Banananomics: Innovative Ways To Circumvent Sanctions

At an essential moment in the BRICS alliance, Russia and China have ditched the U.S. dollar (USD) for trade.

Inputs that matter: Russia's Foreign Minister Sergey Lavrov has recently stated that the economic bilateral relations between the two countries have undergone near-complete de-dollarization.

• Today, more than 90% of the nation's bilateral trade dealings are settled in the yuan or ruble.

• Meanwhile, in Venezuela, Tether, a cryptocurrency pegged to the USD, is being used for oil export transactions to avoid having revenues frozen in foreign bank accounts.

The opportunity: The six-month temporary easing of sanctions, which expired on April 15, allowed Venezuela to increase exports to around 900,000 barrels per day in March, a four-year high, according to Reuters.

• The reimposition of sanctions occurred amid new talks between Venezuela and Chevron to expand a joint venture with state-run PDVSA in the Orinoco Belt. 

• Russian oil exceeds the G7 price cap designed to deprive Moscow of revenue, with the country's flagship Urals grade trading close to $75 a barrel.

• Despite sanctions, crude oil exports from Iran hit the highest level in six years, with almost all 1.56 million barrels going to China, earning Tehran $35 billion.

• While Washington denies China AI chip technology, the Chinese battery and renewable energy companies freely trade with American car manufacturers.

Zoom in: Gotion Inc., the California-based subsidiary of Chinese battery manufacturer Gotion High-Tech Co. (Gotion High-Tech), is planning to build massive electric vehicle battery plants in Michigan and Illinois, both of which stand to benefit from taxpayer funding.

• A director of an American firm building battery manufacturing plants in the U.S. has been pictured attending multiple Chinese Communist Party (CCP) meetings.

• "If they're attending Party committee meetings, they are, in all likelihood, a Party member," explains John Dotson, deputy director of Global Taiwan Institute.

Between the lines: U.S. animation studios may have unknowingly had work on their projects outsourced to illustrators and graphic designers in North Korea.

• Drawings for an upcoming season of Invincible, an Amazon Prime Video show, and other work that appears to be for the forthcoming Max series Iyanu: Child of Wonder were found in a trove of documents found by American researchers on a computer server located in North Korea, according to CNN.

• A source told CNN that Lion Forge Entertainment, which produces Iyanu, had contracted with a South Korean animation studio.

Follow the money: As globalization and digitization escalate, it becomes harder to enforce sanctions.

• The Energy Select Sector SPDR Fund (XLE) is an ETF representing Western energy stocks from the S&P 500 index. It is currently peaking near its all-time high of $100.39 in 2014.

• Chevron Corp (NYSE: CVX) is trading near its 12-month high.

• Shell PLC (NYSE: CHEL) is also near a 12-month high.

Venture Capital firms (VCs) are generating high investment returns with growing influence over U.S. foreign policy.

Inputs that matter: VCs are becoming major Washington influencers while simultaneously jumpstarting the defense industry's newest brands.

• In this respect, billionaire VCs like Peter Thiel and Eric Schmidt are noticeable for involvement in both sides of government-defense sector relations.

• Thiel Capital's chief of Staff, Michael Kratsios, took White House and Defense Department positions in the Trump administration, bringing Thiel closer to power.

• Rebellion investor Schmidt is a member of the Defense Innovation Board, which advises lawmakers and the Pentagon on tech policies.

• As the American Prospect's former managing editor, Jonathan Guyer, writes, the board is "allocating resources toward the exact technology Rebellion [is] selling."

The opportunity: VC groups are poking the stick at China, now a nemesis in what Palantir senior policy adviser Jacob Helberg deems a brewing "tech war."

• 16z Co-Founder Marc Andreessen has observed he has more success in policy conversations with lawmakers when he mentions China.

• Lux Capital's website plainly states that China is "a serious threat to U.S. global hegemony."

Zoom in: As Palantir CEO Alex Karp previously put it, "Bad times are perfect for Palantir."

• Rebellion provides a tactical threat awareness tool (TTA) that uses AI to make battlefield decisions.

• According to two U.S. officials, the Biden administration is preparing a larger-than-normal package of military aid for Ukraine that will include armored vehicles, urgently needed artillery, and air defenses.

• "Give us the damn Patriots," Kyiv's Foreign Minister, Dmytro Kuleba, told Politico in late March. Shortly after, Zelensky said the country needed 25 Patriot systems, up to eight batteries each, "to cover Ukraine completely."

• Thanks to Google, Ukraine generals and commanders have a new way to visualize Russia's movements and communications in one big, user-friendly picture.

Between the lines: Defense companies and startups are lining up for military contracts to create a new generation of space weaponry and adjacent tech, including space vehicles, hypersonic rockets, and extensive surveillance and communications projects.

• North Korea recently launched a spy satellite and is planning to launch more.

• China is "developing the counter-space capabilities to threaten U.S. and allied satellites and developing sophisticated launch capabilities that are moving much more toward reusable launch vehicles."

• DefenseNews reports, "Russia, China, India, and the United States have tested anti-satellite missiles, and several major world powers have developed technology meant to disrupt signals in space."

• Space Force General Chance Saltzman declares, "If we do not have space, we lose."

Follow the money: Lockheed Martin has played a significant role in Israel's bombing and invasion of Gaza, manufacturing Hellfire missiles, providing transport planes, and supplying F-16 and F-35 fighter jets.

• In 2023, Lockheed Martin spent over $14 million lobbying Congress.

• RTX Corporation (NYSE: RTX), formerly Raytheon, is trading at a four-year high as demand for its Patriot Missile System escalates.

• Likewise, defense company General Dynamics Corp (NYSE: GD) is trading at an all-time high.

• Lockheed Martin Corp (NYSE: LMT) is up 41.57% on the new wave of U.S. aid for Israel, Ukraine, and Taiwan.

• Oshkosh Corp (NYSE: OSK) is shy of its yearly high.

• Alphabet Inc (NASDAQ: GOOG), Google's parent company, is at a 12-month high.

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