European Union leaders staked out opening positions Friday for a battle over EU budgets that many conceded they are unlikely to resolve before Britain leaves next year, blowing a hole in Brussels’ finances.

At a summit to launch discussion on the size and shape of a seven-year budget package to run from 2021, ex-communist states urged wealthier neighbors to plug a nearly 10 percent annual revenue gap being left by Britain, while the Dutch led a group of small, rich countries refusing to chip in any more to the EU.

Germany and France, the biggest economies and the bloc’s driving duo as Britain prepares to leave in March 2019, renewed offers to increase their own contributions, though both set out conditions for that, including new priorities and less waste.

Underlining that a divide between east and west runs deeper than money, French President Emmanuel Macron criticized what he said were poor countries abusing EU funds designed to narrow the gap in living standards after the Cold War to shore up their own popularity while ignoring EU values on civil rights or to undercut Western economies by slashing tax and labor rules.

Noting the history of EU “cohesion” and other funding for poor regions as a tool of economic “convergence,” Macron told reporters: “I will reject a European budget which is used to finance divergence, on tax, on labor or on values.”

Poland and Hungary, heavyweights among the ex-communist states which joined the EU this century, are run by right-wing governments at daggers drawn with Brussels over their efforts to influence courts, media and other independent institutions.

The European Commission, the executive which will propose a detailed budget in May, has said it will aim to satisfy calls for “conditionality” that will link getting some EU funding to meeting treaty commitments on democratic standards such as properly functioning courts able to settle economic disputes.

But its president, Jean-Claude Juncker, warned on Friday against deepening “the rift between east and west” and some in the poorer nations see complaints about authoritarian tendencies as a convenient excuse to avoid paying in more to Brussels.

At around 140 billion euros ($170 billion) a year, the EU budget represents about 1 percent of economic output in the bloc or some 2 percent of public spending, but for all that it remains one of the bloodiest subjects of debate for members.

Focus on payments

The Commission has suggested that the next package should be increased by about 10 percent, but there was little sign Friday that the governments with cash are willing to pay that.

“When the UK leaves the EU, then that part of the budget should drop out,” said Dutch Prime Minister Mark Rutte, who leads a group of hawks including Sweden, Denmark and Austria.

“In any case, we do not want our contribution to rise and we want modernization,” he added, saying that meant reconsidering the EU’s major spending on agriculture and regional cohesion in order to do more in defense, research and controlling migration.

On the other side, Czech Prime Minister Andrej Babis said his priorities were “sufficient financing of cohesion policy” a good deal for businesses from the EU’s agricultural subsidies.

German Chancellor Angela Merkel said there had been broad agreement that new priorities such as in defense, migration and research should get new funding and she called for a “debureaucratization” of traditional EU spending programs.

Summit chair Donald Tusk praised the 27 leaders — Prime Minister Theresa May was not invited as Britain will have left before the new budget round starts — for approaching the issue “with open minds, rather than red lines.” But despite them all wanting to speed up the process, a deal this year was unlikely.

Quick deal unlikely

Although all agree it would be good to avoid a repeat of the 11th-hour wrangling ahead of the 2014-20 package, many sounded doubtful of a quick deal even early next year.

“It could go on for ages,” Rutte said. He added that it would be “nice” to finish by the May 2019 EU election: “But that’s very tight.”

Among the touchiest subjects will be accounting for the mass arrival of asylum-seekers in recent years. Aggrieved that some eastern states refuse to take in mainly Muslim migrants, some in the west have suggested penalizing them via the EU budget.

Merkel has proposed that regions which are taking in and trying to integrate refugees should have that rewarded in the allocation of EU funding — a less obviously penal approach but one which she had to defend on Friday against criticism in the east. It was not meant as a threat, the chancellor insisted.

In other business at a summit which reached no formal legal conclusions, leaders broadly agreed on some issues relating to next year’s elections to the European Parliament and to the accompanying appointment of a new Commission for five years.

They pushed back against efforts, notably from lawmakers, to limit their choice of nominee to succeed Juncker to a candidate who leads one of the pan-EU parties in the May 2019 vote. They approved Parliament’s plan to reallocate some British seats and to cut others altogether and also, barring Hungary, agreed to a Macron proposal to launch “consultations” with their citizens this year on what they want from the EU.
…

U.S. stocks rallied on Friday, lifted by gains in technology stocks and a retreat in Treasury yields as the Federal Reserve eased concerns about the path of interest rate hikes this year.

The U.S. central bank, looking past the recent stock market sell-off and inflation concerns, said it expected economic growth to remain steady and saw no serious risks on the horizon that might pause its planned pace of rate hikes.

Investors largely expect the Fed to raise rates three times this year, beginning with its next meeting in March, the first under new Chair Jerome Powell. Traders currently see a 95.5 percent chance of a quarter-percentage-point hike next month, according to Thomson Reuters data.

“Certainly bond yields pulling back today is helpful for stocks, at least for the short term, that has been the narrative that is out there — that higher bond yields are weighing on stocks and this preoccupation with three percent,” said Willie Delwiche, investment strategist at Baird in Milwaukee. “So moving away from that, for today at least, provides a bid for equities.”

Powell’s first public outing will be on Tuesday, when he will testify separately before the House and Senate committees.

The Dow Jones Industrial Average rose 347.51 points, or 1.39 percent, to 25,309.99, the S&P 500 gained 43.34 points, or 1.60 percent, to 2,747.30 and the Nasdaq Composite added 127.30 points, or 1.77 percent, to 7,337.39.

Benchmark 10-year U.S. Treasury notes last rose 13/32 in price to yield 2.8714 percent, from 2.917 percent late on Thursday.

The dip in yields helped boost bond proxy sectors such as utilities, up 2.66 percent, and real estate, up 1.72 percent. The sectors have been among the worst performers so far this year on expectations of climbing rates.

Tech shares climbed 2.17 percent led by gains in Hewlett Packard Enterprise, which rose 10.5 percent and HP Inc, up 3.5 percent.

The two companies created from the split of Hewlett Packard Co in 2015, reported strong results and HPE also announced a plan to return $7 billion to shareholders.

For the week, the Dow rose 0.37 percent, the S&P advanced 0.56 percent and the Nasdaq gained 1.35 percent.

Blue Buffalo Pet Products jumped 17.23 percent after General Mills said it would buy the natural pet food maker for $8 billion. General Mills was the biggest percentage decline on S&P 500, falling 3.59 percent.

Advancing issues outnumbered declining ones on the NYSE by a 4.54-to-1 ratio; on Nasdaq, a 2.82-to-1 ratio favored advancers.

The S&P 500 posted 10 new 52-week highs and one new low; the Nasdaq Composite recorded 64 new highs and 57 new lows.

Volume on U.S. exchanges was 6.05 billion shares, well below the 8.38 billion average over the last 20 trading days.

Reporting by Chuck Mikolajczak.
…

Sub-Saharan Africa continues to appear at the bottom of Transparency International’s annual index, with the violent, chaotic East African nation of Somalia maintaining its 12-year streak as the lowest rated nation on the chart that tracks perceptions of corruption in 180 countries.

The index also found that more than two thirds of the countries surveyed scored below 50 points on the 100-point scale, with an average score of 43.  African nations averaged a score of 32.  No nation has ever earned a perfect score.  New Zealand leads the index with 89 points.  Somalia scored just nine.

Transparency International’s regional adviser for Southern Africa, Kate Muwoki, described the year in corruption on the continent.

“To put it simply, most African governments are failing to address corruption in the region, although we do have leaders that have invested in systemic responses to build strong institutions and create behavior change,” she told VOA from Berlin, where the organization is based.  “… So, in terms of some of these rays of hope, at the top of the table we have Botswana, Seychelles, Cabo Verde, Rwanda and Namibia, who all score, currently, over 50 … And then, in terms of the very bottom of the table, there hasn’t been much change.  We still have the likes of South Sudan, Somalia, right at the bottom, and significant declines from countries like Malawi, Madagascar, Mozambique and Guinea-Bissau.”

But Muwoki says things may change, as the African Union and several key African leaders, notably the presidents of the two largest economies on the continent, Nigeria and South Africa, have recently made clean governance a pet issue.

Key resignations

The year 2017 also saw the fall of several regimes long accused of shady dealings.

No fewer than four heads of state accused of major financial crimes resigned in the past year: Gambia’s Yahya Jammeh, Angola’s Jose Eduardo dos Santos, Zimbabwe’s Robert Mugabe and, most recently, South Africa’s Jacob Zuma.  A high-level corruption scandal also tainted the administration of Ethiopian Prime Minister Hailemariam Desalegn, who resigned earlier this month amid mounting anti-government protests.

But holdouts remain: The Democratic Republic of Congo’s entrenched, corruption-accused leader has repeatedly postponed elections, and the leaders of Uganda, Equatorial Guinea, Gabon, Congo, and Cameroon have all long remained in power amid allegations of mismanagement.  Corruption investigations continue into current and former officials across the continent.

Rays of hope

Zuma’s successor, Cyril Ramaphosa, has made fighting corruption his key issue.  The multi-millionaire  businessman, this week, called for top government officials to be audited, starting with himself.  Several other African heads of state have done the same in recent years.

“Now, if there ever has been anything that many South Africans would like to have line of sight of, it is the lifestyle audit of their public representatives,” he said Tuesday.  “Now that is something that I believe we have to do, and this will be done starting with the executive of the country, yes, we will go in that way,” Ramaphosa said.

And in Nigeria, President Muhammadu Buhari recently announced that all national assets recovered in a recent anti-corruption drive would be sold to benefit the treasury.  Buhari is also the chairman of the AU anti-corruption effort.

Muwoki says the global watchdog has noted these new developments, but urged citizens to keep up the pressure by shining light on suspected corruption.

“2018 marks a very important year for the continent,” she said.  “We have seen this renewed commitment from the African Union and from leaders at the recent summit in Addis Ababa.  It is encouraging and we definitely support this … these are some of the things that we would be encouraging civil society and media, and some of these other key stakeholders to hold these leaders to account.”

 
…

Sub-Saharan Africa continues to appear at the bottom of Transparency International’s annual index, with the violent, chaotic East African nation of Somalia maintaining its 12-year streak as the lowest rated nation on the chart that tracks perceptions of corruption in 180 countries.

The index also found that more than two thirds of the countries surveyed scored below 50 points on the 100-point scale, with an average score of 43.  African nations averaged a score of 32.  No nation has ever earned a perfect score.  New Zealand leads the index with 89 points.  Somalia scored just nine.

Transparency International’s regional adviser for Southern Africa, Kate Muwoki, described the year in corruption on the continent.

“To put it simply, most African governments are failing to address corruption in the region, although we do have leaders that have invested in systemic responses to build strong institutions and create behavior change,” she told VOA from Berlin, where the organization is based.  “… So, in terms of some of these rays of hope, at the top of the table we have Botswana, Seychelles, Cabo Verde, Rwanda and Namibia, who all score, currently, over 50 … And then, in terms of the very bottom of the table, there hasn’t been much change.  We still have the likes of South Sudan, Somalia, right at the bottom, and significant declines from countries like Malawi, Madagascar, Mozambique and Guinea-Bissau.”

But Muwoki says things may change, as the African Union and several key African leaders, notably the presidents of the two largest economies on the continent, Nigeria and South Africa, have recently made clean governance a pet issue.

Key resignations

The year 2017 also saw the fall of several regimes long accused of shady dealings.

No fewer than four heads of state accused of major financial crimes resigned in the past year: Gambia’s Yahya Jammeh, Angola’s Jose Eduardo dos Santos, Zimbabwe’s Robert Mugabe and, most recently, South Africa’s Jacob Zuma.  A high-level corruption scandal also tainted the administration of Ethiopian Prime Minister Hailemariam Desalegn, who resigned earlier this month amid mounting anti-government protests.

But holdouts remain: The Democratic Republic of Congo’s entrenched, corruption-accused leader has repeatedly postponed elections, and the leaders of Uganda, Equatorial Guinea, Gabon, Congo, and Cameroon have all long remained in power amid allegations of mismanagement.  Corruption investigations continue into current and former officials across the continent.

Rays of hope

Zuma’s successor, Cyril Ramaphosa, has made fighting corruption his key issue.  The multi-millionaire  businessman, this week, called for top government officials to be audited, starting with himself.  Several other African heads of state have done the same in recent years.

“Now, if there ever has been anything that many South Africans would like to have line of sight of, it is the lifestyle audit of their public representatives,” he said Tuesday.  “Now that is something that I believe we have to do, and this will be done starting with the executive of the country, yes, we will go in that way,” Ramaphosa said.

And in Nigeria, President Muhammadu Buhari recently announced that all national assets recovered in a recent anti-corruption drive would be sold to benefit the treasury.  Buhari is also the chairman of the AU anti-corruption effort.

Muwoki says the global watchdog has noted these new developments, but urged citizens to keep up the pressure by shining light on suspected corruption.

“2018 marks a very important year for the continent,” she said.  “We have seen this renewed commitment from the African Union and from leaders at the recent summit in Addis Ababa.  It is encouraging and we definitely support this … these are some of the things that we would be encouraging civil society and media, and some of these other key stakeholders to hold these leaders to account.”

 
…

General Motors has proposed $2.8 billion of fresh investment into its South Korean operations over the 10 years as part of its plan to restructure the embattled unit, a South Korean senior government official said on Wednesday.

The offer comes as the Detroit carmaker and the South Korean government discuss restructuring options at loss-making GM Korea, one of GM’s largest offshore operations.

The official with direct knowledge of the matter said GM had also asked South Korea to inject funds into GM Korea in which the country’s state bank also holds a stake. However, the official added that a close look into GM’s proposal was necessary to determine whether the investment plan was sufficient to rescue the unit, which directly employs some 16,000 workers.

“We need to have a closer look through the audit,” the official said.

South Korea’s trade minister said the government has also asked for an audit into GM’s “opaque” management in the country.

“By opaque we mean the high rate of profits to raw material costs, interest payments regarding loans and unfair financial support made to GM’s headquarters,” said Minister Paik Un-gyu told lawmakers in parliament.

Last week, the U.S. automaker announced it would shut down a factory in Gunsan, southwest of Seoul, and said it was mulling the fate of its three remaining plants in South Korea.

A South Korean lawmaker said earlier that GM had put forward a proposal including the investment plan and a debt to equity swap of the Korea unit’s borrowings to the parent company.

In return, GM requested South Korea to take part in financing the investment and raising capital, according to a statement by Jung You-sub, the lawmaker from Bupyeong where GM runs its biggest factory in South Korea.

Jung’s office was not immediately available for comment.

On Tuesday, Reuters reported GM had offered to convert debt of around $2.2 billion owed by its ailing South Korean operation into equity in exchange for financial support and tax benefits from Seoul, four sources with direct knowledge of the matter said.

 
…

General Motors has proposed $2.8 billion of fresh investment into its South Korean operations over the 10 years as part of its plan to restructure the embattled unit, a South Korean senior government official said on Wednesday.

The offer comes as the Detroit carmaker and the South Korean government discuss restructuring options at loss-making GM Korea, one of GM’s largest offshore operations.

The official with direct knowledge of the matter said GM had also asked South Korea to inject funds into GM Korea in which the country’s state bank also holds a stake. However, the official added that a close look into GM’s proposal was necessary to determine whether the investment plan was sufficient to rescue the unit, which directly employs some 16,000 workers.

“We need to have a closer look through the audit,” the official said.

South Korea’s trade minister said the government has also asked for an audit into GM’s “opaque” management in the country.

“By opaque we mean the high rate of profits to raw material costs, interest payments regarding loans and unfair financial support made to GM’s headquarters,” said Minister Paik Un-gyu told lawmakers in parliament.

Last week, the U.S. automaker announced it would shut down a factory in Gunsan, southwest of Seoul, and said it was mulling the fate of its three remaining plants in South Korea.

A South Korean lawmaker said earlier that GM had put forward a proposal including the investment plan and a debt to equity swap of the Korea unit’s borrowings to the parent company.

In return, GM requested South Korea to take part in financing the investment and raising capital, according to a statement by Jung You-sub, the lawmaker from Bupyeong where GM runs its biggest factory in South Korea.

Jung’s office was not immediately available for comment.

On Tuesday, Reuters reported GM had offered to convert debt of around $2.2 billion owed by its ailing South Korean operation into equity in exchange for financial support and tax benefits from Seoul, four sources with direct knowledge of the matter said.

 
…

South Korea’s cryptocurrency industry is anticipating much better times as the market regulator changes tack from its tough stance on the virtual coin trade, promising instead to help promote blockchain technology.

The regulator said Tuesday that it hopes to see South Korea — which has become a hub for cryptocurrency trade — normalize the virtual coin business in a self-regulatory environment.

“The whole world is now framing the outline [for cryptocurrency] and therefore [the government] should rather work more on normalization than increasing regulation,” Choe Heung-sik, chief of South Korea’s Finance Supervisory Service (FSS), told reporters.

FSS has been leading the government’s regulation of cryptocurrency trading as part of a task force.

Cryptocurrency operators have drawn a new optimism from Choe’s comments, seeing them clearly indicating the government’s cooperation in their plans for self-regulation.

“Though the government and the industry have not yet reached a full agreement, the fact that the regulator himself made clear the government’s stance on cooperation is a positive sign for the markets,” said Kim Haw-joon of the Korea Blockchain Association.

Wednesday’s news is a stark reversal of the justice minister’s warnings in January that the government was considering shutting down local cryptocurrency exchanges, throwing the market into turmoil.

Instead, South Korea banned the use of anonymous bank accounts for virtual coin trading as of January 30 to stop cryptocurrencies being used in money laundering and other crimes.

Bitcoin, the world’s most heavily traded cryptocurrency, is now changing hands at a three-week high of $11,086 on the Luxembourg-based Biststamp exchange after falling as low as $5,920.72 in early February.

South Korean electronics giant Samsung has already started production of cryptocurrency mining technologies, local media reported in January.
…

South Korea’s cryptocurrency industry is anticipating much better times as the market regulator changes tack from its tough stance on the virtual coin trade, promising instead to help promote blockchain technology.

The regulator said Tuesday that it hopes to see South Korea — which has become a hub for cryptocurrency trade — normalize the virtual coin business in a self-regulatory environment.

“The whole world is now framing the outline [for cryptocurrency] and therefore [the government] should rather work more on normalization than increasing regulation,” Choe Heung-sik, chief of South Korea’s Finance Supervisory Service (FSS), told reporters.

FSS has been leading the government’s regulation of cryptocurrency trading as part of a task force.

Cryptocurrency operators have drawn a new optimism from Choe’s comments, seeing them clearly indicating the government’s cooperation in their plans for self-regulation.

“Though the government and the industry have not yet reached a full agreement, the fact that the regulator himself made clear the government’s stance on cooperation is a positive sign for the markets,” said Kim Haw-joon of the Korea Blockchain Association.

Wednesday’s news is a stark reversal of the justice minister’s warnings in January that the government was considering shutting down local cryptocurrency exchanges, throwing the market into turmoil.

Instead, South Korea banned the use of anonymous bank accounts for virtual coin trading as of January 30 to stop cryptocurrencies being used in money laundering and other crimes.

Bitcoin, the world’s most heavily traded cryptocurrency, is now changing hands at a three-week high of $11,086 on the Luxembourg-based Biststamp exchange after falling as low as $5,920.72 in early February.

South Korean electronics giant Samsung has already started production of cryptocurrency mining technologies, local media reported in January.
…

Through medication and narcotics smuggling, ivory and people trafficking, oil theft and piracy, Africa is, by conservative estimates, losing about $50 billion a year in illicit financial flows — more, in fact, than it receives in official development assistance. 

A report by the Paris-based Organization for Economic Cooperation and Development offers a bigger look at the illegal economy behind the losses and how African and richer nations can fight it.

The OECD report zooms in on West Africa, and one sector in particular stands out. Catherine Anderson, who heads governance issues as the OECD, said 80 percent of illicit financial flows from West Africa are generated from the theft of natural resouces, principally oil.

But West African countries aren’t the only ones losing out from illicit flows, Anderson said. So are developed nations. Migrant trafficking, a hot-button issue in Europe, is a case in point.

“One of our case studies is on al-Qaida in the Islamic Maghreb, which is benefiting from the kidnap-for-ransom activities,” she said. “They are interdicting the trade and passage of goods across the Sahel, levying protection fees and revenues from the population. These have significant implications, not just for West African populations but for OECD countries, for Europe, in terms of insecurity and instability.”

She said illegal resource flows need to be tackled holistically — not only by the countries of origin, but also by those where the finances are transiting, and those where they finally end up, including developed countries. Doing so can be particularly tricky in West Africa, where a huge informal economy blurs the boundary of what is legal and what isn’t.

Ambassador Según Apata of Nigeria is a member of a U.N. high-level panel looking into illicit financial flows from Africa. He said some African governments are beginning to tackle the problem, but they don’t always have the capacity to do so.

“We have not made giant strides yet,” Apata said. “We are still at the elementary, at the mundane level of implementation.”

Apata said that if the $50 billion in losses from illegal activities were channeled into development in West Africa, it could help check the illegal migration that European countries worry about.
…

Through medication and narcotics smuggling, ivory and people trafficking, oil theft and piracy, Africa is, by conservative estimates, losing about $50 billion a year in illicit financial flows — more, in fact, than it receives in official development assistance. 

A report by the Paris-based Organization for Economic Cooperation and Development offers a bigger look at the illegal economy behind the losses and how African and richer nations can fight it.

The OECD report zooms in on West Africa, and one sector in particular stands out. Catherine Anderson, who heads governance issues as the OECD, said 80 percent of illicit financial flows from West Africa are generated from the theft of natural resouces, principally oil.

But West African countries aren’t the only ones losing out from illicit flows, Anderson said. So are developed nations. Migrant trafficking, a hot-button issue in Europe, is a case in point.

“One of our case studies is on al-Qaida in the Islamic Maghreb, which is benefiting from the kidnap-for-ransom activities,” she said. “They are interdicting the trade and passage of goods across the Sahel, levying protection fees and revenues from the population. These have significant implications, not just for West African populations but for OECD countries, for Europe, in terms of insecurity and instability.”

She said illegal resource flows need to be tackled holistically — not only by the countries of origin, but also by those where the finances are transiting, and those where they finally end up, including developed countries. Doing so can be particularly tricky in West Africa, where a huge informal economy blurs the boundary of what is legal and what isn’t.

Ambassador Según Apata of Nigeria is a member of a U.N. high-level panel looking into illicit financial flows from Africa. He said some African governments are beginning to tackle the problem, but they don’t always have the capacity to do so.

“We have not made giant strides yet,” Apata said. “We are still at the elementary, at the mundane level of implementation.”

Apata said that if the $50 billion in losses from illegal activities were channeled into development in West Africa, it could help check the illegal migration that European countries worry about.
…

When Markus Rohner flew into Cape Town’s airport this month, he found an unexpected line at the men’s washroom.

With the city facing an unprecedented water shortage, airport authorities had turned off all the sink taps but one, leaving visitors to wait in line to wash their hands, under the watchful eye of a bathroom attendant.

“In Johannesburg, there were a lot of jokes about the situation. People were saying to each other: ‘Let’s go to Cape Town for a dirty weekend,'” said Rohner, who visited both cities recently for his job as a sales and marketing director for a Swiss machinery manufacturer.

Cape Town, which is battling to keep its taps flowing as reservoirs run close to dry following a three-year drought, declared a national disaster this month. Without rain, Cape Town could run out of water by July 9, city authorities predict.

For visitors thinking of flying into one of the world’s tourism hotspots, threats of a water “Day Zero” raise a range of questions: Will a visit waste scarce water local people need? Will I be able to flush my hotel toilet and have a shower? Should I come at all?

Sisa Ntshona, who heads the tourism marketing arm of South Africa’s government, has the answer you’d expect: Tourists — who support an estimated 300,000 jobs in South Africa’s Western Cape province — should come but they should be prepared to help out and “Save like a local,” as the slogan goes.

In a city where residents now are expected to use no more than 50 liters of water a day — enough to drink, have a 90-second shower, flush the toilet at least once and wash a few clothes or dishes — tourists “don’t have special privileges,” he said.

That means no baths, swimming pools now sporting salt water instead of fresh, sheets and towels changed less regularly, and signs urging visitors to flush toilets as infrequently as possible.

At one Cape Town hotel, visitors who insist on a bath — which takes 80 liters of water — now have to conspicuously carry a large rubber duck placed in their bathtub to reception to exchange it for a bath plug.

With climate change expected to bring worsening water shortages to cities around the world — from Sao Paulo to Los Angeles to Jakarta — such changes are going to be needed in many places in years to come, said Ntshona, the CEO of South African Tourism.

“How do we recalibrate the norm for global tourism?” he asked, on a visit to London to reassure potential visitors. “Tourists are aware of recycling, carbon emissions. But now it’s water.”

“This is the new norm,” he said. “Even if it rains tomorrow, we can never go back to the old way of consuming water.”

Tourist cash

For Cape Town, keeping tourists flowing through the city is an urgent priority.

Foreign tourists represent only about 1 percent of the people in the city even at peak times, but tourism — foreign and South African — contributes $3.4 billion to the province’s economy each year, said Ravi Nadasen, deputy chair of the Tourism Business Council of South Africa.

Any tourism drop-off in Cape Town also hits the rest of the country, Ntshona said. With many visitors booking itineraries that start in Cape Town and move east, he said, a loss of visitors to Table Mountain also means fewer people at the country’s game parks, vineyards and beaches.

“If South Africa falls off the tourism radar screen globally, to get it back on will take so much attention and focus,” he said.

Bookings for the first quarter of the year have so far not fallen, Ntshona and Nadasen say, though they have been fielding inquiries from worried potential visitors.

“We’ll get a better sense by the end of March, when we look at forward bookings for the next six months,” Ntshona said.

Tourism officials are well aware of the potential threat, however. In 2014, an Ebola crisis in West Africa — a six-hour plane flight away — led to a 23 percent drop in visitors to Ebola-free South Africa as tourists shunned African destinations, Ntshona said.

To try to prevent a repeat of that disaster, government and business leaders are rushing to shore up water supplies — and confidence.

Organizers of dozens of big conferences held in Cape Town each year are making plans to ship in water from other less thirsty parts of the country, Ntshona said.

Hotels have installed low-flow showerheads, turned off fountains and replaced cloth napkins with paper ones.

A Cape Town subsidiary of leading hotel chain Tsogo Sun is this week taking delivery of a pioneering desalination plant, to suck seawater from Cape Town’s harbor and churn out enough fresh water for the chain’s 1,400 Cape Town hotel rooms.

Cape Town itself is also making plans to bring in desalination plants — though not quickly enough to deal with the impending “Day Zero,” now pushed back to July after a successful campaign to cut the city’s water consumption by half.

Political obstacles

Experts have warned of water risks in Cape Town for years, but political infighting has gotten in the way of action, Ntshona admits.

Cape Town is run by an opposition party to the ruling African National Congress — and even the ANC saw its embattled leader, President Jacob Zuma, pushed out of office last week.

“Part of the lesson we’re learning as a country is that when you have a crisis, stop bickering and focus on the issues,” Ntshona said.

Another lesson, he said, is that water shortages — predicted to become longer and deeper across southern Africa as climate change strengthens droughts — cannot be seen as a passing problem.

Winter rains are expected in Cape Town starting in May or June. If they arrive, the current crisis will ease, officials predict.

But, regardless, “we need to recalibrate our relationship with water as a country,” Ntshona said.
…

When Markus Rohner flew into Cape Town’s airport this month, he found an unexpected line at the men’s washroom.

With the city facing an unprecedented water shortage, airport authorities had turned off all the sink taps but one, leaving visitors to wait in line to wash their hands, under the watchful eye of a bathroom attendant.

“In Johannesburg, there were a lot of jokes about the situation. People were saying to each other: ‘Let’s go to Cape Town for a dirty weekend,'” said Rohner, who visited both cities recently for his job as a sales and marketing director for a Swiss machinery manufacturer.

Cape Town, which is battling to keep its taps flowing as reservoirs run close to dry following a three-year drought, declared a national disaster this month. Without rain, Cape Town could run out of water by July 9, city authorities predict.

For visitors thinking of flying into one of the world’s tourism hotspots, threats of a water “Day Zero” raise a range of questions: Will a visit waste scarce water local people need? Will I be able to flush my hotel toilet and have a shower? Should I come at all?

Sisa Ntshona, who heads the tourism marketing arm of South Africa’s government, has the answer you’d expect: Tourists — who support an estimated 300,000 jobs in South Africa’s Western Cape province — should come but they should be prepared to help out and “Save like a local,” as the slogan goes.

In a city where residents now are expected to use no more than 50 liters of water a day — enough to drink, have a 90-second shower, flush the toilet at least once and wash a few clothes or dishes — tourists “don’t have special privileges,” he said.

That means no baths, swimming pools now sporting salt water instead of fresh, sheets and towels changed less regularly, and signs urging visitors to flush toilets as infrequently as possible.

At one Cape Town hotel, visitors who insist on a bath — which takes 80 liters of water — now have to conspicuously carry a large rubber duck placed in their bathtub to reception to exchange it for a bath plug.

With climate change expected to bring worsening water shortages to cities around the world — from Sao Paulo to Los Angeles to Jakarta — such changes are going to be needed in many places in years to come, said Ntshona, the CEO of South African Tourism.

“How do we recalibrate the norm for global tourism?” he asked, on a visit to London to reassure potential visitors. “Tourists are aware of recycling, carbon emissions. But now it’s water.”

“This is the new norm,” he said. “Even if it rains tomorrow, we can never go back to the old way of consuming water.”

Tourist cash

For Cape Town, keeping tourists flowing through the city is an urgent priority.

Foreign tourists represent only about 1 percent of the people in the city even at peak times, but tourism — foreign and South African — contributes $3.4 billion to the province’s economy each year, said Ravi Nadasen, deputy chair of the Tourism Business Council of South Africa.

Any tourism drop-off in Cape Town also hits the rest of the country, Ntshona said. With many visitors booking itineraries that start in Cape Town and move east, he said, a loss of visitors to Table Mountain also means fewer people at the country’s game parks, vineyards and beaches.

“If South Africa falls off the tourism radar screen globally, to get it back on will take so much attention and focus,” he said.

Bookings for the first quarter of the year have so far not fallen, Ntshona and Nadasen say, though they have been fielding inquiries from worried potential visitors.

“We’ll get a better sense by the end of March, when we look at forward bookings for the next six months,” Ntshona said.

Tourism officials are well aware of the potential threat, however. In 2014, an Ebola crisis in West Africa — a six-hour plane flight away — led to a 23 percent drop in visitors to Ebola-free South Africa as tourists shunned African destinations, Ntshona said.

To try to prevent a repeat of that disaster, government and business leaders are rushing to shore up water supplies — and confidence.

Organizers of dozens of big conferences held in Cape Town each year are making plans to ship in water from other less thirsty parts of the country, Ntshona said.

Hotels have installed low-flow showerheads, turned off fountains and replaced cloth napkins with paper ones.

A Cape Town subsidiary of leading hotel chain Tsogo Sun is this week taking delivery of a pioneering desalination plant, to suck seawater from Cape Town’s harbor and churn out enough fresh water for the chain’s 1,400 Cape Town hotel rooms.

Cape Town itself is also making plans to bring in desalination plants — though not quickly enough to deal with the impending “Day Zero,” now pushed back to July after a successful campaign to cut the city’s water consumption by half.

Political obstacles

Experts have warned of water risks in Cape Town for years, but political infighting has gotten in the way of action, Ntshona admits.

Cape Town is run by an opposition party to the ruling African National Congress — and even the ANC saw its embattled leader, President Jacob Zuma, pushed out of office last week.

“Part of the lesson we’re learning as a country is that when you have a crisis, stop bickering and focus on the issues,” Ntshona said.

Another lesson, he said, is that water shortages — predicted to become longer and deeper across southern Africa as climate change strengthens droughts — cannot be seen as a passing problem.

Winter rains are expected in Cape Town starting in May or June. If they arrive, the current crisis will ease, officials predict.

But, regardless, “we need to recalibrate our relationship with water as a country,” Ntshona said.
…

Standing by a towering equatorial forest, Jean-Noel Kouame’s new breeze-block house may be beyond the reach of Ivory Coast’s power grid, but it’s perfectly located for solar power entrepreneurs.

Buoyed by success in East Africa, off-grid solar power startups are pouring into West Africa, offering pay-as-you-go kits in a race to claim tens of millions of customers who lack reliable access to electricity.

At least 11 companies, including leading East African players such as Greenlight Planet, d.light, Off-Grid Electric (OGE), M-KOPE Solar, Fenix International and BBOXX, have moved into the region, most within the last two years.

With a potential market worth billions of dollars, major European energy companies such as French utilities EDF and Engie are taking notice too.

“It’s important to be there now, because the race has already started,” said Marianne Laigneau, senior executive vice president of EDF’s international division.

The main challenge facing smaller companies now is how to raise enough capital to supply the expensive solar kits in return for small upfront payments from customers.

Mobilizing funding for firms providing home solar systems is also part of the U.S. government’s Power Africa initiative.

Major power generation projects have been slow to get off the ground so Power Africa has partnered with startups such as OGE, M-KOPE and d.light, among others, to accelerate off-grid access.

In Abidjan, Kouame doesn’t know when, or if, the national grid will reach the outer edge of the urban sprawl, but thanks to his new solar panel kit he has indoor lighting, an electric fan and a television.

But it’s the light bulb hanging outside his front door that he values the most.

“At night we were scared to go outside,” the 31-year-old taxi driver says as his pregnant wife watches a dubbed Brazilian soap opera. “Where there is light there is safety.”

Some 1.2 billion people around the world have no access to a power grid, according to the International Energy Agency (IEA).

Lighting and phone charging alone costs them about $27 billion a year and some estimates put their total annual energy costs at more than $60 billion.

While governments in much of the developing world are extending access to national networks, Africa is lagging, with less than 40 percent of African households connected, IEA figures show.

But what has long been decried as a major obstacle to Africa’s development is viewed as an opportunity by entrepreneurs such as Nir Marom, co-founder of Lumos Global, the Dutch startup that built and sold Kouame his kit.

“I read an article about people paying 50 cents a day for kerosene and candles, and that just didn’t make sense,” said Marom. “I said I can give them four kilowatt hours for the price of kerosene. And that started everything.”

Off-grid expansion

Lumos Global’s kits, which cost about $600, include a solar panel linked to a battery that supports power sockets, a mobile phone adapter and LED light bulbs.

Kouame, who paid 30,000 CFA francs ($57) upfront for his kit, is now leasing-to-own. A digital counter on the yellow battery pack tells him when he needs to top up his account using his mobile phone.

If he doesn’t pay, the kit, which also houses a global positioning system, shuts down. But in five years, he’ll own it outright and his solar power will be free.

“Five years is nothing,” he says, already weighing the option of another system to run a large freezer sitting empty and unplugged in the corner of his living room. “So my wife can do a little business.”

Pay-as-you-go solar home systems (SHS) like Kouame’s have been the main driver of off-grid power expansion in Africa.

In 2010, when most purchases were limited to simple lighting systems, customers spent $30 to $80 on average over a product’s lifetime, according to GOGLA, an independent off-grid industry association.

Now it’s $370 to $1,120.

Global revenues from the pay-as-you-go SHS sector were $150 million to $200 million in 2016, GOGLA estimates. That should jump to $6 billion to $7 billion in 2022.

Most of the main players in West Africa cut their teeth in East Africa, drawn by the widespread use of mobile money transfers, a key element of the pay-as-you-go off-grid model.

Success there drove annual sector-wide growth of about 140 percent from 2013 to 2016. But as the East African market becomes more crowded and mobile money services spread across the continent, many are now heading west.

“I remember doing a market sizing very early on and from a number of metrics West Africa was a better market,” said Xavier Helgesen, CEO of Tanzania-based Off-Grid Electric (OGE), one of the sector leaders.

About half of the overall African off-grid population are in West and Central Africa, according to the IEA. Nigeria, sub-Saharan Africa’s biggest economy and most populous nation, is  alone home to roughly 90 million people with no grid access.

Lumos is an outlier to the extent it picked West Africa as its first market. It launched in Nigeria in 2016 and by the end of 2017 had sold 73,000 kits and was averaging 16 percent month-on-month revenue growth. Late last year, it expanded into Ivory Coast, French-speaking West Africa’s largest economy.

Still, despite the rapid growth to date, off-grid solar startups say more must be done to improve the capacity of solar home systems and to bring down their cost so the sector can reach its full potential.

“I don’t believe off-grid electrification is a stop-gap,” said Jamie Evans, director of partnerships with d.light.

“I believe it’s here to stay. If the price of batteries starts dropping precipitously, then it will almost certainly change the face of the industry,” he said.

Capital  intensive

The need to provide consumer financing for the relatively expensive kits means expansion requires significant capital.

But banks, lacking expertise in the new sector, often shy away from lending to off-grid companies, said Rolake Akinkugbe, head of energy at Nigeria’s FBNQuest Merchant Bank.

“There’s also a size issue. Most of the off-grid solutions, particularly those that deal with pay-as-you-go, from a funding perspective, are not within the threshold for banks,” she said.

That means startups have largely relied on venture capital, impact investors looking to generate social benefits as well as a profit, and development finance institutions. But the model has its drawbacks.

“Right now off-grid companies are having to constantly fundraise,” said Lyndsay Handler, CEO of Uganda-based Fenix International.

In what was considered a milestone in the African off-grid sector, Engie bought Fenix in October.

With access to Engie’s capital, Handler says Fenix aims to become a pan-African off-grid leader, serving millions in the near term and tens of millions further down the road.

“Hundreds of millions of dollars of investment are needed to have the impact we want to have,” she said.

Facing stagnating customer growth in their home markets, European energy companies such as Engie are increasingly looking abroad. Africa’s underserved, growing population is seen by many as the future.

The number of Africans without grid access actually increased by nearly 14 percent between 2000 and 2016 to 588 million people. By 2030, the IEA estimates that some 80 percent of the global off-grid population will be in sub-Saharan Africa.

Raphael Tilot, Engie Africa’s head of customer solutions, likens off-grid solar to the rise of the mobile phone, which leap-frogged landline networks on the continent.

“Today, no one is thinking about putting telecom wires to individual houses in these places. You can look at energy in the same way today,” he said. “Mini-grids or solar home systems are a far better solution.”

In addition to Engie, French giants Total and EDF also hold stakes in off-grid startups, or are partnering with them. Italian utility Enel and Germany’s E.ON are investing in solar mini-grid companies.

Evidence of the market growth is on exhibit on Kouame’s hillside in Abidjan, where several rooftops, including his neighbor’s, are now crowned with solar panels.

“He asked me how it worked,” Kouame smiles. “Then he went and bought one of his own.”
…

Standing by a towering equatorial forest, Jean-Noel Kouame’s new breeze-block house may be beyond the reach of Ivory Coast’s power grid, but it’s perfectly located for solar power entrepreneurs.

Buoyed by success in East Africa, off-grid solar power startups are pouring into West Africa, offering pay-as-you-go kits in a race to claim tens of millions of customers who lack reliable access to electricity.

At least 11 companies, including leading East African players such as Greenlight Planet, d.light, Off-Grid Electric (OGE), M-KOPE Solar, Fenix International and BBOXX, have moved into the region, most within the last two years.

With a potential market worth billions of dollars, major European energy companies such as French utilities EDF and Engie are taking notice too.

“It’s important to be there now, because the race has already started,” said Marianne Laigneau, senior executive vice president of EDF’s international division.

The main challenge facing smaller companies now is how to raise enough capital to supply the expensive solar kits in return for small upfront payments from customers.

Mobilizing funding for firms providing home solar systems is also part of the U.S. government’s Power Africa initiative.

Major power generation projects have been slow to get off the ground so Power Africa has partnered with startups such as OGE, M-KOPE and d.light, among others, to accelerate off-grid access.

In Abidjan, Kouame doesn’t know when, or if, the national grid will reach the outer edge of the urban sprawl, but thanks to his new solar panel kit he has indoor lighting, an electric fan and a television.

But it’s the light bulb hanging outside his front door that he values the most.

“At night we were scared to go outside,” the 31-year-old taxi driver says as his pregnant wife watches a dubbed Brazilian soap opera. “Where there is light there is safety.”

Some 1.2 billion people around the world have no access to a power grid, according to the International Energy Agency (IEA).

Lighting and phone charging alone costs them about $27 billion a year and some estimates put their total annual energy costs at more than $60 billion.

While governments in much of the developing world are extending access to national networks, Africa is lagging, with less than 40 percent of African households connected, IEA figures show.

But what has long been decried as a major obstacle to Africa’s development is viewed as an opportunity by entrepreneurs such as Nir Marom, co-founder of Lumos Global, the Dutch startup that built and sold Kouame his kit.

“I read an article about people paying 50 cents a day for kerosene and candles, and that just didn’t make sense,” said Marom. “I said I can give them four kilowatt hours for the price of kerosene. And that started everything.”

Off-grid expansion

Lumos Global’s kits, which cost about $600, include a solar panel linked to a battery that supports power sockets, a mobile phone adapter and LED light bulbs.

Kouame, who paid 30,000 CFA francs ($57) upfront for his kit, is now leasing-to-own. A digital counter on the yellow battery pack tells him when he needs to top up his account using his mobile phone.

If he doesn’t pay, the kit, which also houses a global positioning system, shuts down. But in five years, he’ll own it outright and his solar power will be free.

“Five years is nothing,” he says, already weighing the option of another system to run a large freezer sitting empty and unplugged in the corner of his living room. “So my wife can do a little business.”

Pay-as-you-go solar home systems (SHS) like Kouame’s have been the main driver of off-grid power expansion in Africa.

In 2010, when most purchases were limited to simple lighting systems, customers spent $30 to $80 on average over a product’s lifetime, according to GOGLA, an independent off-grid industry association.

Now it’s $370 to $1,120.

Global revenues from the pay-as-you-go SHS sector were $150 million to $200 million in 2016, GOGLA estimates. That should jump to $6 billion to $7 billion in 2022.

Most of the main players in West Africa cut their teeth in East Africa, drawn by the widespread use of mobile money transfers, a key element of the pay-as-you-go off-grid model.

Success there drove annual sector-wide growth of about 140 percent from 2013 to 2016. But as the East African market becomes more crowded and mobile money services spread across the continent, many are now heading west.

“I remember doing a market sizing very early on and from a number of metrics West Africa was a better market,” said Xavier Helgesen, CEO of Tanzania-based Off-Grid Electric (OGE), one of the sector leaders.

About half of the overall African off-grid population are in West and Central Africa, according to the IEA. Nigeria, sub-Saharan Africa’s biggest economy and most populous nation, is  alone home to roughly 90 million people with no grid access.

Lumos is an outlier to the extent it picked West Africa as its first market. It launched in Nigeria in 2016 and by the end of 2017 had sold 73,000 kits and was averaging 16 percent month-on-month revenue growth. Late last year, it expanded into Ivory Coast, French-speaking West Africa’s largest economy.

Still, despite the rapid growth to date, off-grid solar startups say more must be done to improve the capacity of solar home systems and to bring down their cost so the sector can reach its full potential.

“I don’t believe off-grid electrification is a stop-gap,” said Jamie Evans, director of partnerships with d.light.

“I believe it’s here to stay. If the price of batteries starts dropping precipitously, then it will almost certainly change the face of the industry,” he said.

Capital  intensive

The need to provide consumer financing for the relatively expensive kits means expansion requires significant capital.

But banks, lacking expertise in the new sector, often shy away from lending to off-grid companies, said Rolake Akinkugbe, head of energy at Nigeria’s FBNQuest Merchant Bank.

“There’s also a size issue. Most of the off-grid solutions, particularly those that deal with pay-as-you-go, from a funding perspective, are not within the threshold for banks,” she said.

That means startups have largely relied on venture capital, impact investors looking to generate social benefits as well as a profit, and development finance institutions. But the model has its drawbacks.

“Right now off-grid companies are having to constantly fundraise,” said Lyndsay Handler, CEO of Uganda-based Fenix International.

In what was considered a milestone in the African off-grid sector, Engie bought Fenix in October.

With access to Engie’s capital, Handler says Fenix aims to become a pan-African off-grid leader, serving millions in the near term and tens of millions further down the road.

“Hundreds of millions of dollars of investment are needed to have the impact we want to have,” she said.

Facing stagnating customer growth in their home markets, European energy companies such as Engie are increasingly looking abroad. Africa’s underserved, growing population is seen by many as the future.

The number of Africans without grid access actually increased by nearly 14 percent between 2000 and 2016 to 588 million people. By 2030, the IEA estimates that some 80 percent of the global off-grid population will be in sub-Saharan Africa.

Raphael Tilot, Engie Africa’s head of customer solutions, likens off-grid solar to the rise of the mobile phone, which leap-frogged landline networks on the continent.

“Today, no one is thinking about putting telecom wires to individual houses in these places. You can look at energy in the same way today,” he said. “Mini-grids or solar home systems are a far better solution.”

In addition to Engie, French giants Total and EDF also hold stakes in off-grid startups, or are partnering with them. Italian utility Enel and Germany’s E.ON are investing in solar mini-grid companies.

Evidence of the market growth is on exhibit on Kouame’s hillside in Abidjan, where several rooftops, including his neighbor’s, are now crowned with solar panels.

“He asked me how it worked,” Kouame smiles. “Then he went and bought one of his own.”
…

For the first time in Ukraine’s history, U.S. anthracite is helping to keep the lights on and the heating going this winter following a deal that has also helped to warm Kyiv’s relations with President Donald Trump.

The Ukrainian state-owned company that imported the coal told Reuters that the deal made commercial sense. But it was also politically expedient, according to a person involved in the talks on the agreement and power industry insiders.

On Trump’s side it provided much-needed orders for a coal-producing region of the United States which was a vital constituency in his 2016 presidential election victory.

On the Ukrainian side the deal helped to win favor with the White House, whose support Kyiv needs in its conflict with Russia, as well as opening up a new source of coal at a time when its traditional supplies are disrupted.

Trump’s campaign call to improve relations with the Kremlin alarmed the pro-Western leadership in Ukraine, which lost Crimea to Russia in 2014 and is still fighting pro-Moscow separatists.

However, things looked up when President Petro Poroshenko visited the White House on June 20 last year.

“The meeting with Trump was a key point, a milestone,” a Ukrainian government source told Reuters, requesting anonymity.

The Americans had set particular store by supplying coal to Ukraine. 

“I felt that for them it is important,” said the source, who was present at the talks that also included a session with Vice President Mike Pence.

Despite Trump’s incentives, U.S. utilities are shutting coal-fired plants and shifting to gas, wind and solar power.

Ailing U.S. mining companies are therefore boosting exports to Asia and seeking new buyers among eastern European countries trying to diversify from Russian supplies.

Trump, who championed U.S. coal producers on the campaign trail, pressed the message after meeting Poroshenko. 

“Ukraine already tells us they need millions and millions of metric tons right now,” he said in a speech nine days later. “We want to sell it to them, and to everyone else all over the globe who need it.”

The deal with Kyiv was sealed the following month, after which U.S. Commerce Secretary Wilbur Ross said: “As promised during the campaign, President Trump is unshackling American energy with each day on the job.”

The deal helped to “bolster a key strategic partner against regional pressures that seek to undermine U.S. interests,” Ross added, referring to past Russian attempts to restrict natural gas flows to its western neighbors.

A matter of necessity

Ukraine was once a major producer of anthracite, a coal used in power generation, but it has faced a shortage in recent winters as it lost control of almost all its mines in eastern areas to the separatists.

Along with South Africa, Ukrainian-owned mines in Russia have been the main source of anthracite imports but this is fraught with uncertainty. In the past Moscow has cut off gas supplies to the country over disputes with Kyiv, while the Ukrainian government considered forbidding anthracite imports from Russia in 2017 although no ban has yet been imposed.

Overall anthracite imports shot up to 3.05 million tons in the first 11 months of 2017 from just 0.05 million in all of 2013 — the year before the rebellion erupted.

Neighboring Poland, which Trump visited in July, is also turning increasingly to U.S. coal. Its imports from the United States jumped five-fold last year to 839,000 tons, data from the state-run ARP agency showed.

In July Ukrainian state-owned energy company Centrenergo announced the deal with U.S. company Xcoal for the supply of up to 700,000 tons of anthracite.

Centrenergo initially said it would pay $113 per ton for the first shipment, a price industry experts and traders told Reuters was expensive compared with alternatives.

However, chief executive Oleg Kozemko said the cost varied according to the quality of the coal delivered, so Centrenergo had paid around $100 per ton on average for the 410,000 tons supplied by the end of 2017.

Kozemko said in an interview that the U.S. deal was Centrenergo’s only viable option after three tenders it launched earlier last year had failed.

“The idea to sign a contract with Xcoal was a matter of necessity,” he said. “We had agreements but they didn’t work out, because the pricing that they discussed with us and that we signed an agreement on didn’t work out.”

Data on the state tenders registry and documents seen by Reuters show that two of the tenders failed due to a lack of bids, while the results of the third were cancelled.

If that contract had worked out, Centrenergo would have paid around $96 per ton, according to Reuters calculations based on the exchange rate at the time of the tender in April.

Energy expert Andriy Gerus told Reuters the Xcoal deal “probably helps Ukraine to build some good political connections with the USA and that is quite important right now.”

Mutual desire 

The anthracite for Centrenergo is mined in Pennsylvania, which backed Trump in 2016. This marked the first time a Republican presidential candidate had won the state since 1988, and followed Trump’s pledge to reverse the coal industry’s history of plant closures and lay-offs in recent years.

Centrenergo says it and Xcoal agreed the contract independently of their governments and without any political pressure. However, Kozemko said: “If talks between the heads of our countries helped in this, then we can only say thank you… It was a mutual desire.”

For the Ukrainian authorities, the diplomatic benefit is clear. When the first shipment of U.S. anthracite arrived in September, Poroshenko tweeted a photo of himself shaking hands with Trump in Washington. 

“As agreed with @realDonaldTrump, first American coal has reached Ukraine,” he wrote.

Poroshenko’s press service said the deal “is an exact example of when the friendly and warm atmosphere of one conversation helps strengthen the foundations of a strategic partnership in the interests of both sides for the future.”

The Washington meeting also discussed U.S.-Ukrainian military and technical cooperation. Soon after, the Trump administration said it was considering supplying defensive weapons to Ukraine to counter the Russian-backed separatists.

In late December the U.S. State Department announced that the provision of “enhanced defensive capabilities” had been approved.

Kozemko said the Xcoal deal was likely to be only the beginning of Centrenergo’s trade relations with the United States as it is currently holding talks on supplies of bituminous coal, a poorer quality variety.

“It’s good that we studied the U.S. market because we had never looked at it before. We see big prospects for bituminous coal,” he said, adding that other Ukrainian firms were thinking similarly. “We showed how to bring coal from America and they are following our lead.”
…

For the first time in Ukraine’s history, U.S. anthracite is helping to keep the lights on and the heating going this winter following a deal that has also helped to warm Kyiv’s relations with President Donald Trump.

The Ukrainian state-owned company that imported the coal told Reuters that the deal made commercial sense. But it was also politically expedient, according to a person involved in the talks on the agreement and power industry insiders.

On Trump’s side it provided much-needed orders for a coal-producing region of the United States which was a vital constituency in his 2016 presidential election victory.

On the Ukrainian side the deal helped to win favor with the White House, whose support Kyiv needs in its conflict with Russia, as well as opening up a new source of coal at a time when its traditional supplies are disrupted.

Trump’s campaign call to improve relations with the Kremlin alarmed the pro-Western leadership in Ukraine, which lost Crimea to Russia in 2014 and is still fighting pro-Moscow separatists.

However, things looked up when President Petro Poroshenko visited the White House on June 20 last year.

“The meeting with Trump was a key point, a milestone,” a Ukrainian government source told Reuters, requesting anonymity.

The Americans had set particular store by supplying coal to Ukraine. 

“I felt that for them it is important,” said the source, who was present at the talks that also included a session with Vice President Mike Pence.

Despite Trump’s incentives, U.S. utilities are shutting coal-fired plants and shifting to gas, wind and solar power.

Ailing U.S. mining companies are therefore boosting exports to Asia and seeking new buyers among eastern European countries trying to diversify from Russian supplies.

Trump, who championed U.S. coal producers on the campaign trail, pressed the message after meeting Poroshenko. 

“Ukraine already tells us they need millions and millions of metric tons right now,” he said in a speech nine days later. “We want to sell it to them, and to everyone else all over the globe who need it.”

The deal with Kyiv was sealed the following month, after which U.S. Commerce Secretary Wilbur Ross said: “As promised during the campaign, President Trump is unshackling American energy with each day on the job.”

The deal helped to “bolster a key strategic partner against regional pressures that seek to undermine U.S. interests,” Ross added, referring to past Russian attempts to restrict natural gas flows to its western neighbors.

A matter of necessity

Ukraine was once a major producer of anthracite, a coal used in power generation, but it has faced a shortage in recent winters as it lost control of almost all its mines in eastern areas to the separatists.

Along with South Africa, Ukrainian-owned mines in Russia have been the main source of anthracite imports but this is fraught with uncertainty. In the past Moscow has cut off gas supplies to the country over disputes with Kyiv, while the Ukrainian government considered forbidding anthracite imports from Russia in 2017 although no ban has yet been imposed.

Overall anthracite imports shot up to 3.05 million tons in the first 11 months of 2017 from just 0.05 million in all of 2013 — the year before the rebellion erupted.

Neighboring Poland, which Trump visited in July, is also turning increasingly to U.S. coal. Its imports from the United States jumped five-fold last year to 839,000 tons, data from the state-run ARP agency showed.

In July Ukrainian state-owned energy company Centrenergo announced the deal with U.S. company Xcoal for the supply of up to 700,000 tons of anthracite.

Centrenergo initially said it would pay $113 per ton for the first shipment, a price industry experts and traders told Reuters was expensive compared with alternatives.

However, chief executive Oleg Kozemko said the cost varied according to the quality of the coal delivered, so Centrenergo had paid around $100 per ton on average for the 410,000 tons supplied by the end of 2017.

Kozemko said in an interview that the U.S. deal was Centrenergo’s only viable option after three tenders it launched earlier last year had failed.

“The idea to sign a contract with Xcoal was a matter of necessity,” he said. “We had agreements but they didn’t work out, because the pricing that they discussed with us and that we signed an agreement on didn’t work out.”

Data on the state tenders registry and documents seen by Reuters show that two of the tenders failed due to a lack of bids, while the results of the third were cancelled.

If that contract had worked out, Centrenergo would have paid around $96 per ton, according to Reuters calculations based on the exchange rate at the time of the tender in April.

Energy expert Andriy Gerus told Reuters the Xcoal deal “probably helps Ukraine to build some good political connections with the USA and that is quite important right now.”

Mutual desire 

The anthracite for Centrenergo is mined in Pennsylvania, which backed Trump in 2016. This marked the first time a Republican presidential candidate had won the state since 1988, and followed Trump’s pledge to reverse the coal industry’s history of plant closures and lay-offs in recent years.

Centrenergo says it and Xcoal agreed the contract independently of their governments and without any political pressure. However, Kozemko said: “If talks between the heads of our countries helped in this, then we can only say thank you… It was a mutual desire.”

For the Ukrainian authorities, the diplomatic benefit is clear. When the first shipment of U.S. anthracite arrived in September, Poroshenko tweeted a photo of himself shaking hands with Trump in Washington. 

“As agreed with @realDonaldTrump, first American coal has reached Ukraine,” he wrote.

Poroshenko’s press service said the deal “is an exact example of when the friendly and warm atmosphere of one conversation helps strengthen the foundations of a strategic partnership in the interests of both sides for the future.”

The Washington meeting also discussed U.S.-Ukrainian military and technical cooperation. Soon after, the Trump administration said it was considering supplying defensive weapons to Ukraine to counter the Russian-backed separatists.

In late December the U.S. State Department announced that the provision of “enhanced defensive capabilities” had been approved.

Kozemko said the Xcoal deal was likely to be only the beginning of Centrenergo’s trade relations with the United States as it is currently holding talks on supplies of bituminous coal, a poorer quality variety.

“It’s good that we studied the U.S. market because we had never looked at it before. We see big prospects for bituminous coal,” he said, adding that other Ukrainian firms were thinking similarly. “We showed how to bring coal from America and they are following our lead.”
…

Brazil’s political affairs minister Carlos Marun said on Monday that passage of a bill to overhaul the country’s costly social security system has effectively ground to a halt in Congress and would become a campaign issue in this year’s election.

Marun spoke to reporters after the head of the Senate, Eunicio Oliveira, said the federal government’s military intervention in Rio de Janeiro would, by the rules of the country’s constitution, block any vote on pension reform or any other measure requiring a constitutional amendment.

But Marun acknowledged what President Michel Temer’s critics believe is the real reason for holding up a pension vote: the unpopular bill never gained enough support and the government faced certain defeat.

“We don’t have the votes. I couldn’t guarantee we would have the votes by the end of February,” he said. That was the government’s deadline for passing the bill before lawmakers turned their attention to securing their seats in the October general election.

Pension reform is the cornerstone policy in Temer’s efforts to bring a bulging budget deficit under control. Generous pension benefits and early retirement have turned social security into the main driver of a deficit that cost Brazil its investment grade.

Marun, the cabinet minister charged with mobilizing coalition support in Congress, said pension reform would become a key issue in the election campaign if Congress did not take it up again.

The legislation to streamline social security, which required amending the constitution, was lined up for a first vote in the lower house of Congress this week.

But on Friday the government ordered the army to take over command of police forces in Rio de Janeiro state in a bid to curb violence driven by drug gangs, an intervention that blocks any constitutional changes during its duration.

Temer decreed the Rio intervention through Dec. 31, his last day in office.
…

Brazil’s political affairs minister Carlos Marun said on Monday that passage of a bill to overhaul the country’s costly social security system has effectively ground to a halt in Congress and would become a campaign issue in this year’s election.

Marun spoke to reporters after the head of the Senate, Eunicio Oliveira, said the federal government’s military intervention in Rio de Janeiro would, by the rules of the country’s constitution, block any vote on pension reform or any other measure requiring a constitutional amendment.

But Marun acknowledged what President Michel Temer’s critics believe is the real reason for holding up a pension vote: the unpopular bill never gained enough support and the government faced certain defeat.

“We don’t have the votes. I couldn’t guarantee we would have the votes by the end of February,” he said. That was the government’s deadline for passing the bill before lawmakers turned their attention to securing their seats in the October general election.

Pension reform is the cornerstone policy in Temer’s efforts to bring a bulging budget deficit under control. Generous pension benefits and early retirement have turned social security into the main driver of a deficit that cost Brazil its investment grade.

Marun, the cabinet minister charged with mobilizing coalition support in Congress, said pension reform would become a key issue in the election campaign if Congress did not take it up again.

The legislation to streamline social security, which required amending the constitution, was lined up for a first vote in the lower house of Congress this week.

But on Friday the government ordered the army to take over command of police forces in Rio de Janeiro state in a bid to curb violence driven by drug gangs, an intervention that blocks any constitutional changes during its duration.

Temer decreed the Rio intervention through Dec. 31, his last day in office.
…

Latvia’s ABLV Bank sought emergency support Monday after U.S. officials accused it of helping breach North Korean sanctions while the country’s central bank chief faced bribery allegations, turning up the spotlight on its financial system.

The Baltic country, which is a member of the euro zone and shares a border with Russia, has come under increasing scrutiny recently as a conduit for illicit financial activities.

Last year, two Latvian banks were fined more than 2.8 million euros ($3.26 million) for allowing clients to violate sanctions imposed by the European Union and United Nations on North Korea. Three others received smaller fines.

ABLV said it had sought temporary liquidity support from the central bank after depositors withdrew 600 million euros, about 22 percent of total deposits, following a warning by the United States that it was seeking to impose sanctions on the bank.

Latvia’s third-biggest lender denied wrongdoing.

“We don’t participate in any illegal activities,” ABLV Bank Deputy CEO Vadims Reinfelds told a news conference. “There are no violations of sanctions.”

The bank said it would not look for a bailout from the government and that it had adequate liquidity and capital.

The European Central Bank had earlier stopped all payments by ABLV, citing the sharp deterioration in its financial position in recent days and saying a moratorium was needed to allow the bank and Latvian authorities to address the situation.

A source close to the matter said the moratorium would be short, giving ABLV just a few days to assess its situation.

Only solvent institutions may receive emergency liquidity support and should the ECB determine that ABLV cannot meet its financial, liquidity and capital obligations, it could start proceedings that may lead to the bank being wound down.

Latvia’s own central bank said it had agreed to provide 97.5 million euros worth of funding to ABLV but that the bank has yet to receive the money.

The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) said on Feb. 13 that ABLV “had institutionalized money laundering as a pillar of the bank’s business practices.”

It linked some of the alleged activities to North Korea’s ballistic missiles program, saying bank executives and management had bribed Latvian officials to cover up their activities.

​Central bank governor

Separately, Latvia’s anti-corruption authority released central bank Governor Ilmars Rimsevics, an ECB policymaker, who was arrested Saturday on suspicion of having solicited a 100,000 euro bribe. Rimsevics denied the allegations.

The Corruption Prevention and Combating Bureau said its investigation was not connected to the probe into ABLV.

“[Rimsevics’ arrest] … is about demanding a bribe of no less than 100,000 euros,” the bureau’s head, Jekabs Straume, told reporters at a news conference Monday.

Neither the police nor the anti-corruption authority gave details of the alleged request for a bribe.

A lawyer for Rimsevics, who was arrested after police searched his office and home, said he would hold a news conference at 11:00 a.m. (1000 GMT) Tuesday.

“I disagree with it categorically,” Rimsevics told Latvian news portal Delfi following his release, referring to the bribery allegations.

Prime Minister Maris Kucinskis had earlier called on the central bank chief to quit, saying: “I can’t imagine that a governor of the Bank of Latvia detained over such a serious accusation could work.”

Latvia joined the European Union in 2003 and adopted the euro currency at the start of 2014, a move that gave its central bank governor a seat on the ECB’s interest-rate-setting Governing Council.

The European Commission said Monday that Rimsevics’ detention was a matter for Latvian authorities.

Boom time

The economy of Latvia, which gained independence from the Soviet Union in 1991, has boomed in recent years. Its commercial banking sector is dominated by Nordic banks alongside a number of privately-owned local lenders.

In its document detailing the allegations against ABLV, the FinCEN said the reliance of some parts of the Latvian banking system on non-resident deposits for capital exposed it to increased illicit finance risk. It said such deposits amounted to roughly $13 billion.

“Non-resident banking in Latvia allows offshore companies, including shell companies, to hold accounts and transact through Latvian banks,” FinCEN said, adding that criminal groups and corrupt officials may use such schemes to hide true beneficiaries or create fraudulent business transactions.

“[Former Soviet Union] actors often transfer their capital via Latvia, frequently through complex and interconnected legal structures, to various banking locales in order to reduce scrutiny of transactions and lower the transactions’ risk rating.”
…

Potential customers of high end property in India are being enticed by an unusual offer: the chance to spend an evening with the son of the American president if they decide to invest in residential projects licensed by the family’s company.

Donald Trump Junior’s week-long visit to India starting Monday could not escape attention: full, front page newspaper advertisements in the country’s most prominent newspapers have posed the question: “Trump is here. Are you invited?” and “Trump has arrived. Have you?”

Trump Jr. has been in charge of the Trump Organization along with his brother Eric since their father became president.

The advertisements, which featured large photos of Trump Jr, said that those signing up before 22nd February to buy apartments could join him for “a conversation and dinner.”

His first stop will be Gurugram, a business hub on the outskirts of New Delhi, where local firms under a license from the Trump Organization are developing two 47-story towers bearing the Trump brand name. The more than 250 super-luxury units in the residential blocks are selling for approximately $1 million to $1.5 million each.

India is the Trump Organization’s biggest overseas market, earning the family up to $3 million in royalties in 2016.

The hope of the business partners is that the high profile visit of the American president’s son could give sales a boost at a time when India’s real estate market is witnessing a downturn — property prices have dipped nearly 30 percent following a crackdown on untaxed money by the government. In Gurugram, home to several luxury projects, many prominent builders are stuck with hundreds of unsold flats.

Referring to the visit, Samir Juneja at PropEquity, a real estate data analytics company says “There is this big marketing push which is working pretty well.” According to him, the association of the projects with the American president’s family does help. “The brand has been created and now it happens to get a further fillip that it happens to be the president’s.”

But there is criticism of the sales trip since the advertisements began appearing on the weekend. Patrick French, a British historian who is currently Dean of the School of Arts and Sciences at Ahmedabad University in India tweeted, “For the last however many days every newspaper in India has been wrapped in this abominable invitation to dinner with Trump Jr.”

A retired professional in Gurugram, Umesh Sood, was not sure if the sales pitch of a dinner and conversation with Trump Jr. would actually prompt people to put their money down.

 “You are not meeting the president, you are meeting the son with the same name, without the powers, without the pomp.”

Questions have also been raised over issues of conflict of interest. The New York Times quoted Daniel S. Markey, who worked on South Asia policy for the State Department during the George W. Bush administration, as saying that “The idea that the president’s son would be going and shilling the president’s brand at same time Donald Trump is president and is managing strategic and foreign relations with India – that is just bizarre.”

Two of the organizations four Indian projects, in Mumbai and Pune, were launched before Donald Trump was elected president. The Kolkata and Gurugram projects were launched later, but the deals had been signed before his election. The Trump Organization announced it would not launch any project outside the US after he became president.

Trump Jr. is the second child of Donald Trump to visit India. Ivanka Trump visited in November, in her capacity as a member of Trump administration, to address a global entrepreneurship summit.
…

Potential customers of high end property in India are being enticed by an unusual offer: the chance to spend an evening with the son of the American president if they decide to invest in residential projects licensed by the family’s company.

Donald Trump Junior’s week-long visit to India starting Monday could not escape attention: full, front page newspaper advertisements in the country’s most prominent newspapers have posed the question: “Trump is here. Are you invited?” and “Trump has arrived. Have you?”

Trump Jr. has been in charge of the Trump Organization along with his brother Eric since their father became president.

The advertisements, which featured large photos of Trump Jr, said that those signing up before 22nd February to buy apartments could join him for “a conversation and dinner.”

His first stop will be Gurugram, a business hub on the outskirts of New Delhi, where local firms under a license from the Trump Organization are developing two 47-story towers bearing the Trump brand name. The more than 250 super-luxury units in the residential blocks are selling for approximately $1 million to $1.5 million each.

India is the Trump Organization’s biggest overseas market, earning the family up to $3 million in royalties in 2016.

The hope of the business partners is that the high profile visit of the American president’s son could give sales a boost at a time when India’s real estate market is witnessing a downturn — property prices have dipped nearly 30 percent following a crackdown on untaxed money by the government. In Gurugram, home to several luxury projects, many prominent builders are stuck with hundreds of unsold flats.

Referring to the visit, Samir Juneja at PropEquity, a real estate data analytics company says “There is this big marketing push which is working pretty well.” According to him, the association of the projects with the American president’s family does help. “The brand has been created and now it happens to get a further fillip that it happens to be the president’s.”

But there is criticism of the sales trip since the advertisements began appearing on the weekend. Patrick French, a British historian who is currently Dean of the School of Arts and Sciences at Ahmedabad University in India tweeted, “For the last however many days every newspaper in India has been wrapped in this abominable invitation to dinner with Trump Jr.”

A retired professional in Gurugram, Umesh Sood, was not sure if the sales pitch of a dinner and conversation with Trump Jr. would actually prompt people to put their money down.

 “You are not meeting the president, you are meeting the son with the same name, without the powers, without the pomp.”

Questions have also been raised over issues of conflict of interest. The New York Times quoted Daniel S. Markey, who worked on South Asia policy for the State Department during the George W. Bush administration, as saying that “The idea that the president’s son would be going and shilling the president’s brand at same time Donald Trump is president and is managing strategic and foreign relations with India – that is just bizarre.”

Two of the organizations four Indian projects, in Mumbai and Pune, were launched before Donald Trump was elected president. The Kolkata and Gurugram projects were launched later, but the deals had been signed before his election. The Trump Organization announced it would not launch any project outside the US after he became president.

Trump Jr. is the second child of Donald Trump to visit India. Ivanka Trump visited in November, in her capacity as a member of Trump administration, to address a global entrepreneurship summit.
…

Latvian Prime Minister Maris Kucinskis assured the country and Europe “there is no sign of danger,” after anti-corruption police arrested the head of the Latvian central bank Saturday.

“For now, neither I, nor any other official, has any reason to interfere with the work of the Corruption Prevention Bureau,” Kucinskis said.

Neither Kucinskis nor the police gave any reason why central bank governor Ilmars Rimsevics was arrested. But a police spokeswoman said there will be an announcement “as soon as possible.”

The Latvian government plans an emergency meeting Monday.

Along with heading the Baltic nation’s central bank, Rimsevics is also one of 19 governors on the European Central Bank.

The U.S. Treasury Department has proposed sanctions against a major Latvian bank for alleged money laundering linked to North Korea’s weapons program.
…

The Commerce Department is urging President Donald Trump to impose tariffs or quotas on aluminum and steel imports from China and other countries.

Unveiling the recommendations Friday, Secretary Wilbur Ross said in the case of both industries “the imports threaten to impair our national security.”

As an example, Ross said only one U.S. company now produces a high-quality aluminum alloy needed for military aircraft.

Raise US capacity

The measures are intended to raise U.S. production of aluminum and steel to 80 percent of industrial capacity. Currently U.S. steel plants are running at 73 percent of capacity and aluminum plants at 48 percent.

Ross emphasized that the president would have the final say, including on whether to exclude certain countries, such as NATO allies, from any actions.

China’s Commerce Ministry said Saturday that the report was baseless and did not accord with the facts, and that China would take necessary steps to protect its interests if affected by the final decision.

Last year, Trump authorized the probe into whether aluminum and steel imports posed a threat to national defense under a 1962 trade law that has not been invoked since 2001. He has to make a decision by mid-April.

Three options

Ross is offering the president three options:

To impose tariffs of 24 percent on all steel and 7.7 percent on aluminum imports from all countries.

To impose tariffs of 53 percent on steel imports from 12 countries, including Brazil, China and Russia, and tariffs of 23.6 percent on aluminum imports from China, Hong Kong, Russia, Venezuela and Vietnam. Under this option, the U.S. would also impose a quota limiting all other countries to the amount of aluminum and steel they exported to U.S. last year.

To impose a quota on steel and aluminum imports from all sources, limiting each country 63 percent of the steel and 86.7 percent of the aluminum they shipped to the U.S. last year.
…

The uncovering of one of the biggest frauds at a state-owned bank in India has rocked the country’s financial sector and brought scrutiny to a billionaire jeweler who counted Hollywood stars among his customers.

The nearly $1.8 billion fraud reported at India’s second-largest state-owned bank is a blow to the government’s efforts to revive the state-owned banking sector, which is already staggering under a mountain of bad debt.

Nirav Modi, whose jewelry boutiques span high-end streets from Hong Kong to London to New York and whose diamonds have been worn by Hollywood stars such as Dakota Johnson and Kate Winslet, is being investigated for the fraudulent transactions. His brand ambassador is Bollywood star Priyanka Chopra, who has also carved a niche in the United States.

The fraud, which officials say had been going on from a single branch of Punjab National Bank in Mumbai, went undetected since 2011. Calling it a “cancer,” the bank’s chief executive, Sunil Mehta, told a news conference earlier this week that it had been removed. “We will resolve it and we will honor all our bona fide commitments.”

Officials at the bank have accused Modi and his companies of obtaining unauthorized letters of undertaking from junior employees to secure credit from overseas branches of Indian banks. 

Modi has not responded to the allegations and, according to some reports, left the country last month. His home, stores and offices were raided by Indian investigators. His passport is being revoked, according to the Law and Justice Minister, Ravi Shankar Prasad.

“No one will be spared,” he said. “The taxpayers’ money will not be allowed to be lost. The investigation is proceeding with great speed and pace.”

Modi, whose worth is estimated at about $1.74 billion, is the 85th richest man in India, according to Forbes. Belonging to a family of diamond traders, the soft-spoken businessman founded a company called Firestone Diamond in 1999 — later rechristened Firestar Diamond — and quickly made a name in the business. He later set up his own jewelry design brand and won the rich and famous among his customers.

In January, he attended the economic summit in Davos, where a large Indian business delegation was present, along with Prime Minister Narendra Modi. The two are not related. 

The fraud, which went undetected for years, has reignited concerns about governance standards at Indian banks and norms that are used for lending to corporate customers. Questions have been raised as to why audits failed to detect the fraud for years.

It came to light weeks after the government announced a $14 billion bailout for state banks. These banks, which account for about two-thirds of all bank assets in the country, are the backbone of the financial system, but are saddled with bad debt estimated at $147 billion.

Economists have warned that this mountain of bad loans threatens India’s efforts to accelerate its economy as it slows down efforts by banks to lend to potential investors.
…