News round-up, April, 24, 2023
Dear friends:
Although the human being is the result of the fusion of male and female gametes, two people are inevitably needed for procreation. However, due to this dual nature and the fact that we build our lives within a tribe, humans are inclined to become selfish, possessive, and jealous of their territory, which takes them further away from their beginnings.
However, I have had the great fortune to have the support of human beings who are far from insignificant and who persevere in their human vocation. Today is the day of the moon; it could be just another Monday that begins the so-called "week," but this lunar day of April 24, 2023, invokes gratitude within me. Therefore, I want to recall the philosophical writings of St Thomas Aquinas on appreciation – or "moral debt" as he called it. From the bottom of my heart, I thank Bernerd, Juan Ignacio, Ricardo, Bredyg, Armando, Gonzalo, Madelka, Mayka, Paula, Matt, and those who remain in the inkwell for the journey of memory.
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Source: EnergyCentralMost read…
EPA plan would impose drastic cuts on power plant emissions by 2040
A long-awaited climate rule, which is sure to face legal challenges, would push plants that burn fossil fuels to use carbon-capture technology or hydrogen
WP; By Timothy Puko, TODAYTech Billionaires Bet on Fusion as Holy Grail for Business
Avalanche Energy, a Lowercarbon Capital venture, recently closed a $40 million Series A financing. CEO of Avalanche Energy, Robin Langtry, stated that the business focuses on fast developing and testing remote systems using equipment readily available in the marketplace, such as an ultrahigh vacuum chamber bought on eBay.
Germán & CoJeff Bezos and Bill Gates are among titans chasing almost Iimitless energy source
WSI By Jennifer Hiller, April 23, 2023 Biden is running out of time to avoid calamitous debt ceiling outcomes
The GOP’s willingness to court economic disaster without major spending cuts leaves White House aides in a bind
WP, by Jeff Stein, April 22, 2023Wall Street starts to fear a debt limit crisis
The government has until the summer to strike a deal…
WSJ By BEN WHITE, SAM SUTTON and ELEANOR MUELLER, 04/24/2023The Battle of the Generals
A Bloody Turn in Africa's Story of Hope
Two rival generals have sparked a war that has buried hopes for a peaceful and democratic fresh start in Sudan. The activists who once brought down the dictatorship are now fearing for the future – and for their lives.
By Heiner Hoffmann und Fritz Schaap in Nairobi, Kenya, 22.04.2023
How Mexico Became the Biggest User of the World’s Most Notorious Spy Tool
A Times investigation reveals the story behind how Mexico became the first and most prolific user of Pegasus. It’s still using it, despite promising to stop.
NYT By Natalie Kitroeff and Ronen Bergman, Natalie Kitroeff reported this article from Mexico City, and Ronen Bergman from Tel Aviv. April 18, 2023
Andrés Gluski, CEO of energy and utility AES CorpHow can strategic investment achieve both economic growth and social progress?… What is the role of renewable energy and battery storage in achieving the goals of the low-carbon economy?…
The AES Corporation President Andrés Gluski, Dominican Republic Minister of Industry and Commerce Victor Bisonó, and Rolando González-Bunster, CEO of InterEnergy Group, spoke at the Latin American Cities Conferences panel on "Facilitating Sustainable Investment in Strategic Sectors" on April 12 in Santo Domingo, Dominican Republic.
Today's events
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Today's events 〰️
Image: Steam rises from Duke Energy’s Marshall Power Plant in Sherrills Ford, N.C., in November 2018. (Chris Keane/Reuters)/ Editing by Germán & CoEPA plan would impose drastic cuts on power plant emissions by 2040
A long-awaited climate rule, which is sure to face legal challenges, would push plants that burn fossil fuels to use carbon-capture technology or hydrogen
WP; By Timothy Puko, TODAYThe Biden administration is preparing to unveil a proposal to require power plants to drastically reduce their greenhouse-gas emissions by 2040, another attempt to regulate one of the country’s biggest contributors to climate change after the Supreme Court struck down the first effort, according to three people familiar with the plans.
If implemented, the Environmental Protection Agency would set limits so stringent that fossil-fuel-burning power plants probably would have to use technology to capture their carbon dioxide emissions from their smokestacks or switch to other fuels to comply, according to the three people, who spoke on the condition of anonymity to discuss a plan that is not yet public. The proposal is still under final analysis at the White House and could change before the EPA completes and announces it.
The limits could nearly eliminate emissions from fossil-fuel burning plants after the most stringent standards go fully into effect, the people said. Another source familiar with the proposal said that there will be significant cuts to emissions from these plants, but potentially not as dramatic or extreme as others have suggested.
The EPA has been planning an announcement for the coming days, but final details are in flux, and a formal proposal could be more than a week away, according to several people familiar with the planning. Turning that proposal into a final rule package would be likely to take months more, and, according to two of the people familiar with the details, many of the proposal’s most stringent standards would not take effect until the 2030s, giving industry years to come into compliance gradually.
Although its greenhouse-gas emissions have been declining, the electric-power sector remains the country’s second-largest contributor to climate change, being responsible for a quarter of such emissions nationwide in 2021, according to EPA data. That has long made power plants a top target for climate regulations, and President Biden has previously promised to eliminate their emissions by 2035.
The Supreme Court has loomed over the effort. It ruled last year that the EPA during the Obama administration had exceeded its authority by building the first attempt at such regulations around a new system to push power companies to switch fuels across their fleets, and replace coal with cleaner options. The updated rules that Biden has promised have been held up for months in part because the agency has been trying to craft them in accordance with that decision so they might survive a conservative-majority court.
The administration’s plan is to stick with rules that apply within a plant’s fence line, with limits on the amount of what each plant can emit, according to four people familiar with the effort. They will be applied through rules for new gas-fired plants, and existing gas-and-coal-fired plants, those people said.
The policy would not mandate any type of technology or fuel, according to the three people familiar with the latest details. But they said the limits it sets would be so stringent that to meet them, fossil-fuel-burning plants most likely would need to use carbon-capture technology or be capable of switching to use hydrogen, which burns without greenhouse-gas emissions.
Some of these details were previously reported by the New York Times.
“EPA cannot comment because the proposals are currently under interagency review,” agency spokeswoman Maria Michalos said in an emailed statement. “But we have been clear from the start that we will use all of our legally-upheld tools, grounded in decades-old bipartisan laws, to address dangerous air pollution and protect the air our children breathe today and for generations to come.”
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The agency has been issuing a raft of new rule proposals just in recent weeks as it attempts to fulfill Biden’s big climate promises before he faces reelection. The administration spent most of its first year pushing its climate agenda through legislation, and now that Congress approved nearly $370 billion in new climate spending, Biden officials are trying to finish accompanying regulations before Republicans have a chance to take power and undo them.
Fossil-fuel advocates — including several Republican-led states — have vowed to fight these moves in court. And if Republicans take majorities in Congress, they could also use the Congressional Review Act to repeal any regulations that weren’t finalized within 60 legislative days of it being implemented.
Many of the new proposals aim to reduce air pollution and greenhouse-gas emissions from the power sector. Just last week the EPA announced the strictest restrictions ever on emissions for cars and trucks, the country’s largest source of planet-warming emissions. It has also promised later this year to finish a proposed rule on the oil and gas industry’s emissions of methane, which traps roughly 85 times more heat in the atmosphere than carbon dioxide.
Researchers who model emissions say that this collection of regulations is essential for meeting Biden’s commitment to cut total U.S. emissions in half from 2005 levels by 2030. Last year’s climate spending bill, called the Inflation Reduction Act, would get the country on course to reduce emissions by up to 42 percent by that target date. The executive actions on power plants, vehicles and methane would take it most of the rest of the way, another 6 percentage points of reduction, according to analysis released last month by the Rhodium Group.
But environmental groups are concerned the specifics of the EPA’s power-plant proposal may not be strong enough, and are planning to push for faster timelines, according to two people familiar with the response granted anonymity to speak about plans that aren’t yet public. Several leading environmental groups declined to analyze the proposal Saturday, saying they would need to wait until the EPA makes details public.
Urgency will be a top concern, and a 2040 timeline does not match Biden’s initial promise to zero out the sector’s emissions by 2035, said John Paul Mejia, national spokesman for the Sunrise Movement. He also noted concerns about any plan that relies on carbon capture and hydrogen technology, which are opposed by environmental justice groups that advocate for minority and poor communities and say those technologies are ways to sustain historical polluters like the oil and gas industry.
“This is a step in the right direction, but it needs to be much more stringent,” Mejia said. “This proposal should be in line with the scale of ambitions that were promised to us.”
Fossil fuels — almost exclusively gas and coal — still accounted for roughly 60 percent of the country’s electricity last year, according to Energy Department data. Utilities have been moving to zero-emissions sources, mostly wind and solar, retiring a lot of fossil fuels, especially coal, and that trend shows signs of slowing. After retiring about 11 gigawatts of coal-fired capacity annually from 2015 to 2020, the industry plans to shutter 8.9 gigawatts this year, according to the U.S. Energy Information Administration.
To help them reduce their emissions, Congress has provided subsidies to develop carbon-capture technology and make it more profitable. A federal tax credit provides as much as $180 per metric ton for businesses that use it. The Inflation Reduction Act also boosts by 70 percent the tax credit for the troubled legacy carbon capture technologies oil and gas companies have traditionally used to get more oil out of the ground, increasing it to $60 per ton.
Changes like those factor into EPA rulemaking. If the technology needed to comply is cheaper and more efficient, the agency can use that in its rulemaking to raise standards on the basis that it should be easier for businesses to meet them.
The agency is also factoring in flexibilities for plants, according to two people familiar with the details. Targets will vary at each plant based on size and use, and some coal-fired plants scheduled to retire in the coming years may not have to meet the new standards at all, the people said.
Seaboard: pioneers in power generation in the country
…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.
More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.
Image: Billionaires, clockwise from lower left, Jeff Bezos, Bill Gates, Marc Benioff, Vinod Khosla and Peter Thiel. PHOTO ILLUSTRATION BY EMIL LENDOF/THE WALL STREET JOURNAL; PHOTOS / Editing by Germán & CoTech Billionaires Bet on Fusion as Holy Grail for Business
Avalanche Energy, a Lowercarbon Capital venture, recently closed a $40 million Series A financing. CEO of Avalanche Energy, Robin Langtry, stated that the business focuses on fast developing and testing remote systems using equipment readily available in the marketplace, such as an ultrahigh vacuum chamber bought on eBay.
Germán & CoJeff Bezos and Bill Gates are among titans chasing almost Iimitless energy source
WSI By Jennifer Hiller, April 23, 2023 Sam Altman became a tech sensation this year as the CEO of OpenAI, the artificial-intelligence startup that seems pulled from science fiction.
But Mr. Altman, who has been among Silicon Valley’s most prominent investors for more than a decade, has placed one of the biggest bets of his career on a company that might be even more futuristic: a nuclear-fusion startup called Helion Energy Inc.
He is one of a number of tech founders and billionaires who hope to harness the process that powers the sun and stars to deliver almost limitless energy. Jeff Bezos, Peter Thiel, Bill Gates and Marc Benioff are among those betting that the decadeslong goal of building fusion reactors is now within years of being reality.
Mr. Benioff calls fusion a “tremendous dream.”
“It’s the holy grail. It’s the mythical unicorn,” said Mr. Benioff, the CEO of Salesforce Inc., who invested in the Massachusetts Institute of Technology spinout called Commonwealth Fusion Systems, which aims to create compact power plants. Mr. Gates is also an investor.
Fusion has long been seen as a clean-energy alternative to sources that burn fossil fuels and release greenhouse gases. Other technologies and applications being developed in the race for fusion power include powerful magnets, better lasers or radiation therapy for cancer research.
Fusion, Mr. Benioff added, “has no limits if you can get it to work.”
Developers mostly in the U.S., Canada and Europe have been riding a wave of momentum since August 2021, when scientists at Lawrence Livermore National Laboratory came close to achieving more energy in a fusion reaction than was put in with lasers, a goal known as net gain.
Many grew to believe that a breakthrough was imminent. It came in December when the national lab achieved net gain for the first time.
Nuclear fusion occurs when two light atomic nuclei merge to form a single heavier one. That process releases huge amounts of energy, no carbon emissions and limited radioactivity, but companies would have to sustain fusion reactions and engineer a way to turn that energy into net power.
The old saw about fusion is that it is a mirage years away and always will be. It is a long-shot bet even with the high-risk world of venture funding.
Mr. Benioff said he was persuaded by Vinod Khosla, the Sun Microsystems co-founder who was an early investor in private fusion, historically the province of academia and national labs.
Mr. Khosla’s interest hinged on the ability to build a large high-temperature superconducting electromagnet. He spent 15 months on due diligence and hired three teams to evaluate the design before investing.
He thinks that several fusion designs should be tested and is investing in another firm, Realta Fusion, a spinout from the University of Wisconsin-Madison. “Even if one of them can work, the planet is much better off is how I look at it,” he said.
As an investor, Mr. Khosla sees fusion this way: “Financially either you lose one times your money or you can make a thousand times your money,” Mr. Khosla said. “That’s the math of fusion.”
Industrial firms, major oil companies and sovereign-wealth funds are backing efforts along with the Department of Defense, which is in search of a toaster-sized power system for satellite propulsion.
“There’s a reasonable probability at least one, maybe two companies will demonstrate fusion conditions in this decade,” said Ernest Moniz, who is the chief executive of the nonprofit research group Energy Futures Initiative and a former U.S. Energy Secretary.
Mr. Moniz, a physicist, said that improvements in large-scale machine learning have sped experiments and helped several companies achieve or approach the extreme temperatures and pressures needed for fusion reactions.
Firms and their backers see parallels with recent advances in artificial intelligence, which also requires colossal amounts of computing power to run models.
Mr. Altman, whose company OpenAI is behind the viral artificial-intelligence chatbot ChatGPT, has put $375 million into Helion.
Everett, Wash.-based Helion uses a technology called magneto-inertial fusion and aims to prove it can produce net electricity next year.
At Helion, Mr. Altman is more than a passive investor. “I send people for him to vet and interview,” said Helion Chief Executive David Kirtley.
Some Helion employees have started using ChatGPT to see how it can speed up engineering work, Mr. Kirtley said. Other investors, including Mr. Thiel’s Mithril Capital, have previously joined calls to help Helion negotiate with suppliers.
The Fusion Industry Association, based in Washington, D.C., has tracked more than $5 billion in private funding, with seven firms raising at least $200 million. Around 75% of fusion fundraising has happened since 2021, according to PitchBook.
A company called Lowercarbon Capital, founded by early Twitter and Uber venture investor Chris Sacca, launched a fusion fund last year with investors that include endowments, corporations and family offices.
Clay Dumas, a founding partner, said Lowercarbon Capital was persuaded that fusion was at a turning point because regardless of the design, firms were notching technical milestones.
“Growing access to computational power and breakthroughs in materials science were accelerating their progress faster than anyone expected,” Mr. Dumas said.
Lowercarbon Capital’s investments include Avalanche Energy, which has closed a $40 million Series A round. Avalanche Energy CEO Robin Langtry said the company is focused on small systems it can build and test quickly with commercially available equipment, including an ultrahigh vacuum chamber purchased on eBay.
“We want to build the smallest fusion reactor in the world. Then we’re talking about a project that’s maybe tens of millions of dollars, not billions, and you could actually do it with a small team,” he said.
Air Force Maj. Ryan Weed, a plasma physicist and test pilot with the Pentagon’s Defense Innovation Unit, which contracted with the company, said that testing such an approach 20 years ago might have cost $50 million, but much of the work can now take place on a computer at minimal cost.
The DIU wants a nuclear power source that could provide electrical power out of a device the size of a toaster oven or microwave some time in the next five years, said Mr. Weed, who pointed to a need for small satellite propulsion systems in cislunar space, the area between Earth and the moon.
Do you think fusion will be the next business breakthrough? Join the conversation below.
Achieving fusion is so difficult that firms are developing other products as they test machines. That intellectual property has value independent of fusion, said Adam Rodman, founder of the hedge fund Segra Capital Management LLC, which invested in Canadian company General Fusion. Mr. Bezos, founder of Amazon Inc., has also backed General Fusion.
Technologies will eventually need to show a path to profit and not just scientific breakthroughs.
“A lot of these are not businesses—they are tech developers,” said Barbara Burger, who is former president of Chevron Technology Ventures and holds several advisory and board positions. “Until you have revenue, you don’t have a business.”
Image: President Biden listens during a climate forum at the White House on Thursday. The administration faces a looming deadline to find a way to get Congress to raise the U.S. debt limit. (Elizabeth Frantz for The Washington Post)/ Editing by Germán & CoBiden is running out of time to avoid calamitous debt ceiling outcomes
The GOP’s willingness to court economic disaster without major spending cuts leaves White House aides in a bind
WP, by Jeff Stein, April 22, 2023President Biden is running out of time and options to avert an unprecedented default on the federal debt, as House Republicans make increasingly clear that they are willing to court economic catastrophe unless they secure major policy concessions from the White House.
Since Republicans took control of the House in January, Biden’s top aides have expressed confidence both privately and publicly that they can force the GOP to raise the limit on federal borrowing without even partially acquiescing to conservative demands to cut spending.
House GOP unveils bill to cut spending, lift debt ceiling. Here’s how?
But so far, that strategy does not seem have worked. House Speaker Kevin McCarthy (R-Calif.) released a plan on Wednesday that his caucus broadly backed, and GOP leaders hope to pass it in the House next week. There’s little indication yet that Republicans will break off and agree to lift the debt ceiling without conditions, as Biden insists. And attempts by the administration to enlist corporate executives to build pressure haven’t yielded much either, at least not yet.
Instead, many GOP lawmakers appear to be prepared to allow the nation to default without major spending cuts and policy changes — setting up what appears to be a choice between two outcomes that White House officials consider unacceptable.
“At this point, there is no indication whatsoever that moderate Republicans would agree to lift the debt limit with no reforms from the administration,” said Brian Riedl, a policy analyst at the Manhattan Institute, a center-right think tank. “I don’t see that happening. They would be crucified within their own caucus.”
Inside the White House, the GOP’s hardening position on the debt limit has been met with anger and frustration. Biden aides adamantly reject the idea they should agree to anything resembling the spending cuts and policy changes that McCarthy has put forward — both because they oppose the substance of the ideas and because they do not want to reward the GOP for what they regard as its efforts to take the U.S. economy hostage. Biden aides are further frustrated by claims that the GOP has a popular mandate behind it, since Republicans failed to retake the Senate and only captured the House by a handful of seats.
One person familiar with the White House’s thinking, speaking on the condition of anonymity to describe internal deliberations, emphasized that House Republicans would be forced to go on record supporting McCarthy’s bill, which would impose new work requirements, reduce the number of Internal Revenue Service agents and block Biden’s move to cut student debt — measures the administration believes will prove highly unpopular with the American public.
Analysis: So much for that promise: Debt bill talks again done in the backroom
Biden has welcomed the possibility of negotiations with McCarthy on government spending levels — talks that could resolve the debt ceiling debate while allowing the administration to claim it is not negotiating over the nation’s spending limit. The person familiar with the White House’s thinking said “they are going to have to start having conversations on budget and spending, as the president has all along.” The president told congressional Democrats earlier this week that the administration is ready for a separate negotiation with Republicans over the budget, according to a White House statement.
“Let’s be clear about the Speaker’s position: unless the President and the Senate agree to their entire reckless agenda, they are going to crash the economy. That’s not just unreasonable — it’s dangerous,” White House spokesman Michael Kikukawa said in a statement. “The President has been clear: we must avoid default — that’s nonnegotiable — but he will gladly have a separate conversation about the budget with congressional leaders.
If Congress doesn’t increase the limit on how much the Treasury Department can borrow, the federal government will not have enough money to pay all its obligations by as early as June. Such a breach of the debt ceiling — the legal limit on borrowing — would represent an unprecedented breakdown, which economists believe could spark a global financial panic and lead to a recession in the United States.
White House aides have held numerous internal strategy meetings that have explored the potential downsides of trying to lift the debt ceiling unilaterally, without Congress, according to three people familiar with the matter, who spoke on the condition of anonymity to describe private deliberations. Many economists believe such any such move could lead to a permanent increase in U.S. borrowing costs, because investors would demand higher interest rates for buying U.S. bonds of legally dubious status.
Mint the coin? Buy back bonds? 7 ‘gimmicks’ for dodging the debt limit.
Democratic officials have cited as a hopeful precedent the dynamics of past debt ceiling fights, in which pressure from business executives forced the GOP to lift the limit.
“If we do actually start to get close to the drop dead date, and you can’t pay the bills, I’m sure we’ll see a reaction in financial markets and people will put pressure on Republicans for trying to wreck the economy,” said Dean Baker, a White House ally and economist at the Center for Economic Policy Research, a left-leaning think tank. “If we get to that point, you’ll see them backing down.”
And yet, with as few as six weeks to go, little evidence has materialized to suggest that will happen. Financial markets have thus far shrugged off the debt ceiling drama, with almost no discernible movement even in the price of U.S. Treasury bonds. The relative calm in markets has, in turn, relieved pressure on lawmakers to act — which could increase the odds Congress fails to lift the debt limit in time.
Fiscal crisis nears as McCarthy takes debt ceiling plan to Wall Street
“I don’t think lawmakers act until they get calls from investors and others in the business community saying: ‘What are you doing?’ But we’re not hearing those voices yet, because they think lawmakers have always done the right thing and acted just in time,” said Mark Zandi, chief economist of Moody’s Analytics. “It’s a very dangerous drama playing out here.”
The administration’s attempts to enlist the support of business executives may also prove unsuccessful. White House Chief of Staff Jeff Zients has personally asked top business leaders to advocate for a solution to the debt ceiling debate, according to two people familiar with the matter, who also spoke on the condition of anonymity to discuss private remarks. But corporate America doesn’t have as much clout with the GOP as it did in the Obama years, and it’s not clear such measures will be effective with the House conservatives who nearly derailed McCarthy’s leadership bid earlier this year.
“What are we going to do, call them and say, ‘Hey, the debt limit is important?’ They know it’s important,” said one business executive who had been asked by administration officials to press the GOP on the matter, speaking on the condition of anonymity to reflect private conversations.
White House aides may have less time than they anticipated. An economic slowdown could lead to less revenue coming into the Treasury Department, which would hasten the deadline. While acknowledging the data was preliminary, Goldman Sachs analysts said earlier this week that “weak” tax collections in April suggested that the debt limit could be reached in the first half of June, earlier than initially forecast.
Biden aides want to force GOP to abandon debt limit threats
The war of words between the Democratic president and the Republican speaker of the House has become increasingly pitched — and occasionally petty.
On Wednesday, McCarthy said Biden is “giving America’s debt the Southern border treatment — ignore it and hope it goes away.” For his part, Biden is increasingly accusing McCarthy of being reckless with the credit of the United States, beholden to MAGA extremists and misleading Americans about his plan. Last month, McCarthy offered to bring “soft food” to a meeting with Biden at the White House to entice him into a confab about the debt ceiling, an apparent dig at the 80-year-old president’s age.
On Wednesday, it took Biden all of 72 seconds to get through introductory remarks before dinging McCarthy.
“I’m here in this union hall with you when, just two days ago, the speaker of the House, Kevin McCarthy, went to Wall Street to describe the MAGA economic vision for America,” he said, the first of five times that he’d mention McCarthy by name.
Some Democrats say House Republicans face even more political backlash in a debt ceiling breach than Biden, arguing the president is right to hammer the GOP over its proposed spending cuts. Traditionally, Democratic candidates have had low approval ratings on the economy, but a GOP-caused default could give them an opening to change that, said Celinda Lake, a pollster who worked for Biden in 2020.
“We have a huge advantage in selling this contrast,” Lake said. “If Republicans get blamed for shutting down the economy, that will change the dynamics.”
But other Biden allies point out that the economic devastation from a default could persist into next year, affecting the 2024 presidential election. Presidential approval ratings tend to be closely tied to economic performance, and the long-feared recession could materialize if the U.S. government suddenly can’t pay its bills.
“The two endpoints on the spectrum of outcomes — the full GOP policy wish list on the one hand, or a catastrophic default on the other — are both totally unacceptable to them,” said one person in communication with senior White House officials, who spoke on the condition of anonymity to frankly describe private conversations. “But no progress has been made on making sure there’s a resolution that’s between those two options.”
Image: How Wall Street investors react to a possible default is crucial because they’re the ones who finance the country’s enormous debt. | Bebeto Matthews/AP Photo/ Editing by Germán & CoWall Street starts to fear a debt limit crisis
The government has until the summer to strike a deal…
WSJ By BEN WHITE, SAM SUTTON and ELEANOR MUELLER, 04/24/2023NEW YORK — For months, Wall Street has barely focused on the possibility that the government might default on its debt. It’s paying attention now.
As the drop-dead date to raise the nation’s $31.4 trillion debt ceiling looms with no deal in sight, traders and executives are starting to get nervous that President Joe Biden and Republicans won’t resolve the impasse until it’s too late. That’s sparked increasing concern about a potential threat that could rock markets and tilt the world’s largest economy into recession.
“There is this view in D.C. that the market isn’t freaking out enough, and that may be true to an extent,” said Alec Phillips, chief political economist at Goldman Sachs. “But I’ve been dealing almost exclusively with this issue the last few weeks, and there is actually more concern now than even in 2011,” when Standard & Poor’s downgraded U.S. debt during a similar standoff. “It’s just that nobody knows when it’s going to happen or what to do about it.”
How Wall Street investors react to a possible default is crucial because they’re the ones who finance the country’s enormous debt by buying the securities that Treasury sells to fund the government. If they shy away from the market, interest rates could skyrocket, squeezing the government, businesses and consumers.
That’s why their level of confidence can serve as the strongest force to drive Washington partisans to make a deal.
Schumer: GOP risks ‘economic disaster’ over debt ceiling
For most of this year, many on Wall Street assumed that lessons learned from the 2011 crisis — including voters furious over declines in their retirement accounts as stocks plunged — would prevent such an event from happening again. That faith is starting to fade.
“Debt ceiling negotiations are essentially nowhere,” Brian Gardner, chief Washington policy strategist at investment bank Stifel, wrote in a note to clients. Gardner added that while a last-minute deal could certainly emerge, “the GOP’s narrow majority and the Speaker’s tenuous political position make the pathway to an agreement more uncertain than usual.”
To be clear, it’s nowhere near all-out panic. The government has until the summer to strike a deal, when the Treasury Department is likely to run out of room to keep paying the nation’s bills and servicing its existing debt.
But signs of stress are piling up, especially after House Speaker Kevin McCarthy came to the New York Stock Exchange on April 17 to make the GOP case that any hike in the borrowing limit must come with significant spending cuts. That’s something the White House and congressional Democrats say they won’t consider.
The shift from general nonchalance to rising concern can be seen in an obscure corner of the markets: the soaring cost of insuring against exposure to U.S. debt through instruments called credit default swaps, which mitigate risk for large holders of Treasury securities.
The cost of insuring against a U.S. default rose to its highest level in over a decade on Thursday as JPMorgan analysts said there was a “non-trivial risk” of at least a technical default on the government’s debt in which the nation runs out of borrowing ability for even a short period before a deal is reached.
Manchin: Holding the debt ceiling 'hostage' doesn't work
Darrell Cronk, chief investment officer of Wells Fargo’s wealth and investment management division, said his biggest worry is that the “X-Date” — the moment when emergency moves to forestall default are exhausted — gets pulled forward to early-to-mid June with 2022 tax receipts likely weak after a brutal year for markets.
Goldman Sachs researchers said they also expect a much shorter timeline due to a steep reduction in capital gains revenue. And McCarthy’s hardline position — as well as questions about whether he can unify House Republicans over any strategy at all — have amped up alarms. “People seem to be dug in a little bit more in the trenches,” Cronk said.
“People seem to be dug in a little bit more in the trenches.”
Darrell Cronk, chief investment officer, Wells Fargo wealth and investment management division
Some bank executives said they are growing more concerned about the state of play in Washington but remain unsure how to inject themselves into the debate. Speaking out would be unlikely to sway hard-line conservatives, they fear, given that such calls would probably be dismissed as special pleading by rich Wall Streeters.
So for now, they are mostly issuing anodyne statements arguing for the importance of not allowing the U.S. to default, in a bid to nudge the two sides toward a solution.
Following McCarthy’s address, congressional Republicans urged bankers to press Biden to engage with the GOP.
“Obviously, people [on Wall Street] are worried,” Sen. J.D. Vance of Ohio said in an interview. “We’ll just say, ‘Look, it’s a two-party system. And Kevin McCarthy gets to make the first shot across the bow, but they need to put pressure on Joe Biden, to the extent they’re able to, to actually come to the negotiating table.’”
Rep. Warren Davidson of Ohio said he’s telling bankers that “the only way that we’re going to not default later is if we start taking corrective action now.”
“Joe Biden’s plan is to not take corrective action now,” said Davidson, a member of the House Freedom Caucus. “That’s a nonstarter. We’re not going to move his ‘no action now’ bill,” he said, referring to Democrats’ hopes of passing a “clean” debt limit hike with no spending cuts.
Democrats expressed frustration that the financial world hasn’t exerted more pressure on Republicans.
“Wall Street and business need to start getting energized and put pressure on Republicans to do what we’ve done all these years, which is pay for the debt that we incurred and not hold the American people hostage,” said Rep. Pramila Jayapal of Washington, who chairs the Congressional Progressive Caucus.
Senate Banking Chair Sherrod Brown (D-Ohio) said he was confident Wall Street would eventually speak up. “But I think that it’s telling that McCarthy went to Wall Street to talk about all this because he’s Wall Street’s guy,” Brown added. “So we’ll see.”
Meanwhile, concerns over the impact that a nasty fight over the debt limit could have on the economy are showing up on bank earnings calls.
Goldman CEO David Solomon identified uncertainty over the debt limit as a potential source of volatility during the bank’s call on Tuesday. An hour earlier, responding to a question from POLITICO, Bank of America CFO Alastair Borthwick told reporters he didn’t have much to say on the status of non-existent negotiations between the White House and McCarthy.
“Obviously, we’re all hoping that gets resolved successfully,” he added.
Citi CEO Jane Fraser said her bank believes it’s “now more likely that the U.S. will enter into a shallow recession” later this year. “The biggest unknown,” she told analysts on the bank’s recent earnings call, is “how the debt ceiling plays out.”
BlackRock Vice Chair Philipp Hildebrand warned at the Bloomberg New Economy Gateway Europe Forum on Thursday that default would undermine “a basic anchor” of the world’s financial system and “must not happen.”
“All we can do is to pray that everyone in the United States understands how important the sanctity of the sovereign signature of the leading currency, of the leading bond market, of the leading economy in the world is,” Hildebrand said.
Image: Germán & CoCooperate with objective and ethical thinking…
Image: Fighting in Khartoum: Large parts of the city are no without electricity and water. Foto:
Abdullah Moneim / dpaREUTERS/Christian Mang/ Editing by Germán & CoThe Battle of the Generals
A Bloody Turn in Africa's Story of Hope
Two rival generals have sparked a war that has buried hopes for a peaceful and democratic fresh start in Sudan. The activists who once brought down the dictatorship are now fearing for the future – and for their lives.
By Heiner Hoffmann und Fritz Schaap in Nairobi, Kenya, 22.04.2023
A dull bang, first further away, then louder and louder. Shadin Alfadil is still in bed when she begins hearing the sounds early on Saturday morning. But she's already familiar with it from the demonstrations she has regularly been attending for more than four years now.
She has heard it immediately before fellow campaigners, friends, collapsed dead, their blood spilling out on the asphalt. She knows what gunshots sound like. And she knows all too well what they can do.
Alfadil, a young Sudanese woman with a serious face and a firm voice, reaches for her smartphone, with new messages constantly popping up on the screen. "Shots fired downtown." Or later: "Airstrikes in Khartoum." She related her story in a telephone interview with DER SPIEGEL.
Shadin Alfadil: "We had to prevail with the revolution."
It is, for now, the nadir in the history of a revolution that filled not just Sudan, but the whole world with hope. It has been four years since Alfadil first joined thousands of others on the streets of Khartoum in a death-defying act of protest. Starting in December 2018, the Sudanese wrote one of the most impressive chapters of the Arab democracy movements for their country - one which has been ravaged by massacres, famine and crises over the years. They managed to achieve what no one had believed possible: They protested until they drove dictator Omar al-Bashir from office. After 30 years of dictatorship, democracy suddenly seemed within reach. Sudan had become emblematic of what can be achieved through peaceful resistance.
Since then, though, hopes for democracy have been further and further destroyed by the country's powerful military. And now, those dreams could be buried for good in a hail of bombs.
Fighting in the Backyard
Alfadil has shifted into emergency gear. With the violence spreading, she checked her supplies of food and water on Monday. And quickly realized that she wasn't in good shape. It was still Ramadan, the Muslim month of fasting, during which many of the faithful eat only after sundown and with only scant supplies of food at home. "I try not to get too full so that the supplies will last for a while," she told DER SPIEGEL by phone on Monday. "We haven't had any running water since yesterday."
Alfadil speaks fluent English and works for an international organization. But none of that is of any help to her now. The fighting outside her door continues, and few in Khartoum dare to go outside. She says that one of her parents' neighbors was shot to death on Sunday.
Since the early hours of Saturday morning, Africa's third-largest country has been in a state of war. There is fighting in almost all parts of the country, with two rival generals and their armies facing off against each other. On one side is Sudan's regular armed forces, commanded by the de facto president, General Abdel Fattah al-Burhan. On the other is the paramilitary Rapid Support Forces (RSF), under the command of his deputy Lieutenant General Mohamed Hamdan Daglo, known as Hemeti. Hemeti's forces are estimated to include around 100,000 fighters.
A Failed Transition of Power
It is a power struggle between two men, a civil war without civilians, being waged entirely by the military - but with heavy weapons, artillery and fighter jets. By Thursday, hundreds of people had already died, and thousands were injured. The Khartoum airport has been badly damaged and there are no more scheduled flights. Fighter jets circle overhead and shells are exploding in the middle of residential areas. Those who can have been fleeing the city, and the rest, like Shadin Alfadil, have entrenched themselves in their apartments and basements.
It was supposed to be a month of hope. An agreement had been signed back in December according to which Burhan and Hemeti agreed to hand over power to a civilian-led government. It was supposed to have happened on April 11.
It could have been a new attempt to finally complete the revolution. That, at least, is what people like Alfadil had hoped.
For that to happen, though, the two men would have had to reach agreement on how to combine their two forces, a step that is a key part of the agreement. Burhan wanted to integrate the RSF into the regular army within two years. But Hemeti had insisted on a 10-year transition period. The question of what the future command structure should look like also produced irreconcilable differences, as did the prospect that they could eventually be tried for crimes themselves. Out of fear of losing their own influence, the generals turned on each other.
Pressure from Abroad
It's hard to say who has the upper hand in the fighting. Sudan expert Alex de Waal, director of the World Peace Foundation at Tufts University near Boston, sees the army as having an advantage, at least in the short term. But therein lies another danger. "I think they will try to press their advantage and keep fighting, and the window of opportunity for negotiations will pass," he says. But winning, de Waal is certain, is something the army cannot do, at least not across the entire country.
He argues that Egypt, Saudi Arabia and the United Arab Emirates, countries that wield a fair amount of influence in Sudan, need to quickly move to exert pressure. "With every day that passes without them (the regional powers) getting their act together, the dangers escalate because the conflict becomes more complex. And then it will become a long and complicated, multi-sided civil war."
Shadin Alfadil huddled in her apartment over the ensuing days as shots continued to be fired outside and artillery and fighter jets turned buildings into rubble. The life story she has to tell is one that is closely tied to her country's recent history. In telephone conversations, she spoke about her hopes for change, the myriad setbacks and her firm conviction to never give up.
A Victorious Revolution
Alfadil was there in December 2018, in her early 30s at the time, when thousands took to the streets to protest against Bashir. She didn't want to spend her whole life in an authoritarian country with rigid moral norms, oppressed by a violent leader. "We wanted to fight for freedom," she says. The protests went on for four months. Finally, on April 11, 2019, jubilation broke out and activists embraced each other on the streets when the military turned on Bashir and arrested him. "That was a moment of hope," Alfadil says. "I believed in a better Sudan." But the euphoria didn't last long. The military showed no interest in relinquishing power.
Two generals are now determining the country's fate: Burhan and Hemeti. But the power struggle currently plunging the country into chaos began taking shape behind the scenes quite some time ago. Many observers already saw Hemeti as the country's true strongman back in 2019.
His career as a brutal commander began in 2003, during the rebellion in Darfur, which saw African-descended groups there rise up against the Arab-dominated government in Khartoum. Dictator Bashir mobilized Arab youth to put down the uprising, which led to the emergence of the notorious Janjaweed militias. Hemeti became one of their most important commanders.
During the first, particularly brutal, years of the war in Darfur, several hundred thousand civilians were killed and more than 2 million people displaced. Hemeti's Janjaweed rode into villages, slaughtered the inhabitants, raped the women, robbed and looted. The International Criminal Court later issued an arrest warrant against Bashir in connection with these crimes, including genocide.
Looting, Murders and Mass Rapes
Hemeti acted brutally, but more than anything else, loyally. Bashir thus put him in charge of the newly established Rapid Support Forces (RSF) in 2013, and Hemeti took many of his old fighters with him to the new unit. The RSF went on to commit looting, murder and mass rape in a number of regions in the country. Bashir had created an uncontrollable monster.
The dictator transformed the troops into a kind of bodyguard to protect him from protests – even more importantly, though, from coup attempts by the army. Alongside the army and the intelligence service, the RSF became a third power within the Sudanese security apparatus. When revolution swept the country in 2018, Hemeti used it to his advantage, abandoning his loyalty to the dictator and baking his ouster.
When the protests continued even after Bashir's overthrow, Burhan and Hemeti finally agreed to a compromise and created a transitional council. They promised change, but activist Alfadil and her fellow campaigners didn't trust them. The protesters once again took to the streets. Hemeti quickly showed his true face. On June 3, 2019, RSF units burned down protesters' tents, shot indiscriminately into the crowd and beat up participants. More than 100 people died, with many bodies simply being thrown into the Nile River. "I was also attacked," Alfadil says. "But we didn't give up. We had to prevail with the revolution."
After months of negotiations, a council was again formed, this time called the Sovereign Council, staffed half by civilians and half by the military. Free elections were to finally to be held at the end of this transition.
A State within the State
From the beginning, though, the military part of the newly created transitional government showed little interest in actually pursuing reform: The generals were afraid of losing their power – and their access to money. Because in Sudan, the army is basically a state within the state: High-ranking military officers are often firmly established in the business world and they rake in huge amounts of money thanks to widespread corruption. Among his business interests, for example, Hemeti works together with mercenaries of Russia's Wagner Group at his gold mines.
What followed were ups and downs, a tug-of-war for power, until, on October 25, 2021, the army and the RSF staged another coup and dissolved the interim government. They were still working side by side at the time.
The old familiar pattern quickly reestablished itself: Shadin Alfadil and her fellow campaigners took to the streets, and again people died. In the end, the generals again promised a transition to civilian rule.
But in the first months of this year, tensions between the two men increased. Hemeti sought to present himself as a true supporter of democracy and the possible next leader of Sudan and forged an alliance with a coalition of civilian political parties. But Burhan apparently feared Hemeti's growing power. When the RSF moved more units into Khartoum last week, it was apparently one provocation too many.
A Humanitarian Disaster
On Tuesday, the fourth day of the war, the situation for Shadin Alfadil grew increasingly fraught. She lives alone, and her concerns began mounting. What do I do if I get caught up in it? If a bullet hits me? How long will it take before someone finds me? The power went out for hours. It was becoming increasingly clear that a humanitarian catastrophe was developing. The World Food Program has suspended its operations after three of its staff members were killed. Looting took place at the warehouses of other humanitarian organizations. Even before the conflict, more than a third of the population had been dependent on aid.
On Tuesday evening, even though a time had been agreed for DER SPIEGEL to speak to her by phone, Alfadil could no longer be reached. A cease-fire was supposedly in place to enable people to flee or obtain basic necessities, but the fighting continued unabated, and in some parts of the city, it is growing even fiercer.
Eyewitnesses have shared accounts of bodies in the streets that haven't been recovered for days, of the stench of decay, of looting RSF units.
Holding Doctors Against Their Will
Various medical organizations have reported that most hospitals are no longer in operation and that the health-care system in Khartoum is on the verge of collapse.
Some hospitals have been bombed, reports doctor Sara Mohamed, while others lack medical staff. In addition, the doctors' committee made a serious mistake, publishing the names of hospitals that were still in operation. "Shortly after that, the RSF deployed and occupied them because they didn't know how else to take care of their wounded," Mohamed says. She says a doctor friend had just managed to escape, but others were still being held.
The situation is terrible, she says. "There are no words for it. I don't know if I will ever see my family again."
On Wednesday morning, activist Alfadil finally wrote a message, apologizing for her silence. She says she sufferred a mental breakdown. Two hours later, we held a phone call, but it lasted only two minutes and 20 seconds. Her voice sounded different than it had in the previous days - filled with fear. "I can only stay on for a second," she says, "we have to escape." She said a projectile had landed in her yard and exploded, instantly killing the gardener, the guard and one of her friends. "It's so random, there are no targets here," Alfadil says.
Fleeing Khartoum
She takes her sister and her sister's mother-in-law with her, and they drove two hours south, out of Khartoum, through the fighting. But as they guided themselves to safety, fearing for their lives, other activists were already beginning to organize again. They created WhatsApp groups where people needing help can put in requests, and help is then organized for them.
Videos are circulating on Facebook showing activists spray-painting walls with antiwar graffiti. Fighting can be heard in the background. Men singing songs against military rule. The civilian resistance is back in action. Shadin Alfadil is certain: She, too, will join the protests on the streets again. "Whoever wins this war threatens to become Sudan's new dictator," she says. "And one thing is clear to us: We will never accept a dictator again. Never!"
But experts are critical. Alan Boswell, responsible for the Horn of Africa at the International Crisis Group think tank, says: "It's the absolute nightmare scenario for the transition to democracy." Boswell says the intention of the two sides at the moment is clear: "They want to resolve the conflict militarily." But Boswell believes it is highly unlikely that either side can win the war.
It seems just as unlikely, though, that they will be able to find a compromise. The two sides are also fighting each other in the crisis-ridden region of Darfur. Experts are closely watching the escalation there with great concern. "Darfur is going to become a world of hurt. We'll probably see huge devastation and really scary amounts of potential carnage there, which is where Hemeti's stronghold is," Boswell says. The potential for terrible bloodshed, he adds, is high.
Alfadil finally arrived in the southern part of the country on Wednesday night after making her way by car through the fighting. On Thursday morning, she sent two short messages on WhatsApp: "super exhausted," followed by, "It's very safe here." No shots and no bombs. It's a calm that should be prevailing across the country following agreement on a third cease-fire, but in Khartoum, it hasn't held once again. Alfadil is tired. She has no idea what to do next. She does know one thing, though: Giving up isn't an option.
*With additional reporting by Mohamed Alamin
Image: The NSO Group, the manufacturer of Pegasus spyware, is housed in a few top floors of this building complex in Israel.Credit...Amit Elkayam for The New York Times/ Editing by Germán & CoHow Mexico Became the Biggest User of the World’s Most Notorious Spy Tool
A Times investigation reveals the story behind how Mexico became the first and most prolific user of Pegasus. It’s still using it, despite promising to stop.
NYT By Natalie Kitroeff and Ronen Bergman, Natalie Kitroeff reported this article from Mexico City, and Ronen Bergman from Tel Aviv. April 18, 2023The Israelis had come to Mexico to clinch a major sale: The Mexican military was about to become the first client ever to buy their product, the world’s most advanced spyware.
But before they could close the deal, an argument erupted over price and how quickly the spy tool could be delivered. A Mexican general overseeing the negotiations called for a pause until later that evening, according to two people present and a third with knowledge of the talks.
“We’ll pick you up at your hotel and make sure to arrange a better atmosphere,” they recalled the general saying.
That night, a convoy of cars arrived at the Israeli executives’ hotel and took them to a new spot for the fateful negotiations: a strip club in the heart of Mexico City.
The general’s security team ordered all the other clientele to leave the club, the three people said, and the talks resumed.
It was in that dark cabaret in March 2011, among women dancing onstage and shots of tequila, that the most powerful cyberweapon in existence got its start.
The spyware, known as Pegasus, has since become a global byword for the chilling reach of state surveillance, a tool used by governments from Europe to the Middle East to hack into thousands of cellphones.
No place has had more experience with the promise and the peril of the technology than Mexico, the country that inaugurated its spread around the globe.
A New York Times investigation based on interviews, documents and forensic tests of hacked phones shows the secret dealings that led Mexico to become Pegasus’ first client, and reveals that the country grew into the most prolific user of the world’s most infamous spyware.
Mexico went on to wield the surveillance tool against civilians who stand up to the state — abuses the country insists it has stopped. But The Times found that Mexico has continued to use Pegasus to spy on people who defend human rights, even in recent months.
Many tools can infiltrate your digital life, but Pegasus is exceptionally potent. It can infect your phone without any sign of intrusion and extract everything on it — every email, text message, photo, calendar appointment — while monitoring everything you do with it, in real time.
It can record every keystroke, even when you’re using encrypted applications, and watch through your phone’s camera or listen through its microphone, even if your phone appears to be turned off.
It has been used to fight crime, helping to break up child-abuse rings and arrest notorious figures like Joaquín Guzmán Loera, the drug lord known as El Chapo.
But it has also been deployed illegally, again and again, with governments using Pegasus to spy on and stifle human rights defenders, democracy advocates, journalists and other citizens who challenge corruption and abuse.
Alarmed at how Pegasus has been used to “maliciously target” dissidents across the globe, the Biden administration in 2021 blacklisted NSO Group, the Israeli company that manufactures the spyware.
Soon after, Israel’s defense ministry — which must approve the export of Pegasus to other nations — said it would ban sales to countries where there was a risk of human rights violations.
Yet, despite ample evidence of Pegasus abuses in Mexico, the Israeli government has not ordered an end to its use in Mexico, according to four people with knowledge of the contracts for the technology.
In fact, Mexico’s military is not only Pegasus’ longest-running client, the four people say, but it has also targeted more cellphones with the spyware than any other government agency in the world.
And the spy tool continues to be deployed in the country, not just to combat crime.
After the revelations that Pegasus had been wielded against government critics tarred his predecessor, President Andrés Manuel López Obrador, who came to office in 2018, promised to stop what he called the “illegal” spying of the past.
He did not. Previously undisclosed tests show that, as recently as the second half of 2022, Pegasus infiltrated the cellphones of two of the country’s leading human rights defenders, who provide legal representation to the victims of one of the most notorious mass disappearances in Mexican history.
A military patrol last year in Michoacan, Mexico. The Mexican military has used spyware to track down leaders of drug cartels, but has also used it to spy on human rights defenders, a Times investigation found.Credit...Daniel Berehulak for The New York Times
The military has a history of human rights abuses, and its role in the mass disappearance has been a focus of the investigation for years. As new allegations against the military surfaced in the case last year, the two advocates were targeted by Pegasus repeatedly, according to forensic testing conducted by Citizen Lab, a watchdog group based at the University of Toronto.
The Mexican military is the only entity in the country currently operating Pegasus, the four people familiar with the contracts said.
The Israeli defense ministry declined requests for comment. The Mexican defense ministry would not discuss the recent hack but said it followed the government’s position, which asserts that intelligence gathering is “in no way aimed” at invading the private life of political, civic and media figures.
This was the second wave of attacks on the phone of Santiago Aguirre, one of the human rights defenders. He had been targeted with Pegasus during the previous administration, too, Citizen Lab found.
“This government made so many promises that things would be different,” Mr. Aguirre said. “Our first reaction was to say, ‘This can’t be happening again.’”
A spokesman for the Mexican president declined to comment. In a statement, NSO Group said it “adheres to strict regulation and cannot disclose the identity of its customers.” The company challenged the conclusiveness of Citizen Lab’s forensic analyses, while Citizen Lab said it had no doubts about its findings.
To verify whether Pegasus hacked the two Mexican human rights advocates in recent months, NSO Group said it would need to be “given access to the data.” But the advocates said they were not willing to give the government’s spying partner any more of their private information.
Pegasus’ beginnings in Mexico have long been shrouded in secrecy. After the night at the strip club, the Israeli executives of NSO Group, then a fledgling start-up, returned to Tel Aviv with the outlines of their first sale. The next step was an actual contract.
So, a few months later, a team of NSO representatives returned to Mexico to show off the spyware to some of the most powerful people in the country.
On May 25, 2011, Eran Reshef, an Israeli defense industry executive who helped broker the deal, said in an email to NSO’s chairman and its two founders that “the demo to the Secretary of Defense and President will take place next Friday,” referring to the president at the time, Felipe Calderón, and his secretary of defense, Guillermo Galván Galván. A copy of the email surfaced in an Israeli lawsuit over commissions from the sale of Pegasus to Mexico.
Two of the people at the demonstration said it had taken place on a sprawling military base on the outskirts of Mexico City, where the first Pegasus machine would be installed.
Fearing leaks, the Mexican Army made the Israeli executives wait in a tiny room where cleaning supplies were kept so no one would see them before they made their presentation. An armed soldier was stationed outside the door.
When Mr. Calderón and Mr. Galván Galván arrived, they sat in front of large screens on the wall — and watched a phone get hacked, the attendees said.
Udi Doenyas, the chief technology officer of NSO Group who invented the Pegasus architecture and led the team that wrote the code behind the first version of the spyware, confirmed that he had connected the Pegasus system to a screen and handed a BlackBerry phone to senior Mexican officials. He asked them to use it.
As they did, the phone showed no signs of being compromised, but the Pegasus system methodically began extracting every piece of data, beaming it onto the screen for all to see.
This was the spyware’s superpower: the sneak attack.
Miguel Ángel Sosa, a spokesman for Mr. Calderón, acknowledged that the former president had paid a visit to a military facility, where he was “given various presentations about the tasks” being carried out, “including the gathering of information and intelligence.”
But he said Mr. Calderón was never informed whether the spyware was eventually purchased, and that the former president was never told — “nor did he inquire” — what tools were used to capture criminals.
At the time, Mexico desperately needed a way to reliably crack into BlackBerry phones, a device of choice for the nation’s fearsome drug cartels. From the start of his term in 2006, Mr. Calderón had pushed a so-called kingpin strategy for confronting organized crime, focusing on the groups’ top leaders.
Pinpointing the drug lords required technology that allowed spies to follow their location constantly. The criminals were careful, former law enforcement officials said, moving around and shutting down their phones to avoid being captured.
“It didn’t give you enough time to launch an operation,” said Guillermo Valdés, the former director of CISEN, which was the country’s equivalent of the C.I.A., from 2007 to 2011. “If someone turned off his phone, we no longer knew where he was.”
Up to that point, Mexico had relied heavily on the United States.
“The pressure on the military to raise its game in terms of intelligence capabilities was intense,” said Alejandro Hope, a former intelligence officer during the Calderón administration. A potential draw of Pegasus, he said, is that it would give Mexico its own capabilities.
“They no longer wanted to be dependent on the Americans,” Mr. Hope said.
The military signed the contract to buy the spyware soon after the demonstration.
In September 2011, about 30 NSO employees, most of the company’s staff, flew to Mexico to set up Pegasus, test it and instruct a team of about 30 Mexican soldiers and officers how to operate the technology, according to three people familiar with the installation. The Mexican unit chosen to operate it was called the Military Intelligence Center, a secretive arm of the army about which little has been made public.
Once the Mexicans were ready to run Pegasus on their own, a short ceremony took place that December as a way of “handing over the keys,” two of the people said.
A document from 2019, unearthed in an enormous hack of Mexican military emails last year, indicates that the Mexican intelligence center is housed in a horseshoe-shape complex. Three people familiar with it say commanders can watch through internal glass walls as information unspools on huge screens.
In a 2021 document, also made public by the hack, the army says that one of the main risks facing the center is “that the activities carried out by this center are revealed to the public.”
Pegasus was quickly embraced by the Mexican authorities, and after Enrique Peña Nieto took office as president in 2012, two more government agencies bought it: the attorney general’s office and CISEN, according to Mexican officials and three people with knowledge of the contracts.
Within a few years, the spyware began infiltrating the phones of some of Mexico’s most prominent human rights lawyers, journalists and anti-corruption activists — surveillance that strayed far from the agreement with the Israelis to target serious crime and terrorism.
Condemnation came swiftly from at home and abroad, and the scandal clung to Mr. Peña Nieto for the rest of his presidency. In all, Mexico has spent more than $60 million on Pegasus, according to Mexican officials, citing spending by past administrations.
The Mexican military has acknowledged having Pegasus only from 2011 to 2013. But a group of independent experts investigating the disappearance of 43 students who were planning to attend a protest said the military had Pegasus when they were abducted in 2014, and was spying on the phones of people involved in the crime on the night the events unfolded.
It is not clear why the military was spying, but the intelligence was not used to help find the students, the experts said.
After Mr. López Obrador took office in 2018, he dissolved the federal police and replaced the Mexican spy agency with a new entity.
From 2019 through today, only the military has had Pegasus, four people with knowledge of the contracts say. And during that time, the spyware has continued to be deployed against journalists, human rights defenders and an opposition politician, according to Citizen Lab’s analyses.
Under Mexican law, government entities need a judge’s authorization to spy on private communications. But in public disclosures, the military has said it has not made any request to do that kind of surveillance in recent years.
On a Thursday afternoon last December, Mr. Aguirre got an email that read like something out of a spy novel.
“Apple believes you are being targeted by state-sponsored attackers who are trying to remotely compromise the iPhone associated with your Apple ID,” said the message, which was reviewed by The Times. “These attackers are likely targeting you individually because of who you are or what you do.”
In 2021, Apple announced it would begin sending warnings like this to users whose cellphones had been hacked by sophisticated spyware. The email went on to say that “sensitive data” on Mr. Aguirre’s phone may be compromised, “even the camera and microphone.”
Mr. Aguirre, the executive director of the Miguel Agustín Pro Juárez Human Rights Center, had been targeted years earlier with Pegasus.
His stomach sank thinking of government spies poring over his entire digital life, from messages with torture survivors to family photos with his young daughter.
Then it hit him: Others might be compromised, too.
He ran down the hall to the office of María Luisa Aguilar, the lead advocate handling the group’s international work. She had gotten the same email.
The two advocates contacted the Mexican digital rights group known as R3D, which had their phone data analyzed by Citizen Lab. It confirmed that both were hacked multiple times by Pegasus from June through September 2022.
“In the eyes of the armed forces, we represent a risk,” Ms. Aguilar said. “They don’t want to lose the power they have accumulated.”
*Natalie Kitroeff reported from Mexico City, and Ronen Bergman from Tel Aviv. Natalie Kitroeff is The Times’s bureau chief for Mexico, Central America and the Caribbean. @Nataliekitro