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Norway SWF Keeps Eye on Mexican Government Debt over NAFTA

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The United States and Mexico have made progress on revising key parts of the North American Free Trade Agreement (NAFTA), a 24-year old trade agreement. U.S. President Trump called out NAFTA as one of the worst trade pacts in history. A preliminary agreement between the U.S. and Mexico could be coming soon that will be the United States-Mexico Trade Agreement.

On August 27, 2018, U.S. President Trump tweeted, “A big deal looking good with Mexico!”

Outgoing Mexican President Enrique Peña Nieto then tweeted, “He hablado con el Presidente @realDonaldTrump. México y Estados Unidos han alcanzado un entendimiento comercial. Deseamos la reincorporación de Canadá a las pláticas para lograr una exitosa negociación trilateral del TLCAN esta misma semana.”

During the 1992 U.S. presidential campaign, candidate Ross Perot made a popular statement on NAFTA if it were to pass, “We have got to stop sending jobs overseas. It’s pretty simple: If you’re paying $12, $13, $14 an hour for factory workers and you can move your factory South of the border, pay a dollar an hour for labor,…have no health care—that’s the most expensive single element in making a car— have no environmental controls, no pollution controls and no retirement, and you don’t care about anything but making money, there will be a giant sucking sound going south.”

Ross Perot and George Bush lost the 1992 election to former U.S. President Bill Clinton. Clinton supported NAFTA and the trade pact went into effect on January 1, 1994.

Norway’s sovereign wealth fund has gradually lowered its exposure to Mexican government debt, having kept an eye on NAFTA talks, the Mexican presidential election, and ongoing economic and political events within the country.

Period Mexican Government Debt in NOK
Jun 2018 40,223,000,000
Mar 2018 39,958,000,000
Dec 2017 46,036,000,000

On the other hand, Norway’s sovereign wealth fund has gradually increased its exposure to U.S. government debt.

Period U.S. Government Debt in NOK
Jun 2018 665,594,000,000
Mar 2018 608,725,000,000
Dec 2017 607,651,000,000

Carlyle Group Completes Deal on 19.9 Percent Stake in Fortitude Re

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More private equity firms are scooping up reinsurance assets. The Carlyle Group finalized its acquisition of a 19.9% stake in Fortitude Group Holdings, LLC, whose group companies operate as Fortitude Re (formerly DSA Re) from American International Group, Inc. (AIG) The transaction was first announced on August 1, 2018. Part of this deal included Fortitude Re inking an investment management agreement (IMA) whereby US$ 6 billion of assets will be committed into a variety of Carlyle investment strategies.

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RDIF, Indorama Corporation, and Yadran Oil Ink Joint Investment in Tartarstan

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The Russian Direct Investment Fund (RDIF), and Singapore-based Indorama Corporation Pte Ltd, a chemical corporation in Asia, and JSC Yadran-Oil, the company authorized by the Government of the Republic of Tatarstan, have agreed to jointly implement investment projects in Russia. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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DENIED: Bank of England Refuses to Release Venezuelan Gold

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“Whoever has the gold makes the rules,” the King famously said in 1964’s comic strip, The Wizard of Id. England is proving the old truism to be accurate. Keynes’ “barbarous relic” is showing tremendous staying power in a world awash in cryptocurrencies and virtual wealth.

Austria, Germany, and the Netherlands have all repatriated gold reserves in recent years, and they can now count Venezuela among the countries attempting to do the same. Venezuela’s government made the decision to repatriate 14 tons of gold bars on the heels of U.S. sanctions. The custodian, the Bank of England, has refused to release the gold, worth a total sum of US$ 550 million, to Caracas. The British are citing anti-money laundering regulations. The specific concern is that Nicolas Maduro may personally seize the gold and use it for personal gain. Washington’s new rules for Venezuela target the country’s gold exports, based on reports of Maduro spending the country’s current precious metals illegally. Venezuela’s economy collapsed when oil revenue plunged. Supplies of food, medicine, and consumer staples were affected. Shortages and hyperinflation have resulted.

National Security Advisor to the United States, John Bolton, labeled Venezuela a member of a “troika of tyranny,” along with Cuba and Nicaragua. Bolton railed against the “triangle of terror stretching from Havana to Caracas to Managua.” He called it “the cause of immense human suffering, the impetus of enormous regional instability, and the genesis of a sordid cradle of communism in the Western Hemisphere,” Cuba has been accused of assisting the Maduro government. “The Cuban military and intelligence agencies must not disproportionately profit from the United States, its people, its travelers, or its businesses,” Bolton declared. For its part, Nicaragua is in hot water due to a violent crisis that sprung up when President Daniel Ortega announced that there would be changes coming to Nicaragua’s social security system. The U.S. is pushing for free elections.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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