Business

Hiring picked up in August as U.S. employers added a strong 201,000 jobs, a sign of confidence that consumers and businesses will keep spending despite the Trump administration’s conflicts with U.S. trading partners.

The Labor Department said Friday the unemployment rate remained 3.9 percent, near an 18-year low. 

Americans’ paychecks grew at a faster pace in August. Average hourly wages rose last month and are now 2.9 percent higher than they were a year earlier, the fastest year-over-year gain in eight years. Still, after adjusting for inflation, pay has been flat for the past year.

The economy is expanding steadily, fueled by tax cuts, confident consumers, greater business investment in equipment and more government spending. Growth reached 4.2 percent at an annual rate in the April-June quarter, the fastest pace in four years.

Most analysts have forecast that the economy will expand at an annual pace of at least 3 percent in the current July-September quarter. For the full year, the economy is on track to grow 3 percent for the first time since 2005. 

Consumer confidence rose in August to its highest level in nearly 18 years. Most Americans feel that jobs are widely available and expect the economy to remain healthy in the coming months, according to the Conference Board’s consumer confidence survey.

The buoyant mood is lifting spending on everything from cars to restaurant meals to clothes. Consumers’ enthusiasm is even boosting such brick-and-mortar store chains as Target, Walmart and Best Buy, which have posted strong sales gains despite intensifying competition from online retailers.

In August, factories expanded at their quickest pace in 14 years, according to a survey of purchasing managers. A manufacturing index compiled by a trade group reached its highest point since 2004. Measures of new orders and production surged, and factories added jobs at a faster pace than in July.

Not all the economic news has been positive. Higher mortgage rates and years of rapid price increases are slowing the housing market. Sales of existing homes dropped in July for a fourth straight month.

And wages are still rising only modestly, even after more than nine years of economic expansion and an ultra-low unemployment rate.

Many economists also worry President Donald Trump will soon follow through on a threat to impose tariffs of up to 25 percent on $200 billion of imports from China. That would be in addition to $50 billion in duties already imposed. That move could shave as much as a quarter-point off growth over the next year, Mark Zandi, chief economist at Moody’s Analytics, has estimated. 

For now, there’s little sign that companies are worried enough about a trade war to slow hiring. Businesses are increasingly reluctant to even lay off workers, in part because it would be difficult to replace them at a time when qualified job applicants have become harder to find.

On Thursday, the government said the number of people seeking unemployment benefits — a proxy for layoffs — amounted to just 203,000 last week, the fewest total in 49 years.
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Britain risks huge disruptions to its economy and society, including trade, transport, health care and citizens’ rights, if it leaves the European Union next March without a deal. That’s the conclusion of a new report on the short-term risks of a so-called ‘no-deal Brexit.’ The report comes as lawmakers return to London after a six-week summer break to face growing uncertainty over Britain’s future relations with the EU. Henry Ridgwell reports from London.
…

She is many things that would seem to irritate President Donald Trump: a liberal Canadian former journalist.

That makes Foreign Minister Chrystia Freeland an unusual choice to lead Canada’s negotiations over a new free trade deal with a surprisingly hostile U.S. administration.

Recruited into politics by Prime Minister Justin Trudeau, Freeland has already clashed with Russia and Saudi Arabia. Those who know her say she’s unlikely to back down in a confrontation with Trump.

“She is everything the Trump administration loathes,” said Sarah Goldfeder, a former official with the U.S. Embassy in Canada.

Freeland, a globalist negotiating with a U.S. administration that believes in economic nationalism and populism, hopes to salvage a free trade deal with Canada’s largest trading partner as talks resumed Wednesday in Washington. The 50-year-old Harvard graduate and Rhodes scholar speaks five languages and has influential friends around the world.

“I have enormous sympathy for her because she is negotiating with an unpredictable, irrational partner,” said CNN host Fareed Zakaria, a friend of Freeland’s for 25 years.

Freeland cut short a trip to Europe last week after Trump reached a deal with Mexico that excluded Canada. Talks with Canada resumed but Trump said he wasn’t willing to make any concessions.

The Trump administration left Canada out of the talks for five weeks not long after the president vowed to make Canada pay after Trudeau said at the G-7 in Quebec he wouldn’t let Canada get pushed around in trade talks. Freeland then poked the U.S. when she received Foreign Policy magazine’s diplomat of the year award in Washington.

“You may feel today that your size allows you to go mano-a-mano with your traditional adversaries and be guaranteed to win,” Freeland said in the June speech. “But if history tells us one thing, it is that no one nation’s pre-eminence is eternal.”

Despite being the chief negotiator with the Trump administration, Freeland has criticized it when few other leaders of Western democracies have.

“She’s an extremely strong-willed and capable young woman, and I think Trump generally has a problem with that,” said Ian Bremmer, a longtime friend and foreign affairs columnist and president of the Eurasia Group. “She’s not going to bat her eyelashes at Trump to get something done. That’s not Chrystia. She doesn’t play games.”

After Freeland and her department tweeted criticism of Saudi Arabia last month for the arrest of social activists in the kingdom, Canada suffered consequences. The Saudis suspended diplomatic relations and canceled new trade with Canada and sold off Canadian assets.

Peter MacKay, a former Canadian foreign minister, said public shaming like that doesn’t work and said some Americans viewed her June speech in Washington as something less than diplomatic.

“It was around that time, within days, that the U.S. threw Canada out of the room,” MacKay said. “There is sometimes concern that she is taking the lead from her prime minister by playing a little bit to a domestic audience.”

Trudeau personally recruited Freeland to join his Liberal Party while it was the third party in Parliament in 2013. Freeland had a senior position at the Reuters news agency but was ready to move on after setbacks in her journalism career, said Martin Wolf, an influential Financial Times columnist and longtime friend.

Freeland previously had risen rapidly at the Financial Times where she became Moscow bureau chief in her mid-20s during the collapse of the Soviet Union.

Freeland also served as deputy editor of the Globe and Mail in Toronto and the Financial Times. She had designs on becoming editor of the Financial Times but left after a clash with the top editor. She was familiar to many TV viewers in the U.S. because of her regular appearances on talk shows like Zakaria’s.

“She was a godsend for us, frankly, because she is so bright and so talented and articulate,” Zakaria said. “She is as about as impressive a person as I have met.”

Freeland, who is of Ukrainian heritage, also wrote a well-received book on Russia and left journalism for politics in 2013 when she won a district in Toronto. She has been a frequent critic of Russian President Vladimir Putin, who banned her from traveling to the country in 2014 in retaliation for Western sanctions against Moscow.

She remains chummy with journalists, even bringing them frozen treats in 90-degree heat last week while they waited outside the U.S. Trade Representative office in Washington.

Bremmer, who met Freeland in Kiev in 1992, good-naturedly chided her for a strange foible: a habit of writing notes on her hands even when she has notepads.

“I have seen in her environments with foreign ministers and heads of state with stuff on her hands,” he said with a laugh.

Throughout her career, Freeland has cultivated an impressive group of friends. Mark Carney, the Bank of England governor, is a godfather to one of her three children. Friends include Larry Summers, the former U.S. treasury secretary, and billionaires George Soros and Stephen Schwarzman, the Blackstone Group chief executive who once led one of Trump’s disbanded business councils.

“I always found her to be extremely smart and easy to talk with,” Schwarzman said. “She accessible and direct and quick. You don’t get to be a Rhodes scholar by accident.”

Summers is a mentor from Harvard.

“Her clarity of thought, straightforwardness and deep sense of principle make her an ideal leader of the international community as it responds to highly problematic American policy,” Summers said in an email.

Bremmer said Freeland has serious globalist credentials, “but right now, momentum is not with that group globally.”

When Trudeau became prime minister in 2015, he named Freeland to his Cabinet. She served as international trade minister and worked on ensuring that a free trade deal with the European Union didn’t unravel. At one point, she left stalled talks near tears after saying it had been impossible to overcome differences. An agreement was reached not long after that, and Freeland received credit.

Now she’s facing her toughest challenge with the North American Free Trade Agreement, since the U.S. represents 75 percent of Canada’s exports.

“Canada is stuck with the United States. That’s Canada’s trade,” Bremmer said. “Canadians are going to have to swallow a fair amount of pride. They are going have to pretend they like this guy a lot more than they obviously do or they risk getting much more economically punished. That’s just the reality.”
…

Trump administration officials and Canadian negotiators are resuming talks to try to keep Canada in a North American trade bloc with the United States and Mexico.

“We are looking forward to constructive conversations today,” Canadian Foreign Affairs Minister Chrystia Freeland told reporters as she entered a meeting with U.S. Trade Rep. Robert Lighthizer.

Last week, the United States and Mexico reached a preliminary agreement to replace the 24-year-old North American Free Trade Agreement. But those talks excluded Canada, the third NAFTA country.

 

Freeland flew to Washington last week for four days of negotiations to try to keep Canada within the regional trade bloc. The U.S. and Canada are sparring over issues including U.S. access to Canada’s protected dairy market and American plans to protect some drug companies from generic competition.

 

 
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An international money transfer company has launched an online service for East Africans to send and receive money more easily. Analysts say WorldRemit will lower the cost of transferring money and boost African trade and economies.

Africa has become a thriving market for money transfer companies as its telecommunication facilities improve and its economies grow.

WorldRemit, a British-based money transfer company, recently launched a new digital service in four East African countries. The company facilitates the transfer of at least $1.6 billion to Africa each year.

The co-founder and the head of WorldRemit, Ismail Ahmed, told VOA how money transfers in Africa have changed over the years.

“When we launched our services, 99 percent of remittances were cash both on the sending and receiving side. But today that is changing fast and in the next few years we think as much as 50 to 60 percent of international remittances would move from traditional physical cash, traditional remittances, to digital. And that’s why our services has grown very fast in the last few years,” he said.

Ahmed said that as transactions become digital, the cost of each transfer comes down, and tracking money becomes easier.

“It’s easier for businesses and individuals to move within countries but also across countries. It’s easier to fight financial crime because once the transaction becomes digital, there is an audit trail compared to cash where there is no audit trail,” he said.

Gerrishon Ikiara is an international economic affairs lecturer at the University of Nairobi. He said digital money transfers will boost trade within Africa — but notes that some countries still lack the necessary connections.

“Obviously, the main challenge is the level of infrastructure, because a country without the good infrastructure in terms of electricity and telecommunication infrastructure will make it a bit difficult,” said Ikiara.

The World Bank says $37.8 billion was sent to Africa through remittances in 2017. This year, the amount is expected to be $39 billion.
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First it was Argentina, quickly followed by Turkey. Now anxious investors and policy-makers are watching with alarm the plummeting currencies of several emerging-market economies, most of which have borrowed heavily in dollars.

The nosediving currencies are prompting fears of a repeat of the 1997 Asian financial crash or the “Tequila Effect” of Mexico’s 1994 financial crisis. Or is something even worse coming — a financial contagion to compare with 2008?

Argentina’s peso dropped 29 percent against the U.S. dollar in August, the worst performer among major emerging-market currencies. Turkey’s currency followed closely, with a 25 percent slide.South Africa’s rand saw an almost 10 percent drop. The Indonesian rupiah fell to its weakest level since the 1997 Asian financial crisis, while India’s currency slid into unprecedented territory against the dollar.

September has seen no major uplift in those currencies. The Turkish lira is down 40 percent to the U.S. dollar this year, sparking mounting alarm over the sustainability of the country’s sizable dollar-denominated debts held primarily by its banks and businesses rather than the government.

The foreign exchange markets are jittery with traders watching to see if more countries start joining the troubled list, which would indicate contagion is underway. African countries like Angola, Ghana, Ethiopia, and Mozambique could be vulnerable. And in a worst-case scenario even more developed economies like Chile, Poland and Hungary, which are also shouldering large foreign-currency debts above 50 percent of their GDPs, could be impacted, say some financial analysts.

Corporate debt in emerging and developing economies is significantly larger than it was before the 2008 global financial crisis.The bigger the debt, the harder the fall.

“The risk is increasing in those countries,” Bertrand Delgado, director of global markets for Societe Generale in New York, has warned.

There is general consensus why emerging markets are in turmoil. Three main developments are blamed:

1 – The impact on market sentiment from U.S. President Donald Trump’s tit-for-tat trade war with China and others

2 – Rising U.S. interest rate that has prompted global investors to exit emerging markets to chase yield in dollar investments

3 – The winding down of post-2008 quantitative easing by the U.S. Federal Reserve and the European Central Bank, which has reduced liquidity and the availability of cheap money for governments and businesses in emerging markets to borrow.

A global financial crash?

Marcus Ashworth of Bloomberg cautioned last week the emerging-markets sell-off looks contagious.

“The difficulties for emerging markets have entered a new phase.What were once clearly country-specific crises, well contained within their borders, are bleeding across the world,” he warned.

Ashworth, a columnist and a veteran of the banking industry, most recently as chief markets strategist at Haitong Securities in London, added, “One emerging country’s problems have become other emerging countries’ problems, and it’s hard to see how to break the cycle.”

Other analysts dispute that contagion is underway, saying each of the troubled states have their own idiosyncratic problems and country-specific challenges, although they acknowledge the turmoil could mount with the U.S. Federal Reserve expected to raise interest rates several times this year.

In a note to investors, DBS, a Singapore-based international financial services group, warned the currencies of Argentina and Turkey “have been struggling with rising U.S. rates since the start of the year, due to deficits in their fiscal and current account balances.

“Heightened trade tensions threatening to erupt into a full-blown trade war could prompt, DBS said, disorderly capital outflows leading to “financial instability, especially in countries that have high external debt levels.”

Britain’s The Economist magazine argues the weakness in emerging-market currencies “is not fundamentally contagious” and the fallout can be contained.Western lenders including banks will be impacted, it said, as emerging-market borrowers struggle to repay dollar and other foreign-currency debts now worth more in terms of their own currencies. “But it would not threaten their [Western lenders’] solvency,” it said.

Optimists say for all the wider currency woes and the economic weakness of Argentina and Turkey, many major emerging-market countries are doing well.

India’s GDP was growing at an 8 percent rate ending June. Mexico’s peso is steady and it appears to have concluded trade negotiations with the Trump White House, which markets are viewing favorably.

The optimists say the global scare is being fanned by screaming, doom-laden headlines, pointing out that in 2013, when the U.S. Federal Reserve started to cease Quantitative Easing, Brazil, India, Indonesia, Turkey and South Africa all suffered from currency depreciation, but they soon regained their footing.

The biggest emerging-market risk, though, is that rattled global investors could be so alarmed by currency turmoils that they ignore economic fundamentals and stampede away from emerging-market countries, compounding currency falls, triggering indirect contagion, and adding to debt burdens.
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A tiny Alaska Native village has experienced a boom in tourism in recent years as polar bears spend more time on land than on diminishing Arctic sea ice.

More than 2,000 people visited the northern Alaska village of Kaktovik on the Beaufort Sea last year to see polar bears in the wild, Alaska’s Energy Desk reported Monday. 

The far north community is located on north shore of Barter Island on the Beaufort Sea coast in an area where rapid global warming has sped up the movement of sea ice, the primary habitat of polar bears. As ice has receded to deep water beyond the continental shelf, more bears are remaining on land to look for food. 

The village had fewer than 50 visitors annually before 2011, said Jennifer Reed of the Arctic National Wildlife Refuge.

“Today we’re talking about hundreds and hundreds of visitors, many from around the world, each year,” Reed said. 

Polar bears have always been a common sight on sea ice near Kaktovik, but residents started noticing a change in the mid-1990s. More bears seemed to stay on land, and researchers began taking note of more female bears making dens in the snow on land instead of on the ice.

U.S. Fish and Wildlife Service biologists began hearing reports of increasing numbers of polar bears in the area in the early 2000s, Reed said. As more attention was given to the plight of polar bears about a decade ago, more tourists stated heading to Kaktovik.

Bears stranded

Most tourists visit in the fall, when bears are forced toward land because sea ice is the farthest away from the shore. Some bears become stranded near Kaktovik until the sea freezes again in October or November.

The fall is also when residents of Kaktovik kill three bowhead whales. Bruce Inglangasak, an Inupiaq subsistence hunter who offers wildlife viewing tours, said residents were unsure how tourists would react to whaling. 

“The community was scared about, you know, activists that were going to try to get us to shut down the whaling — subsistence whaling,” Inglangasak said. “But that’s not true.”

Inglangasak said he’s been offering polar bear tours since 2003 or 2004. Most of his clients are from China and Europe, as well as from the Lower 48 U.S. states, and arrive in Katovik on charter planes from Anchorage and Fairbanks. 

Many tourists stay several days in the village, which has two small hotels, Inglangasak said.
…

If you already subscribe to digital services like Netflix to binge on TV shows and Spotify to groove to an endless mix of music, the auto industry might have a deal for you: Subscribe to your next car as well.

Make that cars, plural. Some of these packages — which charge a monthly fee for the bundled use of a car, insurance and maintenance — let you trade in your vehicle on a regular basis, sometimes almost as readily as you can skip to a new tune on Spotify.

These still-developing car subscription programs are gaining traction among motorists who don’t want to be locked into the hassles of car ownership or even multiyear leasing commitments. All they want is a vehicle available whenever they want or need it.

“It feels like Christmas morning every time they bring me a new car,” said Steve Barnes, a video producer who subscribes to a high-end vehicle subscription program offered through Clutch Technologies, a startup operating in the Atlanta area.

Although they’re still in their infancy, car subscriptions are hooking more motorists as both long-established automakers and startups roll out plans.

How it works

Ford, a 115-year-old automaker with a network of more than 3,000 dealers, expanded into car subscriptions about 16 months ago through Canvas, a subsidiary in San Francisco.

Canvas offers a variety of used, once-leased Ford and Lincoln models as subscriptions that cost anywhere from $379 per month (for a Ford Fiesta subcompact) to $1,125 per month (for a Lincoln Navigator luxury SUV).

Those plans, however, impose driving limits of 500 miles a month. Subscribers can pay extra for higher limits — $35 per month for an additional 350 miles, for instance, or $100 per month for unlimited travel. Unused miles in any given month can be rolled over to the next one. If Canvas customers exceed the monthly mileage limits under their plan, they are charged an additional 15 cents per mile for a Ford car and slightly more for a Lincoln vehicle.

So far, Canvas has limited subscriptions to the San Francisco and Los Angeles area. In its first 16 months in California, thousands of subscribers have signed up for its subscription service while collectively driving about 8.5 million miles, according to the company.

“People are generally changing the way they are working, they are changing the way they are living and they are generally changing the way they are consuming things,” Canvas CEO Ned Ryan said. “Subscriptions are going to be a very large and growing share of how people consume automobiles.”

About a third of Canvas customers decided to subscribe to cars after moving or some other major event that left them reluctant to make a bigger commitment to leasing or owning, Ryan said. Others just like the simplicity and convenience offered by a car subscription, he said.

Temporary arrangement

Liz Dreskin of San Rafael, California, signed up for Canvas earlier this year to help her college-age kids get around at home during their summer break. Both are under the company’s 21-year-old age limit, so Dreskin got a vehicle for herself while allowing her children to drive the BMW she already owned.

After starting off with a sports utility vehicle from Canvas, she decided to pay $99 to switch to a 2015 Mustang. Although she plans to suspend her $500 monthly subscription at the end of September, she intends to start it up again when her kids return for the holidays. She’s also recommending the service to a friend whose current car is breaking down.

“I could totally see myself doing this in the future so I don’t have to deal with car insurance and car payments,” said Dreskin, 52.

Luxury automakers such as BMW, Mercedes-Benz, Porsche and General Motors’ Cadillac brand also are offering subscription programs, but those are primarily catering to affluent drivers who want to try out a variety of expensive vehicles.

Barnes, the video producer, signed up with Clutch in 2016 for access to luxury vehicles. The divorced father will get a sports utility vehicle when he has custody of his daughters or a Tesla sports car or something else fun to drive when he’s headed out on the town with his current wife.

He pays about $1,400 per month for his Clutch subscription, substantially more than the roughly $900 per month he used to pay for a lease on a Tahoe and his insurance policy. But he says he can’t imagine ever owning or leasing a car again now that he’s driven dozens of different vehicles that he estimates would have cost him more than $1 million to own.

“I am definitely a ‘tech head’ who had always fantasized about being able to get whatever car you want,” Barnes said. 
…

U.S. manufacturing activity accelerated to more than a 14-year high in August, boosted by a surge in new orders, but increasing bottlenecks in the supply chain because of a robust economy and import tariffs could restrain further growth.

The Institute for Supply Management (ISM) survey was at odds with another survey published on Tuesday that suggested a peak in manufacturing and pointed to a slowdown in the months ahead against the backdrop of a strong dollar. Recent surveys have also signaled a cooling in regional factory activity.

“The surge in the ISM manufacturing index is difficult to square with other evidence, which indicate that growth in the factory sector has started to slow,” said Michael Pearce, a senior U.S. economist at Capital Economics in New York.

“With export orders now waning as a result of the dollar’s rapid appreciation over the past few months, we still think that growth in the factory sector will slow in the coming quarters.”

The ISM said its index of national factory activity jumped to 61.3 last month, the best reading since May 2004, from 58.1 in July. A reading above 50 indicates growth in manufacturing, which accounts for about 12 percent of the U.S. economy.

The ISM described demand as remaining “robust,” but cautioned that “the nation’s employment resources and supply chains continue to struggle.”

According to the ISM, survey respondents were “again overwhelmingly concerned about tariff-related activity, including how reciprocal tariffs will

impact company revenue and current manufacturing locations.”

President Donald Trump’s “America First” trade policy has led to an escalating trade war with China and tit-for-tat import tariffs with other trading partners, including the European Union, Canada and Mexico.

Trump has defended the duties on steel and aluminum imports and a range of Chinese goods as necessary to protect American industries from what he says is unfair foreign competition.

Economists have warned that the tariffs could disrupt supply chains, undercut business investment and slow the economy’s momentum. The economy grew at a 4.2 percent annualized rate in the second quarter, almost double the 2.2 percent in the January-March period.

The dollar rose against a basket of currencies, while prices of U.S. Treasuries fell. Stocks on Wall Street were trading lower.

​Impact of tariffs

The ISM’s new-orders sub-index increased to a reading of 65.1 last month from 60.2 in July. A measure of export orders, however, fell in August, most likely reflecting the dollar’s more than 5.0 percent rise this year against the currencies of the United States’ main trade partners.

The survey’s supplier deliveries index jumped to a reading of 64.5 last month, highlighting the rising bottlenecks in the supply chain, from 62.1 in July. It hit a 14-year high of 68.2 in June. Economists said the strong economy, marked by a labor market that is near or at full employment, as well as the import duties were behind the delays in deliveries.

“Bottlenecks in production will support inflation, but the constraints have yet to become overly binding,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

Factories reported hiring more workers last month, with production increasing sharply. That bodes well for August’s employment report, which is scheduled to be released Friday.

Manufacturing payrolls have increased solidly this year.

In the computer and electronic products industry, manufacturers said most suppliers were “waiting to re-evaluate potential price increases until September.”

Machinery manufacturers said while raw material costs appeared to be “leveling off,” and most suppliers “are willing and able to suppress cost increases,” the impact of tariffs remained a concern.

In a separate survey Tuesday, data firm Markit said its U.S. Manufacturing Purchasing Managers’ Index fell to a nine-month low of 54.7 in August from a reading of 55.3 in July.

Manufacturers reported a decline in new orders, with exports the main source of weakness. 

Markit said some of the slowdown in factory activity reflected widespread shortages of inputs, hauliers and labor, leading to a further buildup of backlogs of work.

It said tariffs were exacerbating supply shortages and also driving prices higher. Almost two-thirds of companies surveyed reporting higher input prices explicitly blamed tariffs for the increased costs, Markit said.

“When we look across the recent survey data, it appears that activity has cooled somewhat lately, but remains at a solid level,” said Daniel Silver, an economist at J.P. Morgan in New York.

A third report from the Commerce Department showed construction spending barely rose in July as increases in homebuilding and investment in public projects were overshadowed by a sharp drop in private nonresidential outlays.
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Turkey saw the inflation rate rise to nearly 18 percent in August, a 15-year high fueled by a collapse in the Turkish lira, which fell more than 20 percent over the past few weeks.

The rising inflation and a falling currency are stoking fears Turkey is on the verge of financial and economic crisis.

“It’s the beginning of the slippery slope. It’s going to get worse unless there is a miraculous improvement in the exchange rate,” political analyst Atilla Yesilada of Global Source Partners said. “We’ve reached the stage where there is nothing to anchor price expectations. People simply can’t gauge what prices or wages or costs will be next month.”

“It’s a very dismal set of numbers. The likelihood is headline inflation will reach 20 percent in (the) coming months,” economist Inan Demir of Nomura Securities said. “This is clearly a set of numbers that warrant a monetary response from inflation targeting the central bank.”

The Turkish Central Bank, in a statement on its website, vowed to act, promising to use all tools at its disposal and reshape its monetary policy stance at a Sept. 13 meeting where they will discuss interest rates.

The lira recouped much of its initial heavy losses following the release of the latest inflation figures.

“This (the central bank statement) is seen as a signal for a rate hike in that meeting,” Demir said. “Even though the wording of the statement is very uncertain, the expectation of tightening are curbing lira weakness after bad inflation numbers.”

International criticism

International investors sharply criticized the central bank for failing to aggressively raise interest rates to rein in inflation and defend the currency. Turkish President Recep Tayyip Erdogan’s influence is widely seen as responsible for the failure of the bank to act. Erdogan has repeatedly voiced opposition to raising interest rates.

“There will be a massive sell-off to the point of panic if they don’t raise rates,” Yesilada said. “This time, they have no option, even if they meant something else (in their statement), as everyone interpreted it as rates will be hiked. But there are two questions: by how much, and will it help at all?” he added.

Investors and analyst claim the central bank needs to raise rates by at least 4 percent, while some suggest a 10 percent raise is needed to avoid further drops in the currency, which analysts warned would open the lira to further pressure.

“In such a scenario, Turkish residents would want to hold more FX (foreign exchange) rather than Turkish lira … to protect their savings. That is a big risk to the currency,” Demir said.

Already, 40 percent of individual accounts in banks are in foreign currency.

However, an aggressive increase in rates may not be enough to rein in inflation or defend the lira, analysts warned.

“The concerns are on multiple fronts,” Demir said. 

“What Turkish policy needs to do is straightforward,” he added. “They need to hike rates, tighten fiscal policy (cut government spending) and ease tensions with the United States, removing the threat of further sanctions by releasing (American) pastor (Andrew) Brunson.

“There is a way out of this, but it’s not obvious that the policymakers will take that way,” Demir said.

US trade tariffs 

Last month’s imposition of trade tariffs by U.S. President Donald Trump over the ongoing detention of Brunson was the trigger for the latest rout in the Turkish currency. Brunson is on trial on terrorism charges, a case dismissed by Washington as politically motivated.

Ignoring U.S. pressure, Turkey’s top appeals court judge, Rustu Cirit, on Monday supported Erdogan’s refusal to release Brunson, saying the pastor’s release is a matter only for the courts.

“To use brute force to reverse this fact, which is a basic principle of contemporary democracies and law of nations, would mean weakening human rights, rather than strengthening them,” Cirit said.

Trump is warning of further sanctions against Turkey if Brunson is not released. American regulatory authorities are considering reportedly a multibillion-dollar fine against Turkish state-controlled Halkbank for violations of Iranian sanctions.

Analysts warn the financial implications of an escalation of U.S.-Turkish tensions will continue to undermine confidence in the lira. However, Erdogan continues to take a robust stance against Washington, insisting the Turkish economy remains strong.

“The list of concerns is long, definitely, but the chief concern I have right now is the policymakers. They need to accept first that there is a significant problem that needs to be addressed,” Demir said. “But we heard this morning from finance minister (Berat) Albayrak that short-term fluctuations in inflation are normal. ”

Turkey already seems set to face a severe recession. Similar depreciations of the currency in past decades was accompanied by a double-digit contraction of the economy. 

Analysts warn the stress on the economy will only grow.

“Each day, Ankara lingers or prevaricates the likelihood of a disaster event increases. Right now, the threat is very low, it’s manageable. But as winter approaches, the likelihood increases exponentially,” Yesilada said.
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Yemen’s government says it is giving civil servants and pensioners pay raises, after protests against the country’s woeful economy nearly paralyzed a major port city Sunday.

Officials have not said when the raises would take effect or how much they will be.

Demonstrations against the economy in the port of Aden continued Monday. Many shops were closed, and some people burned tires in the streets.

Some of the marchers demanded to be paid in dollars, accusing senior officials of taking their salaries in the U.S.-based currency while paying the rank-and-file in the increasingly weak Yemeni rial.

The rial has lost more than half its value against the dollar since Iranian-backed Houthi rebels seized the capital of Sanaa in 2014, sending the Western-recognized government into exile in Saudi Arabia.

It has since returned to set up shop in Aden.

Airstrikes

Meanwhile, the Houthis are demanding a war crimes investigation against the Saudi-led coalition after an airstrike last month that killed 40 children.

In an appeal Monday to the International Criminal Court, the Houthis asked the court to look into its “humanitarian conscience.”

A coalition missile struck a market in a Yemeni town near the Saudi border last month, killing 51 people. Among the dead were 40 children on a school bus coming back from a summer camp outing.

The coalition called the airstrike a “mistake.” It promised to hold those behind the attack legally responsible and to compensate the victims.

But the Houithis accuse the Saudis of being both the “judge and the jury” and “making light” of the civilian deaths.

U.N. human rights officials have said they believe both sides in Yemen may be responsible for war crimes.

The Saudi-led airstrikes have compounded the misery in Yemen, which is not only one of the world’s poorest nations, but is also on the edge of famine.

The U.N. has said about 80 percent of Yemeni civilians lack enough food and medical care.

The coalition airstrikes have obliterated entire neighborhoods, including hospitals and schools.
…

It’s coal people like miner Steve Knotts, 62, who make West Virginia Trump Country.

So it was no surprise that President Donald Trump picked the state to announce his plan rolling back Obama-era pollution controls on coal-fired power plants.

Trump left one thing out of his remarks, though: northern West Virginia coal country will be ground zero for increased deaths and illnesses from the rollback on regulation of harmful emission from the nation’s coal power plants.

An analysis done by his own Environmental Protection Agency concludes that the plan would lead to a greater number of people here dying prematurely, and suffering health problems that they otherwise would not have, than elsewhere in the country, when compared to health impacts of the Obama plan.

Knotts, a coal miner for 35 years, isn’t fazed when he hears that warning, a couple of days after Trump’s West Virginia rally. He says the last thing people in coal country want is the government slapping down more controls on coal — and the air here in the remote West Virginia mountains seems fine to him.

People here have had it with other people telling us what we need. We know what we need. We need a job,” Knotts said at lunch hour at a Circle K in a tiny town between two coal mines, and 9 miles down the road from a coal power plant, the Grant Town plant.

The sky around Grant Town is bright blue. The mountains are a dazzling green. Paw Paw Creek gurgles past the town.

Clean-air controls since the 1980s largely turned off the columns of black soot that used to rise from coal smokestacks. The regulations slashed the national death rates from coal-fired power plants substantially.

These days pollutants rise from smoke stacks as gases, before solidifying into fine particles — still invisible — small enough to pass through lungs and into bloodstreams.

An EPA analysis says those pollutants would increase under Trump’s plan, when compared to what would happen under the Obama plan. And that, it says, would lead to thousands more heart attacks, asthma problems and other illnesses that would not have occurred.

Nationally, the EPA says, 350 to 1,500 more people would die each year under Trump’s plan. But it’s northern two-thirds of West Virginia and the neighboring part of Pennsylvania that would be hit hardest, by far, according to Trump’s EPA.

Trump’s rollback would kill an extra 1.4 to 2.4 people a year for every 100,000 people in those hardest-hit areas, compared to under the Obama plan, according to the EPA analysis. For West Virginia’s 1.8 million people, that would be equal to at least a couple dozen additional deaths a year.

Trump’s acting EPA administrator, Andrew Wheeler, a former coal lobbyist whose grandfather worked in the coal camps of West Virginia, headed to coal states this week and last to promote Trump’s rollback. The federal government’s retreat on regulating pollution from coal power plants was “good news,” Wheeler told crowds there.

In Washington, EPA spokesman Michael Abboud said Trump’s plan still would result in “dramatic reductions” in emissions, deaths and illness compared to the status quo, instead of to the Obama plan. Obama’s Clean Power Plan targeted climate-changing carbon dioxide, but since coal is the largest source of carbon dioxide from fossil fuels, the Obama plan would have curbed other harmful emissions from the coal-fired power plants as well.

About 160 miles to the south of Grant Town, near the state capital of Charleston, shop owner Doris Keller figures that if Trump thinks something’s for the best, that’s good enough for her.

“I just know this. I like Donald Trump and I think that he’s doing the right thing,” said Keller, who turned out to support Trump Aug. 21 when he promoted his rollback proposal. She lives five miles from the 2,900-megawatt John Amos coal-fired power plant.

“I think he has the best interests of the regular common people at the forefront,” Keller says.

Trump’s Affordable Clean Energy program would dismantle President Barack Obama’s 2015 Clean Power Plan, which has been caught up in court battles without yet being implemented.

The Obama plan targeted climate-changing emissions from power plants, especially coal. It would have increased federal regulation of emissions from the nation’s electrical grid and broadly promoted natural gas, solar power and other cleaner energy.

Trump’s plan would cede much of the federal oversight of existing coal-fired power plants and drop official promotion of cleaner energy. Individual states largely would decide how much to regulate coal power plants in their borders. The plan is open for public review, ahead of any final White House decision.

“I’m getting rid of some of these ridiculous rules and regulations, which are killing our companies … and our jobs,” Trump said at the rally.

There was no mention of the “small increases” in harmful emissions that would result, compared to the Obama plan, or the health risks.

EPA charts put numbers on just how many more people would die each year because of those increased coal emissions.

Abboud and spokeswoman Ashley Bourke of the National Mining Association, which supports Trump’s proposed regulatory rollback on coal emissions, said other federal programs already regulate harmful emissions from coal power plants. Bourke also argued that the health studies the EPA used in its death projections date as far back as the 1970s, when coal plants burned dirtier.

In response, Conrad Schneider of the environmental nonprofit Clean Air Task Force said the EPA’s mortality estimates had taken into account existing regulation of plant emissions.Additionally, health studies used by the EPA looked at specific levels of exposure to pollutants and their impact on human health, so remain constant over time, said Schneider, whose group analyzes the EPA projections.

With competition from natural gas and other cleaner energy helping to kill off more than a third of coal jobs over the last decade, political leaders in coal states are in no position to be the ones charged with enforcing public-health protections on surviving coal-fired power plants, said Vivian Stockman of the Ohio Valley Environmental Coalition.

“Our state is beholden to coal. Our politicians are beholden to coal,” Stockman said outside Trump’s West Virginia rally, where she was protesting. “Meanwhile, our people are being poisoned.”

And when it comes to coal power plants and harm, Schneider said, “when you’re at Grant Town, you’re at Ground Zero.”

Retired coal miner Jim Haley, living 4 miles from the town’s coal-fired power plant, has trouble telling from the smokestack when the plant is even operating.

“They’ve got steam coming out of the chimneys. That’s all they have coming out of it,” Haley said.

Parked near the Grant Town post office, where another resident was rolling down the quiet main street on a tractor, James Perkins listened to word of the EPA’s health warnings. He cast a look into the rear-view mirror into the backseat of his pickup truck, at his 3-year-old grandson, sitting in the back.

“They need to make that safe,” said Perkins, a health-care worker who had opted not to follow his father into the coal mines. “People got little kids.”

 
…

When President Donald Trump pulled the plug on an upcoming trip to North Korea by his secretary of state, he pointed a finger of blame at China and the global superpower’s trade practices.

In his recent trade breakthrough with Mexico, Trump praised the country’s outgoing president for his help on border security and agriculture.

Both developments offered fresh evidence of how Trump has made trade policy the connective tissue that ties together different elements of his “America First” foreign policy and syncs up them with his political strategy for the 2020 presidential election.

Trump’s 2016 triumph was paved in part by his support among blue-collar voters in Midwestern manufacturing states that narrowly supported him over Democrat Hillary Clinton, including Michigan, Wisconsin, Ohio and Pennsylvania.

His aggressive trade tactics, epitomized by tariffs and standoffs with longtime economic partners and allies, are aimed at reversing what he has long viewed as unfair trade deals while maintaining support among largely white, working-class voters who have been hurt by the loss of manufacturing jobs.

“Trump understands that economic policy is foreign policy and vice versa,” said Stephen Moore, a former Trump campaign adviser and visiting fellow at The Heritage Foundation. “The most important element of foreign policy is to not just keep the world safe but to also promote America’s economic interest. That’s what Trump does — this is America First.”

It’s also good politics, in Trump’s view.

“It’s a populist position. But it’s also a popular position with a lot of Americans,” Moore said.

As he puts a high premium on trade gains, Trump is intertwining the issue with a host of top foreign policy concerns.

Trump, asked by reporters last week about North Korea living up to its commitments to denuclearize, said “part of the North Korean problem is caused by our trade disputes with China,” pointing to the U.S. trade imbalance with China.

“We have to straighten out our trade relationship because too much money is being lost by us,” Trump said. “And as you know, China is the route to North Korea.”

Trade has been a common refrain at the president’s rallies, where he has vowed to pursue “fair and reciprocal trade.”

“We don’t want stupid trade like we had for so long,” Trump said during a rally in Duluth, Minnesota, in June.

Trump’s second year as president has been marked by a number of trade disputes with traditional U.S. allies and global rivals alike, an approach cemented by his tweet that “trade wars are good.”

He imposed tariffs on steel and aluminum imports in March, prompting retaliation from the European Union and other American allies. Later in the month, Trump announced tariffs on China to combat what he called the theft of U.S. technology from a wide range of goods and services.

China struck back with its own sanctions on a variety of U.S. products, including Midwest farm-produced soybeans in a way to hit hard against the president’s base of voters. The two sides have clashed during the spring and summer, raising the stakes in their trade fight.

In late July, Trump and European Commission President Jean-Claude Juncker reached a temporary deal at the White House to avert tariffs on automobile imports and a ramping up of their trade dispute — although the threat still remains.

After a breakthrough with Mexico, Trump’s team has been engaged in talks with Canada aimed at creating a new version of the 24-year-old North American Free Trade Agreement.

While previous administrations have often used a carrot-and-stick approach to trade as a way to forge agreements, before Trump’s arrival trade agendas had emphasized multi-lateral and bilateral deals aimed at maintaining U.S. leadership around the world, promoting American values and improving human rights.

This administration, by contrast, “is leveraging foreign policy tools to achieve its trade goals,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

Critics say Trump’s insistence on trade concessions could hamper his ability to move forward in other areas.

On North Korea, for example, Trump has sought to turn his meeting with Kim Jong Un into a vivid example of how his unconventional style can bring longstanding U.S. adversaries to the bargaining table.

But by raising China’s trade practices as essential to any progress to ensuring North Korea gets rid of its nuclear weapons, Trump runs the risk of getting bogged down in both areas — and having little to show for it.

Mixing foreign policy and trade policy introduces so many variables it’s “virtually impossible to close on a precise policy decision,” said Daniel Ujczo, a trade attorney with Dickinson Wright PLLC in Columbus, Ohio. “You’re constantly chasing after the next issue as opposed to having a very targeted approach to the objective.”
…

Tanned and wearing a swimsuit, So Myong Il walks to the barbecue pit and throws on some clams.

 

He obviously loves the beach he’s on as well as the rugged, emerald Chilbo mountains that rise abruptly behind it. He loves them enough to forget, for a moment at least, that he is a senior official sent to deliver an ideology-soaked pitch singing their praises and instead lets the natural beauty surrounding him speak for itself.

 

Comrade So sees great things for North Korean attractions like this.

Hotels, big and small. Tourists from all over the country, maybe the world. “As long as we have the leadership of our respected Marshal,” he says, referring to leader Kim Jong Un, “our future will be bright indeed.”

 

So wouldn’t think of questioning the leader, but there is a hint of apprehension in his voice. And he isn’t alone.

 

North Korea is pushing ahead with a new strategy of economic development and the intensified diplomacy with China, South Korea and the United States that such a move requires. But hopes for a better future are mixed with concern over potential downsides of political or social volatility, and something that’s harder to articulate: a fear of the unknown – even if it appears far more promising than the arduous path the country has been on for decades.

Even before announcing in January that he had sufficiently perfected his nuclear arsenal and could start to focus on other things, Kim has held economic development to be his primary long-term concern.

 

He has allowed markets and entrepreneurialism to flourish and, since succeeding his father as leader seven years ago, has dramatically transformed the skyline of the capital, Pyongyang, with several high-rise districts. The transformation in the east coast city of Wonsan, where Kim has a summer villa, has been almost as spectacular.

 

As Kim prepares for the 70th anniversary of North Korea’s founding on Sept. 9, his ambitious development plan is being implemented, from the small-time renovation of town halls to the almost biblical-scale mobilization of “soldier-builders,” who are working around the clock to turn the remote northern city of Samjiyon into yet another showcase of Pyongyang-style socialism.

 

Economic development – and how U.S. capital and know-how could speed it along – was President Donald Trump’s big carrot when he met with Kim in Singapore three months ago to try to negotiate a denuclearization deal.

 

But Kim’s diplomatic overtures aren’t intended to open the door to American capitalists, a scenario that would make any good party cadre shudder. They are aimed at breaking down support for sanctions and getting the U.S. to step out of the way. Kim’s game is to play China and the U.S. off each other, grab whatever concessions he can along the way and adjust his position as the situation evolves.

 

In the meantime, lest anyone get the wrong idea, the ruling Workers’ Party of Korea has begun churning out paeans to socialism in its daily newspaper along with anti-capitalism, anti-imperialism screeds that underscore North Korea’s official opposition to essentially anything that might be considered the American way of life. Or, as it’s known in the jargon of North Korea’s propaganda machine, “the imperialists’ bourgeois ideological and cultural poisoning.”

---

 

The past few months have been tense in Pyongyang.

 

Restrictions on some of the movements of foreign diplomats have been tightened, for example, and even requests by The Associated Press to interview government officials or to speak with regular citizens have mostly been denied.

 

Uncertain of where it might all end up, state-run media have provided only limited coverage of Kim’s meetings with Trump in June and his multiple summits with Chinese President Xi Jinping and South Korean President Moon Jae-in. Reports have portrayed Kim as the consummate statesman, firmly in charge of a carefully considered strategy to make his country safer and more prosperous.

 

Kim is ardently wooing South Korean investment to help him build the very things Trump was offering: infrastructure, particularly roads and railways, and the development of selected tourism zones. After a high-profile chill last year, he is also actively courting Beijing, which continues to be an essential source of fuel, a key market for North Korea’s coal and other natural resources and a fairly reliable check on U.S. power in the region.

 

Pyongyang’s explanation for the shift in its foreign policy has been consistent: Having successfully built a credible nuclear deterrent to U.S. aggression, Kim is reaching out to Seoul to join hands in a “for Koreans, by Koreans” effort to secure a lasting peace on the Korean Peninsula, unhindered by the meddling of foreign powers.

 

Undoubtedly, images of the leader smiling and shaking hands with Trump, whose face had never been on the front pages of their newspapers before, signaled a major and bewildering change to many North Koreans.

 

But officials have made sure they don’t have much time to ruminate on it.

 

Normal routines of work and study have been put on hold for large segments of the populace who have been mobilized for the development projects. Tens of thousands of people in Pyongyang, meanwhile, have spent the past several months feverishly preparing for mass rallies and mass games to mark the anniversary.

---

 

Mount Chilbo, a collection of rocky peaks and a stretch of largely untouched seashore on the country’s northeastern fringe, is one of North Korea’s most cherished natural wonders.

 

The first hotel for non-Korean visitors opened in the 1980s, followed in 2004 by homestay-style lodgings near the beach, said So, a North Hamgyong Province People’s Committee official. Together they have a capacity of fewer than 100 guests and only operate from April until early November.

 

Many North Koreans bring tents and sleep on the beach.

 

But even in this rustic corner of the country, the pressure to contribute to Kim’s grand development scheme is keenly felt.

 

So said he would soon travel to China to discuss possible areas of cooperation.

 

As an indicator of Kim’s success with Beijing, tourism from China is already on the rise. Pyongyang’s longer-term goal, however, is to tap the South Korean market. The idea is that, if handled properly, South Korean tourism would present a chance to promote the North in a positive light and boost its image within South Korea.

 

That’s a gamble too.

Back in the late 1990s and early 2000s, South Koreans were allowed to visit in a highly regulated and controlled manner, and massive investment from South Korean businesses helped the North fund infrastructure projects in the same Wonsan-Mount Kumgang area that Kim is focusing on now. But it ended badly in 2008 when a South Korean woman who entered a restricted area was shot to death by a North Korean soldier.

 

So said he believes Chilbo, like Kim’s pet projects in Wonsan, could be a big draw for tourists. But he worries about where the money will come from and what might be lost.

 

“Whatever we do, we need to protect the natural beauty of this place,” he said.”I think there will be many changes in the coming years. Plans are being discussed. But nothing is decided.”

 
…

The International Organization for Migration reports more than 270 Nigerian migrants who recently returned from Libya have completed a skills training course to help them start their own businesses.

Migrants attending this weeklong event in the Nigerian capital Lagos have shared stories of the business frustrations that drove them to try to go to Europe in search of better economic opportunities.

U.N. migration agency spokesman, Paul Dillon, told VOA the migrants also have shared stories of the abuse and suffering they endured at the hands of smugglers and traffickers in Libya. At the same time, he said returnees enrolled in this business course have spoken of their hopes for the future.

“The goal of these types of initiatives is always to give people options and providing them with business skills training, for example. It certainly does that.Start up a small business at home, get hired on by a local company, build your life back in Nigeria. I think that is the goal and also to encourage formal migration efforts,” he said.

This is the 21st training course since the program was started in April 2017. IOM reports more than 2,000 Nigerian returnees have participated in courses given in Lagos, Edo, Nassarawa, Kano and Kaduna States.

Dillon said many of the returnees have become involved in collective reintegration schemes or community-based projects, such as fruit juice, palm oil and plantain processing factories.

He said training now is focused on creating more sustainable businesses, not just on regular trading, buying and selling. Therefore, he said there is greater concentration on agriculture-related businesses, which are more sustainable and more beneficial to the returnees’ communities.

He said IOM, together with the Ministry of Labor and the Lagos Chamber of Commerce and industry are organizing a job fair at the end of September.This, he said, will give returnees the opportunity to meet leaders in Nigeria’s private sector and to search for jobs to match their skills.
…

Investment banks which lost out on big payouts for the work on the shelved listing of oil giant Aramco are lining up for a raft of other projects as Saudi Arabia pursues reforms.

Banks including JPMorgan and Morgan Stanley worked for months to prepare what would have been the biggest ever stock market debut. But the plan to sell 5 percent of the company for a targeted $100 billion was pulled.

The bankers were paid retainer fees but were expecting around $200 million would be shared among all the banks involved when the deal was done.

Now, they are pinning their hopes on other projects from a privatization program that is part of Riyadh’s economic reform plan to loosen its reliance on oil. Without the funds from the Aramco sale, the government is looking to raise money in other ways, creating new opportunities for the banks, bankers say.

Teams from JP Morgan and Morgan Stanley that worked on the IPO, have been shifted to advise on Aramco’ planned acquisition of up to $70 billion in petrochemicals firm Saudi Basic Industries (SABIC), three people familiar with the details of the transaction told Reuters.

HSBC, which was also an adviser on the Aramco IPO, is expected to play a role in putting together the debt to fund that purchase, they said.

One of the sources said the issue could exceed the 2016 sovereign bond issue of $17.5 billion, which was a record for the kingdom. Aramco said earlier this month it was in “very early-stage discussions” with the kingdom’s Public Investment Fund (PIF) to acquire the stake in SABIC but has not said how it will finance the deal.

Spokespeople for JP Morgan, Morgan Stanley and HSBC declined to comment on their role in the Sabic deal. None of those banks have confirmed they were involved in the Aramco IPO. Other deals are expected to be forthcoming.

“The PIF[sovereign wealth fund] has had to reconsider its budget in the last three months, after finding out that they wouldn’t be getting $100 billion from the Aramco IPO right away,” said a banker in Saudi Arabia.

“So there’s been a flurry of activity as they look to raise cash in other ways. A lot of these are smaller deals, $1 billion here and there, but all geared toward financing their commitments for big infrastructure projects without slowing down their timelines.”

The banker did not give details of the other deals. PIF officials did not respond to a Reuters request for comment.

After Reuters reported last week that the Aramco deal had been shelved, Energy Minister Khalid al-Falih said the government was committed to conducting the IPO at an unspecified date in the future.

Bankers wary

The bankers are nevertheless wary after the Aramco experience. It highlighted the hurdles of doing business in a country governed by an absolute monarchy where public protest and political parties are banned. It also added to uncertainty after scores of top royals, ministers and businessmen were rounded up in an anti-corruption campaign last November.

The preparation for the listing was launched by Crown Prince Mohammed bin Salman two years ago and some bankers had flown to the kingdom hundreds of times to work in the Dhahran camp, a gated compound for the oil group’s residents.

A different source said Aramco had demanded it deal only with the very top bankers.

Another person familiar with the Aramco deal said he had made more than 20 trips to Dhahran over 18 months but with little to show for it. He said his team would “give the same presentation each time without getting much feedback.”

Bankers also say the fees are modest in comparison to those paid by other countries.

“The deal flow is huge but there’s a worry that the fees coming from these projects are low,” said a Gulf-based banker who spoke on conditions of anonymity.

“Saudi Arabia is lower than Hong Kong and Dubai when it comes to fees,” he said. “It’s all substandard.”

 

Typical fees for banks doing IPOs in more developed markets are around 1 percent of the overall deal while estimates from bankers and analysts for an Aramco IPO was 0.2 percent.

The 35 banks who worked on Chinese internet giant Alibaba’s $21.8 billion float, led by six main underwriters, pocketed an estimated $300 million among them, according to Thomson Reuters data.

‘Plenty of deals’

Still, the rewards from a privatization that analysts expect to generate ($9 billion to $11 billion) by 2020 are too big for bankers to ignore.

HSBC is already advising Saudi International Petrochemical Company on a potential merger with Sahara Petrochemical, which is being advised by Morgan Stanley, according to disclosures from March.

U.S. bank Citigroup obtained a license to conduct capital markets business in Saudi Arabia last year after an absence of almost 13 years.

Moelis is preparing to apply for an advisory license in Saudi Arabia and U.S. boutique investment bank Evercore opened an office in Dubai in 2017.

The government is also trying to make it easier to do deals, changing the law to allow alternatives to traditional debt finance.

“There are plenty of deals to be made from bigger players looking to consolidate their market position and buy out competitors,” said Mohammed Fahmi, the Dubai-based co-Head of EFG Hermes Investment Banking.

“Good stories will continue to see a following.”
…

The film industry organization that presents the Academy Awards is also developing young talent through a program called Academy Gold — an internship and mentoring program for students and young professionals from communities currently underrepresented in Hollywood. Some of the participants are either immigrants or children of immigrants who are trying to create an unorthodox career path for themselves. VOA’s Elizabeth Lee reports from Los Angeles.
…

Community and conservation groups in Myanmar have branded a planned highway linking a port project to Thailand an “ecological and social disaster,” saying it would uproot indigenous people from their homes and farms.

Critics said an environmental and social impact assessment for the road project, approved by the Myanmar government in June, failed to adequately specify compensation for loss of land and livelihoods, among other problems.

“This is a road to an ecological and social disaster (in Myanmar),” said Christy Williams, Myanmar director for the World Wide Fund for Nature (WWF), an international conservation group.

The highway is considered strategically important to both nations as it would link Thailand to a deep-sea port and planned Special Economic Zone (SEZ) in Dawei, a town on the Myanmar side of an isthmus divided between the two countries.

The industrial complex would serve as a gateway to Southeast Asia’s markets, with goods trucked between Dawei and Thailand, avoiding the need for ships to sail southward through the Malacca Straights, the world’s busiest shipping lane.

​Region of rich biodiversity

But Williams said the planned road would pass through a region of “huge ecological importance with rich biodiversity.”

The assessment looked only at the effects on people and the environment within 500m (550 yards) of the road, he added, but the impact will affect a much wider area.

He said WWF had been working with communities and provided “extensive recommendations and solutions” to the Myanmar government and Myandawei Industrial Estate Co. Ltd, the Thai firm developing the road and SEZ, but these had “been ignored.”

The impact assessment failed to address many issues brought forward by residents during consultation sessions, said Thant Zin, director of the Dawei Development Association, a local civil society group.

“Our main concerns over the project are forced relocation of thousands of local indigenous people, potential industrial pollution … land grabbing and livelihood issues, and human rights violations in project area,” he said.

A spokesman for Myanmar’s environment ministry did not respond to repeated requests for comment.

Gunn Bunchandranon, a spokesman for Myandawei Industrial Estate Co. Ltd, said the highway’s impact assessment was in line with the laws of both Myanmar and Thai.

He said people from affected communities who attended public consultations did not raise any concerns about compensation for loss of land.

However, a 2015 draft of the impact assessment provided by conservation group EarthRights International included the minutes of one such meeting where the land compensation question was raised.

Risk of renewed conflict

Myanmar residents have also expressed fear that the highway could reignite conflict between the government and Myanmar’s oldest armed group, the Karen National Union (KNU), according to Ben Hardman of EarthRights International.

Those concerns did not make it into the impact assessment, Hardman said.

The KNU signed a cease-fire agreement with the military in 2012, ending six decades of fighting. In 2015 it signed a national cease-fire agreement (NCA), along with other armed ethnic groups.

But relations with the government remain tense, and the KNU claims control over territory the highway would pass through.

Saw Tah Doh Moo, the group’s secretary general, said the NCA required that the KNU be consulted about any development projects in areas under its control.

However, neither the company nor the government have officially discussed the road project with them, he said.

“I don’t want to say what would happen, but it would undermine the NCA,” he told the Thomson Reuters Foundation by phone. “We have to think about how to respond.”
…

U.S. President Donald Trump notified Congress on Friday of his intent to sign a trade agreement with Mexico after talks with Canada broke up earlier in the day with no immediate deal to revamp the tri-nation North American Free Trade Agreement.

U.S. Trade Representative Robert Lighthizer said U.S. officials would resume talks with their Canadian counterparts next Wednesday with the aim of getting a deal all three nations could sign.

All three countries have stressed the importance of NAFTA, which governs billions of dollars in regional trade, and a bilateral deal announced by the United States and Mexico on Monday paved the way for Canada to rejoin the talks this week.

But by Friday the mood had soured, partly on Trump’s off-the-record remarks made to Bloomberg News that any trade deal with Canada would be “totally on our terms.” He later confirmed the comments, which the Toronto Star first reported.

“At least Canada knows where I stand,” he later said on Twitter.

Ottawa has stood firm against signing “just any deal.” 

​’Making progress’

But at a news conference Friday afternoon, Canadian Foreign Minister Chrystia Freeland expressed confidence that Canada could reach agreement with the United States on a renegotiated NAFTA trade pact if there was “goodwill and flexibility on all sides.”

“We continue to work very hard and we are making progress. We’re not there yet,” Freeland told reporters.

“We know that a win-win-win agreement is within reach,” she added. “With goodwill and flexibility on all sides, I know we can get there.”

The Canadian dollar weakened to C$1.3081 to the U.S. dollar after The Wall Street Journal first reported that the talks had ended Friday with no agreement. Canadian stocks remained 0.5 percent lower.

Global equities were also down following the hawkish turn in Trump’s comments on trade.

Lighthizer has refused to budge despite repeated efforts by Freeland to offer some dairy concessions to maintain the Chapter 19 independent trade dispute resolution mechanism in NAFTA, The Globe and Mail reported Friday.

However, a spokeswoman for USTR said Canada had made no concessions on agriculture, which includes dairy, but added that negotiations continued.

The United States wants to eliminate Chapter 19, the mechanism that has hindered it from pursuing anti-dumping and anti-subsidy cases. Lighthizer said on Monday that Mexico had agreed to cut the mechanism. For Ottawa, Chapter 19 is a red line.

Trump argues Canada’s hefty dairy tariffs are hurting U.S. farmers, an important political base for his Republican Party.

But dairy farmers have great political clout in Canada too, and concessions could hurt the ruling Liberals ahead of a 2019 federal election.

At a speech in North Carolina on Friday, Trump took another swipe at Canada. “I love Canada, but they’ve taken advantage of our country for many years,” he said.
…

Coca-Cola is hoping for a caffeine-fueled boost with the acquisition of British coffee chain Costa.

Costa is Britain’s biggest coffee company, with over 2,400 coffee shops in the U.K. and another 1,400 in more than 30 countries, including around 460 in China, its second-biggest market. Coca-Cola said Friday it will buy the Costa brand from Whitbread for 3.9 billion pounds ($5.1 billion) in cash.

The deal, expected to close in the first half of 2019, comes on the heels of Coca-Cola’s announcement earlier in August that it was buying a minority ownership stake in sports drink maker BodyArmor for an undisclosed amount. Coca-Cola’s other investments in recent years have included milk that is strained to have more protein and a push into sparkling water.

The move is Coca-Cola’s latest diversification as health-conscious consumers, at least in America, move away from traditional soda.

Rival PepsiCo, meanwhile, recently bought carbonated drink maker SodaStream, which produces machines that allow people to make fizzy drinks in their own homes.

Coca-Cola already owns the Georgia and Gold Peak coffee brands, which make bottled and canned drinks, but the purchase of Costa could allow it to compete with brands like Starbucks.

Coffee is growing by 6 percent a year, making it one of the fastest-growing beverage categories in the world, said James Quincey, Coca-Cola president & CEO.

“Hot beverages is one of the few remaining segments of the total beverage landscape where Coca-Cola does not have a global brand,” he said.

Coca-Cola has over 500 brands in its stable including Fanta, innocent smoothies and Powerade sports drinks. In 2017, it generated operating income of $9.7 billion on revenues of $35.4 billion.

Without being specific about expansion plans, Quincey said in a video posted on Coca-Cola’s website that the company would “over time” look to take Costa “to more people in more places.”

Costa doesn’t currently have a presence in North or South America, but Quincey indicated that one potential early expansion route would be to use Costa’s vending operation and grow the company’s ready-to-drink products. In addition to its shops, Costa has self-serve coffee machines in grocery stores and gas stations.

Whitbread bought Costa for 19 million pounds in 1995, when it had just 39 shops. In recent years, Whitbread has invested heavily in Costa’s expansion overseas, but had been looking to siphon off the business to generate funds for the expansion and for its other business, the budget hotel chain Premier Inn.

Then Coca-Cola got in touch with what Whitbread said was a “highly compelling” offer. The Whitbread board unanimously backed the deal.

Whitbread will use a “significant majority” of the net cash proceeds — around 3.8 billion pounds after taking into account such things as transaction costs — returning cash to shareholders. Some will be used to pay down debt and to make a contribution to the pension fund.

Doing so, Whitbread said, would “provide headroom” to further expand the Premier Inn budget hotel chain in Britain and Germany.

Whitbread’s share price soared 17 percent in early afternoon trading in London.

Nicholas Hyett, equity analyst at London-based stockbrokers Hargreaves Lansdown, said Costa will get “lots of care and attention” from Coca-Cola.

“Its global reach should turbo-charge growth in the years to come, and hot drinks are one of the few areas of the wider beverages sector where the soft drinks giant doesn’t have a killer brand,” he said.
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