Mexico’s incoming financial intelligence chief said it was “shameful” how little had been done about bribes that Brazilian construction firm Odebrecht executives said were paid to secure Mexican public works contracts, and vowed to reexamine the case once in office.

Santiago Nieto will head the finance ministry’s Financial Intelligence Unit, which analyzes suspicious financial records, once the new leftist government takes office on Dec. 1. He said in an interview last week that the unit had been misused for political ends, without elaborating.

“It’s shameful that Mexico and Venezuela are the only countries in Latin America that haven’t sanctioned anyone,” he said of the Odebrecht case, which is at the heart of Brazil’s Lava Jato, or Car Wash, corruption investigation that has reverberated across the region in recent years.

“In the case of Odebrecht, and in any other case, the first thing we would have to do is review what there is in the Financial Intelligence Unit related to the case,” he said. Nieto does not yet have access to files and records kept by the unit.

In Brazil, Odebrecht executives admitted to paying bribes within Mexico. Prosecutors in Mexico have said they are probing business between the Brazilian conglomerate and state oil company Pemex.

Pemex has declined to comment on issues related to Odebrecht, citing the ongoing investigation. The office of Mexico’s attorney general, the finance ministry and the Financial Intelligence Unit all declined to comment for this story. Odebrecht acknowledged receipt of an emailed request for comment, but did not respond further.

Anger at widespread corruption scandals, including the alleged bribes from Odebrecht, a lucrative house deal involving the family of President Enrique Pena Nieto, and hundreds of millions of dollars siphoned from government coffers through fake contracts, helped leftist Andres Manuel Lopez Obrador win a landslide presidential victory in July.

Lopez Obrador pledged in his manifesto to clamp down on financial crime, and tighten money laundering, banking and tax regulations. He has given few details of how he will achieve this, but promises to set an example of probity from the presidency.

Tasked with helping to prevent and fight money laundering and terrorism financing, the financial intelligence unit receives and analyzes information that it should then pass on to prosecutors to investigate and construct a case.

A former lead prosecutor for electoral crimes, Nieto was dismissed in 2017 on the grounds that he broke a code of conduct when he gave an interview about his investigation into Odebrecht bribery during the 2012 presidential campaign.

Nieto has admitted his mistake, but denies breaking rules or revealing sensitive information. He said his firing was illegal.

Last month, two incoming administration officials told Reuters that Odebrecht may be blocked from participating in public works projects under the new government.

Odebrecht responded that wrongdoing at the company should not be used to impose sanctions against it in Mexico.

Corrupt System?

Nieto said he would press for more information sharing between federal departments that investigate tax, electoral and organized crime, and investigate possible corruption within the system.

“I have the impression that there is a factor of internal corruption,” he said, without providing specifics.

The Financial Action Task Force, an international organization that sets global standards for fighting illicit finance, said earlier this year that in Mexico “financial intelligence does not often lead to investigations of money laundering, underlying crimes, and terrorist financing.”

Following the report, Mexico’s finance ministry and the attorney general’s office issued a joint statement recognizing shortcomings and promising to improve efforts.

However, the Mexican government seized just 871 million pesos ($46.3 million) and $14.7 million between September 2017 and June 2018, and began just one criminal proceeding, according to official statistics.

Nieto, who called the outcomes “terrible,” pointed to the financial intelligence unit and attorney general’s office as the two “bottlenecks” holding back cases.

“It is a matter of impunity, a complicit government, and a lack of political will to fight corruption,” Nieto said.
…

When Pearl Jam led 50,000 people in a chant of “Save the Showbox” in a Seattle stadium last month, the rockers confronted a question facing many cities: When do the cultural costs of a property boom become too high?

The Showbox is an 1,100-person venue across the street from Pike Place Market, Seattle’s top tourist attraction. It opened in 1939 and has hosted acts from Duke Ellington to Prince, as well as the hometown grunge pioneers Pearl Jam.

The venue now risks becoming the latest casualty of the Pacific Northwest city’s real estate rush – and many in the community are saying enough is enough.

“Today one of our great cathedrals is at risk of being leveled,” said Ben Gibbard, lead singer of indie rock band Death Cab for Cutie, at a Seattle City Council hearing in August. “It’s not just a music venue, but a cornerstone of our cultural heritage. We cannot allow this vital piece of our rapidly changing city to be snuffed out.”

Historic venues are being crushed by real estate development in cities across Britain and the United States.

London has lost 35 percent of its independent music venues since 2007, according to the mayor’s office.

In 2014, The New York Observer documented eight significant music venues the city lost over the previous decade, beginning with punk icon venue CBGB and ending with the Roseland Ballroom, another pre-World War II concert hall.

Experts say that the trend affects more than just music fans, bands, and others in the industry.

“Music venues are an early canary in the coal mine,” said Shain Shapiro, head of Sound Diplomacy, a Britain-based consultancy firm on music in cities.

“It’s not just about developing our music industry and providing a great night out,” he told the Thomson Reuters Foundation by phone from London. “It improves the quality of life in increasingly denser and denser cities.”

Music or Housing

Interventions by city governments to save historic venues are rare, but the past few years have seen a few – usually in response to public pressure.

Fans of the Showbox were outraged in July when the Onni Group, a real estate developer headquartered in neighboring Vancouver, Canada, filed plans to build a 44-story building where the venue now sits.

A “Save the Showbox” online petition has garnered about 100,000 signatures. They include members of R.E.M., Jamie xx, The English Beat, and other musicians who have performed there.

Supporters packed the city hall hearing in August waving “Save the Showbox” signs.

Last month, the municipal government approved an extension of the Pike Place Market Historic District’s boundaries to incorporate the Showbox, which will be valid for 10 months.

The legislative move means additional scrutiny will apply to any proposed real estate development on the site, even though it is zoned to accommodate a 44-story building.

In response, the owners of the building housing the Showbox filed a $40 million lawsuit against the city of Seattle earlier this month.

The lawsuit noted that halting the project would mean losing $5 million in fees from the developer, which would go towards funding affordable housing.

Showbox supporters argue that the amount of money raised by the project would be paltry and could come from elsewhere.

“What we would be losing culturally is far more valuable than the amount of money that would go toward affordable housing,” Gibbard said in an interview.

City council member Lorena Gonzalez said she intends to submit a plan this month to permanently protect the building housing The Showbox.

Onni Group, the developer, did not reply to a request for comment.

Legal Protection

Authorities in Britain have acted to preserve some well-loved venues, as well as spurring the growth of new ones.

Under British law, developers must sign “Section 106 agreements” before gaining permission to proceed with projects.

Shapiro of Sound Diplomacy said that local governments have leveraged the law to push developers into incorporating live music spaces into their plans.

He pointed to Vicarage Field, a new shopping center in the London district of Barking that will host a music venue.

In Cardiff, Shapiro said, a public outcry last year saved a haven for Welsh-language music called Clwb Ifor Bach.

Developers planned plan to build flats in the live music district, but the City of Cardiff Council eventually purchased the land parcel and leased it to the venue.

“Clwb Ifor Bach is one of the best examples of a direct action that a council has taken,” Shapiro said.
…

China says it has no choice but to retaliate to U.S. President Donald Trump’s 10 percent tariffs on $200 billion in Chinese goods, risking a further escalation of trade tensions between the world’s two biggest economies.

 

In a brief statement posted online Tuesday, China’s Commerce Ministry said, “To protect its legitimate rights and interests and order in international free trade, China is left with no choice but to retaliate simultaneously.”

 

The statement did not say how China might respond. China has previously said it would respond with a list of tariffs that includes products from liquified natural gas to aircraft.  On Monday, the Communist Party backed Global Times newspaper warned that if Trump went ahead with the tariffs, China would not just play defense.

 

At about the same time the Commerce Ministry statement was released, a research director for North America and the Pacific at the Commerce Ministry also delivered a commentary on China’s state-run CCTV news network.

 

The official said the latest round of tariffs have brought uncertainty to ongoing efforts for representatives from both countries to meet again and hold trade talks.

 

“Under the party’s strong central leadership, China has the resolve and confidence to press ahead and use deeper reforms and deeper opening up as well as the development of our domestic market to counter United States unilateralism,” Li Wei said.

 

Foreign Ministry spokesman Geng Shuang told a daily briefing Tuesday in Beijing that talks are the only correct way to resolve the issue and accused the United States of being insincere.  Last week, the United States extended an invitation to China’s top negotiator, Liu He, to resume talks later this month in Washington.

 

“As for what measures China may take in response, that will be announced at an appropriate time,” Geng said.

 

The $200 billion in U.S. tariffs go into effect in less than a week, on September 24, leaving the two sides little time to sit down.

 

On Monday, President Trump warned, in a statement announcing his move, if China retaliates against U.S. farmers or other industries, Washington “will immediately pursue phase three, which is tariffs on approximately $267 billion in additional imports.”

The additional $267 billion in tariffs is expected to cover all Chinese imports to the United States.

American and European businesses operating in China say that if Washington presses ahead with more and more tariffs, it is likely to only add to the challenges businesses are already facing.

 

According to surveys conducted by the American Chamber of Commerce in China and the European Chamber of Commerce, trade tensions are already hitting and hurting supply chains of foreign businesses.  Some companies have begun to move manufacturing away from China and the United States to avoid the impact of growing trade tensions, the European Chamber said.

 

European Chamber President Mats Harborn said engagement on the part of Washington and Beijing is the answer.

 

He said that what the United States is doing now is “economic madness” that risks creating a vicious cycle for business that could have an impact in China and elsewhere.  But the root of the trade dispute is that China’s reform is lagging behind its development, creating a “reform deficit.”

 

“Closing the reform gap will create better private companies in China, foreign companies,” Harborn said.  “And reducing the reform deficit should also help reduce tensions in the ongoing trade war.”

 

In its annual position paper on European business in China, the chamber lists 828 recommendations for Chinese authorities to address that deficit.

 

One of the key hurdles both private Chinese enterprises and foreign companies face is the dominant position state owned enterprises (SOEs) enjoy.  State owned enterprises account for around 30 percent of the economy and yet enjoy nearly 70 percent of all financing, the report said.

 

Unfair trade practices and the way SOEs contribute to an unbalanced playing field in China are key elements of the investigation the Trump administration carried out prior to launching its first round of tariffs.

 

But how far China is willing to go to change is uncertain.  Later this month, a meeting on SOEs will be held that many are expecting will be an indicator of the future course China’s Communist Party leaders plan to chart.

 

“We hear that there is a move to make the SOEs stronger, bigger and better,” Harborn said.  “Such ambitions are hindering the further opening and development of the vibrant private Chinese sector.”

 

If reform of SOEs is not on the agenda at the meeting, that would be seen as a clear provocation, given the current climate, he said. 

 

 

 

 
…

Africa has the globe’s fastest-growing youth population as well as 10 of the poorest countries, a volatile combination that warrants making it “the world’s most important priority for the foreseeable future.”

The Bill & Melinda Gates Foundation lays out that argument in its second annual report on progress toward sustainable development goals set by the United Nations for 2030. This Goalkeepers Data Report, released Tuesday, urges targeting Africa with the same kind of investment intensity that lifted once-poor China and India into the ranks of middle-income nations.

Sixty percent of Africans are younger than 24, numbers that Melinda Gates emphasized in a phone interview earlier this month with VOA’s English to Africa Service.

“If the world makes the right investments in health and nutrition and education,” she said, it could unleash the potential of “an amazing generation that has unbelievable ingenuity.”    

The report notes that while the youth population is booming in Africa, it’s shrinking elsewhere in the world. For example, the median age is 19 in Africa – and 35 in North America. Populations are expected to soar by 2050 in the 10 poorest countries: Benin, Burundi, Central African Republic, Democratic Republic of Congo, Madagascar, Malawi, Nigeria, Somalia, South Sudan and Zambia.

Melinda Gates described the foundation as a “catalytic wedge,” whose investments can fuel beneficial projects and programs.

“We start getting things going” with many partners on the ground “working in culturally, contextually sensitive ways,” she said. “We take some risks, but ultimately it’s the governments who scale them up, and that work is done in deep partnership with many people around the globe.”

The Gates Foundation is the biggest of U.S. funders aiding Africa, such as the Ford, Rockefeller, Conrad N. Hilton, Carnegie and Open Society foundations,  Inside Philanthropy reported in 2016. Earlier this year, the news website observed that charitable giving by Africans is growing, too.    

To date, the Gates Foundation has invested more than $15 billion “in projects relevant to Africa,” the Gatekeepers report says, while promising to spend more. It has targeted three areas for investment: health, education and agriculture.

Health: The foundation subsidizes a range of health programs, from childhood vaccination and good nutrition, but it gives special attention to family planning and HIV interventions.

Among countries that have risen economically, “every one of them allowed voluntary access to contraceptives to women,” Gates told VOA. “We know if men and women can space the births of their children … there are more opportunities then for those children and their families. Girls can stay in school” and, when educated, are better able to provide for their families.

“Those people create amazing opportunities and new jobs in the economy,” Gates added.

The U.S. government is the biggest donor in global family planning and reproductive health, according to the Kaiser Family Foundation (KFF), a nonprofit focused on health issues. U.S. spending on that front was at $608 million in fiscal year 2018, though the Trump administration has proposed reductions for 2019. Funding levels can reflect domestic and international political debates, especially over abortion, KFF’s website notes. It adds that, since 1973, the government has banned “direct use of U.S. funding overseas for abortion as a method of family planning. …”

The report praised Rwanda for building “an effective health system” that has brought about “the steepest drop in child mortality ever recorded.” In 2005, the country recorded 103 deaths per 1,000 lives births; a decade later, the death rate dropped to 50.

As for HIV infections, the report acknowledged progress in Zimbabwe, where a fourth of all adults were infected in 1997, the peak year of the epidemic.

“Since 2010, new infections are down by 49 percent, and AIDS-related deaths are down by 45 percent,” it noted. But it warned that the youth boom could bring a reversal without continued support for treatment and prevention methods.

Education: While school enrollment and literacy rates have improved, as the United Nations reports, that’s not enough.

“We need to get the quality of education to come up, much like Vietnam has done,” Melinda Gates told VOA.

Students in that country, labeled as low income until 2010, ranked among the best in the world in science in the Paris-based Organization for Economic Cooperation and Development’s most recent assessment of 15-year-olds.

Agriculture: “… We need to make sure that we help countries move from subsistence farming to making real investments” supporting larger-scale operations so people can feed themselves, Gates said. 

Ghana provides a good example, she and the report noted.

With its current agricultural productivity and innovations such as new hybrid varieties of maize, the country’s “poverty rate is projected to fall from 20 percent in 2016 to 6 percent in 2030.”

But, the report observed, “There is ample room for Ghana’s agrifood system to keep developing.” For example, “cocoa, the country’s main export crop, is sold raw and processed outside the country. Meanwhile, almost half of all processed foods consumed in Ghana are imported.” Buying food processed in Ghana would keep more money in the country and generate jobs, it said.   

Since 2000, more than a billion people have risen from extreme poverty, a level that the World Bank sets at $1.90 a day. Melinda Gates attributed that rise to “investments the world made systematically in human capital: in health, in education, in agriculture. …

“A lot of the gains that we’ve seen can drop back, particularly with a growing population,” she said. “So our message to the world is keep your foot on the gas. Keep the accelerator going.”
…

The Asian Development Bank said on Tuesday it is expanding its presence in the Pacific islands, at a time of competition for influence there, opening seven new country offices and expecting its loans and grants in the region to top $4 billion by 2020.

The pledge from the Japan-led bank comes amidst a vigorous new campaign by the United States and its allies to check China’s rising sway in the region, where it has sought deeper diplomatic ties and emerged as the second-largest donor.

The battle for influence in the sparsely populated Pacific matters because each of the tiny island states has a vote at international forums like the United Nations, and they also control vast swathes of resource-rich ocean.

The ADB said it will open offices in the Cook Islands, Micronesia, Kiribati, the Marshall Islands, Nauru, Palau, and Tuvalu, as well as expand missions in Samoa, the Solomon Islands, Tonga and Vanuatu.

“The new country offices will allow ADB to have more regular contact and substantive communication with government and development partners,” the bank said in a statement.

Its overall assistance to the Pacific, which stands at $2.9 billion, is expected to surpass $4 billion by 2020, it added, with the money destined for economic and social development projects and disaster resilience.

China has likewise pledged to keep lending to a region where it says its aid is supporting sustainable development.

However, it has spent $1.3 billion on concessionary loans and gifts since 2011, stoking concern in the West that several tiny nations could end up overburdened and in debt to Beijing.

Australia in particular, which has long viewed the Pacific as its backyard, has been critical of some Chinese aid projects, and a former foreign minister has warned that the lending could undermine the long-term sovereignty of recipients.
…

With his popularity ratings in freefall, French President Emmanuel Macron is counting on a rebound in family purchasing power to keep voters from turning against his reforms.

Macron’s government has lined up several tax cuts taking effect in the coming months that should boost the closely tracked measure of disposable income in France.

It could hardly come at a better time for Macron, with many voters saying the former investment banker has spent his first year in office cutting taxes for the wealthy and big companies.

More purchasing power was the single biggest priority in voters’ eyes, well ahead of cutting unemployment or the tax burden, according to a Kantar Sofres poll released on Sunday.

Squeezed by tax hikes on petrol and tobacco as well as oil price-driven inflation, household spending has floundered this year whereas it is traditionally the single biggest source of growth, accounting for 52 percent of economic output.

But next month workers will see a cut in payroll tax they pay to fund jobless insurance and the health system, followed by a cut in a city tax for all but the wealthiest in November.

“We are gradually going to improve French workers’ purchasing power,” Finance Minister Bruno Le Maire told LCI television on Monday. “We are going to make work pay better. The French are going to see the fruit of these policies in the coming months.”

Consumer relief

With a solid parliamentary election behind him, Macron faced little resistance in his first year in office to a major overhaul of the labour code and the scrapping of the wealth tax.

But it earned him a reputation as a “president of the rich” that has been hard to shake off. A summer scandal over his bodyguard beating May Day protesters has further dented his image, and a popular environment minister resigned live on radio over frustration that Macron’s agenda was not green enough.

With his popularity ratings at all time lows, Macron needs to rebuild political capital before he launches what are set to be contentious reforms to unemployment insurance and the pension system next year, while also trying to cut public spending.

In addition to tax cuts this year, Macron’s government has pledged to scrap payroll tax next year on overtime work and profit participation schemes in small firms.

The central bank said in its latest economic outlook on Friday that the stars were aligned for a rebound in purchasing power starting at the end of this year and into 2019.

“We’re expecting about 200,000 [job creations] this year, that should translate into purchasing power for the French,  especially with inflation due to fall,” Bank of France governor Francois Villeroy de Galhau told Europe 1 radio.

The government is counting on the rebound to help the economy grow 1.7 percent next year. While the central bank is optimistic about the outlook for disposable income, it is only expecting GDP growth of 1.6 percent.

Meanwhile, despite the planned tax cuts, questions linger over whether households will actually feel any better off.

From January, taxes will be automatically deducted from people’s monthly pay slip, leaving those who are not already on a monthly plan – about 40 percent of taxpayers — with smaller net take-home pay.

Meanwhile, since the government’s measures to boost purchasing power mainly benefit workers, retirees are likely to be left out. Additionally, while the government has said it will raise the state pension next year it will do so by less than the rate of inflation so as to save money.
…

A top economic adviser to President Donald Trump said on Monday he expects U.S. budget deficits of about 4 to 5 percent of the country’s economic output for the next one to two years, adding that there would likely be an effort in 2019 to cut spending on entitlement programs.

“We have to be tougher on spending,” White House economic adviser Larry Kudlow said in remarks to the Economic Club of New York, adding that government spending was the reason for the wider budget deficits, not the Republican-led tax cuts activated this year.

Kudlow did not specify where future cuts would be made.

“We’re going to run deficits of about 4 to 5 percent of GDP for the next year or two, OK. I’d rather they were lower but it’s not a catastrophe,” Kudlow said. “Going down the road, of course we’d like to slim that down as much as possible and we’ll work at it.”

He stated that the biggest factor for revenue was economic growth rate. A quicker pace of growth will bring in more revenue, Kudlow said, and Trump’s economic policies were aimed at boosting the U.S. growth rate.

Kudlow also said he did not expect Congress would be able to make the Trump administration’s recent individual tax cuts permanent before the Nov. 6 midterm congressional elections.

“I don’t think it will get through the whole Congress” before the election, he said, but added that making the personal tax cuts permanent “is a good message” and disagreed with forecasts that they would further increase budget deficits.
…

More than half of all workplace tasks will be carried out by machines by 2025, organizers of the Davos economic forum said in a report released Monday that highlights the speed with which the labor market will change in coming years.

The World Economic Forum estimates that machines will be responsible for 52 percent of the division of labor as share of hours within seven years, up from just 29 percent today. By 2022, the report says, roughly 75 million jobs worldwide will be lost, but that could be more than offset by the creation of 133 million new jobs.

A major challenge, however, will be training and re-training employees for that new world of work.

“By 2025, the majority of workplace tasks in existence today will be performed by machines or algorithms. At the same time a greater number of new jobs will be created,” said Saadia Zahidi, a WEF board member. “Our research suggests that neither businesses nor governments have fully grasped the size of this key challenge of the Fourth Industrial Revolution.”

The “Future of Jobs 2018” report, the second of its kind, is based on a survey of executives representing 15 million employees in 20 economies. Its authors say the outlook for job creation has become more positive since the last report in 2016 because businesses have a better sense of the opportunities made possible by technology.

The WEF said challenges for employers include enabling remote work, building safety nets to protect workers, and providing reskilling for employees. However, the report found that only one in three respondents planned to reskill at-risk workers.

Despite net positive job growth, the WEF anticipates a “significant shift in the quality, location, format and permanency of new roles. Businesses are to expand use of contractors for task-specialized work, engage workers in more flexible arrangements, utilize remote staffing, and change up locations to get access to the right talent.

The report said nearly half of all companies expect their full-time workforces to shrink by 2022, while nearly two in five expect to extend their workforce generally, and over one-quarter expect automation to create new roles in their enterprises.

Germany’s powerful DGB trade union association warned against too rapid change in the world of work.

“People, whether they’re workers or consumers, will only accept and tolerate the consequences if technology serves them — and not they it,” Reiner Hoffmann told daily Welt in reaction to the WEF report.
…

Aid money urgently needs to be redirected to the poorest countries in order to reach the United Nations’ goal of ending extreme poverty by 2030, according to a report.

The London-based Overseas Development Institute (ODI) says middle-income countries receive more aid than the 30 poorest nations. It also warns that at least 400 million people will still be living on less than $1.90 a day, despite government pledges to eliminate all extreme poverty.

In northern Ethiopia, teams of workers dig irrigation channels through orchards and grain fields. Such projects have turned arid plains into fertile farmland, which has quadrupled agricultural production.

The report from the ODI credits Ethiopia’s “Productive Safety Net Program,” launched in 2005, with lifting 1.4 million people out of extreme poverty. It also enabled Ethiopia to avoid another famine during severe droughts in 2010 and 2015.

In contrast, neighboring Uganda has seen extreme poverty levels rise recently, after a rapid reduction in previous years.

“One of the reasons is because climate change is starting to have an impact in that country,” said Marcus Manuel, author of the ODI report. “Now in Ethiopia, they’ve managed, with a lot of support partly from the U.S., to have programs that support farmers when a sudden climate or weather event happens. In Uganda, they didn’t. So when they had a drought, that led to a real increase in poverty. So it’s a matter of having the right systems in place.”

Ethiopia’s program, the largest of any low-income country, pays beneficiaries to work on public works projects such as irrigation, roads, schools and health clinics, which helps to create long-term poverty relief.

Such programs are vital in ending extreme poverty, according to the ODI report. The report says there is an annual funding shortfall of $125 billion in the three core sectors of education, health and what it terms social protection transfers, or welfare.

“You need to do economic growth to do part of things, and you also need investment in the social sectors,” Manuel said. “You need to have both sides of the coin to make this work. Donors are investing both in growth and in social sectors, but they’re not investing it in the right countries to nearly the extent that’s needed. And, in particular, in this report we’ve identified 29 countries which can’t afford the investment needed in the social sectors and donors are not giving enough money to that group of countries.”

The statistics show middle-income countries receive more aid than poorer countries, whose share of global aid has fallen over the past six years from 30 percent to 24 percent.

In addition to better aid allocation, the report says more donor nations need to reach the U.N. goal of allocating at least 0.7 percent of gross domestic product to aid budgets. Without urgent action, the authors warn the goal of eliminating extreme poverty by 2030 will remain out of reach.
…

U.S. President Donald Trump has instructed aides to proceed with tariffs on about $200 billion more in Chinese products, despite Treasury Secretary Steven Mnuchin’s attempts to restart talks with China about resolving the trade war, Bloomberg reported on Friday.

Reuters could not immediately verify the report, which had an immediate effect on financial markets. It led U.S. stocks to trade lower, fueled drops in the Chinese yuan in offshore trading and gains in the dollar index, and sent the S&P 500 index negative.

The step comes exactly one week since Trump raised the possibility of duties on the $200 billion of imports and also threatened tariffs on $267 billion worth of goods. Trump has already levied duties on $50 billion worth of Chinese goods.

The United States only imported $505 billion in goods imported from China last year. But 2018 imports from China through July were up nearly 9 percent over the same period of 2017, according to U.S. Census Bureau data.
…

The Turkish central bank caught international markets by surprise Thursday as it aggressively hiked interest rates in an effort to strengthen consumer confidence, stem inflation and rein in the currency crisis. 

Interest rates were increased to 24 percent from 17.75 percent, which is more than double the median of investor predictions of a 3 percent hike. The Turkish lira surged above 5 percent in response, although the gains subsequently were pared back.

International investors broadly welcomed the move. “TCMB [Turkish Republic Central Bank] did show resolve in hiking the one-week repo rate substantially and going back to orthodoxy,” chief economist Inan Demir of Nomura International said.

The central bank had drawn sharp criticism for failing to substantially raise interest rates to rein in double-digit inflation and an ailing currency. The lira had fallen by more than 40 percent this year.

The rate hike is an apparent rebuke to Turkish President Recep Tayyip Erdogan, who has been opposed to such a move.

Only hours before the central bank decision, Erdogan again voiced his opposition to increasing interest rates. The Turkish president reiterated his stance of challenging orthodox economic thinking, arguing that inflation is caused by high rates, although that runs contrary to conventional economic theory. Erdogan also issued a presidential decree banning all businesses and leasing and rental agreements from using foreign currency denominations.

The central bank indicated further rate hikes could be in the offing. “Tight stance monetary policy will be maintained decisively until inflation outlook displays a significant improvement,” the central bank statement reads.

The strong commitment to challenge inflation was welcomed by investors. “Most importantly, the CBT seemed to be vocal about price stability risks,” wrote chief economist Muhammet Mercan of Ing bank.

‘Crazy’ spending

Fueled by August’s sharp fall in the lira, which drove up import costs, inflation is on a rapid upward trajectory. Some predictions warn inflation could approach 30 percent in the coming months.

While international markets are broadly welcoming the central bank’s interest rate hike, economist Demir warns more action is needed.

“This rate hike does not undo the damage inflicted on corporate balance sheet, and market concerns about geopolitics will remain in place. So this is not the hike to end all problems,” said Demir.

The World Bank and IMF repeatedly have called on Ankara to rein in spending, which they say is fueling inflation. Perhaps in response, Erdogan has announced a freeze on new state construction projects.

In the past few years, he has embarked on an unprecedented construction boom, including building one of the world’s largest airports and a multibillion-dollar canal project in Istanbul, which the president himself described as “crazy.”

Trade tariffs

Investors also remain concerned about ongoing diplomatic tensions between Ankara and Washington. The two NATO allies remain at loggerheads over the detention on terrorism charges of American pastor Andrew Brunson.

Brunson’s detention saw U.S. President Donald Trump impose trade tariffs on Turkey, which triggered August’s collapse in the lira. Trump has warned of further sanctions.

“If we somehow sort out our problems with the United States and adopt an orthodox austerity program, we may find a way out of this mess,” said political analyst Atilla Yesilada of Global Source Partners.  “Turkey is a country that has a net foreign debt of over $400 billion, and where 40 percent of [Turkish] deposits are in foreign currency, so the game could be over in a day.”

Turkey has a long tradition of carrying out business in foreign currencies to mitigate the threat of inflation and a falling lira. The growing danger of the so-called “dollarization” of the economy and the public abandonment of the lira are significant risks to the currency.

Turkish companies are paying the cost for the depreciation of the lira. Analysts estimate about $100 billion in foreign currency loans have to be repaid by the private sector in the coming year. Companies and individuals borrowing in local currency, however, will be facing higher repayments. And most analysts predict the Turkish economy is heading into a recession.

Economist Demir says, though, that the situation could have been far worse.

“In the absence of an [interest rate] hike, the rollover pressures on banks would get even worse, damage on corporate balance sheets would intensify, and local deposit holders’ confidence would have weakened further. So this hike, although it doesn’t eliminate other risks, eliminates some of the worst outcomes for the Turkish economy,” he said.

Thursday’s rate hike appears to have bought time for the Turkish economy and the nation’s besieged currency. Analysts say investors are watching to see if Turkey’s decision-makers use that time wisely.
…

A new report by Transparency International suggests foreign bribery is alive and well. 

The report, by the Berlin-based, anti-corruption watchdog, suggests little has changed in recent years in the way governments enforce their anti-bribery laws. Today, only seven major exporting countries actively crack down on companies that offer bribes to foreign officials in exchange for favorable business deals.

The United States is one of the seven countries, which together account for 27 percent of world exports, Transparency International said. The others are Germany, Israel, Italy, Norway, Switzerland and the United Kingdom. 

2016 a record year

Between 2014 and 2017, the United States launched at least 32 investigations, opened 13 cases and concluded 98 cases involving foreign bribery, according to the report. Enforcement activity surged in 2016, resulting in a record $2.5 billion in penalties levied by U.S. authorities. 

Among several high-profile foreign graft cases adjudicated in the United States, the report cited a case in which British aircraft engine maker Rolls-Royce payed law enforcement authorities in the United States, Britain and Brazil $800 million in 2017 to resolve allegations of bribing officials in at least a dozen countries over more than two decades

The report rated the performance of 44 major exporting countries, including 40 nations that have signed the Organization of Economic Cooperation and Development’s (OECD) Anti-Bribery Convention. The 1997 compact requires signatories to make it a crime for companies and individuals in their countries to bribe foreign officials. 

Transparency International’s last report on the topic, released in 2015, listed just four countries with active anti-foreign bribery law enforcement: Germany, Switzerland, Britain and the U.S.

But the elevation of Israel, Italy and Norway to the ranks of countries with vigorous anti-foreign bribery enforcement was offset by declining levels of enforcement in four other countries: Austria, Canada, Finland and South Korea. 

“Disappointingly, there has been little change in the overall enforcement level (taking the share of world exports into account) since the last report,” the report said. 

‘Limited’ enforcement

Of the 44 countries examined by Transparency International, four — Australia, Brazil, Portugal and Sweden  had “moderate” anti-foreign bribery law enforcement; 11 had “limited” enforcement, while 22, including Russia and China, had “little to no” enforcement. Argentina, Brazil and Chile were among countries that improved their enforcement. 

For the first time, Transparency rated the performance of China, Hong Kong, India and Singapore — all non-OECD members that have not signed the organization’s anti-graft convention — and put them all in its lowest rung of enforcement. 

Concern about Chinese corporate bribery of foreign officials has heightened since Beijing rolled out its ambitious Belt and Road Initiative in 2013. But Transparency said there were no known foreign bribery cases or investigations brought by the Chinese government between 2014 and 2017. 

The watchdog said that China has recently “signaled” that it may focus more on foreign bribery enforcement, noting that Beijing and the World Bank held a symposium last year that focused, in part, on corruption risks associated with Belt and Road projects. 

‘Naive’ suggestion

To close the enforcement gap, Transparency recommended that all four sign the OECD convention.

Stuart Gilman, a former head of the United Nations global program against corruption, called the recommendation “naive.”

For China and Russia, “corruption and whatever way they can influence other governments is, in effect, part of their foreign policy,” Gilman said. “I think in my discussions with Chinese officials — not officially but reading between the lines — they see it as one among many tools to extend the influence of China around the world, from the Silk Road to Africa to other areas of the world.”
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Labor unions and social groups blocked streets in downtown Buenos Aires on Wednesday, with more marches planned over the days ahead over   austerity measures proposed by the government and backed by the International Monetary Fund.

Protesters are angry about the belt-tightening policies, which are cutting services to low-income Argentines already walloped by inflation of 31 percent and climbing.

But Argentine leader Mauricio Macri says he needs to carry out such measures to regain investors’ confidence by reducing the country’s fiscal deficit.

The outlook for Latin America’s third biggest economy is grim, according to orthodox and left-leaning economists alike.

Planned cuts to public utility subsidies, forcing Argentines to pay more for transportation and electricity, are expected to keep upward pressure on consumer prices for the rest of 2018.

“The day to day uncertainty is getting worse,” said protester Gabriela Gil, a 49-year-old mother of five.

The year will close with inflation at more than 40 percent, according to economists’ forecasts. Hardest hit are low-income families that spend a high proportion of their income on food.

“The poorest people in the country are on the verge of hunger,” said Daniel Menendez, a spokesman for Barrios de Pie, one of the groups that helped organized the march.

Fiscal medicine

Measures aimed at taming inflation, like the central bank’s 60 percent monetary policy rate, have helped push the economy into recession by choking off credit. Stimulus spending that might pep up the economy would dash Macri’s promise of bringing the primary fiscal deficit to zero next year. The previous 2019 deficit target was 1.3 percent of gross domestic product.

Economy Minister Nicolas Dujovne said earlier this month that it was weakness on the country’s “fiscal flank” that prompted a run on the peso in August. The currency fell 26 percent last month alone and has lost more than half its value so far in 2018.

On Tuesday, the peso wobbled 1.4 percent lower to close at 38.5 per dollar.

Having signed a $50 billion standby financing deal with the IMF in June, the slide in the peso prompted Macri’s administration to pledge deeper spending cuts to secure an early release of funds.

The revamped fiscal targets are being hammered out in Washington and will be part of the 2019 budget bill that Macri is expected to send to Congress over the days ahead.

“What we are seeing in asset prices in Argentina is that people are not giving them the benefit of the doubt,” Daniel Osorio, president of New York-based consultancy Andean Capital Advisors, said in a telephone interview.

With investors demanding that the government stand by its budget-cutting program, some economists say the bitter fiscal medicine called for by the IMF might prove worse than the recession and high inflation that are already ailing Argentina.

“The financial markets have closed for the country. Argentina’s government is responding by attempting a much more drastic fiscal adjustment,” said Martin Guzman, an economist at Columbia University Business School. “My view is that such a measure will lead to another recession in 2019.”
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The median U.S. household income reached $61,372 last year — its highest level ever, the U.S. Census reported Wednesday.

The new median figure, meaning that half of U.S. families earned more money and half less, was a reflection of the robust U.S. economy, the world’s largest, that expanded 4.1 percent in the April-to-June period even as the unemployment rate held steady in August at 3.9 percent. The 2017 household income was 1.8 percent higher than the $60,309 figure in 2016.

Middle-class income in the U.S. has been expanding in recent years as the country continues its recovery from the steep recession of a decade ago — a time when millions of people lost their jobs, and many lost their homes through foreclosure when they no longer had enough money to make monthly home loan payments.

Now, one Census official said, many Americans are moving from part-time to full-time work, adding to their financial well-being.

With the income improvement, the Census said that 12.3 percent of the 328 million Americans are living in poverty, a slight improvement from the 12.7 percent figure in 2016. It said 8.8 percent of Americans are without health insurance coverage, the same figure as the year before.
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South Korea’s unemployment rate hit an eight-year high in August as mandatory minimum wages rose, adding to economic policy frustrations and political challenges for President Moon Jae-in whose approval rating is now at its lowest since inauguration.

The unemployment rate rose to 4.2 percent in August from 3.8 percent in July in seasonally adjusted terms as the number of unemployed rose by 134,000 people from a year earlier.

This was the labor market’s worst performance since January 2010, when the economy was still reeling from the global financial crisis, when 10,000 jobs were lost.

Finance Minister Kim Dong-yeon said on Wednesday the government will need to adjust its wage policies, signaling some future soft-pedaling in the drive to raise minimum wages.

“(The government) will discuss slowing the speed of minimum wage hikes with the ruling party and the presidential office,” Kim Dong-yeon told a policy meeting in Seoul, adding he did not expect a short-term recovery in the job market.

Experts say the uproar over jobs could also cost Moon considerable political capital as he pursues closer ties with Pyongyang, as any good news from an inter-Korean summit may not be enough to offset public discontent over the lack of jobs and soaring housing prices.

More than 60 percent of respondents in a Gallup Korea survey criticized Moon’s handling of the economy, including his ‘inability to improve the livelihoods of ordinary citizens’ and ‘minimum wage increases.’

The jobs report showed the labor-intensive retail and accommodation sector, which lost 202,000 jobs in August from a year earlier, was the hardest hit.

A total 105,000 jobs were lost from manufacturing industries, the report said.

However, the agriculture, construction and transport sectors saw a rise in the number of employed, partly offsetting the rise in the number of workers laid off.

The overall number of employed people rose by just 3,000 – also the worst since January 2010.

Each month’s worsening jobs report has sparked a strong public backlash, with President Moon Jae-in’s approval rating falling below 50 percent for the first time on Sept. 7.

A weekly Gallup Korea survey released on Friday showed Moon’s support fell 4 percentage points to 49 percent, the lowest since he took office in May 2017.

“At this rate, we may not see any gains in the number of employed in September or the month after that,” said Oh Suk-tae, an economist at Societe Generale.

Oh said economists at the Korea Development Institute, a state-run think tank, believed this year’s 16 percent increase in the minimum wage – the biggest jump in nearly two decades – was discouraging employers from hiring.

“The president should be held responsible for this, nothing could change the trend unless the boss changes his mind about minimum wage hikes,” Oh said.

The workforce participation rate declined slightly to 63.4 percent from 63.6 percent in July, as more jobs were lost than created, Statistics Korea data showed.

 
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In Iraq, a major Middle East grain buyer, will cut the irrigated area it plants with wheat by half in the 2018-2019 growing season as water shortages grip the country, a government official told Reuters.

Drought and dwindling river flows have already forced Iraq to ban farmers from planting rice and other water-intensive summer crops. Water scarcity was one of the issues galvanizing street protests in the country this year.

An investigation by Reuters in July revealed how Nineveh, Iraq’s former breadbasket, was becoming a dust bowl after drought and years of war.

This latest move is likely to significantly raise wheat imports.

Deputy Agriculture Minister Mahdi al-Qaisi said irrigated land grown with winter grains, namely wheat and barley, would be halved.

“The shortage of water resources, climate change and drought are the main reasons behind this decision, our expectation is the area will shrink to half,” Qaisi said in an interview.

Iraq’s agricultural plan included 1.6 million hectares of wheat last 2017-2018 season. Of those, around one million hectares were irrigated and the rest relied on rainfall.

“We expect that the irrigated wheat area falls to half of what it was last year,” Qaisi said, implying plantings of 500,000 hectares.

The cut is expected to lower the country’s wheat production by at least 20 percent, implying a significantly higher import bill Fadel al-Zubi, the U.N. Food and Agriculture Organization Iraq Representative said.

Iraq already has an import gap of more than one million tonnes per year, with annual demand at around 4.5 million to 5 million tons.

“Imports will go up as a result of cutting down on production and also as a result of population increase,” Zubi said but he declined to give an exact estimate for size of imports next year.

Haidar al-Abbadi, the head of Iraq’s General Union of Farmers, confirmed the cut saying water shortage was the main reason behind it.

“Irrigated wheat will reach 2 million donhums (500,000 hectares) down from around 4 million last season,” he said.

Qaisi said it was too early to tell the area of land that could be grown with wheat relying on rainfall this season but he hoped it would make up for some of the shortfall.

“We will follow a few programs to increase the crop, like raising yields and bringing Nineveh province back to more production … that can partly make up for shortfall,” he said.

But the rains failed Iraq’s Nineveh last season with the government procuring a little over 100,000 tonnes of wheat this year from a region that used to produce close to one million tons annually before Islamic State took over in 2014.

Iraq imports wheat to supply a rationing program created in 1991 to combat U.N. economic sanctions, including flour, cooking oil, rice, sugar and baby milk formula.

The trade ministry is responsible for procuring strategic commodities, including wheat, for the program.

Trade ministry officials were not immediately available for comment on a potential rise in imports.
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Residents in a Bangkok neighborhood are trying out a renewable energy trading platform that allows them to buy and sell electricity between themselves, signaling the growing popularity of such systems as solar panels get cheaper.

The pilot project in the center of Thailand’s capital is among the world’s largest peer-to-peer renewable energy trading platforms using blockchain, according to the firms involved.

The system has a total generating capacity of 635 KW that can be traded via Bangkok city’s electricity grid between a mall, a school, a dental hospital and an apartment complex.

Commercial operations will begin next month, said David Martin, managing director of Power Ledger, an Australian firm that develops technology for the energy industry and is a partner in the project.

“By enabling trade in renewable energy, the community meets its own energy demands, leading to lower bills for buyers, better prices for sellers, and a smaller carbon footprint for all,” he said.

“It will encourage more consumers to make the switch to renewable energy, as the cost can be offset by selling excess energy to neighbors,” he told the Thomson Reuters Foundation.

Neighborhoods from New York to Melbourne are upending the way power is produced and sold, with solar panels, mini grids and smart meters that can measure when energy is consumed rather than overall consumption.

The World Energy Council predicts that such decentralized energy will grow to about a fourth of the market in 2025 from 5 percent today.

Helping it along is blockchain, the distributed ledger technology that underpins bitcoin currency, which offers a transparent way to handle complex transactions between users, producers, and even traders and utilities.

Blockchain also saves individuals the drudgery of switching between sending power and receiving it, said Martin.

For the pilot in Bangkok’s upmarket Sukhumvit neighborhood, electricity generated by each of the four locations will be initially used within that building. Excess energy can be sold to the others through the trading system.

If there is a surplus from all four, it will be sold to the local energy storage system, and to the grid in the future, said Gloyta Nathalang, a spokeswoman for Thai renewable energy firm BCPG, which installed the meters and solar panels.

Thailand is Southeast Asia’s leading developer of renewable energy, and aims to have it account for 30 percent of final energy consumption by 2036.

The energy ministry has encouraged community renewable energy projects to reduce fossil fuel usage, and the regulator is drafting new rules to permit the trade of energy.

The Bangkok Metropolitan Electricity Authority forecasts “peer-to-peer energy trading to become mainstream for power generation in the long run,” a spokesman told reporters.

BCPG, in partnership with the Thai real estate developer Sansiri, plans to roll out similar energy trading systems with solar panels and blockchain for a total capacity of 2 MW by 2021, said Gloyta.

“There are opportunities everywhere – not just in cities, but also in islands and remote areas where electricity supply is a challenge,” she said.
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Policymakers in Indonesia are grappling to deal with a weakened currency, the rupiah, which was valued at just 14,930 per U.S. dollar last week — its lowest point since the 1998 Asian financial crisis. But unlike 20 years ago, when economic turmoil led to major political upheaval in Indonesia, most observers say that Southeast Asia’s largest economy is now far better positioned to endure a poorly performing currency.

The United States Federal Reserve’s planned interest rate hikes have impacted emerging markets worldwide as investors sell assets in countries such as Indonesia in favor of American ones. The Argentine peso and Turkish lira both crashed in late August, crises that sent major shockwaves across developing economies. President Donald Trump’s trade war with Beijing has also seen a devaluation of the Chinese yuan.

These external factors have badly hit the Indonesian rupiah, already one of the weakest currencies in Asia. According to Bloomberg, the rupiah has lost around 9 percent of its value against the greenback during 2018. Like Turkey and Argentina, Indonesia also has a so-called “twin” deficit, meaning it is running both fiscal and current account deficits.

“Indonesia obviously is one of the frontline currencies alongside the Indian rupee and the Philippine peso, these are the three currencies most battered among the regional pack… in the latest turmoil,” said Prakash Sakpal, an economist from ING in Singapore.

Stronger 20 years on

In the late 1990s, the collapse of the rupiah exacerbated a severe economic crisis, which led to the fall of Indonesia’s longtime dictator Suharto.

“We know what we face with the rupiah is a really, really important problem,” the head of Research at the Jakarta-based brokerage and investment management firm Ekuator, David Setyanto, told VOA. “But if you compare with Turkey or Argentina, we are not the same with them because our fundamental economics are much stronger than these two countries.”

Dr. Tommy Soesmanto, an economics lecturer at Griffith University, told VOA that “Indonesians should not be overly concerned with the current situation,” as the economy is in a far stronger position than in 1998. During the Asian Financial Crisis, the rupiah fell from 3000 against the US dollar to 15,000 — a depreciation of some 500 percent from which it never recovered, hovering at around 10,000 per dollar in subsequent years.

Indonesia’s credit rating is now Triple B as opposed to 1998 when it was “considered junk”, Soesmanto said, while the country now has net capital inflow compared with “severe” capital outflow in 1998. Bank Indonesia holds foreign reserves worth some $118 billion compared with just $24 billion back then, allowing it greater leverage to finance debts and imports.

Charu Chanana, Deputy Head of Asia Research at Continuum Economics in Singapore, agreed. “We believe Indonesia is much stronger today fundamentally when compared to 1998,” she wrote in an email. “However, as external headwinds persist, we believe Indonesia’s currency will remain in the firing line due to a weak external position and high foreign exposure in the stock and bond markets.”

“I think it’s a little bit overblown,” said Sakpal of ING when asked about the severity of the currency crisis, noting that “economic fundamentals for most of the regional economies are still solid.”

“In Indonesia, growth has accelerated in the second quarter to 5.3 percent, which was the fastest in many quarters… all the recent turmoil is driven by external factors,” he said.

Unite for the rupiah

Bank Indonesia, the central bank, has responded aggressively to the latest currency problems by raising interest rates four times since May. For months it has also sold foreign currency and bought sovereign bonds in a bid to stabilize the currency.

The government, meanwhile, has now imposed higher import taxes of up to 10 percent on some 1000 consumer goods, including cosmetics and luxury cars.

“This is a good chance for local producers to penetrate our own domestic market that is usually filled with imported goods,” Indonesia’s Finance Minister Sri Mulyani Indrawati said last week.

The weak rupiah is likely to hit Indonesia’s manufacturing sector hardest, and accordingly, the government has imposed lower tax hikes of 2.5 percent on imported raw materials. The energy and resources ministry also announced it would delay $25 billion worth of power projects, aimed at producing an additional 35 gigawatts of electricity, which is expected to save $8 to $10 billion in import costs.

“We can come together for the success of the #AsianGames2018,” read a Facebook post from the Finance Ministry last week, accompanied by infographics urging Indonesians to buy local products, reduce their consumption of imports, change U.S. dollars for rupiah, travel within Indonesia and invest locally. “We can also #BersatuUntukRupiah [unite for the rupiah].”

 

 
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United States is a land of opportunity. We have all heard this saying, but what does it mean and how does it happen? A Kurdish-American family in the state of Virginia is seeing how their 13-year-old son has made the most of a unique opportunity. VOA’s Yahya Barzinji recently visited this family and filed this report narrated by Bezhan Hamdard.
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Japan will once again try to get the international ban on whale hunting overturned at the global conference of the International Whaling Commission (IWC), which opened in Brazil on Monday.

The proposal presented by Japan says, “Science is clear: there are certain species of whales whose population is healthy enough to be harvested sustainably.”

While the Japanese proposal is supported by other traditional whaling countries, such as Iceland and Norway, it faces fierce opposition from countries such as Australia and Brazil, and the European Union, as well as from numerous environmental groups.

Japan, which has pushed for an amendment to the ban for years, accuses the IWC of siding with anti-whaling nations rather than trying to reach a compromise between conservationists and whalers.

Whale meat has been a a traditional part of the Japanese diet for centuries.

After the IWC adopted a ban on commercial whaling in 1982, Japan, Norway and Iceland continued to hunt whales. Tokyo justified the practice as a part of scientific research, which was allowed by the moratorium.

But in 2014, the International Court of Justice ruled that Japan’s whaling practice had no scientific basis, but instead it was a way to keep the industry alive.

This year, Japan wants to establish a Sustainable Whaling Committee to oversee the hunting of healthy whale populations for commercial purposes.

But environmentalists say allowing even limited hunting of the mammoth mammals will only again push the species to the brink of extinction. Brazil introduced  proposal Monday that says hunting whales is “no longer a necessary economic activity.”

Australia has vowed to lead the charge against reinstatement of commercial whaling and it has the strong backing of New Zealand, the European Union and the United States.

Japan’s proposal will likely be put to a vote sometime before the conference ends on Sept. 14.
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