The U.S. government has sentenced 21 people to jail terms for their involvement in a call center scam based in India that targeted U.S. victims.

The prison sentences for the convicted ranged from 4 to 20 years.

“The stiff sentences imposed this week represent the culmination of the first-ever, large scale, multijurisdiction prosecution targeting the India call center scam industry,” U.S. Attorney General Jeff Sessions said in a statement Friday.

Thousands defrauded

U.S. officials say the call center scam defrauded thousands of U.S. residents of hundreds of millions of dollars. Prosecutors say the Indian call centers used various telephone fraud schemes to defraud mainly vulnerable Americans, including the elderly and legal immigrants.

Justice Department officials say some of the schemes included impersonating employees of the Internal Revenue Service or the U.S. Citizenship and Immigration Services.

Officials say the callers duped victims into believing that they owed money to the U.S. government and would be arrested or deported if they did not pay immediately.

Victims were instructed to wire money or purchase stored value cards. Once a victim provided payment, the call centers turned to a network of U.S.-based “runners” who would quickly move the money by using anonymous reloadable cards.

India and US defendants

Prosecutors say Miteshkumar Patel, 42, of Illinois, was the head of a Chicago-based crew of “runners” and also coordinated directly with the Indian side of the conspiracy. He was given the longest prison term of the group — 20 years.

“This case represents one of the most significant victories to date in our continuing efforts to combat elder fraud and the victimization of the most vulnerable members of the U.S. public,” Sessions said.

The indictment for the case also charged 32 India-based conspirators and five India-based call centers with general conspiracy, wire fraud conspiracy, and money laundering conspiracy. Those defendants have not yet been arraigned.
…

Chinese policymakers are pumping more liquidity into the financial system and channeling credit to small- and medium-sized firms, and Beijing looks set to further loosen monetary conditions to mitigate threats to growth from a heated Sino-U.S. trade war.

The world’s second-biggest economy has started to lose momentum this year as a government campaign to reduce a dangerous build-up of debt has lifted borrowing costs, hitting factory output, business investment and the property sector.

As an intensifying trade conflict raises risks to exporters and overall growth, many economists expect the central bank to further reduce reserve requirements in the coming months, on top of the three reductions made so far this year.

Benchmark rate unchanged

However, few see a cut in the benchmark policy rate this year, as authorities walk a fine line between keeping liquidity conditions supportive and preventing any destabilizing capital outflows that could put the skids on a fragile yuan currency.

On Wednesday, a source with direct knowledge of the matter said the People’s Bank of China (PBOC) plans to introduce incentives that will boost the liquidity of commercial banks.

These are aimed at encouraging banks to expand lending and increase their investment in bonds issued by corporations and other entities, such as local government financing vehicles (LGFVs).

The PBOC has also been ensuring ample liquidity by allowing commercial banks to tap its Medium-Term Loan Facility (MLF), especially lenders that have invested in bonds rated AA+ and below, the source said.

The improved cash conditions have been reflected in reduced short-term borrowing costs for banks, with the country’s key seven-day money rate at 2.6409 percent Thursday, 37 basis points lower than recent highs at the end of June.

Economy expansion slows

The combination of lower interbank rates and the push to boost bank support should help to ease financing pressures for weaker firms, analysts said.

“This should spell good news for lower-grade bond markets which have been suffering from a flight to quality-grade bonds, and some firms have subsequently found access to liquidity difficult,” analysts at Everbright Sun Hung Kai said in a note.

China’s economy expanded a slower-than-expected 6.7 percent in the second quarter, and June factory output growth weakened to a two-year low as the trade dispute with the United States intensified.

To be sure, markets don’t expect aggressive policy loosening, given Beijing’s broad deleveraging pledge and fears that doing so could hit the yuan and trigger a spike in capital outflows.

Trade war worries have already weighed on the yuan, which hit a one-year low on Thursday.

Focus on small, medium businesses

A key focus is on small- and medium-sized enterprises (SMEs), which account for 80 percent of all jobs in China, and have suffered from rising borrowing costs and a shrinking credit pool amid Beijing’s three-year-long crackdown on off-balance sheet financing and a corporate debt build-up.

A trader at a state-run copper smelter in southern China told Reuters his firm has resorted to selling inventory to raise cash in light of the tougher financing conditions.

“Banks give, but the cost has gone up,” said the trader, who declined to be identified as he was not authorized to comment on his firm’s finances.

While the PBOC did not respond to faxed questions about its plans, a Shanghai-based trader at an Asian bank said the bond market had seen a notable pick-up in the volume of trade of LGFV debt.
…

The Trump administration wants to scrap automatic federal protection for threatened plants and animals, a move that would anger environmentalists but please industry.

A proposal unveiled Thursday would no longer grant threatened species the same instant protection given to endangered species. It would also limit what can be declared a critical habitat for such plants and animals.

Officials with the Interior Department and Fish and Wildlife Service said Thursday that they wanted to streamline regulations. They said current rules under the Endangered Species Act were inconsistent and confusing.

Deputy Interior Secretary David Bernhardt said the new rules would still be very protective of endangered animals.

“At the same time, we hope that they ameliorate some of the unnecessary burden, conflict and uncertainty that is within our current regulatory structure,” he told reporters.

But conservationists called the changes a “wrecking ball” and a gift to big businesses.

“They could decide that building in a species habitat or logging in trees where birds nest doesn’t constitute harm,” the Center for Biological Diversity’s Noah Greenwald said.

Industries such as logging, mining and oil drilling have long complained that the Endangered Special Act has stopped them from gaining access to new sources of energy and has stifled economic development.
…

The financial leaders of the world’s 20 biggest economies meet in Buenos Aires this weekend for the first time since long-simmering trade tensions burst into the open when China and the United States put tariffs on $34 billion of each other’s goods.

The United States will seek to persuade Japan and the European Union to join it in taking a more aggressive stance against Chinese trade practices at the G-20 meeting of finance ministers and central bank presidents, according to a senior U.S. Treasury Department official who spoke on condition on anonymity.

But those efforts will be complicated by frustration over U.S. steel and aluminum import tariffs on the EU and Canada. Both responded with retaliatory tariffs in an escalating trade conflict that has shaken markets and threatens global growth.

“U.S. trading partners are unlikely to be in a conciliatory mood,” said Eswar Prasad, international trade professor at Cornell University and former head of the International Monetary Fund’s China Division. “[U.S.] hostile actions against long-standing trading partners and allies have weakened its economic and geopolitical influence.”

At the close of the last G-20 meeting in Argentina in March, the financial leaders representing 75 percent of world trade and 85 percent of gross domestic product released a joint statement that rejected protectionism and urged “further dialogue,” to little concrete effect.

Since then, the United States and China have slapped tariffs on $34 billion of each other’s imports and U.S. President Donald Trump has threatened further tariffs on $200 billion worth of Chinese goods unless Beijing agrees to change its intellectual property practices and high-technology industrial subsidy plans.

Trump has said the U.S. tariffs aim to close the $335 billion annual U.S. trade deficit with China.

U.S. Treasury Minister Steven Mnuchin has no plans for a bilateral meeting with his Chinese counterpart in Buenos Aires, a U.S official said this week.

Growth concerns

Rising trade tensions have led to concerns within the Japanese government over currency volatility, said a senior Japanese G-20 official who declined to be named. Such volatility could prompt an appreciation in the safe-haven yen and threaten Japanese exports.

Trump’s metals tariffs prompted trade partners to retaliate with their own tariffs on U.S. goods ranging from whiskey to motorcycles. The United States has said it will challenge those tariffs at the World Trade Organization.

The EU finance ministers signed a joint text last week that will form their mandate for this weekend’s meeting, criticizing “unilateral” U.S. trade actions, Reuters reported. The ministers will stress that trade restrictions “hurt everyone,” a German official said.

In a briefing note prepared for the G-20 participants, the International Monetary Fund said if all of Trump’s threatened tariffs — and equal retaliation — went into effect, the global economy could lose up to 0.5 percent of GDP, or $430 billion, by 2020.

Global growth also may have peaked at 3.9 percent for 2018 and 2019, and downside risks have risen due to the tariff spat, the IMF said.

“While all countries will ultimately be worse off in a trade conflict, the U.S. economy is especially vulnerable,” IMF Managing Director Christine Lagarde wrote in a blog post. “Policymakers can use this G-20 meeting to move past

self-defeating tit-for-tat tariffs.”

Trade is not on host country Argentina’s published agenda for the July 21-22 ministerial, which focuses on the “future of work” and infrastructure finance. But it will likely be discussed during a slot devoted to risks facing the global

economy, much as in March, according to an Argentine official involved in G-20 preparations, who asked not be named.
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A former official at a Venezuelan state-run electric company pleaded guilty on Monday to U.S. charges that he participated in a scheme to solicit bribes in exchange for helping vendors win favorable treatment from state oil company PDVSA.

Luis Carlos De Leon Perez, 42, pleaded guilty in federal court in Houston to conspiring to violate the Foreign Corrupt Practices Act and to conspiring to commit money laundering, the U.S. Justice Department said.

He became the 12th person to plead guilty as part of a larger investigation by the Justice Department into bribery at Petroleos de Venezuela SA that became public with the arrest of two Venezuelan businessmen in December 2015.

The two men were Roberto Rincon, who was president of Tradequip Services & Marine, and Abraham Jose Shiera Bastidas, the manager of Vertix Instrumentos. Both pleaded guilty in 2016 to conspiring to pay bribes to secure energy contracts.

De Leon is scheduled to be sentenced on Sept. 24. His lawyers did not respond to requests for comment.

De Leon was arrested in October 2017 in Spain and was extradited to the United States after being indicted along with four other former Venezuelan officials on charges they solicited bribes to help vendors win favorable treatment from

PDVSA.

An indictment said that from 2011 to 2013 the five Venezuelans sought bribes and kickbacks from vendors to help them secure PDVSA contracts and gain priority over other vendors for outstanding invoices during its liquidity crisis.

Prosecutors said De Leon was among a group of PDVSA officials and people outside the company with influence at it who solicited bribes from Rincon and Shiera. De Leon worked with those men to then launder the bribe money, prosecutors said.

De Leon also sought bribes from the owners of other energy companies and directed some of that money to PDVSA officials in order help those businesses out, prosecutors said.

Among the people indicted with De Leon was Cesar David Rincon Godoy, a former general manager at PDVSA’s procurement unit Bariven. He pleaded guilty in April to one count of conspiracy to commit money laundering.

Others charged included Nervis Villalobos, a former Venezuelan vice minister of energy; Rafael Reiter, who worked as PDVSA’s head of security and loss prevention; and Alejandro Isturiz Chiesa, who was an assistant to Bariven’s president.

Villalobos and Reiter were, like De Leon, arrested in Spain, where they remain pending extradition, the Justice Department said. Isturiz remains at large.
…

The United States launched five separate World Trade Organization dispute actions on Monday challenging retaliatory tariffs imposed by China, the European Union, Canada, Mexico and Turkey following U.S. duties on steel and aluminum.

The retaliatory tariffs on up to a combined $28.5 billion worth of U.S. exports are illegal under WTO rules, U.S. Trade Representative Robert Lighthizer said in a statement.

“These tariffs appear to breach each WTO member’s commitments under the WTO Agreement,” he said. “The United States will take all necessary actions to protect our interests, and we urge our trading partners to work constructively with us on the problems created by massive and persistent excess capacity in the steel and aluminum sectors.”

Lighthizer’s office has maintained that the tariffs the United States has imposed on imports of steel and aluminum are acceptable under WTO rules because they were imposed on the grounds of a national security exception.

Mexico said it would defend its retaliatory measures, saying the imposition of U.S. tariffs was “unjustified.”

“The purchases the United States makes of steel and aluminum from Mexico do not represent a threat to the national security,” Mexico’s Economy Ministry said in a statement.

“On the contrary, the solid trade relationship between Mexico and the U.S. has created an integrated regional market where steel and aluminum products contribute to the competitiveness of the region in various strategic sectors, such as automotive, aerospace, electrical and electronic,” the ministry added.

Lighthizer said last month that retaliation had no legal basis because the EU and other trading partners were making false assertions that the U.S. steel and aluminum tariffs are illegal “safeguard” actions intended to protect U.S. producers.
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Democratic Republic of Congo’s plan to drill for oil in national parks could leave thousands of farmers and fishermen who rely on the land in a struggle to survive, rights groups said Monday.

The central African country announced last month that it was taking steps toward declassifying parts of Virunga and Salonga national parks, both recognized as world heritage sites by the United Nations, to allow for oil exploration.

The parks, which together cover an area about the size of Switzerland, are among the world’s largest tropical rainforest reserves and home to rare species including forest elephants.

Allowing drilling in the parks would cause a loss of biodiversity, release huge amounts of carbon dioxide into the atmosphere and pollute water that thousands of local people use for fishing and farming, according to several rights groups.

Congolese state spokesman Lambert Mende told Reuters that the government will study the potential impact of oil drilling on local communities before they proceed.

The government has previously defended its right to authorize drilling anywhere in the country and said it is mindful of environmental considerations, such as protecting animals and plants, in the two national parks.

“There are lake-shore communities, especially in Virunga, that are very dependent on fishing and on the park’s integrity,” said Pete Jones of environmental advocacy group Global Witness.

“That really needs to be taken into account and doesn’t seem to be part of the debate that’s happening, which is a shame,” he told Reuters.

Conservation group World Wildlife Fund (WWF) also said it is concerned about the impact of oil drilling on at least 50,000 people who benefit from the fishing industry in Virunga, and tens of thousands more who farm on the outskirts of the parks.

“The risks of pollution are clear and present. The fishing industry would suffer considerably if it gets to that point,” said Juan Seve, WWF country director in Congo.

The oil industry would be unlikely to create local jobs since specialists would be brought in from abroad, he added.

The U.N.’s cultural agency UNESCO has previously said that oil exploration should not be conducted at world heritage sites.
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China’s economic growth slowed in the quarter ending in June, adding to challenges for Beijing amid a mounting tariff battle with Washington.

The world’s second-largest economy expanded by 6.7 percent, down from the previous quarter’s 6.8 percent, the government reported Monday.

Even before the dispute with Washington erupted, forecasters expected growth to cool after Beijing started tightening controls on bank lending last year to rein in surging debt.

Economic activity is expected to decline further as global demand for Chinese exports weakens and lending controls weigh on construction and investment, major contributors to growth.

Beijing has responded to previous downturns by flooding the state-dominated economy with credit. But that has swelled debt so high that global rating agencies have cut China’s government credit rating.

Chinese leaders are in the midst of a marathon effort to encourage self-sustaining growth driven by domestic consumption and reduce reliance on exports and investment. 

Consumer spending is rising more slowly than planned, leaving economic growth dependent on debt-supported investment.
…

U.S. President Donald Trump advised British Prime Minister Theresa May to sue the European Union instead of negotiating with the bloc, as part of her Brexit strategy.

 

“He told me I should sue the EU,” May told BBC television. “Sue the EU. Not go into negotiations — sue them.”

Her revelation about how Trump advised her ended several days of speculation about what advice the U.S. leader had offered the prime minister.

Trump said last week in an interview with The Sun newspaper that he had given May advice, but she did not follow it. The president told the newspaper ahead of his meeting with May that she “didn’t listen” to him.

“I would have done it much differently. I actually told Theresa May how to do it but she didn’t agree, she didn’t listen to me. She wanted to go a different route,” Trump said.

Trump did not reveal what advice he offered May in a press conference with her Friday. Instead, he said, “I think she found it too brutal.”

He added, “I could fully understand why she thought it was tough. And maybe someday she’ll do that. If they don’t make the right deal, she may do what I suggested, but it’s not an easy thing.”

May also told the BBC that the president had advised her not to walk away from the negotiations “because then you’re stuck.”

For the past few months, British politics have been obscured by squabbling, irritability and bravado about how, when and on what terms Britain will exit the European Union, and what the country’s relationship will be with its largest trading partner after Brexit.

Britons narrowly voted to leave the EU in a referendum in June 2016.

 

 
…

Liang Liang is feeling a lot of stress lately. He owns an import wholesale business in Los Angeles.

“I have been watching the news every day — when will the tariffs be put in place? When are my goods arriving; it’s a fight against time. I’m trying to order all my products for the rest of the year,” he said. His goods, such as toys and T-shirts, come from China through the largest port complex in the United States, the twin ports of Los Angeles and Long Beach.

He expects a 10 to 20 percent increase in shipping costs because of the trade war between the United States and China.

Shipping costs likely to rise

China is the largest trading partner for both ports. As tariffs from both countries increase the cost of goods, manufacturers and retailers may order fewer products, which will cause a decrease in trade volume between the two countries, according to Stephen Cheung, president of the World Trade Center Los Angeles.

“Once that happens, you’re going to see an increase in the rates for shipping because then you don’t have the volume to justify the goods going back and forth,” he said.

Cheung explained that shipping costs will affect all goods between the U.S. and China, not just the ones on the list to be taxed. He said the trade and logistics sector, which includes the ports and the supply chain of trucks and warehouses, will be the first to feel the effects of the trade war.

Liang said he will absorb the cost and live with smaller profits, up to a point.

“If the tariffs increase by another 20 percent, we’ll have to raise our prices,” he said.

“The consumers are going to feel it in their wallets very quickly,” Cheung said.

​Supply chain may be less reliable

The U.S. as a manufacturing center depends on parts from China, but that supply may become less reliable as the trade war continues. Cheung said there may be uncertainty about whether the products will be produced or “whether they will be in the same price, so this potentially can have a huge aspect in terms of our exporting capability not only to China but to the rest of the world, Cheung said. “And there are a lot of jobs that are tied to this,” he added.

Officials at the ports of Long Beach and Los Angeles said it is too early to tell the impact of the trade tariffs.

“We’ll have to wait and see how various businesses restructure their supply networks and adjust to the tariff environment,” said Duane Kenagy, the Port of Long Beach’s interim deputy executive director.

He said so far, the port has seen record container volumes this year, but there is concern.

“The impacts of a sustained long-term trade war could be devastating to both economies,” Kenagy said.

Political theater?

Liang said he has hope, saying he thinks the trade war is actually political theater for the U.S. and China.

“China also has its position on trade. The Chinese government also has to be accountable to the 1.4 billion people of China. I think China and the U.S. will disagree over trade on the surface. (For Trump), it’s a show for the November midterm elections, so he can be accountable to the electorate,” Liang said.

Washington has been critical of China’s unfair trade practices and concerned with a trade imbalance. The U.S. imported more than $500 billion of Chinese goods last year compared to $130 billion of U.S. products exported to China.

These concerns and issues of American intellectual property are reasons the Trump administration announced tariffs on an additional $200 billion in Chinese imports.

“If you’re utilizing this as a tactic, that’s fine. What are the steps that you’re going to use to mitigate some of these damages that will be happening to the local community? These are huge issues that have not been addressed yet,” Cheung said.
…

As the Trump administration announces tariffs on an additional $200 billion in Chinese imports, the largest port complex in the United States is bracing for its impact. For the twin ports of Los Angeles and Long Beach, China is the largest trader, and what happens at these ports can ripple through the rest of the U.S. economy. VOA’s Elizabeth Lee reports.
…

Suspiciously cheap diamonds, jeans for $1 and a pair of skis for next to nothing. It’s not a dream, these are actual bargains at a store in a small town in Alabama. What it sells are the contents of lost airline baggage. Every year airline companies lose about 20 million suitcases, and while most of them find their way back to their owners, thousands of bags are never picked up. As Daria Dieguts found out, some of these lost items end up here at the lost baggage store in Alabama.
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The United States has formally lifted a crippling ban on exports to the Chinese telecommunications giant ZTE. 

The Commerce Department said Friday that it had removed the ban after ZTE deposited $400 million in a U.S. bank escrow account as part of a settlement reached last month.

ZTE has already paid a $1 billion fine that is also part of its settlement with the U.S. government. 

“While we lifted the ban on ZTE, the department will remain vigilant as we closely monitor ZTE’s actions to ensure compliance with all U.S. laws and regulations,” Commerce Secretary Wilbur Ross said in a statement. He described the terms of the deal as the strictest ever imposed in such a case.

The Chinese company is accused of selling sensitive technologies to Iran and North Korea, despite a U.S. trade embargo. 

In April, the Commerce Department barred ZTE from importing American components for its telecommunications products for the next seven years, practically putting the company out of business. However, Trump later announced a deal with ZTE in which the Chinese company would pay a $1 billion fine for its trade violations, as well as replace its entire management and board by the middle of July.

Lawmakers from both parties have criticized Trump’s efforts and have taken steps to block the White House’s efforts to revive ZTE. The Senate passed legislation last month included in a military spending bill that would block ZTE from buying component parts from the United States. That legislation now moves to a joint committee of House and Senate members who will decide the fate of the ZTE measure in a compromise defense bill. 

Most of the world first heard of the dispute over ZTE in May after one of Trump’s tweets. “President Xi of China and I are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!” Trump said.
…

The White House released a report Thursday contending that the United States’ war on poverty — a drive that started over 50 years ago to improve the social safety net for the poorest citizens of the world’s largest economy — is “largely over and a success,” contrasting with other reports on the nation’s poor.

The report, authored by President Donald Trump’s Council of Economic Advisers, called for federal aid recipients to be pushed toward work requirements.

The report says poverty, when measured by consumption, has fallen by 90 percent since 1961. It also says that only 3 percent of Americans currently live under the poverty line.

“The timing is ideal for expanding work requirements among non-disabled working-age adults in social welfare programs,” according to the report. “Ultimately, expanded work requirements can improve the lives of current welfare recipients and at the same time respect the importance and dignity of work.”

U.N. report

The council’s report contrasts with a U.N. report on poverty in the U.S. that was released last month. That report said about 12 percent of the U.S. population lives in poverty, and that the U.S. “leads the developed world in income and wealth inequality.”

Phillip Alston, a U.N. adviser on extreme poverty and the author of the report, wrote in December 2017 that he believed Trump and his administration, along with U.S. House Speaker Paul Ryan, a Wisconsin Republican, “will essentially shred crucial dimensions of a safety net that is already full of holes.”

In April, Trump signed an executive order outlining work mandates for low-income citizens on federal aid programs. These programs included Medicaid, which provides federal health insurance for low-income individuals, and the Supplemental Nutrition Assistance Program, which provides these low-income individuals with assistance in food purchasing.

Both programs were among those introduced in the 1960s, during the administration of then-President Lyndon Johnson, a Democrat who coined the term “war on poverty” during his first State of the Union address.

Four state mandates

The Trump administration has already permitted four states — Kentucky, Indiana, Arkansas, and New Hampshire — to implement work requirement programs for Medicaid recipients, the first such restrictions enforced on the program. In June, however, a federal judge struck down Kentucky’s mandate, writing that the administration’s waiver “never adequately considered whether [the program] would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid.”

Anne Marie Regan, a senior staff attorney for the Kentucky Equal Justice Center, one of the organizations that successfully challenged the Kentucky waiver, told VOA that while she didn’t know the specifics of other states’ Medicare waivers, she thought similar challenges could be successful because of the administration’s insistence on work requirements.

Regan said her state’s proposal would have removed 95,000 people from health care coverage.

“The war on poverty is certainly not over,” Regan said. “There’s certainly still a great need for a safety net.”

In June, the U.S. House of Representatives narrowly passed a farm bill that includes work requirements for some adults who receive food assistance benefits. Every Democrat, along with 20 Republicans, voted against the bill, which is not expected to pass the Senate.
…

The Turkish lira recovered some losses Thursday hours after it hit record lows. New Treasury and  Finance Minister Berat Albayrak, President Recep Tayyip Erdogan’s son-in-law, sought to reassure nervous markets that the central bank’s independence was not in question.

The wild currency gyrations following Albayrak’s appointment underscore concerns over what economic policy Erdogan will adhere to now that he has consolidated power following his June re-election.

The lira approached five to the dollar late Wednesday in a nearly 30 percent depreciation since the beginning of the year.

The heavy decline is a result of worries over Erdogan’s economic expansion policy.

Although growth has soared more than 7 percent, inflation has surpassed 15 percent — a 15-year high — while the current deficit has widened to more than 6 percent of national income.

Analysts say after the June election, key ministers led investors to believe Erdogan would adopt austerity measures to rein in inflation. They are concerned the president, with the appointment of his son-in-law, may be seeking more control over monetary issues while excluding two prominent government figures from any say on policy.

“The two faces of market-friendly policies, Deputy Prime Minister Mehmet Simsek and Finance Minister Naci Agbal, are being excluded from policymaking roles,” economist Inan Demir of Nomura International Securities said.

“Before the elections,” he continued, “Agbal and Simsek had been talking to investors before the election, promising a return to orthodoxy that would generate a cooldown in the economy. The appointment of his son-in-law [Berat Albayrak] as the economy czar, would lead many investors to believe Erdogan will take tighter control of the economy, which would essentially annul promises of Agbal and Simsek.”

Agbal and Simsek are credited with persuading Erdogan to agree to an emergency hike in interest rates in May to protect the lira after steep falls. The Turkish president subscribes to the unorthodox view that low interest rates curb inflation, describing high interest rates as “the mother and father of all evils.”

Erdogan unnerved markets Tuesday by declaring his belief that “we will see interest rates fall in the period ahead.” Investors say any interest rate reduction would result in the total collapse of the currency, and that further increases are needed to secure the lira.

In a move to calm investors, Albayrak Thursday pledged to cut inflation, saying structural reform and fiscal discipline would be enforced, and he guaranteed the central bank’s independence. His statement saw the lira bounce back slightly.

Words, though, might not be enough. “It depends on how Albayrak will act really,” economist Demir said. “It’s possible if he manages to reassure the markets by actions, then the sell-off can subside. Otherwise, we will see an ongoing fall in lira assets going forward.”

Analysts warn there is skepticism about whether Albayrak will follow through on his commitment to fiscal discipline. Erdogan’s re-election campaign centered on the promise to continue with massive public construction projects and opposition to interest rate increases.

Political considerations

Political analyst Atilla Yesilada of Global Source partners suggests that political considerations could outweigh economic concerns.

“Something needs to be done. And the traditional recipe is belt-tightening and structural reforms in the traditional sense, to curtail domestic demand,” he said. “The challenge there is not that Erdogan is incapable of signing off for such a recipe. He is facing local elections in March 2019, which are extremely important, and the voters need to be fed, and that is the opposite of what the traditional recipe requires.”

A critical test of the direction Erdogan might choose will come at a July 24 meeting of the central bank. “If the central bank cannot find an opportunity to hike, the markets will take it very badly,” Demir said.

The failure of the central bank to act likely would increase worries about the introduction of capital controls to restrict money from leaving Turkey in a bid to protect the lira.

Demir said such a move would be counterproductive as it would end much of the international investment. Turkey needs to borrow about $5 billion monthly to cover the difference between its imports and exports.

As speculation rises over the threat of capital controls, Demir acknowledged investors now are asking about the risk of such a move. Pressure for decisive action by the central bank at its meeting July 24 is seen as critical to stemming the risk of an investor stampede out of the Turkish market.
…

U.S. consumer prices barely rose in June, but the underlying trend continued to point to a steady buildup of inflation pressures that could keep the Federal Reserve on a path of gradual interest rate increases.

Other data on Thursday showed first-time applications for unemployment benefits dropped to a two-month low last week as the labor market continues to tighten. The Fed raised interest rates in June for a second time this year and has forecast two more rate hikes before the end of 2018.

“U.S. inflation continues to drift gradually higher in response to a nearly fully employed economy, with some nudging from tariffs,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “The Fed has every reason to pull  the rate trigger again in October.”

The Labor Department said its Consumer Price Index edged up 0.1 percent as gasoline price increases moderated and the cost of apparel fell. The CPI rose 0.2 percent in May. In the 12 months through June, the CPI increased 2.9 percent, the biggest gain since February 2012, after advancing 2.8 percent in May.

Excluding the volatile food and energy components, the CPI rose 0.2 percent, matching May’s gain. That lifted the annual increase in the so-called core CPI to 2.3 percent, the largest rise since January 2017, from 2.2 percent in May.

Economists polled by Reuters had forecast both the CPI and core CPI rising 0.2 percent in June.

The Fed tracks a different inflation measure, which hit the U.S. central bank’s 2 percent target in May for the first time in six years. Economists expect the personal consumption expenditures (PCE) price index excluding food and energy will overshoot its target.

U.S. financial markets were little moved by the data.

In another report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 18,000 to a seasonally adjusted 214,000 for the week ended July 7, the lowest level since early May.

That suggests robust labor market conditions prevailed in early July. The economy created 213,000 jobs in June.

A tightening labor market and rising raw material costs are expected to push up inflation through next year. Manufacturers are facing rising input costs, in part because of tariffs imposed by the Trump administration on lumber, aluminum and steel imports.

So far, they have not passed on those higher costs to consumers. Fed officials have indicated they would not be too concerned with inflation overshooting its target.

Last month, gasoline prices rose 0.5 percent after increasing 1.7 percent in May. Food prices gained 0.2 percent, with food consumed at home rebounding 0.2 percent after falling 0.2 percent in May. Food prices were unchanged in May.

Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, rose 0.3 percent last month after increasing by the same margin in May. But the cost of hotel accommodation fell 3.7 percent after rising 2.9 percent in May.

Healthcare costs advanced 0.4 percent, with the price of hospital services surging 0.8 percent. Healthcare prices gained 0.2 percent in May. Consumers also paid more for prescription medication last month.

Prices for new motor vehicles rose for a second straight month. There were also increases in the cost of communication, motor vehicle insurance, education and alcoholic beverages.

But apparel prices fell 0.9 percent after being unchanged in May. The cost of airline tickets declined for a third straight month. Prices of household furnishings and tobacco also fell last month.
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The U.S. is on pace to leapfrog both Saudi Arabia and Russia to become the world’s biggest oil producer.

The latest data released by the Energy Information Administration shows U.S. output growing again next year to 11.8 million barrels a day.

 

Linda Capuano, who heads the agency, says that would make the U.S. the world’s No. 1 producer.

 

The director of the International Energy Agency, a group of oil-consuming countries, made a similar prediction in February.

 

Russia and Saudi Arabia pumped more crude than the U.S. last year.

 

Production is booming in U.S. shale fields because of newer techniques such as fracking and horizontal drilling.
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Nigeria’s President Muhammadu Buhari said on Wednesday the country will soon sign up to a $3 trillion African free trade zone.

Nigeria is one of Africa’s two largest economies, the other being South Africa. Buhari’s government had refused to join a continental free-trade zone established in March, on the grounds that it wishes to defend its own businesses and industry.

The administration later said it wanted more time to consult business leaders.

“In trying to guarantee employment, goods and services in our country, we have to be careful with agreements that will compete, maybe successfully, against our upcoming industries,” Buhari told a news conference during a visit by South African President Cyril Ramaphosa.

“I am a slow reader, maybe because I was an ex-soldier. I didn’t read it fast enough before my officials saw that it was all right for signature. I kept it on my table. I will soon sign it.”

The continental free-trade zone, which encompasses 1.2 billion people, was initially joined by 44 countries in March. South Africa signed up earlier this month.

Economists point to the continent’s low level of intra-regional trade as one of the reasons for Africa’s enduring poverty and lack of a strong manufacturing base.
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In a ceremony last week attended by heads of state from across East Africa, Djibouti inaugurated what it says will become the largest free-trade zone on the continent.

The project will take 10 years to complete and will occupy more than 48 square kilometers when finished. In the pilot phase, it will increase the size of Djibouti’s economy by 11 percent, Prime Minister Abdoulkader Kamil Mohamed told VOA’s French-to-Africa service.

But the $3.5 billion project will also add to what some experts consider to be an extreme reliance on Chinese financing and could raise the small desert nation’s debt to alarming levels.

Debt distress

Scott Morris is a senior fellow at the Center for Global Development and the director of the U.S. Development Policy Initiative. He co-wrote a report in March that highlights the debt implications of the Belt and Road Initiative.

Morris and his colleagues considered the debt vulnerability of 68 countries involved in the BRI, including China. They concluded that most countries have a low risk, but for eight countries, the risk is high.

Djibouti is the only high-risk African country. It stands out because its debt represents a large portion of its gross domestic product, which economists consider to be a good indicator of a country’s overall economic strength and size. By the end of 2016, Djibouti’s debt had reached more than 86 percent of its GDP, and it owed nearly all of that money to China.

Combined, these factors make Djibouti susceptible to debt distress, a condition that can hurt economic growth or even cause an economic crisis.

The new free-trade zone will add significantly to Djibouti’s Chinese debt, possibly elevating Djibouti’s risk to “an alarming state,” Morris said.

‘We are well-situated’

Djibouti is optimistic its investments will pay off.

“We don’t have natural resources, but God has placed us in a strategic zone where about 30 percent of the maritime commerce in the world passes through,” Mohamed said. “So, we are well-situated, and we plan to take advantage of this placement to have the maximum profit for our country and our people.”

Morris agrees that Djibouti’s infrastructure deals could generate significant economic activity and growth, and that helps keep the risks of debt in check.

The catch, according to Morris, is big infrastructure projects pay dividends over the long haul, but debt obligations kick in much sooner. “With deals like this continuing to stack up, it does seem to me that Djibouti is facing a real debt problem,” Morris said.

If Djibouti were to default on its loans, it might find itself handing full control of projects such as the free-trade zone or Chinese-built ports over to China. That precedent was set late last year, when Sri Lanka, burdened with $8 billion in loans to Chinese firms, transferred the Port of Hambantota to China on a 99-year lease. 

If China were to take control over a Djibouti-based infrastructure project, the geopolitical implications could extend far beyond finances. But a handover wouldn’t be necessary for China to sway politics in the region and beyond.

“There’s no doubt that the Chinese government as a creditor also makes its political will known on issues that matter to it,” Morris said.

Those stipulations aren’t unique to China, Morris added, citing the United States as one example of a country that ties economics to politics. President Donald Trump’s administration, Morris said, has made clear that countries would be eligible for financial assistance depending on their votes in the United Nations.

The additional challenge with Chinese loans, according to Morris, is a lack of transparency. “It’s really hard to judge the degree to which they are extracting political concessions.”

Risks and rewards

An opaque approach to financing makes Chinese loans more risky overall, Morris said.

“There’s not a consistent reporting principle on the part of China as a creditor,” he added. And because China hasn’t agreed to be governed by globally accepted financing rules, the risk for countries that accept Chinese loans goes up.

African countries need to vet Chinese-financed projects carefully, Morris said, being sure the terms adhere to accepted financing standards. But that doesn’t mean all BRI projects should be taken off the table.

“If there is a viable infrastructure project that an entity like the China Development Bank wants to finance, and the terms look reasonable, there’s no reason not to proceed with that,” Morris said. “But one has to evaluate each project on its own merits.”

In Djibouti, the government is confident its strategy is paying off. “Chinese interests are Djiboutian interests also,” Mohamed said. “We are happy to profit from our position so we can develop our country.”

Idrissa Fall and Anasthasie Tudieshe contributed to this report.
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As the trade war between the world’s two largest economies nears the end of its first week, its most unsettling fact may be this: No one seems to foresee any clear path to peace.

 

The United States insists that China abandon the brass-knuckles tactics it’s used to try to supplant America’s technological dominance. Yet Beijing isn’t about to drop its zeal to acquire the technology it sees as crucial to its prosperity.

 

Having run for the White House on a vow to force China to reform its trade policies, President Donald Trump won’t likely yield to vague promises by Beijing to improve its behavior — or to pledges to buy more American soybeans or liquefied natural gas.

 

“It certainly feels like we’re in for a protracted fight,” said Timothy Keeler of the law firm Mayer Brown and a former chief of staff at the Office of the U.S. Trade Representative. “Truthfully, I don’t know what the off-ramp is.”

 

The first shots sounded July 6: The United States slapped 25 percent taxes on $34 billion in Chinese imports. Most of them are industrial goods that the Trump administration says receive subsidies or other unfair support from Beijing. China quickly lashed back with tariffs on $34 billion in U.S. products.

The two countries have targeted an additional $16 billion worth of each other’s products for a second round of25 percent tariffs. On Tuesday, the Office of the U.S. Trade Representative proposed 10 percent tariffs on another $200 billion in Chinese imports, ranging from fish sticks to burglar alarms.

 

All told, Trump has threatened eventually to slap tariffs on up to $550 billion in Chinese imports — more than China actually exported to the United States last year — if Beijing won’t relent to U.S. pressure and continues to retaliate.

 

At the heart of the dispute: The Trump administration’s complaints that China has used predatory practices in a relentless push to grant Chinese companies an unfair advantage in the industries of the future, including robotics, electric cars and biopharmaceuticals. These tactics include the outright theft of trade secrets, government subsidies to homegrown tech firms and demands that U.S. and other foreign companies hand over technology if they want access to China’s vast market.

 

Eliminating the new tariffs will prove a lot harder than it was to raise them in the first place, said Wendy Cutler, a former U.S. trade negotiator who is a vice president at the Asia Society Policy Institute. “Both sides have too much at stake and don’t want to back down.”

 

So how does the trade war end? Analysts offer several potential scenarios:

 

China Blinks

 

The Trump administration boasts that China has more to lose in a trade war. After all, Beijing sold $524 billion worth of goods and services to the United States last year and bought far less — $188 billion. So China has far fewer goods to tax than the United States does.

 

And China’s benchmark stock index — the Shanghai Composite — has dropped 15 percent this year, at least partly on fears about damage from the trade conflict with Washington.

 

“It’s a dicey time for the Chinese economy,” said Claude Barfield, a resident scholar at the conservative American Enterprise Institute and former consultant to the U.S. Trade Representative.

Beijing is trying to contain a run-up in corporate debt and manage a difficult transition away from fast but unsustainable export-driven growth based on exports and often-wasteful investment toward steadier growth built on consumer spending. The International Monetary Fund expects Chinese economic growth to decelerate to 6.6 percent this year from 6.9 percent in 2017.

 

So it’s possible that economic pressure could persuade Beijing to cave. Yet many analysts are skeptical. Eswar Prasad, an economist at Cornell University, said the economic damage from U.S. tariffs is “likely to be muted since China has enough room to forestall a growth slowdown” by increasing government spending or adopting easy-money policies that put more cash into the economy.

 

Mary Lovely, an economist and trade expert at Syracuse University, says it’s unclear how China could appease Trump, even if it wanted to. China has pledged in the past to police cyber-theft and end coerced technology transfers. So any negotiations, Lovely said, would raise more questions: Would the Trump administration accept another promise? How would any promise be verified? How long would it take to determine whether Beijing has actually reformed its ways?

 

And China’s leaders might prove reluctant to back down and risk a backlash from the public.

 

“They have nothing to gain internally by kowtowing to President Trump, and that’s exactly what it would be,” Lovely said.

 

Trump Blinks

 

Trump faces pressures, too. The Chinese designed their tariffs to inflict political pain in the United States. They have, for example, targeted soybeans and other farm products in a shot at Trump supporters in the American heartland. And U.S. farmers are represented by trade groups and congressional delegations who aren’t shy about attacking U.S. policies that threaten farm incomes.

But the president would also find it hard to back down. He’s already considered one possible solution only to back away from it. In May, Treasury Secretary Steven Mnuchin announced after a meeting with the Chinese that the trade war was “on hold” and the tariffs suspended after Beijing agreed to reduce the U.S. trade deficit by buying more American energy and farm products.

 

Yet the cease-fire quickly collapsed once critics complained that the Trump administration was letting China buy its way out of the impasse.

 

“The president felt the sting of that and didn’t like that,” Keeler said. So the administration decided to “drive a harder bargain,” and it revived — and ramped up — its tariff threat.

 

A Win-Win Resolution

 

Taiya Smith, a former Treasury official who handled negotiations with China, says it’s possible a deal could be reached in which Beijing ends its predatory practices but can still keep itself competitive in advanced industries. The key, she says, is persuading China that its tech companies don’t need massive assistance from the state.

 

“Their companies are becoming very powerful,” Smith said. “They have to be willing to compete on a level playing field. They no longer need a leg up.”

 

But she said the U.S. would have to make concessions, too, perhaps by agreeing to let China play a bigger role in global economic policymaking.

 

“The Chinese have to have a political win somewhere in there, too,” Smith said. “You can’t design something where we get what we want and China gets nothing. They have their own politics.”

 

The War Drags On

 

Scott Paul, president of the Alliance for American Manufacturing and a sharp critic of Beijing’s trade practices, wants to see the tariffs remain until either U.S. companies leave China or Beijing opens its market wider to American goods and investment.

 

“They should stay on for long enough that they manifest some change,” he said. “I don’t see the tariffs coming off anytime soon.”

 

Paul notes that China has repeatedly made empty promises to reform its practices.

“We have waste cans full of promises by the Chinese government to reform its anti-competitive practices that are completely ignored,” he said. “The tariffs are the best and only leverage that we have with China, and we would be foolish to squander them without major gains.”
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Uber is getting into the scooter-rental business.

 

The ride-hailing company said Monday that it is investing in Lime, a startup based in San Mateo, California.

 

“Our investment and partnership in Lime is another step towards our vision of becoming a one-stop shop for all your transportation needs,” Rachel Holt, an Uber vice president, said in a statement.

 

Uber will add Lime motorized scooters to the Uber mobile app, giving consumers another option for getting around cities, especially to and from public transit systems, Holt said.

 

Financial details of the deal were not disclosed.

 

Lime co-founders Toby Sun and Brad Bao wrote in a blog that Uber’s “sizable investment” is part of a $335 million fund-raising round led by GV, the venture-capital arm of Google parent Alphabet Inc. They said Alphabet is among several new investors. The money will help Lime expand and develop new products.

According to the company website, customers can rent Lime scooters in more than 70 locations in the U.S. and Europe and leave them parked for the next customer to ride. The company is looking to buy tens of thousands of motorized foot-pedal scooters to expand its reach.

 

The scooters aren’t without their critics, however, who consider them a nuisance and a hazard to pedestrians. Officials in cities like San Francisco have been torn between promoting cheap and relatively non-polluting transportation and keeping sidewalks safe and clear of clutter.

 

For Uber, the Lime investment follows its purchase for an undisclosed sum of Jump Bikes, which rents electric bicycles in a half-dozen cities including San Francisco, Chicago and Washington.

 

San Francisco-based Uber Technologies Inc. CEO Dara Khosrowshahi aims to turn Uber into the Amazon.com of transportation, a single destination where customers can go to hitch a ride in a car and on other modes of transportation — even buy rides on city buses and subway systems. Uber also has a food-delivery service.

 

Rival Lyft is looking for new rides too. Last week, it bought part of a company called Motivate that operates Citi Bike and other bike-sharing programs in several major U.S. cities including New York and Chicago. It will rename the business Lyft Bikes. Terms of that deal were not disclosed either.

 

While the often brightly colored rental bikes are becoming a more common sight in the U.S., they have already gained widespread use in China and parts of Europe.
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President Donald Trump is threatening to “respond” after several major U.S. drug companies raised prices of some widely prescribed medicines.

“Pfizer and others should be ashamed that they have raised drug prices for no reason,” Trump tweeted Monday. “They are merely taking advantage of the poor and others unable to defend themselves while at the same time giving bargain basement prices to other countries in Europe and elsewhere.”

Pfizer hiked the cost of about 40 different drugs earlier this month, including Viagra for male impotence, Lipitor for treating high cholesterol, and the arthritis drug Xeljanz.

Trump, who campaigned on promises to lower drug prices, said in May that some companies were volunteering to cut prices.

Pfizer said the list price of medicines do not include discounts and rebates, and that customers generally do not pay full price at the drug counter.

It also said it makes more than 400 different drugs and is cutting prices on some of them.
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Behind a row of sealed red incubator doors in a new facility in northern China, about 400,000 chicks are hatched every day, part of the rapidly modernizing supply chain in China’s $37 billion egg industry, the world’s biggest.

As China overhauls production of everything from pork to milk and vegetables, farmers raising hens for eggs are also shifting from backyards to factory farms, where modern standardized processes are expected to raise quality and safety.

That’s an important step in a country where melamine-tainted eggs and eggs with high antibiotic residues have featured in a series of food safety scandals in recent years. It is also spurring demand for higher priced branded eggs over those sold loose in fresh produce markets.

“These days if you’re a small farmer, your eggs won’t get into the supermarkets,” said Yuan Song, analyst with China-America Commodity Data Analytics.

Tough new regulations on treating manure and reducing the environmental impact from farms have also pushed many small farmers out.

Most egg producers now have between 20,000 and 50,000 hens, said Yuan, a significant change even from two years ago. The remainder with less than 10,000 birds are likely to be shut down soon as local governments favor larger producers that can be more easily scrutinized.

High-tech hatchery

Those rapid changes are driving investments like the 150 million yuan ($22.60 million) hatchery in Handan, about 400km (250 miles) southwest of Beijing.

The highly automated plant, owned by a joint venture between China’s Huayu Agricultural Science and Technology Co. Ltd. and EW Group’s genetics business Hy-Line International, is the world’s biggest hatchery of layer chicks, or birds raised to produce eggs rather than meat.

By producing 200,000 females a day, or around 60 million layers a year (one day a week is for cleaning), it can meet demand from larger farms who want to buy day-old-chicks in one batch, said Jonathan Cade, president of Hy-Line International, based in West Des Moines, Iowa.

“That’s the best way to start off with good biosecurity,” he said. When the birds on one farm are the same age, they are less likely to spread disease.

Imported, latest-generation equipment helps speed up the throughput of the hatchery. An automatic grading machine, which can handle 60,000 eggs an hour, sorts eggs into two acceptable sizes before they enter incubators — uniform eggs produce similar sized chicks that will have the same feeding ability.

Once hatched, female chicks go to automated beak-clipping machines that process around 3,500 an hour.

Only 20 staff will be needed in the new plant, compared with around 100 in Huayu’s older hatchery, said Huayu chairman Wang Lianzeng.

Fierce competition, disease

Efficiency is important in an industry which is not expected to see much volume growth. The Chinese already eat more eggs per capita than almost everyone else, about 280 a year or almost one billion a day across the country, so consumption is unlikely to rise much.

Breeders like Huayu are trying to grow by taking market share from others. In addition to the new Handan hatchery, it is building another in Chongqing, which will bring annual production to 180 million chicks.

Layer inventory last year was around 1.2 billion, according to the China Animal Agriculture Association.

Huayu is also looking into breeding layers and building hatcheries in South-East Asia and Africa, said Wang, the chairman.

Key to industrial-scale facilities will be managing the risks of disease. Prices and demand for eggs and poultry plunged last year, after hundreds of people died from contracting bird flu, even though the disease left flocks largely unscathed.

Although that has created new opportunities for large players to expand after others were forced to exit, the impact of a disease outbreak on intensive operations is significantly higher.

Huayu itself has recently suffered from outbreaks, with high rates of poultry disease Mycoplasma synoviae (MS) in China’s breeding flocks last year, said Wang. The disease can reduce egg production in layers.

Wang said biosecurity is the major advantage in the new hatchery, which uses advanced ventilation and environmental controls to keep new chicks healthy.

“When you enter the hatchery, you wouldn’t know you’re in a hatchery,” he said, referring to the smell typical in older facilities.

Disinfection is used at every step along the chain and workers follow strict procedures on hygiene, he added.

A safe environment with very high standards of biosecurity is important in raising chicks, said Wang.

With such pressures on production, improving animal welfare is unsurprisingly not a priority, said Jeff Zhou, China representative for Compassion in World Farming (CIWF), a nonprofit.

China has no animal welfare regulations, although some companies have begun voluntarily to phase out the painful beak-trimming practice, including Huayu rival Ningxia Xiaoming Farming and Animal Husbandry Co. Ltd.

Xiaoming is also supplying male chicks from its hatcheries to local farmers to rear for meat in free-range environments, according to CIWF. Huayu sells its male chicks as food for snakes, which are farmed in China for traditional medicine.
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What started as a simple desire to be able to provide for her children has turned into a multimillion-dollar business for Tammie Umbel of Dulles, Virginia. She not only runs a cosmetics company but home-schools her 14 children — and says she still finds time for herself. Leysa Bakalets has her story.
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