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Concerns have arisen that European sanctions against countries like Iran, Syria and North Korea could be undermined by Britain’s upcoming departure from the European Union. Britain will be free to implement its own sanctions regime — and while both Brussels and London insist they will continue to work together, analysts say there are risks that Britain will seek a different path as it carves out new economic and strategic partnerships after Brexit. Henry Ridgwell reports from London.
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Another clutch of U.S. Federal Reserve officials said Wednesday they would be cautious about any further increases in interest rates so that the central bank could assess growing risks to an otherwise solid U.S. economic outlook.

The presidents of three of the 12 Fed regional banks, from Chicago, St. Louis and Atlanta, all pointed to a need for greater clarity on the state of the economy before extending the central bank’s rate hike campaign into a fourth year.

Two of the three, Charles Evans of Chicago and James Bullard of St. Louis, are voting members this year on the Federal Open Market Committee, the bank’s policy-setting panel. Bullard has long been critical of the Fed’s rate increases, begun in December 2015, but the caution from Evans is new, even if he still asserted that rates probably need to rise more.

The remarks from the three come less than a week after Fed Chairman Jerome Powell eased market concerns that policymakers were ignoring signs of an economic slowdown. Powell said he was aware of the risks and would be patient and flexible in policy decisions this year.

The new tone of caution comes after the U.S. stock market dropped precipitously in the fourth quarter of 2018, suffering its worst December performance since the Great Depression. Other signs of tightening financial conditions surfaced as well, including a sharp slowdown in issuance of corporate bonds.

Evans has been among the most vocal backers of gradually tightening U.S. monetary policy. In a speech in Riverwoods, Illinois, his first public comments since November, he nodded to an array of “tough-to-read” factors highlighted by the recent market sell-off, but penciled in a forecast for reasonably good U.S. growth and employment in 2019 and beyond.

His prepared remarks gave no hard timeline for further rate hikes, but they hinted he could agree to stand pat until around midyear to see how factors like global growth and U.S. trade and fiscal policy pan out.

Bullard, meanwhile, told the Wall Street Journal that while the Fed had “a good level of the policy rate today,” there was no rush to push them higher.

Latest hike

The Fed last raised rates in December, to a range of 2.25 percent to 2.50 percent, to conclude a full year of quarterly increases in its benchmark lending rate.

Minutes from that meeting will be released later Wednesday and could shed more light on how policymakers assessed the economy as they agreed to raise rates and, at that time, projected two more increases in 2019.

Overall, that marked the ninth increase of a quarter percentage point since December 2015, when the Fed began lifting interest rates from near zero, where they had been since the financial crisis in 2008.

Defensive decisions

Atlanta Fed President Raphael Bostic, who earlier this week said the Fed was likely to need at most a single rate increase this year, on Wednesday elaborated on that view as driven by conversations with business executives, who say they have become more defensive in preparing for slower growth by paying down debt and holding off on new plans.

Those conversations “are not consistent with the business sector ramping up,” Bostic said in remarks prepared for delivery to the Chattanooga Area Chamber of Commerce. Bostic, who backed all four rate hikes in 2018 as an FOMC voter, does not have a policy vote on the panel this year.

Meanwhile, back in November, Evans had said raising rates to about 3.25 percent would be a “reasonable assumption.” Powell and other top officials in recent weeks have stressed that they are listening to the concerns implied by the stock market sell-off that began in early October, and traders are very skeptical of much more tightening this year.

“A case can be made for a reasonably good 2019 economic outcome,” Evans said. “But I do not want to downplay the risks too much.”
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The World Bank is downgrading its outlook for the global economy this year, citing rising trade tension, weakening manufacturing activity and growing financial stress in emerging-market countries.

In a report titled “Darkening Skies,” the anti-poverty agency said Tuesday that it expects the world economy to grow 2.9 percent in 2019, down from the 3 percent it forecast back in June. It would be the second straight year of slowing growth: The global economy expanded 3 percent last year and 3.1 percent in 2017.

‘Risks are rising’

“Global growth is slowing, and the risks are rising,” Ayhan Kose, the World Bank economist who oversees forecasts, said in an interview. “In 2017, the global economy was pretty much firing on all cylinders. In 2018, the engines started sputtering.”

The bank left its forecast for the U.S. economy unchanged at 2.5 percent this year, down from 2.9 percent in 2018. It predicts 1.6 percent growth for the 19 countries that use the euro currency, down from 1.9 percent last year; and 6.2 percent growth for China, the world’s second-biggest economy, versus 6.5 percent in 2018.

The bank upgraded expectations for the Japanese economy, lifting its growth forecast to 0.9 percent, up from 0.8 percent in 2018.

President Donald Trump, declaring that years of U.S. support for free trade had cost America jobs, last year slapped import taxes on foreign dishwashers, solar panels, steel, aluminum and $250 billion in Chinese products. Other countries retaliated with tariffs of their own in disputes that have yet to be resolved.

The exchange of tariffs is taking a toll on world trade. The bank predicts that the growth of world trade will slow to 3.6 percent this year from 3.8 percent in 2018 and 5.4 percent in 2017. Slowing trade is hurting manufacturers around the world.

Rising interest rates

Rising interest rates are also pinching emerging-market governments and companies that borrowed heavily when rates were ultra-low in the aftermath of the 2007-2009 Great Recession. As the debts roll over, those borrowers have to refinance at higher rates. A rising dollar is also making things harder for emerging-market borrowers who took out loans denominated in the U.S. currency.

“Now debt service is eating into government revenues, making it more difficult (for governments) to fund essential social services,” said World Bank CEO Kristalina Georgieva, who will replace bank president Jim Yong Kim on an interim basis when he leaves at the end of January.

The bank slashed its forecast for 2019 growth for Turkey, Argentina, Iran and Pakistan, among others.
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Peru Attorney General Pedro Chavarry resigned on Tuesday after a public outcry over his handling of the high-profile corruption investigation involving Brazilian builder Odebrecht.

His departure from the public prosecutors office marks a fresh victory for President Martin Vizcarra and supporters of his measures to uproot entrenched corruption in one of Latin America’s fastest-growing economies.

Chavarry prompted widespread scorn and days of street protests after he announced on New Year’s Eve that he was removing two lead prosecutors from the Odebrecht inquiry, which has targeted former presidents and presidential candidates.

Vizcarra responded by sending Congress legislation to suspend Chavarry and overhaul the prosecutor’s office.

Resignation protects prosecutor?

Chavarry denied he was trying to meddle in the investigation and said he was stepping down to protect the independence of the prosecutor’s office, which he portrayed in his resignation letter as under attack by Vizcarra’s government.

Vizcarra had repeatedly called for Chavarry to step down since he was appointed by a panel of prosecutors in July despite his ties to an alleged criminal group of judges, lawmakers and businessmen. Chavarry was later named by a prosecutor in his office as a suspect in the probe. He denies wrongdoing.

A former vice president, Vizcarra has made fighting corruption a focus of his government since taking office last year to replace Pedro Pablo Kuczynski, who stepped down in one of several graft scandals to grip Peru in recent years.

Vizcarra, however, lacked the authority to dismiss Chavarry. Under Peru’s constitution, only Congress, where Chavarry enjoyed support with the opposition majority, can oust the attorney general.

Avalos is acting attorney general

Supreme Prosecutor Zoraida Avalos, one of several prominent prosecutors to call for Chavarry to resign in the past week, was named as acting attorney general on Tuesday.

The prosecutors whom Chavarry had dismissed last week — Rafael Vela and Jose Domingo Perez — were reinstated amid the outcry.

The two are seen as pivotal figures in the Odebrecht investigation and recently drew up a plea deal that commits the company to providing evidence on about $30 million in bribes it acknowledges it paid to local politicians.

‘Car Wash’ probe

Odebrecht is at the center of the “Car Wash” investigation in Brazil, which has rippled across Latin America and which U.S. prosecutors have said is the biggest political graft scheme ever uncovered.

In late 2016, Odebrecht acknowledged it had paid millions of dollars in bribes to officials in a dozen countries to secure public works contracts dating back over a decade. The company has committed to paying billions of dollars in fines.
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Labor rights campaigners warned against complacency as the European Union on Tuesday withdrew its threat to ban Thai fishing imports into the bloc, saying that the country has made progress in tackling illegal and unregulated fishing.

The EU’s so-called “yellow card” on Thai fishing exports has been in place since April 2015 as a warning that the country was not sufficiently addressing the issues.

“Illegal, unreported and unregulated fishing damages global fish stocks, but it also hurts the people living from the sea, especially those already vulnerable to poverty,” Karmenu Vella, European Commissioner for environment and fisheries said.

“Today’s decision reverses the first step of a process that could have led to a complete import ban of marine fisheries products into the EU,” he said in a statement.

Thailand has amended its fisheries legal framework in line with international law, and improved its monitoring and surveillance systems, including remote monitoring of fishing activities and more robust inspections at port, the EU said.

The country’s multibillion-dollar seafood industry has also come under scrutiny for slavery, trafficking and violence on fishing boats and at onshore processing facilities.

After the EU threatened to ban fish exports, and the U.S. State Department said it was failing to tackle human trafficking, the Southeast Asian country toughened up its laws and increased fines for violations.

Thailand has introduced modern technologies — from satellites to optical scanning and electronic payment services — to crack down on abuses.

But the International Labor Organization said in March that fishermen remained at risk of forced labor, and the wages of some continued to be withheld.

The EU on Tuesday said it recognized efforts by Thailand to tackle human trafficking and to improve labor conditions in the fishing sector.

Thailand voted in December to ratify ILO convention 188 — which sets standards of decent work in the fishing industry — becoming the first Asian country to do so.

But important gaps remain, said Steve Trent, executive director at advocacy group Environmental Justice Foundation.

“We still have concerns about the workers. We need to see that the reforms are durable,” he said.

Thailand is yet to ratify two other ILO conventions on the right to organize and the right to collective bargaining, both of which are essential to protect workers, he told the Thomson Reuters Foundation.

This is particularly important in the fishing and seafood processing industries, as most of their estimated 600,000 workers are migrant workers.

“There is a risk that with the lifting of the yellow card, complacency will set in. We need to see a culture of compliance, and more being done to protect vulnerable workers in the industry,” Trent said.
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Hospitals in Zimbabwe are turning away patients as a strike by doctors enters its sixth week. There is no end in sight to the strike, as President Emmerson Mnangagwa’s government says it cannot meet the doctors’ demands.

The Parirenyatwa Group of Hospitals, Zimbabwe’s largest treatment center, is largely empty as a doctors’ strike that began December 1 drags on.

Sixty-nine-year-old Kasirina Zibveka had a lung infection in September, according to her medical records. After numerous tests were done, it was confirmed that her right lung had gone bad and needed to be removed.

 

But by then, doctors were on strike. She was discharged December 13 and was told to return Monday for the ailing lung to be removed. But with the strike unresolved, that did not happen.

 

Her daughter, Margret Chikoti, says the family has paid for her treatment, but only nurses are attending to her mother.

 

“We have no idea what is really happening to her since December 13,” she said. “All we see is her discharging some blood stained stinking fluids [through a hole pierced by nurses under her right breast]. What is happening inside her body? Is it getting worse? We just give her painkillers and use ointment to clean her wound. We hope that their negotiations [doctors and government] bear fruit and they return to work.”

Doctors held a meeting Monday and resolved to remain on strike until their demands are met. The doctors want the government to equip hospitals with modern technology, sufficient medicine and protective clothing for doctors.

 

They also want to be paid in U.S. dollars instead of Zimbabwe’s depreciating currency, known as bondnotes.

 

“We will not accept the money that they are refusing. We want the money that buys,” Zimbabwe Hospital Doctors Association Vice President Marambire Sinaravo Jongwe said this to his members. “We are very understanding people, we are very lenient to our government. They are just trying to ignore us, they are very insincere to doctors. But yet we are saving the public, the general of Zimbabwe. For our patients we care, the government does not care.”

 

The doctors also say they do not want to prescribe drugs that are not in stock, a practice that forces patients to seek out black market drugs.

The Medicines Control Authority of Zimbabwe has warned about such drugs being fake, expired and unsafe to use.

 

The government, meanwhile, said last week it is not in a position to pay doctors or any civil servants in U.S. dollars.

Officials say they have imported medicines and are now stocking hospitals. But with doctors still on strike, that news might not be enough to help patients like Kasirina Zibveka.
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U.S. Commerce Secretary Wilbur Ross said there is “a very good chance” that the United States and China will reach a trade agreement. 

Ross told CNBC he is hopeful such a deal would address “all the key issues.”

Working-level trade talks between the United States and China began Monday in Beijing with negotiators for the world’s two biggest economies trying to resolve tariff disputes that have roiled world markets in recent weeks.

In a sign the meeting was off to a good start, China’s economic czar, Vice Premier Liu He, dropped by the talks on Monday to encourage the negotiators.

While Chinese officials expressed optimism at the start of the two-day talks, Beijing at the same time complained about the sighting of the U.S.S. McCampbell, a warship, in what it said were Chinese waters near disputed islands in the South China Sea.

Chinese Foreign Ministry spokesman Lu Kang said China had made “stern complaints” with the United States about the sighting of the destroyer, but the trade talks went ahead as scheduled.

There was no immediate U.S. response to the Chinese complaint.

Few details have emerged from the trade talks, which are scheduled to run through Tuesday.

​The trade talks are the result of an agreement last month between U.S. President Donald Trump and Chinese President Xi Jinping to stop the tit-for-tat tariff conflict between the two countries for 90 days starting on New Year’s Day. 

Trump said last week, “I think we’ll have a deal with China.” 

Lu said the two countries have agreed to hold “positive and constructive” discussions.

“From the beginning we have believed that China U.S. trade friction is not a positive situation for either country or the world economy,” Lu said. “China has the good faith, on the basis of mutual respect and equality, to resolve the bilateral trade frictions.”

​The talks are occurring as Chinese growth — 6.5 percent in the July-to-September period — fell to its lowest point in a decade. There are concerns that U.S. growth, 3.4 percent in the third quarter, is also slowing even as the country’s unemployment rate remains nearly at a five-decade low.

Even so, Lu said, “China’s development has ample tenacity and huge potential. We have firm confidence in the strong long-term fundamentals of the Chinese economy.”

The United States has long complained about access to the vast Chinese market and Beijing’s demands U.S. companies reveal their technology advances.
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Mexican President Andres Manuel Lopez Obrador said on Monday that his crackdown against fuel theft was yielding positive results, even as the intervention sparked severe fuel shortages in parts of the country and long lines of angry motorists.

In a bid to eliminate years of mounting theft, state oil firm Pemex has changed its distribution, triggering shortfalls in at least six states, including Guanajuato, a major car-making hub in central Mexico.

Guanajuato’s state government said that less than one third of the state’s gas stations were open on Monday.

Lopez Obrador told a news conference the government had not established a date for when operations would return to normal, but stressed that supply was not in danger.

“We are changing the whole distribution system, that’s the reason for the shortage. We have enough gasoline,” he said.

Mexican television showed long lines of drivers waiting to fill up in central states as well as Jalisco in the west and Tamaulipas in the north.

Years of fuel theft by criminal groups and others by tapping pipelines and stealing tanker trucks has led to losses totaling billions of dollars for public coffers.

Lopez Obrador’s government has ordered the armed forces to intervene in Pemex’s facilities, including one refinery.

“The supply will normalize, and at the same time we are going to guarantee that fuel is not stolen,” said Lopez Obrador, who took office in December. “We have seen a reduction in theft like never before … but we still have work to do.”

Guanajuato’s governor Diego Sinhue told local radio that of the state’s 415 gas stations, only 115 were open. In Leon, Guanajuato’s biggest city with a population of more than 1.5 million, only 7 of 196 stations were open on Sunday, he said.

“Fuel is becoming a serious problem,” said Sinhue, a member of the opposition center-right National Action Party (PAN). “People are really angry about this shortage.”

Sinhue said the army had informed him it had taken control of the state’s Salamanca refinery on Monday morning. There, members of the armed forces were monitoring tankers going in and out of the facility, as well as the pressure of pipelines.

Energy Minister Rocio Nahle offered an apology on Mexican radio for the shortages. Asked when the problem would be fixed, she said it was in the process of being “normalized.”
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Tesla broke ground Monday on a new factory for its electric cars in China, the first of its factories to be located outside the United States.

Chief Executive Elon Musk appeared at a ceremony alongside local officials on the outskirts of Shanghai to mark the start of the project. He said the goal is to finish initial construction by summer and start production by the end of the year.

Tesla will build its Model 3 vehicles at the site and says it hopes to eventually have a production capacity of 500,000 vehicles per year. The factory is wholly owned by Tesla, a departure from usual Chinese policy for foreign businesses.

The new factory comes as the United States and China negotiate trade issues that have led each side to impose higher tariffs on the other’s goods, including the automotive sector.

By having a factory in China, Tesla will not have to worry about consumers there facing higher prices on cars imported from the United States.
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A U.S. trade delegation has arrived in Beijing.

The group is in China to hold two days of talks, beginning Monday, focusing on how best to carry out an agreement reached by U.S. President Donald Trump and Chinese President Xi Jinping to postpone new tariff hikes.

On December 1, the two leaders agreed to complete talks about technology, intellectual property and cyber theft issues within 90 days, and hold off on new tariffs in the meantime.

U.S. officials have said that if the talks fail to produce a satisfactory agreement Washington will increase tariffs on $200 billion of Chinese goods from 10 percent to 25 percent.

 

 

 
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China has sounded a positive note ahead of trade talks this week with Washington, but the two sides face potentially lengthy wrangling over technology and the future of their economic relationship.

Both sides have expressed an interest in settling their tariff fight over Beijing’s technology ambitions. Yet neither has indicated its stance has changed since a Dec. 1 agreement by Presidents Donald Trump and Xi Jinping to postpone further increases.

Envoys will have “positive and constructive discussions” during meetings Monday and Tuesday, said Chinese Foreign Ministry spokesman Lu Kang.

The American side is led by a deputy U.S. trade representative, Jeffrey D. Gerrish, according to the U.S. government. Neither side gave details of their agenda but Gerrish’s delegation includes agriculture, energy, commerce, treasury and State Department officials.

The Chinese government gave no details of who would represent Beijing.

The talks are going ahead despite tensions over the arrest of a Chinese tech executive in Canada on U.S. charges related to possible violations of trade sanctions against Iran.

Trump imposed tariff increases of up to 25 percent on $250 billion of Chinese imports over complaints Beijing steals or pressures companies to hand over technology. Beijing responded by imposing penalties on $110 billion of American goods, slowing customs clearance for U.S. companies and suspending issuing licenses in finance and other businesses.

Washington, Europe and other trading partners complain Beijing’s tactics violate its market-opening obligations.

The clash reflects American anxiety about China’s rise as a potential competitor in telecommunications and other technology. Trump wants Beijing to roll back initiatives like “Made in China 2025,” which calls for the state-led creation of global competitors in such fields as robotics and artificial intelligence. American officials worry those might erode U.S. industrial leadership.

The ruling Communist Party is reluctant to give up initiatives it sees as a path to prosperity and global influence.

China’s leaders have tried to defuse complaints by emphasizing the country’s potential as an export market. They have announced a series of regulatory changes over the past year to increase foreign access to their auto, finance and other industries.

Some Chinese officials suggest the technology initiatives might be opened to foreign companies. But they have given no details, leaving it unclear whether that will satisfy Washington.

Trump and Xi agreed to a 90-day postponement of additional tariff increases to take effect Jan. 1. But economists say that is too little time to settle all the disputes that bedevil U.S.-Chinese relations. They say Beijing’s goal probably is to show enough progress to persuade Trump to extend his deadline.

During that 90-day period, agreements “may not be reached until the last day,” said Tu Xinquan, director of the China Institute for World Trade Organization Studies at the University of International Business and Economics in Beijing.

This week’s talks will focus on technical details before higher-level leaders “make hard political decisions,” Tu said.

In the longer term, the final tariffs might “remain for several years,” Tu said. “I don’t think it will proceed that fast. It must take time.”

Cooling economic growth in both countries is turning up the pressure to reach a settlement.

Chinese growth fell to a post-global crisis low of 6.5 percent in the quarter ending in September. Auto sales tumbled 16 percent in November over a year earlier. Weak real estate sales are forcing developers to cut prices.

The U.S. economy grew at an annual rate of 3.4 percent in the third quarter, and unemployment is at a five-decade low. But surveys show consumer confidence is weakening because of concern that growth will slow this year.

Beijing has tried in vain to recruit France, Germany, South Korea and other governments as allies against Trump. They criticize his tactics but echo U.S. complaints about Chinese industrial policy and market barriers.

The European Union filed its own challenge in the World Trade Organization in June against Chinese rules that the 28-nation trade bloc said hamper the ability of foreign companies to protect and profit from their own technology.

For their part, Chinese officials are unhappy with U.S. curbs on exports of “dual use” technology with possible military applications. They complain China’s companies are treated unfairly in national security reviews of proposed corporate acquisitions, though almost all deals are approved unchanged.

Some manufacturers that serve the United States have shifted production to other countries to avoid Trump’s tariffs.

UBS said Friday that 37 percent of 200 manufacturers surveyed by the bank have shifted out of China over the past 12 months. The threat of U.S. tariff hikes was the “dominating factor” for nearly half, while others moved because of higher costs or tighter environmental regulation.

“Most firms expect the trade war to escalate,” the bank said.

 

 
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A surge in U.S. job creation and some reassuring words from the head of the U.S. central bank sent U.S. stocks soaring Friday.  

The Labor Department reported a net gain of 312,000 jobs in December, far more than economists predicted. The unemployment rate, however, rose slightly, to 3.9 percent.

Many analysts said the rising unemployment rate was probably good news because rising wages prompted many jobless people to start looking for work.

People are not counted as officially unemployed unless they have searched for work in the past four weeks. In December, the labor force expanded by a healthy 419,000 people as wages rose 3.2 percent over the past year.

PNC Bank Chief Economist Gus Faucher said the data meant worries about a possible recession were probably “overblown.” Worried investors have sent stocks mostly downward in recent months in a series of drastic gains and losses driven in part by concern that the U.S. central bank might raise interest rates too quickly and choke off growth.

Federal Reserve Chair Jerome Powell said Friday that Fed officials were “listening carefully” to markets that were weighing the impact of “concerns on global growth and trade negotiations.”

Dec Mullarkey of Sun Life Investment Management wrote that “markets were reassured” because the Fed made it clear it was not on course to automatically raise rates and would “dynamically adjust as new data and trends emerge.”

By the close of trading, the Dow advanced more than 700 points, as the major U.S. indexes rose more than three percent.  
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Marriott International Inc said Friday that fewer than 383 million customer records were stolen in a massive cyberattack disclosed last month, down from its initial estimate that up to 500 million guests were affected.

The hotel operator also said that some 25.55 million passport numbers were stolen in the attack on the Starwood Hotels reservation system, 5.25 million of which were stored in plain text. Another 8.6 million encrypted payment cards were also taken in the attack, it said.

Marriott previously confirmed that passport numbers and payment cards were taken, but not said how many.

The company disclosed on Nov. 30 that it had discovered its Starwood hotels reservation database had been hacked over a four-year period in one of the largest breaches in history.

At least five U.S. states and the UK’s Information Commissioner’s Office are investigating the attack.

Marriott also said that it had completed an effort to phase out the Starwood reservations database that it acquired in September 2016 with its $13.6 billion purchase of Starwood. The hack began in 2014, a year before Marriott offered to buy Starwood.
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It sounds like a Hollywood caper: A group of investors and officials convince European banks to loan a total of $2 billion to a resource-rich African nation trying to rebuild after a bruising civil war.  

The money promptly disappears, and then this caper turns tragic.  The government doesn’t learn of the loans until three years after they happen. It defaults on the loans, and that triggers an economic crisis: the currency tumbles, prices rise, hospitals run out of basic supplies and key roads go unrepaired.  Thousands of people contract cholera – an easily preventable and treatable illness that is often caused by a breakdown of health services.

This isn’t Hollywood. This, allegedly, is Mozambique, according to an indictment that has resulted in the arrests of at least four figures in recent days, including a former finance minister.  The men are now awaiting extradition to the U.S. for their role in defrauding U.S. investors when seeking the loans.

VOA obtained a redacted copy of the indictment, issued by the U.S. District Court’s Eastern District of New York.  It accuses the four, plus another man who has not been arrested and two others who were not named, of “creat(ing) the maritime projects as fronts to raise money to enrich themselves and intentionally divert(ing) portions of the loan proceeds to pay at least $200 million in bribes and kickbacks to themselves, Mozambican government officials and others.”

Last week, South African officials arrested Mozambique’s former finance minister, Manuel Chang, on an Interpol warrant as he transited through the country.  

This, says analyst Alex Vines of the Chatham House think tank, is a very big deal. This matter has been investigated by both an independent firm and also by the British government, and until now, nothing has come of it.

“So it looked as if nothing would happen about these many millions, probably billions, of U.S. dollars that were (un)accounted for,” Vines told VOA. “So the indictment that has occurred from the U.S. District Court, Eastern District of New York, for key characters involved in this loan scandal, is very very significant and is a game-changer, I think.”

The reaction: Public vs Party?

That’s certainly the case in Mozambique, where commentator Fernando Lima notes the public has largely applauded the arrests, while the ruling Frelimo party has been silent.

“There is a sentiment of huge enthusiasm and joy, which causes a lot of irritation on the other side, meaning people related to the Frelimo party,” he told VOA  “…It caused this huge, huge embarrassment for the current government. And up to now, which is also very, very surprising, no Mozambican authorities have said anything related to the arrest of Mr. Chang. Neither the government, neither Frelimo party, neither the attorney general’s office, or our parliament.”

Vines says it’s unclear how President Filipe Nyusi – who was defense minister at the time of the secret loans – will come out of this scandal, but he says there may be a bright side for investors who are eager to put money into the nation, which will start exporting natural gas in 2023.

“The International Monetary Fund, IMF, and bilateral donors to Mozambique had suspended lending to Mozambique, or direct government lending, should I say,” he said. “They do want to move on, and so again, I think this might help clear things up so that longer term, the relationship of Mozambique with some of its international creditors and international partners can be improved.”

Rudi Krause, the South African lawyer representing the former finance minister, Manuel Chang, says they’ll fight the U.S. extradition request.

Krause said attorneys had not been given a full copy of the indictment by South African officials at the time of Chang’s arrest and so could not comment on the allegations.

VOA was unable to reach Krause after receiving the U.S. copy of the indictment, for further comment.

Chang will appear in a South African court on January 8. But the court of public opinion will also have its chance to weigh in, when Mozambique goes to the polls in October.

 

 
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Asian markets Friday continued the global sell-off triggered by Apple’s warning of lower revenues and futures indicators predict a sharply lower opening for U.S. markets.

The Tokyo market dropped 3 percent in morning trading, and markets in Shanghai, Sydney, Seoul and Taipei were also down.

Stock markets across the globe dropped Thursday after tech giant Apple said sales of its devices had fallen sharply in China last month, perhaps signaling a broader slowing in the world economy.

Apple has blamed U.S. President Donald Trump’s trade dispute with China for its shrinking outlook, but the U.S. leader tweeted his defense Thursday, claiming, “The United States Treasury has taken in MANY billions of dollars from the Tariffs we are charging China and other countries that have not treated us fairly. In the meantime we are doing well in various Trade Negotiations currently going on. At some point this had to be done!”

US-China trade talks

On Friday China’s government said a U.S. trade delegation will visit Beijing next week for two days of talks on carrying out an agreement reached by Trump and Chinese President Xi Jinping to postpone new tariff hikes.

On Dec. 1 the two leaders agreed to complete talks about technology, intellectual property and cyber theft issues within 90 days, and hold off on new tariffs in the meantime. U.S. officials have said that if the talks fail to produce a satisfactory agreement Washington will increase tariffs on $200 billion of Chinese goods from 10 percent to 25 percent.

Apple chief executive Tim Cook blamed the company’s sales shortfall on the trade battle President Donald Trump is waging against China.

“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Cook wrote.

Not just Apple

Kevin Hassett, chairman of the White House Council of Economic Advisers, said the contentious U.S.-China relations will force other U.S. companies to cut their sales estimates in China.

“It’s not going to be just Apple,” Hassett told CNN. “There are a heck of a lot of U.S. companies that have sales in China that are going to be watching their earnings being downgraded next year until we get a deal with China.”

He said slowing consumer demand in China gives Trump an edge in ongoing trade negotiations.

“That puts a lot of pressure on China to make a deal,” he said. “If we have a successful negotiation with China then Apple’s sales and everybody else’s sales will recover.”

The U.S. economy remains strong, with the country’s 3.7 percent jobless rate at a nearly five-decade low. But economists say the U.S. economy could be slowing and uncertainty in global economic fortunes has led to volatile daily swings in stock indexes in recent weeks.

In 2018, U.S. stock indexes suffered their worst year in a decade, with most of the losses recorded in December. The Dow was off 5.6 percent for the year, with the broader Standard & Poor’s index of 500 stocks down 6.2 percent.
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Herb Kelleher, who changed the airline industry by helping create and lead Southwest Airlines, a low-fare carrier that made air travel more accessible to the masses, has died. He was 87. 

 

Southwest confirmed that Kelleher died Thursday. 

 

Kelleher was a lawyer in San Antonio when a client came to him in the late 1960s with the idea for a low-fare airline that would fly between big cities in Texas. Today, Southwest carries more passengers within the United States than any other airline. 

 

At a time when many other airlines were run by colorless finance wizards, Kelleher boasted about drinking whiskey and showed a gift for wacky marketing ploys.  
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Three former Credit Suisse Group AG bankers were arrested in London on Thursday on U.S. charges that they took part in a $2 billion fraud scheme involving state-owned companies in Mozambique, a spokesman for U.S. prosecutors said.

Andrew Pearse, Surjan Singh and Detelina Subeva were charged in an indictment in Brooklyn, New York federal court with conspiring to violate U.S. anti-bribery law and to commit money laundering and securities fraud, according to spokesman John Marzulli. They have been released on bail.

The arrests came five days after former Mozambique finance minister Manuel Chang was arrested in South Africa as part of the same criminal case, which was brought by federal prosecutors in Brooklyn.

The prosecutors will seek to have all of the defendants extradited to the United States, according to Marzulli. Lawyers for the defendants could not immediately be reached for comment after business hours in New York and London.

“The indictment alleges that the former employees worked to defeat the bank’s internal controls, acted out of a motive of personal profit, and sought to hide these activities from the bank,” Credit Suisse said in a statement. It added that the bank will continue to cooperate with authorities.

Chang oversaw Mozambique’s finances when it failed to disclose government guarantees for $2 billion in international borrowing by state-owned firms. The disclosure of those loans in 2016 plunged the southern African country into a suffocating debt crisis it is still struggling to climb out of two years later.
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A federal judge says a New York City law forcing Airbnb and HomeAway home-sharing platforms to reveal detailed information about its business seems unconstitutional.

Judge Paul Engelmayer on Thursday blocked the law from taking effect on Feb. 2, finding there’s a greater than 50 percent chance the companies would prevail on claims that the law violates the Fourth Amendment right to be free from unreasonable searches and seizures.

The ruling comes at an early stage of the litigation. Lawyers for the city and the companies will gather additional evidence before Engelmayer makes a final ruling.

The city did not immediately comment.

The San Francisco-based Airbnb in a statement called the ruling a “huge win.”

The law was passed last summer.

 
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Tesla made about 9,300 more vehicles than it delivered last year, raising concerns among industry analysts that inventory is growing as demand for the company’s electric cars may be starting to wane.

If demand falls, they say, the company will enter a new phase of its business. Like other automakers, Tesla will have to either cut production or reduce prices to raise sales. A drop in demand could also curtail the company’s earnings and jeopardize CEO Elon Musk’s promise to post sustained quarterly profits.

On Wednesday, Tesla did cut prices, knocking $2,000 off each of its three models. The company said the cuts will help customers deal with the loss of a $7,500 federal tax credit, which was reduced to $3,750 this month for Tesla buyers and will gradually go to zero by the end of 2019.

“They have for a long time had more demand than supply,” Gartner analyst Michael Ramsey said. “It’s becoming apparent that that dynamic is changing.”

Tesla reported that it produced 254,530 cars and SUVs last year and delivered 245,240.

The company’s deliveries for the full year matched Wall Street estimates, but its figures for the fourth quarter didn’t reach expectations. Tesla said it delivered 90,700 vehicles from October through December. Analysts polled by data provider FactSet expected 92,000.

Jeff Schuster, a senior vice president at the forecasting firm LMC Automotive, said demand for Tesla’s lower-priced Model 3 has been artificially high for the past six months as the company overcame production problems at its Fremont, California, factory.

“You’ve had these inflated months because of delayed deliveries,” Schuster said. “We’re probably getting to that point where we’re getting to equilibrium and consumers aren’t necessarily waiting for vehicles.”

Last year, Tesla reported that about 420,000 buyers had put down $1,000 deposits to join the Model 3 waiting list.

LMC predicts that Tesla U.S. sales will rise in 2019 because it’s the first full year on the market for the Model 3. It anticipates sales to then fall by about 10,000 in 2020.

Losing the tax credit will hit those who have been holding out for the $35,000 version of the Model 3, Schuster said. At present, Tesla is selling only versions that cost at least $44,000. Under federal law, buyers get the full tax credit until a manufacturer reaches 200,000 in sales since the start of 2010. Tesla hit 200,000 in July but the full credit continued for vehicles delivered by Dec. 31. It was cut in half on Jan. 1 and will go away by the end of the year.

“You’ve had your early adopters, those early followers have already come in” to buy, Schuster said. “Now you’re trying to appeal to the mainstream market. I think that will have an impact on overall demand.”

At the same time, inventory appears to be rising. The company parked hundreds of cars at lots and Tesla stores all over the country at the end of last year, which could indicate excess stock. Tesla wouldn’t give inventory numbers but said it has lower stocks than its two biggest competitors, BMW and Mercedes.

The Associated Press found one lot on the north side of Chicago where Tesla was storing dozens of vehicles in late December, and Mark Spiegel, a hedge fund manager who bets against Tesla stock, said other lots were full across the country.

Tesla said it sometimes stores vehicles on lots as they’re being shipped to company dealerships across the nation. The lot in Chicago has fewer cars on it now, the company said. “Our inventory levels remain the smallest in the automotive industry,” the company said Wednesday.

Tesla also says Model 3 sales should grow worldwide as it expands distribution and begins to offer leases. Deliveries in Europe and China will start in February, and a right-hand-drive version is coming later in the year, the company said.

In addition, inventory dropped in the fourth quarter as Tesla “delivered a few thousand vehicles more than produced.”

Tesla said it had about 3,000 vehicles in transit to customers at year’s end. But even with that number, Schuster said production still exceeded deliveries, which doesn’t fit Tesla’s business model of building cars when they are ordered by customers. Still, even at 9,300, Tesla’s inventory is smaller than other automakers that have to stock dealerships, Schuster said.
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The sweet aroma of mutton smoke drifts through a maze of crumbling alleyways, a barbecue tang that for decades has lured meat-eaters from across Pakistan to the frontier city of Peshawar.

The ancient city, capital of northwestern Khyber Pakhtunkhwa province, has retained its reputation for some of Pakistan’s tastiest cuisine despite bearing the brunt of the country’s bloody war with militancy.

University student Mohammad Fahad had long heard tales of Peshawar’s famed mutton.

“Earlier we heard of Peshawar being a dangerous place,” he told AFP — but security has improved in recent years, and he finally made the hours-long journey from the eastern city of Lahore to see if it could live up to the hype.

“We are here just to see what the secret to this barbecue is,” he says, excitedly awaiting his aromatic portion in Namak Mandi — “Salt Market” — located in the heart of Peshawar.

The hearty cuisine comes from generations-old recipes emanating from the nearby Pashtun tribal lands along the border with Afghanistan.

It is feted for its simplicity compared with the intricate curries and spicy dishes from Pakistan’s eastern plains and southern coast.

“Its popularity is owed to the fact that it is mainly meat-based and that always goes down well across the country,” says Pakistani cookbook author Sumayya Usmani.

The famed Nisar Charsi (hashish smoker) Tikka — named after its owner’s renowned habit — in Namak Mandi chalks up its decades of success to using very little in the way of spices.

For its barbecue offerings, tikkas — cuts of meat — are generously salted and sandwiched on skewers between cubes of fat for tenderness and taste, and slow-cooked over a wood fire.

Its other famed dish, karahi — or curry stew — is made with slices of mutton pan-cooked in heaped chunks of white fat carved from the sheep’s rump, along with sparing amounts of green chilli and tomatoes.

Both plates are served with stacks of oven-fresh naan and bowls of fresh yogurt.

“It is the best food in the entire world,” gushes co-owner Nasir Khan, adding that the restaurant sources some of the best meat in the country and serves customers from across Pakistan daily along with local regulars.

By Khan’s calculations, the restaurant goes through hundreds of kilograms of meat a day — or about two dozen sheep — with hundreds if not thousands served.

Hash and meat

The clientele at Nisar’s Charsi and other Salt Market eateries usually arrive in large groups, with experienced customers ordering food by the kilo and guiding cleaver-wielding butchers to their preferred cuts, which are then cooked immediately.

Peshawar’s improved security has given business a boost, Khan said.

“We had a lot of troubles and pains,” he admitted, remembering friends lost during the years of devastating bombings and suicide attacks.

But some customers said they had been loyal to Peshawar’s cuisine even during the bloodshed.

“I’ve been coming here for more than 20 years now,” said Hammad Ali, 35, who travelled to Peshawar with eight other colleagues from Pakistan’s capital Islamabad for a gluttonous lunch.

“This taste is unique, that’s why we have come all this way.”

Orders generally take close to an hour to prepare, with customers quaffing tea and occasionally smoking hash ahead of the meal.

“They smoke it openly here,” explained Nisar Charsi’s head chef Mukam Pathan. “When someone smokes one joint of hash, they eat around two kilos of meat.”

For those looking for a little less lamb, the city’s renowned chapli kebab offers an alternative.

The kebab is typically made of minced beef and a mix of spices kneaded into patties and deep fried on a simmering iron skillet.

Rokhan Ullah — owner of Tory Kebab House — said the dish is most popular on cold, winter days that see ravenous customers flocking to its four branches across the city, overwhelming staff and making orders hard to fill.

“They eat it with passion… because one enjoys hot food when the weather is cold,” explained Ullah, who plans to expand in major cities across Pakistan.

Customer Muhib Ullah has been eating kebabs three to four days a week for the last decade.

“This is the tastiest and most famous food in Peshawar,” he declared.

Hours-long meals

For regular barbecue eater Omar Aamir Aziz, it is not just the heaping portions of meat that attract foodies to Peshawari cuisine, but the culture that has built up around the meal.

Other cities in Pakistan and abroad have more in the way of entertainment and nightlife options.

But in deeply conservative Peshawar, eating out is the primary leisure activity.

Meals tend to last for hours after the meat has been consumed as conversation continues over steaming cups of green tea.

“That’s what we have and that’s our speciality,” says Aziz. “We’ve been doing this for two, three, four hundred years.”
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