the Generalisimo Francisco de Miranda Air Base, far away enough for us to feel safe.

I will never forget the roar, that light, or the panic that I can only describe as when your blood freezes and your heart skips a beat.

But at the same time, out of pure reflex, I was getting out of my pajamas and putting on jeans, a sweater, and sneakers, anticipating that we might suddenly have to leave urgently for some unknown reason, without knowing where to find shelter.

Suspecting the possibility of a power outage, I turned on the phone, and in less than two minutes it rang. I didn’t want to answer, but when I realized it was one of my good friends from school, one of those I’ve seen twice in the 20 years since he left the country, I had to.

José Ricardo, with the classic greeting, “What’s up, Joe?”, immediately asked if we were okay, and I could only tell him the same thing I told my wife.

—Aircraft and explosions can be heard in the distance. We’re far away, everything is calm, but it sounds like things are rough and it’s raining bullets along the Guaire River.

I promised to call him with more details as soon as the sun came up. At that precise moment, I didn’t have much to say, other than confirm that the bombing of Caracas was true.

—Nothing’s happening here in El Hatillo—I said before hanging up, unaware that, in a matter of seconds, I would eat my words. I left the phone plugged in to recharge the battery and went out onto the terrace to continue contemplating the sky and listening to the buzzing and booming sounds. The only thing running through my head was the lyrics and melody of Pink Floyd’s “Goodbye Blue Sky”: Did you see the frightened ones? Did you hear the falling bombs? Did you ever wonder why we had to run for shelter when the promise of a brave new world unfurled beneath the clear blue sky?

It was impossible not to recall what my grandfather once told me about his adolescence during World War II. Of all the grim anecdotes in his repertoire, the one that impressed me most was the terrifying sound of the bombings, when they heard the sound of the planes flying overhead, the whistling and the impact, the shaking of the ground making the walls and ceilings creak, as if death were dancing above their heads, claiming lives without distinguishing between the righteous and the sinners. “The only thing you can do,” my grandfather would say, “is pray that that hell won’t last long.”

That cruel memory haunted me just as I heard the roar of the engines approaching and I looked up. I heard the whistling sound and didn’t even have a chance to move. I was petrified with terror. The explosion illuminated the bleak landscape as if the sun had peeked out for that fleeting moment, adding color to a blast that shook the floor, walls, ceiling, and windows of the house with the force of the most violent earthquake.

I will never forget the roar, that light, or the panic that I can only describe as when your blood freezes and your heart skips a beat. The sound of war and a bombing raid is the most terrifying thing I have ever heard. No one can imagine it until they experience it firsthand, murmuring prayers to God for it all to end quickly, for the bombs to stop falling, and for dawn to break, while the uncertainty of what the end of the storm will bring gnaws at you from within.

As of December 2025, new laws came into effect making Hainan a separate customs zone and consolidating a favorable regulatory environment in the southernmost province of China.

The move contrasts with the current global trend of protectionism, as many countries move to tighten trade rules and investment controls.

Hainan is now effectively the world’s largest free trade port by area. Encompassing over 35,000 square kilometers, it is roughly fifty times bigger than Singapore and even slightly bigger than Belgium.

China is attempting to offer a solution for the “growing uncertainties in the global economy” and trying to replicate the success of Singapore, with a free trade port the size of a European nation.

According to the state-run Xinhua news agency, the launch of “special customs operations” is not merely a policy tweak but a fundamental restructuring of how the island province interacts with international markets.

The unique framework, instituted by the Chinese Communist Party, could make Hainan the most business-friendly jurisdiction in the world.

This is not the first time the state-led economy, described as a socialist market economy, takes a page from the capitalist playbook to boost its global dominance.

Special economic zones (SEZs) have been successfully implemented in China since the late 1970s, as part of the country’s economic open-door policy. These SEZs allow Beijing to experiment with capitalist mechanisms, in limited areas, while maintaining broader state control over the economy.

In 2020, the CCP unveiled a comprehensive plan to shift Hainan from a mere special economic zone to a strategic hub designed to rival Hong Kong, Singapore and Dubai.

Creating a completely separate trade and investment system for the province was the objective until the end of 2025. Going forward, the party projects that Hainan will reach “institutional maturity” by 2035 and achieve a “strong global influence” by the middle of the century.

First line open, second line controlled

The province comprises Hainan Island and various smaller islands in the South China Sea, and now operates under a “two-line” customs system designed for greater openness while maintaining domestic security.

The first line marks the boundary between Hainan and the global economy, where most trade barriers have been removed. Under the new legislation, the majority of goods can enter the province freely, with a significantly expanded list of zero-tariff imports covering raw materials, equipment and consumer products.

The second line functions as a filter between Hainan and mainland China. There, standard customs rules apply, with goods subject to tariffs and controls intended to protect domestic markets.

However, the system creates a powerful incentive for manufacturers. Goods entering Hainan that achieve at least 30% added value within the province can enter mainland China duty-free, a policy designed to encourage additional production on the islands rather than using it solely as a transit hub.

For example, Australian beef can be imported into Hainan duty-free. Then, if the beef is sliced and packaged for China-destined hotpot products on the island province itself, it can enter mainland Chinese supermarkets with the same exemptions.

China’s strategic gateway

The scope of the CCP’s plans for Hainan extends well beyond customs arrangements.

The province applies a flat corporate tax rate of 15%, lower than those in Hong Kong (16.5%), Singapore (17%) and mainland China (25%).

Hainan is now also operating under a distinct regulatory framework in several other areas, which differs significantly from regulation on the mainland.

For instance, if a pharmaceutical product or medical device is approved by one of many regulatory agencies anywhere in the world, it can be used on the island province despite being banned on the mainland.

Similarly, companies registered in Hainan can apply for broader internet access, allowing them to bypass the so-called “Great Firewall of China”, a system of laws and technologies enforced by the CCP to control online activity nationwide.

Foreign companies can also open special bank accounts in Hainan, with capital flows exempt from mainland foreign-exchange controls, while foreign universities are permitted to establish campuses without a Chinese partner.

Visa-free entry to the province has also been expanded from 59 to 86 countries, now including the United States, Germany and Australia, as well as several countries in the Middle East and South America.

Visitors can stay for up to 30 days without a visa for business, medical treatment or tourism, as the authorities also promote the island province as a major travel destination.

Amid rising tensions in the global economy, Hainan serves as China’s “pressure valve” offering a low-tax, zero-tariff, high-access gateway to Asia-Pacific markets.

Published on
01/01/2026 – 16:59 GMT+1

President Donald Trump has eased pressure on two key import sectors — furniture and pasta — by delaying or scaling back steep tariffs shortly before they were due to take effect on 1 January, 2026.

For furniture, Trump has postponed planned tariff increases on certain imported home goods for one year, keeping existing duties in place while allowing further negotiations with trading partners.

On Wednesday Trump signed a proclamation delaying the scheduled increases — originally set to take effect on Thursday — until January 1, 2027.

The order preserves the current 25% tariff on “certain upholstered wooden products,” kitchen cabinets and vanities, rather than allowing it to rise to 30% for upholstered furniture and 50% for kitchen cabinets and vanities as previously directed.

“The United States continues to engage in productive negotiations with trade partners to address trade reciprocity and national security concerns with respect to imports of wood products,” the White House said in a statement announcing the move.

The furniture tariffs were imposed in September 2025 under a broader push to reshape US trade relationships and protect domestic industries. In addition to the 25% on furniture and cabinets, the administration also placed a 10% duty on imported softwood timber and lumber late last year.

The higher rates that were set to begin this week would have hit imports from major suppliers like Vietnam and China particularly hard and come amid ongoing concern about rising consumer prices.

Separately, the US Supreme Court is expected to rule on the legality of some broad tariff measures imposed under national security authorities, a decision that could have wider implications for Trump’s trade strategy.

In contrast to the furniture delay the Trump administration has significantly reduced planned anti-dumping duties on Italian pasta, offering relief to several major brands after months of dispute.

The US Department of Commerce had initially proposed very high provisional anti-dumping duties — more than 91% — on certain imports of Italian pasta, on top of an existing 15% general tariff on EU food products.

Following a review and consultations with Italian authorities, the United States lowered those planned tariffs sharply. La Molisana will face a 2.26% duty, Garofalo will face a 13.98% duty and eleven other Italian producers will face 9.09% duties.

“The redefining of these tariff rates is a testament to the US authorities’ recognition of our companies’ effective will to cooperate,” Italy’s foreign ministry said in a statement.

Italy had been working with both the US government and the European Commission since October 2025 to find a solution to the dispute.

The US market remains crucial for Italian pasta producers. Exports of pasta to the United States were estimated at about €671 million in 2024, representing roughly 17% of Italy’s total pasta exports.

U.S. President Donald Trump’s sweeping April 2025 tariff measures sent shockwaves through financial markets while upending decades of carefully built trade relationships worldwide, marking the most significant U.S. trade policy shift in at least a century. Economic experts immediately warned that raising the average effective U.S. tariff rates from just under 1.0% to between about 22.5% and 24%, the highest since 1910, could be catastrophic for an economy that was among the few to show significant growth coming out of the pandemic.

Since “the tariff increases were significantly larger than expected,” U.S. Federal Reserve Chair Jerome Powell said in a speech two days after their announcement, “the same is likely to be true of the economic effects, which will include higher inflation and slower growth.” George Pearkes, a macro analyst at Bespoke Investment Group, and Justin Wolfers, professor of public policy and economics at the University of Michigan, both told Investopedia the size of the tariffs significantly increased the likelihood of a recession, with JPMorgan forecasters raising their risk of a global recession to 60%.

Tariffs and the Potential for a Recession

The rationale economists give is based on several mutually reinforcing outcomes they view as likely:

1. Direct consumer impact: “These tariffs are going to hurt. A lot,” Wolfers wrote in a piece for the New York Times, adding that “they are going to reshape your life in much more fundamental ways”—more akin to a “crash” than a “jolt”—compared with those from the first Trump administration. The tariffs are expected to raise consumer prices by 2.3% in 2025, an average loss of about $3,800 per U.S. household, with the proportional effects growing worse for those lower on the income scale. Higher costs will come, too, from knock-on effects beyond the price tags for foreign goods. For example, “higher prices for auto parts will raise insurance costs,” Wolfers pointed out to Investopedia.
2. Business investment and supply chain disruptions: Half of U.S. imports are production inputs, meaning tariffs directly increase manufacturing costs for American companies that need them to make finished products. On the heels of the April tariff changes, many analysts projected it would decrease real gross domestic product (GDP) growth by about 0.9% in 2025, with exports projected to fall 18.1%.
3. Global retaliation: Trading partners are sure to counter with their own tariffs, causing blowback for the world’s economy: the World Trade Organization warns of a potential 1% contraction in global trade volumes.
4. Problems facing any U.S. Federal Reserve response: Specific sectors are expected to see major price increases (see the table on this page), potentially creating a combination of rising inflation and economic contraction called stagflation—something that the U.S. Federal Reserve would find difficult to address since its primary tool, interest rates, can’t address both prices and growth at the same time.

If the tariffs do lead to an economic contraction, how you prepare depends on your circumstances:

Long-term investors: “Your focus right now should be structured by your time frame. For anyone in the long term—10-plus years, like retirement accounts—today’s headlines don’t matter,” Pearkes said. “Don’t try and time the market, you won’t be successful.”

Short-term investors: “For shorter-term investors, it’s hard to see a positive catalyst in the near term,” Pearkes said. “The better entries to step in and buy are likely going to come later.” In other words, those with shorter time horizons might consider maintaining higher cash positions until the markets stabilize.

Consumers: With projected price increases of 2.3% across the board and significantly higher in categories like food (2.8%) and apparel (17%), households should consider doing the following:

• Review your budget to account for higher prices on imported goods.
• Consider accelerating major purchases in categories facing steep tariffs before they arrive, then switching to delaying, if you can, those purchases once they are in force.
• Build emergency savings.

The Bottom Line

“Few propositions command as much consensus among professional economists as that [free] world trade increases economic growth and raises living standards,” noted Harvard economist Greg Mankiw has written. Economists now worry the April 2025 U.S. tariffs could trigger a recession. With global markets in turmoil and businesses beginning to implement layoffs, the question is how severe and widespread the pain will be. “No one wins a trade war,” Wolfers said.

What started as a niche corner of the internet has evolved into a multibillion-dollar industry.

In 2025, prediction markets have become a substantial instrument for speculation and the forecasting of real-world events in both finance and media. Two major players in the sector, Polymarket and Kalshi, have amassed a combined volume of over $37 billion (€31.5bn) in wagers placed this year, according to the 2026 Digital Assets Outlook Report.

A prediction market is essentially a platform where people bet on what they think will happen, and the price of the bet becomes a forecast. For example, instead of asking people directly or through on-the-street interviews who they expect will win an election, you let people put money on their answer.

The market price tells you what outcome people collectively think is most likely, and the forecast updates in real time, which is why some believe prediction markets capture collective thinking better than polls.

The sheer amount of capital flowing through these exchanges has triggered a gold rush. This month, Kalshi secured a Series E funding round of $1 billion(€850mn) valuing the platform at $11 billion (€9.4bn).

Polymarket hit a milestone back in October when Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, announced a strategic investment of up to $2 billion (€1.7bn) and valued the platform at $8 billion (€6.8bn). Additionally, ICE became the distributor of Polymarket’s data to institutional investors globally.

The overall interest from financial institutions is undeniable. Terrence Duffy, the CEO of CME Group, the world’s leading derivatives exchange, described prediction markets as “a legitimate domain of speculation and information aggregation that our clients are demanding” during their third-quarter earnings call.

EU-based or homegrown prediction markets have yet to take off, and EU regulations have kept the existing ones largely offshore.

From beating polls to signing partnerships

As platforms, prediction markets function similarly to a financial exchange. Users buy and sell binary contracts, betting yes or no, on the outcomes of unknown future events such as election results, corporate earnings reports and sports scores.

Typically, these contracts pay out $1 if the event occurs and $0 if it does not. For example, if a contract is priced at $0.50 it implies that the collective belief of the participants is pricing a 50% probability of an event occurring.

The relevance of prediction markets was cemented after the 2024 US presidential election and the 2025 German snap election. In both cases, these platforms functioned as real-time scoreboards, consistently pricing outcomes and delivering predictions that were nearly as reliable or even more so than traditional polling.

This perceived accuracy has now forced legacy media to adapt.

Earlier this month, CNN set a global precedent by partnering with Kalshi to integrate live prediction market data into its broadcasts. A couple days later, CNBC made a similar announcement.

Before the recent partnerships, several media outlets were already starting to incorporate these predictions into their regular news stories, such as interest rate decisions and legislative votes, granting them similar editorial weight to conventional polling.

Hyper-commodification, insider trading and outcome manipulation

Critics of prediction markets argue that they have effectively gamified everyday human outcomes, drawing a dangerously thin line between serious forecasting and high-stakes gambling.

This gamification has accelerated a phenomenon some call “hyper-commodification”, which refers to the process of turning every aspect of social life into a commodity that becomes subject to market forces.

In its worst form, the phenomenon encourages gambling, creates new opportunities for insider trading and incentivises manipulating the outcomes of real-world events.

In early December, a Polymarket trader nicknamed “AlphaRaccoon” sparked controversy after winning 22 out of 23 bets related to Google’s 2025 Year in Search rankings.

The trader netted over $1 million (€850,000) in 24 hours, and was later accused of being a Google employee who used internal access to proprietary search data to find out the most searched terms ahead of the company’s announcement.

The incident raised concerns about the integrity of prediction markets, especially since the fact that users can be anonymous makes it more difficult for those engaging in insider trading to be immediately weeded out.

In late October, Coinbase CEO Brian Armstrong, who leads one of the largest crypto assets exchanges, turned the company’s third-quarter earnings call into ademonstration of the risks of outcome manipulation in prediction markets.

In the European Union, the crackdown on prediction markets began in late 2024 when the French National Gaming Authorityblocked Polymarket, ruling that its operation constituted unlicensed gambling.

The Romanian National Gambling Office (ONJN) blacklisted Polymarket in October after it hosted wagers on the Romanian 2025 presidential election held in May. In this case, the volume traded exceeded $600 million and the President of ONJN stated that “regardless of whether you bet in lei or crypto, if you bet money on a future result, under the conditions of a counterpart bet, we are talking about gambling that must be licensed.”

However, there are still many EU member states where prediction markets are accessible, such as Germany and Spain. The broader EU regulatory landscape remains fragmented, with no unified framework in place.

As we head into 2026, prediction markets also face the full implementation of the EU’s Markets in Crypto-Assets (MiCA) regulation, as most of these platforms make use of blockchain technology.

By July of next year, the grandfathering period ends for securing a Crypto-Asset Service Provider licence. According to the European Securities and Markets Authority, MiCA contains strict market abuse regimes that will apply to any prediction market using crypto assets.

The new reality is that every world event is being priced in real-time and the EU must decide if it will be a part of this era or opt for an outright ban.