All posts by MBusiness

UN: Afghan Opium Cultivation Down 20 Percent

A new United Nations survey finds that opium cultivation in Afghanistan has decreased by 20 percent in 2018 compared to the previous year, citing a severe drought and falling prices of dry opium at the national level.

The total opium-poppy cultivation area decreased to 263,000 hectares, from 328,000 hectares estimated in 2017, but it was

still the second highest measurement for Afghanistan since the U.N. Office on Drugs and Crime (UNODC) began monitoring in 1994.

The potential opium production decreased by 29 percent to 6,400 tons from an estimated 9,000 tons in 2017.

The UNODC country representative, Mark Colhoun, while explaining factors behind the reduction told reporters in Kabul the farm-gate prices of dry opium at the harvest time fell to $94 per kilogram, the lowest since 2004.

The decreases, in particular in the northern and western Afghan regions, were mainly attributed to the severe drought that hit the country during the course of the last year, he added.

“Despite these decreases, the overall area under opium-poppy cultivation is still the highest ever recorded. This is a clear challenge to security and safety for the region and beyond. It is also a threat to all countries to and through which these drugs are trafficked as well as to Afghanistan itself,” said Colhoun.

He warned that more high-quality low-cost heroin will reach consumer markets across the world, with increased consumption and related harms as a further likely consequence.

“The significant levels of opium-poppy cultivation and illicit trafficking of opiates will further fuel instability, insurgency and increase funding to terrorist groups in Afghanistan,” he said.

Colhoun noted that while there is no single explanation for the continuing high levels of opium-poppy cultivation, rule of law-related challenges such as political instability, lack of government control and security as well as corruption have been found to be among the main drivers of illicit cultivation.

The UNODC survey estimated that the total farm-gate value of opium production decreased by 56 percent to $604 million, which is equivalent to three percent of Afghanistan’s GDP, from $1.4 billion in 2017. The lowest prices strongly undermined the income earned from opium cultivation by farmers.

The study finds that 24 out of the 34 Afghan provinces grew the opium-poppy in 2018, the same number as in the previous year.

The survey found that 69 percent of the opium poppy cultivation took place in southern Afghanistan and the largest province of Helmand remained the leading opium-poppy cultivating region followed by neighboring Kandahar and Uruzgan and Nangarhar in the east.

It noted that opium poppy weeding and harvesting provided for the equivalent of up to 354,000 full-time jobs to rural areas in 2017.

A U.S. government agency, the Special Inspector General for Afghanistan Reconstruction (SIGAR), has noted in its latest report that as of September 30, Washington’s counternarcotics-related appropriations for the country had reached almost $9 billion.

“Despite the importance of the threat narcotics pose to reconstruction and despite massive expenditures for programs including poppy-crop eradication, drug seizures and interdictions, alternative-livelihood support, aviation support, and incentives for provincial governments, the drug trade remains entrenched in Afghanistan, and is growing,” said Sigar, which monitors U.S. civilian and military spendings in the country.

 

 

UN: Afghan Opium Cultivation Down 20%

A new United Nations survey finds that opium cultivation in Afghanistan has decreased by 20 percent in 2018 compared to the previous year, citing a severe drought and falling prices of dry opium at the national level.

The total opium-poppy cultivation area decreased to 263,000 hectares, from 328,000 hectares estimated in 2017, but it was

still the second highest measurement for Afghanistan since the U.N. Office on Drugs and Crime (UNODC) began monitoring in 1994.

The potential opium production decreased by 29 percent to 6,400 tons from an estimated 9,000 tons in 2017.

The UNODC country representative, Mark Colhoun, while explaining factors behind the reduction told reporters in Kabul the farm-gate prices of dry opium at the harvest time fell to $94 per kilogram, the lowest since 2004.

The decreases, in particular in the northern and western Afghan regions, were mainly attributed to the severe drought that hit the country during the course of the last year, he added.

“Despite these decreases, the overall area under opium-poppy cultivation is still the highest ever recorded. This is a clear challenge to security and safety for the region and beyond. It is also a threat to all countries to and through which these drugs are trafficked as well as to Afghanistan itself,” said Colhoun.

He warned that more high-quality low-cost heroin will reach consumer markets across the world, with increased consumption and related harms as a further likely consequence.

“The significant levels of opium-poppy cultivation and illicit trafficking of opiates will further fuel instability, insurgency and increase funding to terrorist groups in Afghanistan,” he said.

Colhoun noted that while there is no single explanation for the continuing high levels of opium-poppy cultivation, rule of law-related challenges such as political instability, lack of government control and security as well as corruption have been found to be among the main drivers of illicit cultivation.

The UNODC survey estimated that the total farm-gate value of opium production decreased by 56 percent to $604 million, which is equivalent to three percent of Afghanistan’s GDP, from $1.4 billion in 2017. The lowest prices strongly undermined the income earned from opium cultivation by farmers.

The study finds that 24 out of the 34 Afghan provinces grew the opium-poppy in 2018, the same number as in the previous year.

The survey found that 69 percent of the opium poppy cultivation took place in southern Afghanistan and the largest province of Helmand remained the leading opium-poppy cultivating region followed by neighboring Kandahar and Uruzgan and Nangarhar in the east.

It noted that opium poppy weeding and harvesting provided for the equivalent of up to 354,000 full-time jobs to rural areas in 2017.

A U.S. government agency, the Special Inspector General for Afghanistan Reconstruction (SIGAR), has noted in its latest report that as of September 30, Washington’s counternarcotics-related appropriations for the country had reached almost $9 billion.

“Despite the importance of the threat narcotics pose to reconstruction and despite massive expenditures for programs including poppy-crop eradication, drug seizures and interdictions, alternative-livelihood support, aviation support, and incentives for provincial governments, the drug trade remains entrenched in Afghanistan, and is growing,” said Sigar, which monitors U.S. civilian and military spendings in the country.

 

 

Nissan Chairman Faces Arrest In Japan

Japanese automaker Nissan says it has determined that its chairman, Carlos Ghosn, falsified reports about his compensation “over many years.” The company said its internal investigation also found Ghosn had used company assets for personal purposes.

Japanese media are reporting Monday that Ghosn is being questioned by Tokyo prosecutors on allegations that he underreported his income and that he will likely be arrested.

Ghosn is suspected of failing to report hundreds of millions of dollars in income.

Nissan says Ghosn will be dismissed from the company.

The Ashai newspaper reported that prosecutors have raided Nissan’s headquarters in Yokohama.

The Brazilian-born Ghosn, who is of Lebanese descent and a French citizen, was the rare foreign top executive in Japan.

Ghosn was sent to Nissan in the late 1990s by Renault SA of France, after it bought a controlling stake of Nissan. He is credited with rescuing Nissan from the brink of bankruptcy.

In 2016, Ghosn also took control of Mitsubishi, after Nissan bought a one-third stake in the company, following Mitsubishi’s mileage-cheating scandal.

“If he is arrested, it’s going to rock the Renault-Nissan-Mitsubishi alliance as he is the keystone of the alliance,” said Satoru Takada, an analyst at TIW, a Tokyo-based research and consulting firm.

Shares in Renault fell more than 12 percent in late morning trading in Paris after the news about Ghosn came out.

 

 

 

 

 

 

Pence, Xi Sell Competing Views to Asian Regional Economies

The United States and China offered competing views to regional leaders at the Asia Pacific Economic Cooperation (APEC) meetings in Papua New Guinea, trading sharp words over trade, investment, and regional security.  Washington said it can provide a better option for regional allies under is “Free and Open Indo-Pacific” strategy.  as VOA’s State Department correspondent Nike Ching reports, the APEC gathering ended without a formal leaders’ statement.

Federal Reserve Policymakers See Rate Hikes Ahead, Note Worries

Federal Reserve policymakers on Friday signaled further interest rate  increases ahead, but raised relatively muted concerns over a potential global  slowdown that has markets betting heavily that the Fed’s rate hike cycle will soon peter out.

The widening chasm between market expectations and the rate path the Fed laid out just two months ago underscores the biggest question in front of U.S. central bankers: How much weight to give a growing number of potential red flags, even as U.S. economic growth continues to push down unemployment and create new jobs?

“We are at a point now where we really need to be especially data dependent,” Richard Clarida, the newly appointed vice chair of the Federal Reserve, said in a CNBC interview. “I think certainly where the economy is today, and the Fed’s projection of where it’s going, that being at neutral would make sense,” he added, defining “neutral” as interest rates somewhere between 2.5 percent and 3.5 percent.

But that range that implies anywhere from two more to six more rate hikes, and Clarida declined to say how many more increases he would prefer.

He did say he is optimistic that U.S. productivity is rising, a view that suggests he would not see faster economic or wage growth as necessarily feeding into higher inflation or, necessarily, requiring higher interest rates. But he also

sounded a mild warning.

“There is some evidence of global slowing,” Clarida said. “That’s something that is going to be relevant as I think about the outlook for the U.S. economy, because it impacts big parts of the economy through trade and through capital markets and the like.”

Federal Reserve Bank of Dallas President Robert Kaplan, in a separate interview with Fox Business, also said he is seeing a growth slowdown in Europe and China.

“It’s my own judgment that global growth is going to be a little bit of a headwind, and it may spill over to the United States,” Kaplan said. .

The Fed raised interest rates three times this year and is expected to raise its target again next month, to a range of 2.25 percent to 2.5 percent. As of September, Fed policymakers expected to need to increase rates three more times next year, a view they will update next month.

Over the last week, betting in contracts tied to the Fed’s policy suggests that even two rate hikes might be a stretch. The yield on fed fund futures maturing in January 2020, seen by some as an end-point for the Fed’s current rate-hike cycle, dropped sharply to just 2.76 percent over six trading days.

At the same time, long-term inflation expectations have been dropping quickly as well. The so-called breakeven inflation rate on Treasury Inflation Protected Securities, or TIPS, has fallen sharply in the last month. The breakeven rate on five-year TIPS hit the lowest since late 2017 earlier this week.

Those market moves together suggest traders are taking the prospect of a slowdown seriously, limiting how far the Fed will end up raising rates.

But not all policymakers seemed that worried. Sitting with his back to a map of the world in a ballroom in Chicago’s Waldorf Astoria Hotel, Chicago Federal Reserve Bank President Charles Evans downplayed risks to his outlook, noting that the leveraged loans that some of his colleagues have raised concerns about are being taken out by “big boys and girls” who

understand the risks.

He told reporters he still believes rates should rise to about 3.25 percent so as to mildly restrain growth and bring unemployment, now at 3.7 percent, back up to a more sustainable level.

Asked about risks from the global slowdown, he said he hears more talk about it but that it is not really in the numbers yet.

But the next six months, he said, bear close watching.

“There’s not a great headline” about risks to the economy right now, Evans told reporters. “International is a little slower; Brexit — nobody’s asked me about that, thank you; [the slowing] housing market: I think all of those are in the mix for uncertainties that everybody’s facing,” he said.

“But at the moment, it’s not enough to upset or adjust the trajectory that I have in mind.”

Still, Evans added, the risks should not be counted out: “They could take on more life more easily because they are sort of more top of mind, if not in the forecast.”

South Africa Cannabis Ruling Leads to Pot-Themed Products

Now that South Africa’s highest court has relaxed the nation’s laws on marijuana, local entrepreneurs are trying to cash in on the popular herb. Among the latest entries to the market: several highly popular cannabis-laced alcohol products, which deliver the unique taste, though without the signature high. Marijuana activists say this could just be the beginning and that the famous plant could do much more for the national economy. VOA’s Anita Powell reports from Johannesburg.

Experts: Without Proof of Ownership, Land Laws Worthless

Land laws mean nothing unless communities can prove their ownership, researchers said Thursday, calling for better tools to map the land and stave off conflict over property.

From South Africa to the Amazon rainforest, battles over land and who owns it are unleashing unprecedented conflict and labyrinthine legal cases as governments and companies seek to exploit ever more of the world’s natural resources, from trees to minerals to rubber.

With an estimated 70 percent of the world unmapped, more than 5 billion people lack proof of ownership, according to the Lima-based Institute for Liberty and Democracy.

Laws no safeguard

Speaking at the Thomson Reuters Foundation’s annual two-day Trust Conference, which focuses on a host of human rights issues, experts said the existence of laws in itself was no safeguard against abuse.

South Africa enshrines security of tenure in its constitution but the government rides roughshod over locals by promoting controversial mining deals, said Aninka Claassens, director of the University of Cape Town’s Land and Accountability Research Center.

More than two decades after the end of apartheid, whites still own most of the land in resource-rich South Africa and ownership remains a highly emotive subject ahead of next year’s national election.

“Our constitution means nothing unless people affected can prove their land rights, that’s why recorded rights are so important,” she said. “Mining is destroying livelihoods and land.”

Who owns what, where

Mapping property rights is crucial to understand “who owns what, where and how,” said Anne Girardin, land surveyor at the Cadasta Foundation, which develops digital tools to document and analyze land and resource rights information.

“That allows you to monitor changes in land resources, but also to better protect them,” she added.

More than 200 activists protecting their land and environment were killed in 2017, according to a survey of 22 countries by Global Witness, marking the deadliest year since the human rights group began collecting data.

Better and more coordinated information is needed to ward off more deadly conflicts, the experts said, citing satellite images and smartphones as tools that could document land.

Technology is plentiful but resources are scattered, Girardin said.

“It would take all the land surveyors we have 200-300 years to map the world’s undocumented land, so we need to be more pragmatic and work together,” she said.

Communities document land

Rampant deforestation means communities should rush to document their own land rather than wait for governments to act, said Nonette Royo, executive director of the International Land and Forest Tenure Facility, which helps indigenous people.

“In the world, forest area the size of Belgium disappears every year,” she said.

For Claassens, land rights should be mapped and recorded in accordance with who uses land as well as who actually owns it.

“Who uses the land? Most often, it’s women,” she said, adding that women were often excluded from property records.

Women are key in the fight for land rights from Brazil to Cambodia, often deployed at the frontline to ward off development and protect family plots, fields and villages.

‘Perfect Time,’ Ethical Businesses Say, to Drive Social Change

Ethically driven businesses are becoming increasingly popular and profitable but they can face threats for shaking up the existing order, entrepreneurs said on Social Enterprise Day.

When Meghan Markle wore a pair of “slave-free” jeans on a royal tour of Australia last month, she sparked a sales stampede and shone a spotlight on the growing number of companies aiming to meet public demand for ethical products.

“Right now is the perfect time to have this kind of business,” said James Bartle, founder of Australia-based Outland Denim, which made the $200 (150 pound) jeans. “There is awareness and people are prepared to spend on these kinds of products.”

Social Enterprise Day

Social Enterprise Day, which celebrates firms seeking to make profit while doing good, is being marked in 23 countries, including Australia, Nigeria, Romania and the Philippines, led by Social Enterprise UK (SEUK), which represents the sector.

Outland Denim is one such company, employing dozens of survivors of human trafficking and other vulnerable women in Cambodia to make its jeans, which all contain a written thank-you message from the seamstress on an internal pocket.

Bartle said he wanted to create a sustainable model that gives people power to change their future through employment.

More companies are striving to clean up their supply chains and stamp their goods as environmentally friendly and ethical, with women and millennials, people born between 1982 and 2000, driving the shift to products that seek to improve the world.

“For-profits create the mess, and then the not-for-profits clean it up,” said Andrew O’Brien, director of external affairs at SEUK, which estimates that 2 million British workers are employed by a social enterprise. “We are an existential threat to that system, by coming through the middle and forcing businesses to change the way they do business.”

Risky business 

Britain has the world’s largest social enterprise sector, according to the U.K. government. About 100,000 firms contribute 60 billion pounds ($76 billion) to the world’s fifth largest economy, SEUK says.

Elsewhere in the world, it can be a risky business.

“I get threats,” said Farhad Wajdi who runs Ebtakar Inspiring Entrepreneurs of Afghanistan, which helps women enter the workforce by training and providing seed money for them to operate food carts in the war-torn country. “I can’t go to the provinces.”

His work has met resistance in parts of Afghanistan, a conservative society where women rarely work outside the home.

“A social enterprise can lead to sustainable change in those communities,” Wajdi said on the sidelines of the Trust Conference in London. “It can propagate gender equality and create friction for social change at a grassroots level.”

Niche? Window dressing?

There is, however, a danger that social enterprise will remain a niche form of business or become window-dressing for firms that just want to improve their public image.

“I don’t want social enterprise to become the next (corporate social responsibility), another (public relations) move,” said Melissa Kim, the founder of Costa Rican-based Uplift Worldwide, which supports social enterprises.

“To me this is just good business, and good sustainable business is not just about the environment and human rights … if you care about your relationships internally and externally you will stay in business.”

China Woos Pacific Islands With Loans, Showcase Projects

As world leaders land in Papua New Guinea for a Pacific Rim summit, the welcome mat is especially big for China’s president.

A huge sign in the capital, Port Moresby, welcomes Xi Jinping, picturing him gazing beneficently at Papua New Guinea’s leader, and his hotel is decked out with red Chinese lanterns. China’s footprint is everywhere, from a showpiece boulevard and international convention center built with Chinese help to bus stop shelters that announce their origins with “China Aid” plaques. 

On the eve of Xi’s arrival for a state visit and the Asia-Pacific Economic Cooperation meeting, newspapers in the country ran a full-page statement from the Chinese leader. It exhorted Pacific island nations to “set sail on a new voyage” of relations with China, which in the space of a generation has transformed from the world’s most populous backwater into a major economic power. 

With both actions and words, Xi has a compelling message for the South Pacific’s fragile island states, long both propped up and pushed around by U.S. ally Australia: they now have a choice of benefactors. With the exception of Papua New Guinea, those island nations are not part of APEC, but the leaders of many of them have traveled to Port Moresby and will meet with Xi.

The APEC meeting, meanwhile, is Xi’s to dominate. Headline-hogging leaders such as Russia’s Vladimir Putin and U.S. President Donald Trump are not attending. Trump’s stand-in, Vice President Mike Pence, is staying in Cairns in Australia’s north and flying into Papua New Guinea each day. Australia’s new prime minister, Scott Morrison, the country’s fifth leader in five years, is barely known abroad.

“President Xi Jinping is a good friend of Papua New Guinea,” its prime minister, Peter O’Neill, told reporters. “He has had a lot of engagement with Papua New Guinea and I’ve visited China 12 times in the last seven years.”

Pacific island nations, mostly tiny, remote and poor, rarely figure prominently on the world stage but have for several years been diligently courted by Beijing as part of its global effort to finance infrastructure that advances its economic and diplomatic interests. Papua New Guinea with about 8 million people is by far the most populous, and with its extensive tropical forests and oil and gas reserves is an obvious target for economic exploitation.

Six of the 16 Pacific island states still have diplomatic relations with Taiwan, a sizeable bloc within the rapidly dwindling number of nations that recognize the island regarded as a renegade province by Beijing. Chinese aid and loans could flip those six into its camp. A military foothold in the region would be an important geostrategic boost for China, though its purported desire for a base has so far been thwarted. 

Beijing’s assistance comes without the oversight and conditions that Western nations and organizations such as the World Bank or International Monetary Fund impose. It is promising $4 billion of finance to build the first national road network in Papua New Guinea, which could be transformative for the mountainous nation. But experts warn there could also be big costs later on: unsustainable debt, white elephant showpieces and social tensions from a growing Chinese diaspora.

“China’s engagement in infrastructure in PNG shouldn’t be discounted. It should be encouraged but it needs to be closely monitored by the PNG government to make sure it’s effective over the long term,” said Jonathan Pryke, a Papua New Guinea expert at the Lowy Institute, a think tank in Sydney.

“The benefits of these projects, because a lot of them are financed by loans, only come from enhanced economic output over a long time to be able to justify paying back these loans,” he said.

“The history of infrastructure investment in PNG shows that too often there is not enough maintenance going on,” Pryke said. “There’s a build, neglect, rebuild paradigm in PNG as opposed to build and maintain which is far more efficient.”

Some high-profile Chinese projects in Papua New Guinea have already run into problems. A promised fish cannery hasn’t materialized after several years and expansion of a port in Lae, the major commercial center, was botched and required significant rectification work. Two of the Chinese state companies working in the country, including the company responsible for the port expansion, were until recently blacklisted from World Bank-financed projects because of fraud or corruption.

Xi’s newspaper column asserted China is the biggest foreign investor in Papua New Guinea, a statement more aspirational than actual. Its involvement is currently dwarfed by the investment of a single company—ExxonMobil’s $19 billion natural gas extraction and processing facility.

Australia, the former colonial power in Papua New Guinea, remains its largest donor of conventional foreign aid. Its assistance, spread across the country and aimed at improving bare bones public services and the capacity of government, is less visible. 

But its approach is shifting in response to China’s moves. 

In September, the Australian government announced it would pay for what is typically a commercial venture — a high-speed undersea cable linking Australia, Papua New Guinea and the Solomon Islands that promises to make the internet and telecommunications in the two island countries faster, more reliable and less expensive.

Earlier this month, Australia announced more than $2 billion of funding for infrastructure and trade finance aimed at Pacific island nations and also agreed to joint development of a naval base in Papua New Guinea, heading off feared Chinese involvement. It is also boosting its diplomatic presence, opening more embassies to be represented in every Pacific island state.

“The APEC meeting is shaping up to be a faceoff between China and Australia for influence in the Pacific,” said Elaine Pearson, the Australia director of Human Rights Watch.

That might seem a positive development for the region, but Pearson cautioned that competition for Papua New Guinea’s vast natural resources has in the past had little positive impact on the lives of its people.

“Sadly exploitation of resources in PNG has fueled violent conflict, abuse and environmental devastation,” she said.

 

 

Automaker Groups Warn US Tariffs Will Undermine New NAFTA Deal

U.S. automakers and parts suppliers on Thursday urged the Trump administration to end steel and aluminum tariffs on Mexico and Canada and warned that potential U.S. national security tariffs on automotive imports would lead to widespread job losses.

In testimony at a U.S. International Trade Commission hearing on the deal to replace the North American Free Trade Agreement, several automotive trade groups said automotive side letters to the agreement indicated that imposition of such tariffs were inevitable.

And the failure of the new U.S.-Mexico-Canada Agreement (USMCA) to lift steel and aluminum tariffs have also cost the industry billions of dollars, and trade turmoil in general has paralyzed investment decisions, they said.

“The current state of play on trade has placed our industry in turmoil. In the last year our members have faced section 232 steel and aluminum tariffs, other Section 232 tariffs proposed, and Section 301 tariffs on goods from China,” said Ann Wilson, senior vice president of government affairs at the Motor and Equipment Manufacturers Association.

The Trump administration is considering recommendations from the Commerce Department on whether to impose tariffs on national security grounds under Section 232 of the Trade Expansion Act of 1962. No decisions have been made, but President Donald Trump has frequently threatened to impose 25 percent tariffs on autos and parts to pressure the European Union and Japan to make trade concessions to the United States.

“If implemented, increased auto tariffs would not only undermine the potential success of the USMCA, they would also pose a material threat to the economy and may result in the loss of as many as 700,000 jobs across the U.S.,” said Jennifer Thomas, vice president of government affairs for the Alliance of Automobile Manufacturers.

John Bozzella, president of the Association of Global Automakers, which represents foreign brand automakers with U.S. plants, said the USMCA’s inclusion of duty-free import quotas for Mexico and Canada in the event such tariffs are imposed suggests that it is a “foregone conclusion” that Trump will impose them.

“The threat of additional tariffs on autos and auto parts under the section 232 investigation that Commerce is conducting hangs like a sword over our industry and complicates any assessment of the USMCA,” Bozzella said.

“In our view, there is no credible justification for the idea that automotive imports threaten our national security — in fact, the growth of international automakers in the United States during the past quarter century proves otherwise.”

Detroit vs. foreign brands

There also was a divergence of views among domestic and foreign automakers on the overall benefits of the USMCA agreement, which requires autos to have 75 percent regional content and at least 40 percent from the United States or Canada.

Bozzella expressed concern that the “many layered” content requirements would hurt automakers’ competitiveness by requiring “unnecessary” supply chain shifts and investment in compliance.

Matt Blunt, president of the American Automotive Policy Council, which represents Detroit automakers General Motors, Ford and Fiat Chrysler described the trade deal as “workable” for these companies which have larger U.S. manufacturing footprints than their competitors.

He said it would not require massive manufacturing and supply chain changes immediately, but over time, automakers would need to consider changes in where they build cars and major components.

“While the new rules will present some challenges for our industry, we believe the [Trump] administration included sufficient flexibilities that will help our automakers remain competitive while they successfully transition to the new, more stringent rules of origin included in the USMCA,” Blunt said.

Blunt estimated, however, that higher steel and aluminum costs due to tariffs mean that it costs about $400 more to produce a vehicle in the United States than it does to make them elsewhere with foreign metals.

Upset by Trump’s Iran Waivers, Saudis Push for Deep Oil Output Cut

When U.S. President Donald Trump asked Saudi Arabia this summer to raise oil production to compensate for lower crude exports from Iran, Riyadh swiftly told Washington it would do so.

But Saudi Arabia did not receive advance warning when Trump made a U-turn by offering generous waivers that are keeping more Iranian crude in the market instead of driving exports from Riyadh’s arch-rival down to zero, OPEC and industry sources say.

Angered by the U.S. move that has raised worries about over supply, Saudi Arabia is now considering cutting output with OPEC and its allies by about 1.4 million barrels per day (bpd) or 1.5 percent of global supply, sources told Reuters this week.

“The Saudis are very angry at Trump. They don’t trust him anymore and feel very strongly about a cut. They had no heads-up about the waivers,” said one senior source briefed on Saudi energy policies.

Washington has said the waivers are a temporary concession to allies that imported Iranian crude and might have struggled to find other supplies quickly when U.S. sanctions were imposed on November 4.

U.S. Secretary of State Mike Pompeo said on November 5 that cutting Iranian exports “to zero immediately” would have shocked the market. “I don’t want to lift oil prices,” he said.

A U.S. source with knowledge of the matter said: “The Saudis were going to be angry either way with the waivers, pre-briefed or even after the announcement.”

A U.S. State Department official said: “We don’t discuss diplomatic communications.”

The U.S. shift towards offering waivers adds to tension between the United States and Saudi Arabia, as Washington pushes for Riyadh to shed full light on the murder of Saudi journalist Jamal Khashoggi in the Saudi consulate in Turkey.

“The Saudis feel they were completely snookered by Trump. They did everything to raise supplies assuming Washington would push for very harsh Iranian sanctions. And they didn’t get any heads up from the U.S. that Iran will get softer sanctions,” said a second source briefed on Saudi oil thinking.

Saudi energy ministry did not respond to a Reuters request for comment.

Since the summer, Riyadh has led the Organization of the Petroleum Exporting Countries, Russia and other producers to hike supplies by over 1 million bpd to keep a lid on prices as U.S. sanctions were imposed.

Brent oil had surged above $86 a barrel in October on tight supply worries, but prices have since slid to $66 on concerns about oversupply.

Unexpected waivers

Trump had wanted lower oil prices before the U.S. midterm elections earlier this month. Washington gave waivers in November to eight buyers to purchase Iranian oil for 180 days.

This was more waivers than were initially expected. Saudi Crown Prince Mohammed bin Salman, a key Trump administration ally, wants prices at $80 or more for his economic reforms, sources familiar with Saudi thinking say.

“The waivers were totally unexpected, especially after calls to raise output. A few people are upset,” said a senior Gulf oil source familiar with the discussions among OPEC and its allies on output policy.

While the United States set a time limit for the waivers, it did not tell the eight recipients how much oil they could buy and has not eased payment restrictions, complicating purchases.

Iran’s oil exports are expected to drop sharply to about 1 million bpd in November from a peak of 2.8 million bpd earlier this year. Although output is expected to recover from December thanks to waivers, it is still not clear by how much.

Riyadh’s concern is to avoid the kind of oversupply in the market that led to a price collapse in 2014 to below $30.

But the lack of clarity about the level of Iran’s supplies makes it tough for Saudi Arabia to work out appropriate production levels, especially after Russia raised output steeply in recent months and has said it wanted to produce more in 2019.

Saudi Arabia would need to convince Russia to join in any move for new supply cuts.

“First the Saudis let oil prices rise to $86 per barrel and then flooded the market. Can they now cut back enough going into a seasonally weak time of the year? Without Russia it won’t be credible,” said Gary Ross, CEO of Black Gold investors.

Saudi Arabia must also contend with rising U.S. production that has hit record levels above 11 million bpd and is set to climb further next year. U.S. exports could surge from the second part of 2019 when new pipeline infrastructure opens.

Rapidan Energy Group said it saw a supply glut now lasting much more than just a few months in 2019.

“Now that the market has correctly priced weaker-than-anticipated Iran sanctions and much bigger inventory builds next year, we wish to emphasize that ‘OPEC plus’ officials face more than a single-year supply tsunami in 2019,” Rapidan said.

US Envoy for Iran Warns EU Banks, Firms Against Non-Dollar Iran Trade

European banks and firms which engage in a special European Union initiative to protect trade with Iran will be at risk from newly reimposed U.S. sanctions, the U.S. special envoy for Iran warned on Thursday.

It is “no surprise” that EU efforts to establish a so-called Special Purpose Vehicle (SPV) for non-dollar trade with Iran were floundering over fear in EU capitals that hosting it would incur U.S. punishment, Special Representative Brian Hook said.

“European banks and European companies know that we will vigorously enforce sanctions against this brutal and violent regime,” he said in a telephone briefing with reporters.

“Any major European company will always choose the American market over the Iranian market.”

The SPV is seen as the lynchpin of European efforts to salvage the 2015 nuclear accord with Iran from which U.S. President Donald Trump, who took office after the deal was sealed, withdrew in May.

Iran has warned it could scrap the agreement, which curbed its disputed program in exchange for sanctions relief, if the EU fails to preserve the deal’s economic benefits.

The SPV was conceived as a clearing house that could be used to help match Iranian oil and gas exports against purchases of EU goods in an effective barter arrangement circumventing U.S. sanctions, based on global use of the dollar for oil sales.

Brussels had wanted to have the SPV set up by this month, but no country has offered to host it, six diplomats told Reuters this week.

Their reluctance arises from fears that SPV reliance on local banks to smooth trade with Iran may trigger U.S. penalties, severing the lenders’ access to U.S. financial markets, diplomats said.

Criticizing EU efforts to bypass sanctions, Hook reiterated a warning that such an EU effort sent “the wrong signal, at the wrong time.”

However, he added that waivers from sanctions granted to eight of Iran’s biggest oil importers were to ensure the U.S. measures did not harm allies or raise oil prices.

“We have looked at these on a case by case basis, taking into account the unique needs of friends and partners, and also ensuring that as we impose sanctions on Iran’s oil sector that we do not lift the price of oil,” Hook said.

Draft Brexit Deal Ends Britain’s Easy Access to EU Financial Markets 

The United Kingdom and the European Union have agreed on a deal that will give London’s vast financial center only a basic level of access to the bloc’s markets after Brexit. 

The agreement will be based on the EU’s existing system of financial market access known as equivalence — a watered-down relationship that officials in Brussels have said all along is the best arrangement that Britain can expect. 

The EU grants equivalence to many countries and has so far not agreed to Britain’s demands for major concessions such as offering broader access and safeguards on withdrawing access, neither of which is mentioned in the draft deal. 

“It is appalling,” said Graham Bishop, a former banker and consultant who has advised EU institutions on financial services. The draft text “is particularly vague but emphasizes the EU’s ability to take decisions in its own interests. … This is code for the UK being a pure rule taker.” 

Britain’s decision to leave the EU has undermined London’s position as the leading international finance hub. Britain’s financial services sector, the biggest source of its exports and tax revenue, has been struggling to find a way to preserve the existing flow of trading after it leaves the EU. 

Many top bankers fear Brexit will slowly undermine London’s position. Global banks have already reorganized some operations ahead of Britain’s departure from the European Union, due on March 29. 

Currently, inside the EU, banks and insurers in Britain enjoy unfettered access to customers across the bloc in all financial activities. 

No commercial bank lending

Equivalence, however, covers a more limited range of business and excludes major activities such as commercial bank lending. Law firm Hogan Lovells has estimated that equivalence rules cover just a quarter of all EU cross-border financial services business. 

Such an arrangement would give Britain a similar level of access to the EU as major U.S. and Japanese firms, while tying it to many EU finance rules for years to come. 

Many bankers and politicians have been hoping London could secure a preferential deal giving it deep access to the bloc’s markets. 

Under current equivalence rules, access is patchy and can be cut off by the EU within 30 days in some cases. Britain had called for a far longer notice period. 

The draft deal is likely to persuade banks, insurers and asset managers to stick with plans to move some activities to the EU to ensure they maintain access to the bloc’s markets. 

Britain is currently home to the world’s largest number of banks, and about 6 trillion euros ($6.79 trillion) or 37 percent of Europe’s financial assets are managed in the U.K. capital, almost twice the amount of its nearest rival, Paris. 

London also dominates Europe’s 5.2 trillion-euro investment banking industry. 

Rachel Kent, a lawyer at Hogan Lovells who has advised companies on future trading relations with the EU, said the draft deal did not rule out improved equivalence in the future. 

“I don’t see that any doors have been closed,” she said. “It is probably as much as we could hope for at this stage.” 

Ocean Shock: Portugal Mourns Sardines’ Escape to Cooler Waters 

This is part of “Ocean Shock,” a Reuters series exploring climate change’s impact on sea creatures and the people who depend on them. 

A priest in a white robe swung an incense burner, leading the way for thousands of marchers as they crammed into a winding cobblestone alley decorated with candy-colored streamers in Lisbon’s ancient Alfama neighborhood. 

Behind the priest, six men carried a life-sized statue of St. Anthony, Lisbon’s patron saint, born more than 800 years ago. The musky incense swirled together with the smoke from orange-hot charcoals grilling whole sardines a few streets away. 

The procession moved along, leaving behind just the smell of the sardines. 

In this city, June is the month to celebrate the saints. Almost every neighborhood throws a party, known as an arraial. 

Some are just a scattering of makeshift tables in alleyways. Others cover several blocks and are jammed with tourists and locals alike. The saints are quickly forgotten in the din of pumping pop music, brass bands, chattering families, indiscreet lovers and flirty teens. The sardines are not. They’re the star of every party. 

The fish are so popular here, fisheries managers estimate that the Portuguese collectively eat 13 sardines every second during a typical June — about 34 million fish for the month. 

But as climate change warms the seas and inland estuaries, sardines are getting harder to catch. Just a week before the festival, authorities postponed sardine fishing in some ports out of a fear that the diminishing population, vulnerable to changes in the Atlantic’s water temperatures, was being overfished. 

In the last few decades, the world’s oceans have undergone the most rapid warming on record. Currents have shifted. These changes are for the most part invisible. But this hidden climate change has had a disturbing impact on marine life — in effect, creating an epic underwater refugee crisis. 

Effect on communities

Drawing on decades of maritime temperature readings, fisheries records and other little-used data, Reuters has undertaken an extensive exploration of the disrupted deep. A team of reporters has discovered that from the waters off the East Coast of the United States to the shores of West Africa, marine creatures are fleeing for their lives, and the communities that depend on them are facing turbulence as a result. 

Here in Lisbon, the decline of the country’s most beloved fish tugs at the Portuguese soul. A nation on Europe’s western edge, Portugal has always turned toward the sea. For centuries, it has sent its people onto the sometimes treacherous oceans, from famous explorers like Ferdinand Magellan and Vasco da Gama to little-known fishermen who left weeping wives on the shore. 

The St. Anthony’s festival commemorates a 13th-century priest who, church doctrine says, once drew a bay full of fish to hear his sermon. It is the capital’s biggest, most joyous celebration of the year. 

At the bottom of the track where two bright yellow funicular trains begin and end an 800-foot vertiginous trip through the Bica neighborhood, a social club and a local cafe set up for the festival. Mostly locals were present, though a few German and French tourists have found their way to the party. 

Four friends sat around a wobbly plastic table perched outside the G.D. Zip Zip social club. There was just enough room for others to walk past and get to the homemade grill where the sardines were being cooked. Three of the friends had sardine skeletons and heads heaped on their plates. They talked about the fish that’s as iconic in Portugal in the summer as a hamburger on the grill in America. 

This year, however, because of limits on fishing, the available fish were mostly frozen. 

“We listen to it all year round that maybe this year, we will not have sardines,” Helena Melo said. 

Fifteen feet up the hill, Jorge Rito, who has been cooking for the club every June for five years, wiped his watering eyes with the back of his hand. He’d just gotten another order and tossed a dozen whole sardines onto the grill in neat rows. 

As he flipped the silvery fish, each seven or eight inches long, a burst of smoke rose from the charcoal, and he wiped his eyes again. 

“Worried? Yes, of course,” he said, removing the fish from the grill and placing them onto a platter. “It is important for our finances, our economies, for us.” 

 

Youngest sardines vulnerable 

 

Just as the next generation of humans may pay the highest price for climate change, the youngest generation of sardines is at risk. 

Susana Garrido, a sardine researcher with the Portuguese Oceanic and Atmospheric Institute in Lisbon, said larval sardines are especially vulnerable to climate change when compared with other similar pelagic species, such as larval anchovies, which are capable of living in a wider range of temperatures. 

Deep seawater upwelling dominates the waters off the western coast of the Iberian Peninsula and keeps the coastal waters cool. But small differences in temperature, especially when sardines are young, can have a significant impact on whether the fish larva dies or grows to maturity, Garrido said. 

Other researchers had tested how well adult sardines survived in a variety of conditions, and there was little evidence that environmental variables such as food abundance and water temperature affected the full-grown fish, she said. So she focused on the larval stage of the species. 

“We did a bunch of experiments varying salinity and all of these other variables, and they survived quite well,” she said. “It was when you change temperature that everything, yes, fell apart. So they have a very narrow range of temperatures where survival is good.” 

Garrido said a recently completed stock assessment showed that the larval sardine population was extremely low. 

“This is getting very serious,” she said. 

The Portuguese sardine population started to fall about a decade ago, even though there were plenty of adults at the time to sustain large catches. And around the same time, southerly species, such as chub and horse mackerel, slowly moved in. 

Chub mackerel, a subtropical species that was once found only in southern Portugal, is now caught all the way up the coast. 

“Probably as a consequence of warming, it is now invading the main spawning area of sardines,” Garrido said. 

Larger forces at work

Alexandra Silva, who works down the hall from Garrido, has been managing the Portuguese sardine stock assessment since the late 1990s — pivotal work that the organization uses to decide the size of the sardine catch. 

When she started, the northern population of the species was in trouble following a period of strong upwelling that brought unusually cold water to the surface. The southern stock, however, was relatively healthy. And in the early years of the century, the species recovered. 

It was not to last. These days, without large numbers of larvae growing to maturity, the population is near collapse all along the coast from Galicia in Spain to the southern end of the Portuguese coast. 

All officials can do is cut down on the fishing. But larger forces, especially climate change, are now affecting the stock in ways that fisheries managers cannot control, the two said. 

Regulators have tried. 

Starting in 2004, they blocked fishing during the spring, when sardines spawn. And for a while, that seemed to work. 

Between 2004 and 2011, the stock remained relatively healthy, with landings ranging from about 55,000 to 70,000 tons, even if the population seemed to be dipping. (From the 1930s to the 1960s, and as recently as the 1980s, fishermen landed more than 110,000 tons in a year.) 

In 2009, the Portuguese proudly announced that the Marine Stewardship Council, an independent monitoring body, had designated the species healthy and sustainable. That year, Portuguese fishermen landed 64,000 tons of the fish. By 2012, however, that number had dropped to 35,000 tons, and the country lost its sustainable certification.  

Since then, fisheries managers have restricted the number of days a week that fishermen can catch sardines, as well as the size of the catch. They’ve also restricted fishing to six months during a year. 

Last year, the catch was limited to about 14,000 tons. 

Further cuts ahead

Earlier this year, the International Council for the Exploration of the Sea, a forum of scientists that advises governments about fisheries management, warned that it would take at least 15 years to restore the stock at current fishing levels.  

After the report, European Union regulators permitted fishermen along the Iberian coast to continue at the current 16,100-ton level. But it also required Portugal, which gets the bulk of the quota, and Spain to submit a plan to restore the stock in October, which may well lead to further quota cuts. 

Fisheries manager Jorge Abrantes handles landings for Peniche, a sleepy fishing town about 60 miles north of Lisbon. He doesn’t think the fishing industry is the culprit. 

For example, Portuguese government stock assessments indicated that the sardine population had decreased by 10 percent to 25 percent in just a few months. Abrantes argued that the dip clearly wasn’t caused by fishermen pulling sardines from the sea, because no sardine nets were in the water during that period. Instead, he said, there are just not enough juvenile sardines to replenish the population. 

In Peniche, fishermen Erbes Martins and Joao Dias sat among piles of nets on a bright but chilly February morning. The two 75-year-old men would have preferred to be fishing for sardines. But the fish were spawning, so they were not allowed to catch them. 

Sure, there were other fish they could catch, but it wasn’t worth it, they say. 

 

Horse mackerel, or carapau in Portuguese, one of the southerly species that now thrive all along the coast, is abundant but doesn’t sell for much at market, Dias said. 

 

“We can’t fish for sardines in October, November, December, January, February, March — six months,” Dias said. “And carapau just doesn’t pay the bills.” 

He said the restrictions on fishing sardines were keeping a new generation from going to sea, because they can’t make enough money. 

 

“When we die,” he said, “no one is going to do the work.” 

‘I would miss this’ 

Lisbon’s Graca neighborhood sits at the highest point in the capital, its pastel homes looking down over the city’s six other hills. For the St. Anthony festival, two stages were set up for music, along with about 20 temporary food and drink stalls. 

 

Luis Diogo Sr., his wife, Rita, and their two children, Luis Jr. and Vera, came out to join the party. Luis Sr. looked across a picnic table at his son, who was well into his third plate of sardines. 

“This is a country between Spain and the sea, so we went to the sea very soon in our history,” he said. The talk turned to the present, and the dwindling catch of the city’s favorite seafood. 

Luis Jr. didn’t pay much attention to his father. He was too focused on his sardines. 

 

“I would miss this very much,” the 17-year-old said, wiping his lips clean after polishing off the last sardine on his plate. 

US Adds New Sanctions on Cuba Tourist Attractions

The Trump administration is adding new names to a list of Cuban tourist attractions that Americans are barred from visiting.

 

The 26 names range from the new five-star Iberostar Grand Packard and Paseo del Prado hotels in Old Havana to modest shopping centers in beachside resorts far from the capital. All are barred because they are owned by Cuba’s military business conglomerate, GAESA.

 

Travel to Cuba remains legal. Hundreds of U.S. commercial flights and cruise ships deliver hundreds of thousands of Americans to the island each year. And nothing prevents the government from funding its security apparatus with money spent at facilities that aren’t owned by GAESA and banned by the U.S. But the sanctions appear to have dampened interest in travel to Cuba, which has dropped dramatically this year.

 

 

May’s Brexit ‘Moment of Truth’

Britain’s Theresa May scrambled Wednesday to sell to her Cabinet a draft Brexit divorce agreement British negotiators concluded after months of wrangling with their European Union counterparts.

But the 500-page draft remains a source of deep dispute within Britain’s ruling Conservative party and also in the country’s parliament, which will have the final say on whether to approve it.

As news emerged Tuesday that a text had been agreed, hardline Brexiteers lined up to attack the proposed agreement with former British foreign minister Boris Johnson, who resigned earlier this year, urging other ministers to join him in opposing the terms of the deal. Britain’s main opposition parties also announced their disapproval of the deal, which has not even been published yet. 

The agreement, if approved by the Cabinet and subsequently the British parliament, would see Britain remaining in a customs union for several years with the EU after it formally exits the bloc in March, but with an unclear legal path to quitting the customs arrangement while a fuller trade deal is negotiating.

Remaining in a customs union allows Britain and the EU to avoid introducing customs checks along the border separating Northern Ireland and the Republic of Ireland and would also allow “frictionless trade” between Britain and its erstwhile partners in the EU.

Tough sell

But critics say it would reduce Britain to the status of a “vassal state” by requiring it to accept EU rules and regulations without having any say about them. It would also block Britain from signing trade deals with other countries while a trade agreement is concluded with the EU, which itself could take three or four years or even longer. Reaching trade deals independently with non-EU countries was a key selling point of Brexit for many who voted nearly two years ago in a referendum to relinquish EU membership.

“This is just about as bad as it could possibly be,” Johnson fumed Tuesday to reporters in the corridors of the British House of Commons. Other Brexiteers joined him to denounce the proposed deal, one they are determined to sabotage and which runs, they say, contrary to the Conservative Party manifesto they fought an election on a year.

“For the first time in a thousand years this place, this parliament will not have a say over the laws which govern this country. It is quite an incredible state of affairs,” Johnson added.

“She hasn’t so much struck a deal as surrendered to Brussels… the UK will be a slave state,” said Conservative lawmaker Jacob Rees-Mogg.

Conservatives’ future at stake

The stakes couldn’t be higher for Theresa May. The draft agreement, May’s fate as Prime Minister and the longevity of the Conservative government are all hanging in the balance. The consequences of the process to get the draft agreement approved are difficult to guess and could end up sinking May, the Conservative government and even Brexit itself. “I don’t think anyone knows, to be truthful,” said Labour lawmaker Chuka Umunna.

May’s minority government relies on the votes in the House of Commons on a handful of lawmakers from a quirky Protestant-based Unionist party, which is also opposed to the draft deal.

Without the backing of the Democratic Unionist Party, and faced with an inevitable revolt by dozen of Conservative lawmakers, May will need to persuade opposition lawmakers to break with their party leaderships by arguing her deal is the best Britain can get.

Second vote?

But an increasing number of opposition lawmakers are jumping on the bandwagon of the People’s Vote movement, which is calling for a second Brexit referendum. Recent opinion polls suggest a majority of voters now, especially in traditional Labour heartlands, many of which voted in June 2016 for Brexit, now want Britain to retain EU membership, fearing the economic fallout from departure.

But even before seeking next month parliamentary backing for the draft customs union deal, May has to persuade her cabinet to back her — and that is not even a sure thing. On Tuesday — ahead of a full cabinet meeting called for Wednesday afternoon — May took a leaf out of the playbook of her Conservative predecessor Margaret Thatcher, who in 1990 called in ministers one by one to place them on the spot and demand their support. However, the tactic backfired on Thatcher and she was forced to resign. 

Former Conservative leader Iain Duncan Smith predicts May’s days will be numbered if she fails to reverse course and decides not to pursue a cleaner break from the EU. “If the cabinet agrees it, the party certainly won’t,” he said. Conservative lawmakers who want Britain to remain in the EU are also publicly opposing the draft agreement, placing May in a tight political vice.

Leave-supporting ministers were coming under intense pressure from hardline Brexiteers in the hours leading up to the cabinet meeting to reject the deal. They pointed to a leaked EU document outlining a strategy to force Britain to accept an almost permanent alignment with its rules and regulations governing state aid, environmental protection and workers’ rights.

In a note to EU ambassadors, Sabine Weyand, a deputy EU negotiator, said the customs union will form the basis for Britain’s future trade deal with the bloc. “They must align their rules but the EU will retain all the controls. UK wants a lot more from the future relationship, so EU retains leverage,” she wrote. 

 

 

 

 

 

Amazon Splits 2nd HQ Between NYC, DC Suburb

Amazon says it will split its long-awaited second headquarters between New York City and and Crystal City, part of Arlington, Virginia, as well as open a new facility in Nashville, Tennessee.

“These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come,” CEO and founder Jeff Bezos said Tuesday in an official press release.

The new headquarters will split the 50,000 jobs and $5 billion in local investments Amazon promised while taking bids from cities across the country, while adding 5,000 more for its new “Operations Center of Excellence” in Nashville.  In return, Amazon will receive incentives of about $1.5 billion from New York City and $573 million from Arlington.

The announcement marks the end of a year-long search for Amazon’s “H2,” as it came to be known.  The online retail giant narrowed a list of 238 initial applicants to 20 finalists, including Boston, Chicago and Miami.  

The process drew outrageous publicity stunts from local officials trying to attract attention to their bids and and cushy offers of heavy tax breaks and rebuilt infrastructure to accommodate the Seattle-based company.

Hiring will begin next year.  Amazon has said jobs in both cities will have average annual salaries of $150,000.  The new headquarters are expected to bring high-paying jobs and tax revenue, but critics anticipate local property values soaring into unaffordability and congested local infrastructure.

 

Gin Up, South Africa: Gin Craze Going Big

A recent proliferation of craft gins and new distilleries has taken over South Africa’s bar scene. But this is not your average gin, distillers say: South African gin is infused with unique local flavors — like fynbos, rooibos, marula, sceletium and other distinctive South African botanicals — that they feel will take the world’s taste buds by storm. VOA’s Anita Powell reports from Gin Town, AKA Johannesburg.

Ocean Shock: In Land of Sushi, Squid Moves Out of Reach

This is part of “Ocean Shock,” a Reuters series exploring climate change’s impact on sea creatures and the people who depend on them.

Takashi Odajima picked up a cracked and faded photograph and dusted it off with his sleeve. He smiled a little sadly at the image from long ago, back when he was a baby boy.

In the photo, he sits on his uncle’s lap as his family poses at a nearby dock, squid heaped in the background. In another, his uncle dries rows of squid, carefully folded like shirts over a clothesline on the roof of their house.

Odajima’s family has lived for generations in Hakodate, on Japan’s northern island of Hokkaido. It’s a city steeped in squid, a place where restaurants outside the local fish market advertise the start of the squid-fishing season with colorful banners.

When Odajima’s father returned home from World War II, he supported his family by driving a truck for a local seafood company. He was paid in salt, a valuable commodity at the time.

Using the salt, his family began making and selling shio-kara, a fermented squid dish that derives its name from its taste: “salty-spicy.” Because it keeps for days without refrigeration, it was an important source of protein for Japan’s starving population after the war.

Seven decades later, most Japanese bars still serve it as an appetizer, and small bottles are sold in supermarkets as a condiment to be eaten with rice.

“Someone once asked me what squid means to people in Hakodate, and I told him that it was our soul. I was half-joking at the time,” Odajima, 66, said. “But squid was always the main dish, long before we started eating rice.”

Out of more than a dozen types of squid eaten here, the Japanese flying squid, or Todarodes pacificus, is so central to the national cuisine, it’s sometimes referred to as maika, or the true squid.

But now, fluctuations in ocean temperatures and years of overfishing and lax regulatory oversight have drastically depleted populations of the translucent squid in waters around Japan. As recently as 2011, fishermen in Japan were hauling in more than 200,000 tons of flying squid a year. That number had fallen by three-quarters to 53,000 tons last year, the lowest harvest since Japan’s national fisheries cooperative started keeping records more than 30 years ago. Japanese researchers say they expect catches of flying squid to be even smaller this year.

That such a ubiquitous creature could disappear has shaken a country whose identity is intertwined with fish and fishing, a nation where sushi chefs are treated like rock stars and fishermen are the heroes of countless TV shows. The shortage of flying squid, an icon of the working and middle classes, has dealt a hard blow to the livelihoods of not only fishermen, but everyone from suppliers to traders at Tokyo’s famous fish market.

The fate of the flying squid is a microcosm of a global phenomenon that has seen marine life fleeing waters that have undergone the fastest warming on record. Reuters has spent more than a year scouring decades of maritime temperature readings, fishery records and other little-used data to create a portrait of the planet’s hidden climate change — in the rarely explored depths of the seas that cover more than 70 percent of the Earth’s surface.

Fish have always followed changing conditions, sometimes with devastating effects for people, as the starvation in Norwegian fishing villages in past centuries when the herring failed to appear one season will attest. But what is happening today is different: The accelerating rise in sea temperatures, which scientists primarily attribute to the burning of fossil fuels, is causing a lasting shift in fisheries.

In Japan, average market prices of the once-humble squid have nearly doubled in the past two years, quickly putting the dish out of reach for many blue-collar and middle-class Japanese families that grew up eating it.

A Town’s Identity Threatened

Here in Hakodate, the squid shortage threatens the very culture and shared history of the town. One of the country’s first ports to open for trade with the outside world in the 19th century, it has the look of a Japanese San Francisco, with gingerbread Victorians and tram lines that slope down to the waterfront.

Odajima’s earliest memory is of his mother buying squid from a neighbor’s cart piled high with the morning’s catch. Now, fishermen barely have enough squid to sell to traders, much less to neighbors. A festival celebrating the start of the squid season in a nearby town has been canceled two years in a row.

Odajima still works in the family compound, a collection of deteriorating buildings near the Hakodate docks. Walking through a cluttered storage shed, he shows off the factory floor where he keeps his family treasure: dozens of 60-year-old barrels made of Japanese cedar. He’s one of the last local manufacturers still using wooden barrels to ferment and age his product.

Odajima also refuses to use cheaper imported squid, saying it would harm the brand’s locally sourced appeal.

But with costs skyrocketing, he isn’t sure about the future of his family business. His 30-year-old son quit his office job to help out after Odajima failed to find new workers. “I wanted to be able to hand it to him in better shape,” he said, “but now…”

One morning in June, Odajima joined a huddle of men at the docks for one of the first squid auctions for the season.

They looked over three neat piles of white Styrofoam boxes, comforting one another that it was still early in the squid season.

“Shit, they’re all tiny,” one buyer said. His friend walked away without waiting for the bidding to start.

At exactly 6.20 a.m., men in green jackets tipped their hats and began the auction. Once an event that used to attract dozens of buyers and take as long as an hour, this one took less than two minutes.

A gruff buyer supplying local restaurants that cater mostly to tourists strode to the front of the pack and bought all 11 boxes without looking. The rest of the group, including Odajima, hung back and shook their heads.

In the month of June, just 31 tons of fresh squid ended up at Hakodate’s main market, 70 percent less than the previous year. A typical squid caught in the Sea of Japan now weighs a third less than it did 10 years ago, according to surveys by Takafumi Shikata, a researcher at the Ishikawa Prefecture Fisheries Research Center.

An Early Warning on Squid

The squid shortage has become so dire, anxious bankers with outstanding loans to those in the industry have started showing up at the annual seminars held by Yasunori Sakurai, one of Japan’s foremost experts on cephalopods.

Sakurai, the chair of the Hakodate Cephalopod Research Center, began warning fishermen and other researchers about the effects of climate change on Japan’s squid population nearly two decades ago.

The flying squid gains its name from the way it can spread its mantle like a parachute to draw in and eject water, using propulsion to fly above the waves. The squid spend their short life — just over a year — migrating thousands of miles between the Sea of Japan and the Pacific Ocean, mating, then returning to lay eggs in the same area where they were born.

Sakurai blames climate change for recent fluctuations in ocean temperatures — a cold snap in waters where the squid spawn and steadily warming waters in the Sea of Japan where they migrate. These changes mean that fewer eggs laid in the colder-than-average waters in the East China Sea survive, and those that do hatch are swimming northward to avoid unnaturally warm waters in the Sea of Japan.

The Sea of Japan has warmed 1.7 degrees Celsius (around 3 degrees Fahrenheit) in the past century, making it one of the fastest-warming areas in the seas surrounding the archipelago.

Based on predictions by Sakurai’s former students now at Japan’s Fisheries Research and Education Agency, surface temperatures in these waters may rise an additional 3.7 degrees Celsius over the next century.

These changes have taken a toll on squid.

“It’s something that’s always been eaten on the side, and now it’s just gone. Everyone is asking why,” Sakurai said.

Others, like retired regulator and researcher Masayuki Komatsu, argue that although Japanese officials and fishermen are loath to admit it, the country’s rampant overfishing and lax regulatory oversight are also to blame for the shortage.

“They all blame it on climate change, and that’s the end of the discussion for them,” said Komatsu, who served as a senior official in Japan’s fisheries agency until 2004.

Since Japan started setting catch limits for the flying squid 20 years ago, fishermen have never come close to hitting the limit of the quotas. This year, the fisheries agency said it will allow fishermen to catch 97,000 tons of squid, a third less than the government’s limit for last year, but nearly double what fishermen actually caught during the same period.

The ministry acknowledges that flying squid, particularly those born in winter months, are rapidly declining. But officials say the catch limits are appropriate given the scientific evidence available. They say it is especially hard to study the elusive creature, which travels long distances over a short lifespan and is more susceptible to environmental changes than many other marine species.

“It isn’t scientific to simply say that because squid isn’t being caught, we need to lower the catch limits, when we don’t have the scientific backing to justify that,” said Yujiro Akatsuka, assistant director of the agency’s resources management promotion office.

A Fishing Town on the Rocks

Ripped curtains and fraying bits of cardboard cover windows of the empty storefronts along the main shopping street in Sakata, a town on the northwestern coast of Japan that once thrived as a major trading hub for rice and later as a fishing port. Old signs for grocery stores, camera shops and beauty parlors are barely visible through a thicket of vines.

Wooden warehouses that once stored the region’s rice are one of the few reminders of the town’s prosperous past. They were turned into souvenir stores after the buildings were featured in a popular television drama series.

On an early summer day, the docks were deserted except for a group of young Indonesian men living in shared rooms next to the port. They’re Japan’s answer to an aging industry, part of an army of young foreign men brought into the country to take fishing jobs spurned by Japanese men.

Shigeru Saito was 15 when he boarded his first fishing boat.

By the time he was 27, he was at the helm of his own ship. He never questioned his path. Both his father and grandfather, born on a small island off Sakata’s coast, had been fishermen.

Now 60, Saito has steered dozens of ships all over Japan.

When Saito started fishing, Japan had a fleet of more than 400 ships harvesting squid. He now captains one of the 65 remaining ships specially kitted with powerful light bulbs that lure squid from dark waters.

Until recently, his crew could return to port in two weeks after the start of the squid-fishing season in early June with their ship’s hold full of flying squid. Now, it takes them almost 50 days to catch that much.

“We’re having to travel farther and farther north to chase squid, but there are limits,” he said, pausing his round of checks to sit in the captain’s room of his ship, the Hoseimaru No. 58, where he sleeps in a tiny cot under boxes of equipment.

As competition intensifies for an ever-dwindling catch, fishermen have begun blaming trawlers from China, South Korea and Taiwan for overfishing in nearby waters. In recent years, fishermen from North Korea have also joined the competition.

Japan says North Koreans are illegally poaching squid in the Yamato Shallows, a particularly abundant area in the Sea of Japan.

Saito’s fishing lines got tangled in a net set by a North Korean boat there last year. Cautious about any confrontation with North Koreans, he and other Japanese fishermen abandoned the area early in the squid season.

“We can’t fish in these conditions,” he said.

Young Japanese men like Saito’s son are reluctant to join the industry, with its long months away from home and physically grueling labor. His crew is already half Indonesian. Soon, he said, only the captain will need to be Japanese.

In the last decade, the number of fishermen in Japan has declined by more than a third to fewer than 160,000. Of those left, an average fisherman earns about $20,000, not even half of Japan’s national median income.

“My son is a salaryman in the city,” Saito said. “I couldn’t recommend this to him – how could I? We’re away a third of the year,” and, with North Korean poachers on the prowl, “the waters are more dangerous now.”

The next day, men set up folding chairs and tents on Sakata’s dock for a ceremony marking the start of the fishing season. Saito joined other captains in the front row, bowing his head with his baseball cap in his hands. Young Indonesian men fidgeted in the back of the crowd. Melodic chants of Buddhist monks filled the salty air.

“We know we are powerless before the might of nature,” one monk said as the captains fixed their eyes on the ground. “We cannot go against the power of the sea. But we pray for a bountiful harvest and safe passage over the seas.”

Anxiety in Tokyo

Several weeks had passed since Japan’s squid-fishing fleet left port. But in Tokyo, near the Tsukiji fish market, Atsushi Kobayashi was waiting anxiously. The specialist wholesaler still hadn’t received a single shipment of flying squid from northern Japan. His driver sat on the concrete curb next to Kobayashi’s truck smoking in the midday sun.

In the past, each week Kobayashi would unload three to four shipments of 1,200 squid, to be dispatched to high-end sushi restaurants around Tokyo.

“Last year, the fishing season ended in November because the squid disappeared” — two months earlier than usual. He unlocked his phone to message another customer that he had nothing to sell that day.

Elsewhere in Tsukiji, the largest wholesale seafood exchange in the world, hundreds of other family-run fish traders were also awaiting this season’s catch. But by the time cases of squid finally began to arrive later in the summer, many of the traders were preparing to close their stalls to abandon the 80-year-old market.

In October, hundreds of fishmongers moved to a gleaming new market on the waterfront that cost more than $5 billion. But others, their businesses already failing from a drop in consumer demand, higher operational costs and a lack of interest from the families’ younger generation, didn’t make the move.

Those who left felt a powerful sense of loss about a place that has been a colorful symbol of the country’s fishing industry.

Masako Arai was one of them. Her husband’s family started their wholesale fish trading business 95 years ago, first in Nihonbashi, where the previous market was destroyed in a massive earthquake and fire in 1923, and later in Tsukiji.

“Our families have lived here and protected this place for generations,” the 75-year-old grandmother said.

Near Arai’s store were empty spaces where families had tended shop for generations; more than a hundred businesses have closed in the past five years. Nearly a third of the remaining 500 fish traders at the market were losing money.

“It feels like we’re always on shifting sand, and we don’t know what the future holds,” Arai said.

Nor do the chefs who create Japan’s signature cuisine.

Kazuo Nagayama has visited Tsukiji most mornings for the past 50 years to buy fresh fish. Once back at his sushi bar in the Nihonbashi district, he changes into his white uniform to write out the day’s menu with an ink brush.

For the past few years, the 76-year-old chef has found it harder to list local fish he deems decent enough to serve to his customers. On this summer day, the first item on his handwritten menu was yellowfin tuna shipped from Boston.

“I’m worried that people won’t know what it’s like to taste truly delicious fish,” he said. “Fishermen feel they have no future, and fisherfolk are disappearing. Our culture surrounding fishing is disappearing, and our culinary culture is also fading.”

Nagayama doesn’t allow anyone else to handle fish behind the counter, where customers pay up to $300 each for the chef’s nightly omakase course. Although his tiny bar is usually fully booked, he doesn’t see a future for it — he has no children and no heir.

“We’ll have to close in the next four to five years,” he said. “I’ll be the last one here.”

‘Everyone’s Raising Prices’

At Nabaya, a dark bar across the street from his Tokyo office, Hiroshi Nonoyama sipped a beer after another long day at work.

“It’s all depressing news, not a great topic of conversation over drinks,” he said. Nonoyama manages a trade group overseeing 79 companies that manufacture everything from squid-flavored potato chips to squid jerky. They’ve been some of the hardest hit by the recent run of poor harvests, Nonoyama said.

“A lot of these guys are old school. They haven’t diversified beyond using flying squid, you see? And when that becomes too expensive? Boom!” he said, crashing his hand on the bar counter.

Already this year, two of his companies had gone out of business because of the rising cost of squid.

“I only heard about one of them because I got a call from the tax office about unpaid taxes,” he said, sighing. The owner, who had employed 70 workers for half a century, was now on the run from his creditors.

“Everyone’s raising prices, but how much are customers willing to pay?” Nonoyama asked.

It’s the same question that Odajima, the Hakodate squid merchant, asks himself every day. He has nearly doubled prices in the past two years to 700 yen per bottle.

“Buyers are telling me that if I raise prices again, they won’t be able to sell it as a side dish or condiment — consumers just won’t buy it,” he said.

His factory’s yearly output is almost half of what it was 10 years ago. Looking for ways to survive, Odajima is now courting boutique supermarkets and upscale restaurants.

Recently, Odajima flew to Tokyo to pitch his product. By the time he arrived at Ginza Six, a shimmering luxury mall in the city’s posh shopping district, he was already sweating in his oversized pinstripe suit. He adjusted his tie and patted down his freshly cut hair in front of Imadeya, a premium liquor store on the basement floor of the mall.

Two Chinese women sampled glasses of Japanese wine under a pair of Edison bulbs at the shop counter. Shohei Okawa, the store’s 36-year-old manager, waited patiently as Odajima pulled several jars of shio-kara out of a cooler he had carried on the plane from Hakodate. Folded copies of Tokyo’s subway map peeked out of his large duffel bag.

“As you know, prices are getting higher, particularly for squid,” he said, suddenly sounding formal and looking anxious.

“Which is part of the reason why we’d love to sell in a higher-end store like yours.”

“What other stores carry this in Tokyo?” Okawa asked. “And is this rare? Is it authentic?”

Odajima quickly added that his product was handmade with no artificial coloring.

Satisfied, Okawa said he would send in orders for a few cases.

Outside, leaning against the mall’s glass façade, Odajima was happy — for the moment, at least.

“I wonder what my father would think, selling it at a place like this,” he said. “It’s a little unbelievable. We had so much squid we didn’t know what to do with it. Now, it’s become a delicacy.”

Tech Giants Slide, Pulling US Stock Market Sharply Lower

A broad sell-off in technology companies pulled U.S. stocks sharply lower Monday, knocking more than 600 points off the Dow Jones Industrial Average.

 

The wave of selling snared big names, including Apple, Amazon and Goldman Sachs. Banks, consumer-focused companies, and media and communications stocks all took heavy losses. Crude oil prices fell, erasing early gains and extending a losing streak to 11 days.

 

The tech stock tumble came followed an analyst report that suggested Apple significantly cut back orders from one of its suppliers. That, in turn, weighed on chipmakers.

 

“With the news out of the Apple supplier this morning, you have the market overall questioning the growth trajectory as we look out to 2019,” said Lindsey Bell, investment strategist at CFRA. “We continue to like tech going into next year, but we think it could be a little bit of a rocky period for the group as we continue through the last two months of the year.”

 

The market’s slide came after a two-week winning streak.

 

The S&P 500 index dropped 54.79 points, or 2 percent, to 2,726.22. The Dow fell 602.12 points, or 2.3 percent, to 25,387.18. It was down briefly by 648 points.

 

The Nasdaq composite slid 206.03 points, or 2.8 percent, to 7,200.87. The Russell 2000 index of smaller companies gave up 30.70 points, or 2 percent, to 1,518.79.

Bond trading was closed for Veterans Day. Stocks in Europe also suffered losses.

 

Apple tumbled 5 percent to $194.17 after Wells Fargo analysts said the iPhone maker is the unnamed customer that optical communications company Lumentum Holdings said was significantly reducing orders. Shares in Lumentum plunged 33 percent to $37.50.

 

Several chipmakers also fell. Advanced Micro Devices gave up 9.5 percent to $19.03, while Nvidia lost 7.8 percent to $189.54. Micron Technology gave up 4.3 percent to $37.44.

 

Amazon slid 4.4 percent to $1,636.85.

 

Banks and other financial companies also took heavy losses Tuesday. Goldman Sachs slid 7.5 percent to $206.05.

“Expectations are really that the deregulation process that has benefited banks up to this point is going to be slowed down with the Democrats in charge,” Bell said.

 

Stocks appeared to have regained their footing after a skid in October snapped a six-month string of gains for the S&P 500. Stocks rallied last week after the U.S. midterm elections turned out largely as investors expected, with a divided Congress promising legislative gridlock in Washington the next couple of years.

 

While the market has typically thrived in periods of divided government, investors continue to grapple with uncertainty over the U.S.-China trade dispute and the potential impact of increased oversight of Corporate America by Democrats, who will be taking over leadership in the House of Representatives in January.

 

In addition, some companies have recently reported third-quarter earnings and outlooks that have stoked investors’ worries about the future growth of corporate profits.

 

While companies got a boost this year from the lower tax rates put in place by President Donald Trump and the GOP last December, several companies have recently warned about the impact of higher costs related to tariffs and rising interest rates.

 

“The bull market is not over, the economic expansion is not over, but things are starting to wind down,” said Randy Frederick, vice president of trading & derivatives at Charles Schwab. “We’re clearly getting into the late innings of the ball game.”

 

British American Tobacco, which makes Newport cigarettes, plunged 8.8 percent to $38.08 on reports that regulators were considering a ban on menthol cigarettes.

 

PG&E tumbled 17.4 percent to $32.98 after the electric utility told regulators that a high-voltage line experienced a problem near the origin of one of the major California wildfires before the blaze started.

 

Investors bid up shares in Athenahealth after the struggling medical billing software maker said it received a $5.7 billion cash buyout offer. The stock jumped 9.7 percent to $131.97.

 

About 90 percent of S&P 500 companies have reported third-quarter results so far, with some 51 percent of those posting earnings and revenue that topped Wall Street’s forecasts, according to S&P Global Market Intelligence. Several big retailers are due to deliver results this week, including Walmart, Home Depot, Williams-Sonoma, Nordstrom and J.C. Penney.

 

“That could actually probably boost the market,” Bell said.”Retailers are going to have a better third quarter than most people expect. A lot of them ordered goods ahead of the tariffs going into place, so they’re not going to have to pass on higher prices on to the consumer this holiday season.”

 

Benchmark U.S. crude gave up an early gain, sliding 0.4 percent to settle at $59.93 per barrel in New York. Brent crude, used to price international oils, dipped 0.1 percent to close at $70.12 per barrel in London. Oil futures rose earlier on news that Saudi Arabia and other major producers planned to reduce output.

 

The dollar strengthened to 113.86 yen from 113.80 yen on Friday. The euro fell to $1.1240 from $1.1336. The British pound weakened to $1.2853 from $1.2975 amid concerns that Britain’s government is struggling to find unity on a Brexit deal.

 

Gold fell 0.4 percent to $1,203.50 an ounce. Silver lost 0.9 percent to $14.01 an ounce. Copper slid 0.3 percent to $2.68 a pound.

 

In other energy trading, heating oil fell 0.8 percent to $2.16 a gallon and wholesale gasoline gained 0.9 percent to $1.64 a gallon. Natural gas rose 1.9 percent to $3.79 per 1,000 cubic feet.

 

Major stock indexes in Europe also ended lower Monday. Germany’s DAX lost 1.8 percent and France’s CAC 40 fell 0.9 percent. Britain’s FTSE 100 shed 0.7 percent.

 

In Asia, markets finished mixed. Japan’s Nikkei 225 added 0.1 percent, while Hong Kong’s Hang Seng rose 0.1 percent. Australia’s S&P-ASX 200 gained 0.3 percent. The Kospi in South Korea dipped 0.3 percent.

Bolsonaro: Brazil Pension Reform Legislation Unlikely in 2018

Brazil’s Congress is unlikely to pass pension reform legislation this year, far-right President-elect Jair Bolsonaro said on Monday, a blow to investor hopes that caused the country’s currency to weaken in futures markets.

Investors snapped up Brazilian assets in the wake of Bolsonaro’s election victory last month, cheered by his party’s stronger-than-expected showing in congressional races, which raised hopes he could make quick advances on fiscal reforms.

Many economists say cuts to Brazil’s social security system are essential to controlling a huge federal deficit and regaining Brazil’s investment-grade rating.

Last week, Bolsonaro said he would like to see some form of pension reform passed this year to make it easier to deal with the deficit after he takes office on Jan. 1.

On Monday, however, he told reporters in Rio de Janeiro that after speaking with his chief economic advisor Paulo Guedes, passing a 2018 pension reform bill looked increasingly unlikely.

He added that the reform would not just be based on crunching the numbers, but would also have to take into account the social impact of the overhaul.

Brazil’s currency, the real, weakened against the U.S. dollar in futures markets after his comments.

Bolsonaro also said that no decision had yet been taken on the next head of state-controlled oil company Petroleo Brasileiro SA, with more names for the chief executive position set to come out on Tuesday.

Separately, Guedes said on Monday that World Bank chief financial officer and former Brazilian finance minister Joaquim Levy had accepted Bolsonaro’s offer to lead state development bank BNDES.

Abu Dhabi Summit: Oil Production Cuts May Be Necessary

OPEC and allied oil-producing countries will likely need to cut crude supplies, perhaps by as much as 1 million barrels of oil a day, to rebalance the market after U.S. sanctions on Iran failed to cut Tehran’s output, Saudi Arabia’s energy minister said Monday.

The comments from the minister, Khalid al-Falih, show the balancing act the U.S. allies face in dealing with President Donald Trump’s actions related to the oil industry.

Trump in recent weeks demanded the oil cartel increase production to drive down U.S. gasoline prices. “Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!” he tweeted Monday.

The U.S. has meanwhile allowed some of its allies — Greece, India, Italy, Japan, South Korea, Taiwan and Turkey — as well as rival China to continue to purchase Iranian oil despite reimposed sanctions, as long as they work to reduce their imports to zero.

Al-Falih, who on Sunday said the kingdom would cut production by over 500,000 barrels per day in December, said Monday that Saudi Arabia had been giving customers “100 percent of what they asked for.” That appeared to be a veiled reference to Trump.

Before the United States reimposed sanctions on Iran, “fear and anxiety gripped the market,” al-Falih said at the Abu Dhabi International Petroleum Exhibition & Conference. Now “we’re seeing the pendulum swing violently to the other side,” he added.

The energy minister of the United Arab Emirates, Suhail al-Mazrouei, currently the president of OPEC, said “changes” likely would be necessary as the oil cartel meets in December in Vienna. However, he added: “We need not to overreact when these things happen.”

Al-Falih said OPEC officials have seen analysis papers suggesting a production cut of upward of 1 million barrels of crude a day may be necessary to rebalance the market. However, he stressed that more study needed to be done.

“There are a lot of assumptions in their projections that may change,” al-Falih said. “We don’t want to throttle the global economy.”

A gallon of regular gasoline in the U.S. on average now sells for $2.69, down from $2.90 a month ago, according to AAA. Those lower prices likely quieted Trump, but production cuts could again boost prices at the pump.

Trump and volatility

Neither al-Falih nor al-Mazrouei directly criticized Trump, but Mohammed Hamad al-Rumhy, Oman’s oil and gas minister, blamed the U.S. president for some of the volatility striking the oil market. Oman, a sultanate on the eastern edge of the Arabian Peninsula, maintains close diplomatic ties to Iran and often serves as an interlocutor between Western powers and Tehran.

“Supply and demand is perhaps the easy part because you can measure it,” al-Rumhy said. It’s “extremely difficult to quantify what is happening in [the] White House — almost impossible.”

Iran, which has tense relations with Abu Dhabi, the capital of the UAE, did not have a high-level official at the summit.

Crude oil dropped to a low of $30 a barrel in January 2016. That forced OPEC to partner with non-OPEC countries, including Russia, to cut production to help prices rebound.

Benchmark Brent crude, which had been trading above $80 a barrel recently, now hovers just over $70 after the U.S. sanction waivers on Iran.

Fracking

Meanwhile, Sultan Ahmed al-Jaber, the head of the state-run Abu Dhabi National Oil Co., said the UAE planned to increase oil production to 4 million barrels a day by 2020 and 5 million barrels a day by 2030. The UAE now produces some 3 million barrels of oil a day.

Al-Jaber also said the UAE would begin fracking — injecting high-pressure mixtures of water, sand or gravel and chemicals — to gain access to otherwise unreachable natural gas reserves.

“Make no mistake: Hydrocarbons will continue to play an absolutely essential part of a diversified energy mix,” al-Jaber said.

But the highs and lows of the market need to end for both oil consumers and producers to profit, said al-Rumhy, the Omani official.

“If it was my heart beat going that way, I think I would be in the hospital right now,” he said.

Japan’s Abe Calls for Public Works Spending to Help Economy 

Japan’s Prime Minister Shinzo Abe called Monday for a new public works spending program to stimulate the economy amid growing concerns about global risks. 

The spending, which is expected in the first half of next fiscal year starting in April, will focus on strengthening infrastructure to withstand earthquakes and frequent flooding, according to a presentation made at the Council on Economic and Fiscal Policy (CEFP). 

Some of Japan’s top government advisers also called for stimulus to offset a decline in consumption expected after an increase in the nationwide sales tax in October next year. 

The rush to approve public works spending and other measures to support consumption highlights growing concern among policymakers about the economy. 

“The prime minister asked me to take firm measures to ensure that our economic recovery continues,” Economy Minister Toshimitsu Motegi said at the end of the CEFP meeting. “He also said the public works spending program expected at the end of this year should be compiled with this point in mind.” 

Japan’s economy is forecast to contract in July-September, and a recent slump in machinery orders suggests any rebound in the following quarters is likely to be weak if exports and business investment lose momentum. 

Government ministers will compile a preliminary public works plan by the end of this month and then submit a final version of the plan by year’s end, according to documents used at the CEFP meeting. 

Urgent matter

Members of the CEFP did not say how large the spending program should be or how the government should fund the package. At the meeting, Abe said compiling the package has become an urgent matter, according to a government official. 

Japan’s government is considering a 10 trillion-yen ($87.77 billion) stimulus package to offset the impact of a sales tax hike next year, sources told Reuters last week, as concerns about consumer spending and the global economy grow. 

Increasing spending on public works started to gain support after a strong earthquake in September caused a blackout in the northern island of Hokkaido and a series of typhoons damaged transport infrastructure in western Japan. 

The advisers on the CEFP are academics and business leaders who are considered close to Abe, so their recommendations often influence policy decisions. 

The CEFP met earlier Monday to debate consumer prices and fiscal policy, which is where the advisers made their recommendations. 

The advisers did not lay out the specific steps the government should take to stimulate consumption, but government officials have previously said they are considering shopping vouchers for low-income earners and more spending on public works. 

The nationwide sales tax is scheduled to rise to 10 percent in October 2019 from 8 percent currently. The government already plans to exempt food and some daily goods from the tax hike to soften the blow, but there is still a lot of concern that the tax hike will wreck consumer spending and sentiment. The economy was tipped into a recession the last time the tax was raised in 2014. 

Advisers at the CEFP meeting also threw their support behind the government’s plan to encourage mobile phone carriers to lower smartphone fees, saying they hoped the move would increase households’ disposable incomes. 

Oman Oil Minister: Majority of OPEC and its Allies Support Cut

A majority of OPEC and allied oil exporters support a cut in the global supply of crude, Oman Oil Minister Mohammed bin Hamad al-Rumhi said on Sunday.

“Many of us share this view,” the minister said when asked about the need for a cut. Asked if it could amount to 500,000 or one million barrels per day, he replied: “I think it is unfair for me to throw numbers now.”

He was speaking in Abu Dhabi where an oil market monitoring committee was held on Sunday, attended by top exporters Saudi Arabia and Russia.

“We need a consensus,” he said, indicating that non-OPEC Russia would need to approve any decision. Oman is also not a member of the Organization of the Petroleum Exporting Countries.

Saudi Arabia is discussing a proposal to cut oil output by up to 1 million barrels per day by OPEC and its allies, two sources close to the discussions told Reuters on Sunday.