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Even more worryingly, this samarium dump can supply the US defense industry for barely a year; beyond that, there are no credible alternative supply plans in place. How the US got into this rabbit hole, despite pioneering the technology of samarium processing and its various uses in the defense industry in the 1960s, is a story as bizarre as today’s situation, where some of the world’s largest defense giants are living on a thread, not sure how long their supply of critical heavy rare earth magnets will last.

The Making Of Samarium Supply Bottlenecks

The US pioneered the development of samarium-cobalt (SmCo) permanent magnets, the primary defense-related use of samarium. These high-performance magnets, which offer strong magnetic fields, excellent resistance to demagnetization, and superior high-temperature stability, were invented based on work by Karl Strnat at Wright-Patterson Air Force Base and Alden Ray at the University of Dayton. Due to their remarkable properties, Samarium Cobalt magnets are used in aircraft and satellite systems, as well as missile guidance and control systems. However, the industry moved to China in the 1980s for a variety of reasons, including the presence of rich rare-earth deposits, lax environmental regulations (samarium processing is extremely polluting), and heavy state subsidies from the Chinese Communist government. Today, China mines, processes, and sells such massive quantities of rare earths that it can keep prices artificially low, knocking out any foreign competition. Over the decades, all Western companies that processed rare earths went out of business, unable to compete with China’s prices. Today, China mines nearly 60% of the world’s rare earths and processes almost 90% of rare-earth magnets. However, China controls nearly all of the world’s supply of Samarium Cobalt magnets.

Earlier this year, in response to US President Donald Trump’s punitive tariffs on China, Beijing imposed strict restrictions on the export of rare-earth magnets. Subsequently, China removed restrictions on the export of several light and medium rare-earth magnets; however, restrictions on the export of heavy rare-earth magnets, including Samarium Cobalt magnets, remained in place. China began requiring export licenses for samarium and six other rare-earth metals in April this year, choking the supply for US defense giants. Underscoring the criticality of samarium supply chains for the US, the U.S. Geological Survey named samarium the No. 1 critical mineral at highest risk of supply chain vulnerabilities in October in its proposed 2025 Critical Mineral List. The chokehold China exerted on the supply of samarium could have halted production of many critical defense systems in the US. However, a decades-old samarium dump in a bankrupt factory in France gave the US defense giants a lifeline.

Samarium Dump In A Bankrupt Factory That Gave Lifeline To US Defense Giants

New York-based Arnold Magnetic Technologies, a subsidiary of US conglomerate Compass Diversified and manufacturer of samarium-cobalt magnets with factories in Switzerland, Thailand, and China, had over a year’s supply of the metal on hand when China announced its export controls on April 4, said Aaron Williams, the company’s chief commercial officer. However, as months passed and their supply plummeted, the company began to worry. Arnold contacted UK-based Less Common Metals, one of the last remaining manufacturers of rare-earth metals in the Western world. Less Common Metals contacted Solvay, a Belgian chemical company that was once one of the world’s largest producers of rare-earth oxides. Luckily, Solvay had a factory in France that still had a decades-old, abandoned samarium dump. Solvay had stopped separating rare-earth elements in France two decades ago because it had become “uneconomical,” a company spokeswoman told the New York Times. Samarium processed outside China is five to eight times as expensive. But Solvay kept its stock of semifinished materials and still had the know-how and equipment to refine it. Solvay’s entire inventory was around 200 tons, enough to supply the US defense industry for a year.

The U.S. defense industry requires less than 200 tons per year, according to estimates by Jack Lifton, co-chair of the Critical Minerals Institute, an industry advisory organization. Less Common Metals (LCM) brought Solvay’s samarium to Britain, where the company is turning it into metal that will be melted into alloys. These alloys will be cut into magnets at US factories, which will in turn be supplied to US defense giants for use in fighter jets and missile systems. “As market demand accelerates for sustainable, Western-sourced magnet materials, Arnold is taking decisive action to guarantee supply and provide commercial flexibility for our customers,” Aaron Williams, chief commercial officer of Arnold Magnetic Technologies, said. “We are very pleased to partner with LCM and Arnold Magnetic Technologies to provide essential resources for high-performance applications, particularly in the strategic domain of the European Aerospace Industry,” An Nuyttens, president of GBU Special Chem at Solvay, said. Notably, to further secure supply chains, the UK-based LCM was acquired by American miner USA Rare Earth on November 18. The acquisition demonstrates vertical integration strategies aimed at securing Western-origin material sources.

Even though these samarium magnets are much more expensive than the prices at which China was supplying the US until months ago, they provided a lifeline to the US defense-industrial complex at a critical time. For now, the US has secured its supply of samarium magnets for at least a year, and the industry is confident that new samarium sources will be found before Solvay’s stash runs out. China might also relax its export restrictions in the meantime. However, as a popular saying goes, “Once burned, twice shy,” the US will be extremely cautious in the future, avoiding entirely depending on China for the supply of such a critical mineral.

In the 50s (up til 1972), the US led a total embargo on China, including a food and fertilizer embargo in the express goal of causing a famine that would lead to regime change. By 1959, China's grain reserves were low and production was not capable of keeping up. It was clear to the CCP that things were heading to an upcoming famine, without imports to cushion the upcoming deficit. Here's a breakdown of the factors:

• Poor weather leading to poor crop yields. This was the biggest factor despite mainstream rhetoric both in China and abroad: «The Economic Situation in Communist China», Apr 4 1961. https://www.cia.gov/readingroom/docs/DOC_0001098172.pdf (p.3 paragraph 13, or p.5 of pdf file). Both the West and Chinese successors of Mao (who were of an opposing faction to him) have very good political reasons to blame him for everything.
• Bad policies leading to poor crop yields: the infamous Four Pest Campaign. While not the main factor for the poor crop yield as modern rhetoric claims, it remained a significant factor. (Same CIA document addresses this in paragraph 14)
• Rampant population growth. The same CIA document, in paragraph 9, notes that agricultural production actually increased in China from 168 to 185 million tons, just not enough to keep up with population growth
• Bad policies leading to poor grain reserves: in 1958, (same CIA document, paragraph 9), grain production increased to 212 million tons. However, CCP allowed free supply of food in the communes' mess halls instead of its usual rationing, which led to depleting reserves instead of padding it despite a good year.
• Bad policies leading to poor grain reserves: as a rule, China was a food exporter instead of a food importer in the 50s prior to the famine, as it required capital for its industrialization and had little else to offer that other nations would buy. This wasn't an inherently bad tradeoff (a similar kind of tradeoff would lead to China's rise as a nation), but became one due to CCP not keeping enough grain reserves that could account for 3 consecutive bad years.

It was therefore in 1959 that the CCP started negotiating grain purchases with Western nations that had a surplus, but they were resisting at that point due to US-led embargo. (The US put significant pressure on its allies to comply with the embargo) https://www.theglobeandmail.com/news/national/an-era-ends-as-china-becomes-an-aid-donor/article978192/ (paywall. Mirror: https://archive.is/9Ksoq). The famine happened as engineered by the US despite CCP's efforts in preventing it (both in attempting to purchase grain and in transporting their available food around to lower death toll). Death tolls are likely exaggerated (all state actors around the world had reason to, again due to political expediency vis-à-vis Mao), but the famine did indeed happen. The lowest estimates are around 5 million (figure Mao gave to US diplomats), up to 30 something million (extremely unlikely).

After the famine worsened in winter 1961, Canada and Australia had enough of being complicit in genocide and decided to defy the US embargo and sent China grain (both paid and given). This was sufficient to stop the famine and bought them considerable goodwill from the PRC for a few decades. At this point, the CIA calculated that if Canadian and Australian grain imports stopped, it would be enough to send China back into the worst parts of the famine (thereby confirming that if grain imports started in 1959, there wouldn't have been a famine to begin with). It then lamented at the poor cooperation of US allies in this attempted genocide in the CIA report «Communist China: Economic Performance in 1962», Dec 3 1962. https://www.cia.gov/readingroom/docs/DOC_0000402879.pdf (p.8-9; or p.10-11 of pdf file).

Side note that doesn't really affect how the events unfolded in either CCP actions nor US intentions: In February 1961, the CCP expressed a need for urgent grain purchases to the Soviet Union. Khrushchev offered 1 million tons of grain and half a million tons of Cuban sugar on a loan basis. China agreed to use the sugar loan and asked to keep the grain offer in reserve (Lorentz M. Lüthi's book «The Sino-Soviet Split»). It then however used part of the offer soon after (200 000 tons, according to Barbara Barnouin in «Zhou Enlai: A Political Life»). This was shortly before the Sino-Soviet split was complete. The loan was paid back with Canadian grain. That China negotiated for grain from Canada in 1959, and only from the Soviets in 1961 after the famine got really bad, spoke volumes about how bad Sino-Soviet relations were at that point. Also, it is probably slightly unfair to say that CCP successors to Mao blamed him solely for political expediency; there was good grounds to say if CCP did not make the numerous poor policy decisions listed above, the famine may not have happened (or at least not have been as bad) despite the poor weather and the US genocide attempt. CCP is inherently pragmatic and considers being able to weather both natural disasters and hostile factors its mandate. This was likely a large part of why it declared the GLF famine "mostly man-made [by itself]" despite the fact that the men that intentionally made the famine were in Washington and not Beijing.

from the linked CIA doc:

Failure to import 5 million mt of grain in 1963 might reduce by 3 to 4 percent the total caloric availability, thereby diminishing labor productivity ... and causing increased rural dissatisfaction. ... The cumulative effects of prolonged malnutrition ... could lead to a level of unrest that would tax the police powers of the regime.

The U.S. Coast Guard is waiting for additional forces to arrive before potentially attempting to board and seize a Venezuela-linked oil tanker it has been pursuing since Sunday, a U.S. official and a source familiar with the matter told Reuters. The ship, which maritime groups have identified as the Bella 1, has refused to be boarded by the Coast Guard. That means that the task will likely fall to one of just two teams of specialists - known as Maritime Security Response Teams - who can board vessels under these circumstances, including by rappelling from helicopters. The days-long pursuit highlights the mismatch between the Trump administration's desire to seize sanctioned oil tankers near Venezuela and the limited resources of the agency that is mainly carrying out operations, the Coast Guard.

Unlike the U.S. Navy, the Coast Guard can carry out law enforcement actions, including boarding and seizing vessels that are under U.S. sanctions. Trump earlier this month ordered a "blockade" of all sanctioned oil tankers entering and leaving Venezuela, in Washington's latest move to increase pressure on Venezuelan President Nicolas Maduro. The Coast Guard has in recent weeks seized two oil tankers near Venezuela. After the first seizure, on Dec. 10, U.S. Attorney General Pam Bondi posted a 45-second video showing two helicopters approaching a vessel and armed individuals in camouflage rappelling onto it. A Saturday social media post by the Department of Homeland Security, which oversees the Coast Guard, showed what appeared to be Coast Guard officers aboard the Gerald Ford aircraft carrier getting ready to depart and seize the Centuries tanker, the second of the ships boarded by the U.S. A U.S. official, speaking on condition of anonymity, said the Coast Guard officials on the Ford were from a Maritime Security Response Team and at the time too far from Bella 1 to carry out a boarding operation. "There are limited teams who are trained for these types of boardings," said Corey Ranslem, chief executive of maritime security group Dryad Global and previously with the U.S. Coast Guard.

The Department of Homeland Security did not immediately respond to a request for comment and Reuters could not determine what, if any other reasons, have led to the Coast Guard not seizing the vessel yet. The administration could ultimately choose to not board and seize the vessel. The White House said that the United States was still in "active pursuit of a sanctioned dark fleet vessel that is part of Venezuela’s illegal sanctions evasion."

LIMITED RESOURCES

The U.S. Coast Guard is a branch of the armed forces but a part of the Department of Homeland Security. The United States has assembled a massive military force in the Caribbean, including an aircraft carrier, fighter jets and other warships. Ospreys and additional MC-130J Commando II aircraft arrived in Aguadilla, Puerto Rico in recent days, according to a separate source. The Coast Guard has far fewer resources in place. The service has long said that it lacks the resources to effectively carry out a growing list of missions, including search and rescue operations and drug seizures. In November, the Coast Guard announced that it had seized about 49,000 pounds of drugs worth more than $362 million in the eastern Pacific. "The Coast Guard is in a severe readiness crisis that is decades in the making," Admiral Kevin Lunday, who leads the Coast Guard, told lawmakers in June. For the fiscal year ending September 2026, the Coast Guard requested $14.6 billion in funding. It will receive an additional $25 billion through a sweeping spending and tax legislation, known as the "One Big Beautiful Bill Act." "Our Coast Guard is less ready than in any other time in the past 80 years since the end of World War Two. The downward readiness spiral we are on is not sustainable," Lunday said earlier this year.

With the opening of the Xi'an–Yan'an high-speed railway in Northwestern China's Shaanxi province on Friday, the country's high-speed rail network has surpassed 50,000 kilometers, marking a major milestone in China's railway development and reinforcing its position as the world's largest high-speed rail operator.

The new line, cutting travel time between the two cities from over two hours to about one, brings both historical regions and modern communities closer, highlighting the transformative power of high-speed rail.

The 299-kilometer line runs north from Xi'an, the provincial capital, to Yan'an, a city that served as the base of the Communist Party of China leadership between 1937 and 1947.

Traversing Shaanxi's Loess Plateau, it links towns and cities that are part of China's revolutionary base areas, with 10 stations including Fuping South, Tongchuan, and Luochuan. The line not only shortens travel times but also connects the region more closely to the rest of the country, reinforcing its role in China's high-speed rail network.

In a written response to Conservative MP Ben Obese-Jecty, defence minister Luke Pollard said “there are no plans to extend the out-of-service date for Warrior beyond 2027, and as such an extension is not under consideration.” The answer makes clear that the Army will not revisit the decision to retire the long-serving infantry fighting vehicle, despite ongoing concern about potential armoured capability gaps. Pollard said the department’s focus is now on delivering the ambitions set out in the Strategic Defence Review. He told Parliament that priority is being given to “achieving the Strategic Defence Review’s vision for a tenfold increase in British Army lethality over the next decade,” with modern armoured fighting vehicles forming part of a wider force structure. The minister added that future capability will rely on “survivable and lethal platforms” operating alongside “new layered systems of attritable and consumable platforms,” signalling a continued shift away from extending legacy equipment and towards mixed, multi-layered force designs.

y'know, maybe before you switch to "attritable and consumable" platforms, you should make sure you actually have the industrial capability to make enough things that you can indeed treat them as consumable?

Recently, we reported that the government confirmed that Project ATILLA, the Army’s plan to convert retired Warrior infantry fighting vehicles into optionally crewed minefield-breaching platforms, has now advanced beyond its initial concept work and entered the early stages of commercial competition. Responding to a written question from Conservative MP Ben Obese-Jecty, Defence Minister Luke Pollard said ATILLA “has progressed from considering conceptual elements such as evaluating project feasibility” and is now preparing to move into the Invitation to Tender stage. He did not provide a date for the formal end of the concept phase, but the answer makes clear that the programme has already passed that milestone. The clarification follows earlier disclosures setting out the structure and ambition of ATILLA. As previously reported, the programme aims to turn surplus Warrior hulls into heavy, attritable uncrewed ground vehicles capable of breaching minefields for the Royal Engineers. A Prior Information Notice published in August revealed the MoD’s intention to procure up to six converted Warriors as a Minimum Deployable Capability, fitted with front-end breaching equipment and able to operate either with a crew or remotely. From the outset, ATILLA has been designed as a spiral-development effort. Phase 1 will deliver the initial six vehicles for operational use and experimentation, while Phase 2 will focus on advancing autonomy and refining requirements for a future purpose-built heavy UGV fleet. Industry bidders must meet a stringent entry test, with only suppliers able to deliver six fully functioning optionally crewed breaching vehicles within the set time limits allowed to progress.

The logic behind the project is straightforward: Warrior’s retirement from frontline service leaves the Army with robust tracked hulls offering the mobility, protection and payload needed for high-risk engineering tasks. Converting them avoids the lengthy timelines and significant expense associated with designing a bespoke platform from scratch, and gives the Royal Engineers a survivable option for clearing minefields without placing crews directly in harm’s way. According to the Ministry of Defence, by cutting through minefields, the device clears explosives and pushes them aside, opening a safe path for troops to move faster and more securely towards critical enemy positions or key objectives, outpacing current methods in speed and safety. “The device, called WEEVIL, was developed collaboratively by the Defence Science and Technology Laboratory (Dstl) and Pearson Engineering Ltd – a British company based in the north-east – using the latest tech. WEEVIL can clear minefields quicker and safer than present capabilities, reducing risk to soldiers on the front line. Current mine-clearing methods include the TROJAN Armoured Vehicle, which requires a three-person crew to operate directly within hazardous areas.” “The system prototype currently uses the Warrior Infantry Fighting Vehicle, fitted with a full-width mine plough, advanced remote-control system, and vehicle-mounted cameras. This allows it to be operated by a single person from several miles away from danger and is expected to be able to adapt to work with any suitable vehicle platform. The ground-breaking trials are set to continue with the British Army, who will push the robotic system to its limits, providing vital insight to inform future mine-clearing capabilities. The prevalence of anti-tank and anti-personnel mines in modern warfare to slow troop movements has been highlighted by the conflict in Ukraine.”

On the 18th, the European Commission finally met for the climactic moment of the reparations loan saga. At stake were Ukraine’s war effort, the future of the European banking system, the sovereignty of EU member states, and €210 billion in frozen Russian cash. “No one will leave the EU summit until a solution on financing Ukraine is found,” said EC president Ursula von der Leyen that morning. Von der Leyen was serious, as European leaders spent a marathon session attempting to hash out a solution to the seemingly insurmountable obstacles that had thus far prevented the reparations loan scheme from becoming a reality. A last-minute attempt to satisfy the Belgians with an “uncapped” EU backstop for their potential liability was rejected as leaders realized they’d potentially face a bailout of the entire Belgian banking system. Late that night, diplomats involved in the negotiations reported that the scheme was finally dead. Ukraine will instead be provided with €90 billion raised through joint EU debt from capital markets. The British plan to use the frozen Russian assets stored in their banks failed simultaneously.

With the full collapse of the scheme, diplomats are speaking more freely, and we have confirmation of Belgian prime minister Bart de Wever’s hint that other EU states were “hiding” behind him, or in other words, quietly supporting him. The full coalition contains, of course, Belgium and Russia-neutral renegades Hungary, Slovakia, and the Czech Republic. Banking microstates Luxembourg and Malta were on Wever’s side, along with Ukraine-skeptical Italy and Bulgaria. The most significant revelation of the past few days is that Emmanuel Macron’s France played a significant role in torpedoing a last-minute attempt to make a deal whereby the EU would agree to bail the Belgians out for the entire amount of the Russian assets if things went south. Readers of our reporting on this were likely unsurprised by the EC’s failure to find a path forward for the reparations loan. But the last-minute decision to take on new debt to fund Ukraine happened despite there having been just as many obstacles to doing so as there were to the reparations loan. Von der Leyen, Merz, and their allies had to make major compromises to overcome the roadblocks. The first compromise is notable more as a moral defeat than a practical one. Hungary, the Czech Republic, and Slovakia were sure to veto the joint borrowing plan, which would have forced the EC to again activate controversial emergency powers for the second time in a month to force the scheme through with a simple majority. Doing so would have opened von der Leyen’s coalition up to legal challenges and the increasing perception that the EU’s democratic mechanisms, or what remains of them, are fully broken. To avoid this, the terms of the agreement exempt the trio of countries from any liability stemming from the new debt, meaning they won’t have to help make the EU whole if the Ukrainians fail to repay the loan. While this does damage to the image of EU unity, these three countries would have been responsible for perhaps 4% of any such liability, or a few billion euros. This risk will be spread to the remaining member states. For Orbán, Fico, and Babiš, it’s around a billion euros they can assure their taxpayers they won’t be on the hook for. The second compromise is more consequential: the loan to Ukraine will provide only €90 billion over the next two years. €45 billion a year is just half of what the Ukrainians received in combined US/European aid each year from 2022 to 2024, and the war has gotten significantly more expensive since then. We can take the EU’s own projections as evidence of this, because they made detailed calculations when prospectively divvying up the €210 billion in Russian assets:

This chart, which was posted by Politico just two weeks ago based on EC numbers, assumes the war will end in 2026, only covers financing needs (what the Ukrainians can’t pay for themselves), and doesn’t include reconstruction costs, which the World Bank estimates will exceed €500 billion. If the Ukrainians have a €72 billion budgetary hole just for 2026, €45 billion certainly won’t cut it, even factoring in the few billion the IMF and Germany have pledged. As we’ve covered previously, even the €165 billion reparations loan wouldn’t have been enough to cover the Ukrainians for much longer than a year or two. Last month, the Economist calculated the Ukrainians would need a staggering $389 billion (€332B) in external financing over the next four years. The reality is that the Ukrainians need both massive loans from the EU and the Russian assets. Without the latter, they’ll have no choice but to make cuts. If we consider military costs, budgetary deficits, the cost of reconstruction, and Ukraine’s existing external debt, the country likely needs over a trillion euros of financial assistance over the next five to ten years. Although this has been mostly overlooked amidst all the complexity of the reparations loan, the EU is apparently letting go of another major item with this compromise. With the Russian assets totaling €210 billion and the reparations loan plan only giving the Ukrainians €165 billion, what would have happened to the other €45 billion? The Europeans intended to use it to pay themselves back for a loan the G7 issued to the Ukrainians in 2024. The interest on this loan is currently being paid from the profits taken from the frozen Russian assets. Since this loan will now go unpaid, those profits can’t be used to pay the interest on the new one, and European taxpayers will be on the hook for €3 billion a year.

Adding these two loans to Ukraine’s other existing debt obligations, Ukrainian external debt has exploded to $298 billion. This will skyrocket the Ukrainians to fourth place worldwide in debt-to-GDP ratio (assuming Ukraine’s GDP can even meaningfully be calculated), at 155%. The Europeans will hold more than half of this debt while being significantly exposed to international lending institutions like the IMF that hold much of the remainder. If the Ukrainians are unable to pay, the EU has no plan in place to cover the over €130 billion liability other than the European taxpayer. And the loan will have strings attached. The terms of the loan will require continued Ukrainian deference to Western-controlled anti-corruption organs like NABU. And as we’ve covered in the past, European aid to Ukraine won’t do the Europeans much good if their money is funneled to the US for weapons. Although the Ukrainians have repeatedly denounced the idea, the loan will require its money marked for military assistance to be spent on EU-produced weapons, unless the EU produces no viable option for a given need. The Ukrainians have been so resistant to this idea because it greatly limits the quantities and types of weapons they can purchase. With EU states like Italy dropping out of NATO’s PURL program to buy US weapons for Ukraine, procurement options for the AFU are rapidly dwindling. To mitigate the perceived financial burden, the EU has declared that the immobilized Russian assets—which are now frozen indefinitely thanks to the activation of emergency EU powers—will not be released until the Russians pay Ukraine reparations. But this amounts to little more than a loose promise. Because the assets still reside in Euroclear accounts, their immobilization remains sensitive to legal challenges both from the Russians themselves and to the Article 122 invocation. And because the Europeans have no Russian pool of cash to backstop the loan, it’s an effective admission that the EU itself won’t be getting paid back anytime soon, or perhaps ever.

The Western commentariat has had a gloomy reaction to the failure of the reparations loan scheme. The Wall Street Journal’s editorial board called the loan “another half-measure.” A piece in Politico today went further, singling out the failure to pass the reparations loan scheme as an EU defeat that will lead directly to the end of the war in 2026 and an unfavorable peace for Ukraine. The piece cites falling European public support for Ukraine funding (45% of Germans want to cut aid) as a key danger in building support for the future loans Ukraine will need. The Financial Times linked the failure to a deepening rift between Macron and German chancellor Friedrich Merz, while also citing equally concerning divisions around a contentious trade deal that fractured along similar lines. Brookings Institution fanatic Robin Brooks was furious, calling it “a dark day for Europe” and a “disaster.” As responsibility for the war falls solely on Europe’s shoulders, Ukraine’s future is an open question. If this is the best the EU can muster despite all the pressure and politicking, who will pay to rebuild Ukraine when the war is over? Can the EU reasonably expect to keep the war going with half the aid it’s been receiving? And most disturbingly (or it should be, for the EU), who will cough up the hundreds of billions more Ukraine will require over the ensuing years?

LA PAZ, Bolivia (AP) — The streets of Bolivia’s largest cities, La Paz and Santa Cruz, were brought to a standstill on Friday as public transportation workers went on strike against a 100% fuel price increase ordered by the new government in the South American country.

Food and transportation prices soared, and the workers have demanded that officials revoke the fuel increase.

In La Paz, protesters blocked street corners, while in other cities, public transportation was shut down, long lines formed and residents joined the protests with marches.

Protests could spread nationwide in the coming days, if the government doesn’t restore subsidies for gasoline and diesel, said Edson Valdez, a leader of the transportation union.

“The government has given the people the worst Christmas gift,” he said.

“Not only have transportation fares doubled, food prices are through the roof, they’ve risen again,” said Natalia Rodríguez, a homemaker.

People crowded into markets to stock up before prices climb further.

“The decree will not be touched,” Presidency Minister José Luis Lupo said. “It is not negotiable.

“It is a painful measure, but it must be done,” he said. “We will negotiate public service rates, but there is no other way.”

The government delegated to mayors the negotiations over urban fares with drivers.

President Rodrigo Paz, a center-right politician, took office more than a month ago, ending two decades of leftist rule in Bolivia.

“We inherited a country hurt in its economy, hurt in its reserves, without dollars, with rising inflation, without fuel and with a ransacked state,” Paz said.

Lupo said that “these measures close a populist cycle that encouraged waste and corruption, and now it is up to us to stabilize the economy to generate growth.”

According to the Ministry of Economy, accumulated inflation will close the year at 22%, with a fiscal deficit of 12.5% of gross domestic product. Cutting fuel subsidies “will allow savings of $3 billion that will go to investments,” the office said.

Bolivia has imported half of its gasoline and nearly all of its diesel for domestic use and sold it at half price, draining its foreign currency reserves. Fuel shortages have severely affected food production and pushed food prices higher.

The president’s latest measures — which also include a 20% wage increase and the preservation of social bonuses for poor sectors — have received backing from business leaders and the U.S. government.

A delegation of U.S. business leaders met with Paz on Thursday to learn about the government’s plans for investors, while the Legislative Assembly approved an initial $550 million loan from the Andean Development Corp., known by its Spanish acronym CAF, aimed at stabilizing the economy and paying down debt.