International Monetary Fund chief Christine Lagarde led an attack by global economic organizations on U.S. President Donald Trump’s “America First” trade policy Monday, warning that clouds over the global economy “are getting darker by the day.”

Trump backed out of a joint communique agreed by Group of Seven leaders in Canada over the weekend that mentioned the need for “free, fair and mutually beneficial trade” and the importance of fighting protectionism.

The U.S. president, who has imposed import tariffs on metals, is furious about the United States’ large trade deficit with key allies. “Fair trade is now to be called fool trade if it is not reciprocal,” he tweeted Monday.

In response, Lagarde unleashed a thinly veiled attack on Trump’s trade policy, saying challenges to the way trade is conducted were damaging business confidence, which had soured even since the weekend G-7 summit.

The Washington-based IMF is sticking to its forecast for global growth of 3.9 percent both this year and next, she said, before adding: “But the clouds on the horizon that we have signaled about six months ago are getting darker by the day, and I was going to say by the weekend.”

“The biggest and darkest cloud that we see is the deterioration in confidence that is prompted by (an) attempt to challenge the way in which trade has been conducted, in which relationships have been handled and in which multilateral organizations have been operating,” Lagarde said.

The IMF managing director spoke after a meeting in Berlin with German Chancellor Angela Merkel and the chiefs of the World Trade Organization (WTO), the World Bank, the Organization for Economic Cooperation and Development (OECD), the International Labor Organization and the African Development Bank.

Merkel said on Sunday the EU would implement countermeasures against U.S. tariffs and described Trump’s rejection of the G-7 communique as “sobering and a bit depressing.”

Investors are fearful of a tit-for-tat trade war, though markets were relatively calm on Monday after an early wobble.

‘Stop this escalation’

WTO Director-General Roberto Azevedo told the Berlin news conference: “We must … stop this escalation of tensions. A tit-for-tat process is not going to be helpful.”

He also criticized the United States’ conduct at the WTO.

“The U.S. has been focusing much more on bilateral — unilateral even sometimes — measures, which is not something that is support of the rules-based trading system.

“They have been complaining about the system, they say that they want to improve the system, but we would expect a more constructive approach on their part,” Azevedo said.

Earlier, Germany’s economy minister said Berlin saw no immediate solution to the trade row between the United States and other major economies but remained open to talks “among friends,” seeking to head off a full-blown global trade war.

As Europe’s biggest exporter to the United States, and with more than one million German jobs at stake, Germany is desperate to avoid an EU trade war with the United States.

“I believe a win-win situation is still possible,” Economy Minister Peter Altmaier, one of Merkel’s closest lieutenants, told broadcaster Deutschlandfunk. “At the moment, however, it seems that no solution is in sight, at least not in the short term.”

Automobile tariffs

Particularly concerning for Germany, a major car exporter to the United States, is Trump’s weekend tweet that Washington is looking at tariffs on automobiles.

The European Commission, which coordinates trade policy for the 28-member EU, aims to target 2.8 billion euros worth of U.S. imports, including bourbon and jeans, with additional 25 percent duties from early July.

It already has broad backing from EU member states, but needs to consult with them in the next couple of weeks.

European Commission President Jean-Claude Juncker, while questioning whether the United States was truly an ally, said the bloc did not want to stop talking with Washington.

“We do not want to cut off discussions and further talks will of course need to address the automobile sector,” he said.
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South Sudan’s central bank said Monday it will issue higher denomination banknotes, enabling citizens to carry fewer notes as rampant inflation continues to devalue the local currency.

The bank said it would introduce a 500-pound bill, worth $1.5 U.S. dollars, into circulation this month. Currently the largest note in circulation is a 100-pound bill.

South Sudan’s economy is close to collapse after a 2015 peace deal with Sudan failed to stick and fighting between rival soldiers has continued. The conflict has hurt the country’s crude oil output, which is at less than half of its pre-war level of 245,000 barrels per day.

“The Bank of South Sudan would like to inform the general public that it is introducing a new banknote of 500 South Sudanese pounds as legal tender in the Republic of South Sudan,” central bank Governor Dier Tong Ngor said in a statement.

Dier said the measure was meant to help reduce the amount of bills people carry.

Soaring inflation has persisted for several years, due in part to a depreciating South Sudan pound, which has lost more than halve its value against the dollar since December 2016 in the black market. In March, year-on-year inflation stood at 161.20 percent, according to the National Bureau of Statistics.

It has averaged 89 percent over the past 10 years, racing to a peak of 835.70 percent in October 2016.

South Sudan secured independence from Sudan in 2011, but in December 2013 slid into civil war after a dispute between President Salva Kiir and his former deputy Riek Machar. As the conflict continues, many of South Sudan’s 12 million people are struggling to find enough to eat.
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President Donald Trump tweeted out more criticism of U.S. trade partners Monday, including allies in Europe and Canada, adding to his declarations that the United States will no longer tolerate what he has called “trade abuse.”

“Sorry, we cannot let our friends, or enemies, take advantage of us on Trade anymore. We must put the American worker first!” Trump said.

That was part of a string of messages in which the president asserted the United States “pays close the the entire cost of NATO” while other member countries take advantage of the U.S. on trade.

“We protect Europe (which is good) at great financial loss, and then get unfairly clobbered on Trade,” he said. “Change is coming!”

NATO members, in general, make financial contributions based on their economic output, and as a result of being the world’s biggest economy the United States does contribute a larger amount than other nations.

Trump tweeted from Singapore where he traveled for a summit with North Korean leader Kim Jong Un after attending a meeting of G-7 leaders in Canada.

After Trump left, Canadian Prime Minister Justin Trudeau called Trump’s decision to impose invoke national security grounds to impose new tariffs on aluminum and steel “insulting” because of the long history of Canadian troops supporting the United States in conflicts.

Trudeau also pledged to respond with equivalent tariffs on U.S. goods beginning July 1.

While airborne, Trump ordered U.S. officials to refuse to sign the traditional end-of-summit communique and tweeted criticism of what he said were Trudeau’s “false statements at his news conference.”

“PM Justin Trudeau of Canada acted so meek and mild during our G7 meetings only to give a news conference after I left saying that, ‘US Tariffs were kind of insulting’ and he ‘will not be pushed around.’ Very dishonest & weak. Our Tariffs are in response to his of 270% on dairy!” he said.

Trump followed Monday with another tweet saying, “Fair Trade is no to be called Fool Trade if it is not Reciprocal,” and that Trudeau “acts hurt when called out.”

Trudeau did not respond to the U.S. attacks, instead declaring the summit a success.

“The historic and important agreement we all reached” at the summit “will help make our economies stronger and people more prosperous, protect our democracies, safeguard our environment, and protect women and girls’ rights around the world. That’s what matters,” Trudeau said.

But foreign minister Chrystia Freeland said, “Canada does not believe that ad hominem attacks are a particularly appropriate or useful way to conduct our relations with other countries.”

The G-7 summit communique called for working together to stimulate economic growth “that benefits everyone,” and highlighted a commitment to a “rules-based international trading system” and “fight protectionism.” The document also supports strong health systems, advancing gender equality, ending sexual and gender-based violence, as well as efforts to create a more peaceful world and combat climate change.

German Chancellor Angela Merkel told ARD television that Trump’s withdrawal from the communique through a tweet is “sobering and a bit depressing.”

French President Emmanuel Macron attacked Trump’s stance, saying, “International cooperation cannot be dictated by fits of anger and throwaway remarks.” He called Trump’s refusal to sign the communique a display of “incoherence and inconsistency.”

U.S. Republican Sen. John McCain, a vocal Trump critic, offered support for the other six world leaders at the Canadian summit.

“To our allies,” McCain tweeted, “bipartisan majorities of Americans remain pro-free trade, pro-globalization & supportive of alliances based on 70 years of shared values. Americans stand with you, even if our president doesn’t.” 

Trudeau and May also bucked Trump on another high-profile issue: Russia. Trump suggested Russia rejoin the group after being pushed out in 2014 when it annexed Ukraine’s Crimean peninsula. Trudeau said he is “not remotely interested” in having Russia rejoin the group.

May added, “We have agreed to stand ready to take further restrictive measures against Russia if necessary.”
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A radical plan to transform Switzerland’s financial landscape by barring commercial banks from electronically creating money when they lend was resoundingly rejected by Swiss voters on Sunday.

More than three quarters rejected the so-called Sovereign Money initiative, according to the official result released from the Swiss government.

All of the country’s self-governing cantons also voted against in the poll, which needed a majority from Switzerland’s 26 cantons as well as a simple majority of voters to succeed. Concerns about the potential risks to the Swiss economy by introducing a “vollgeld” or “real money” system appear to have convinced voters to reject the proposals.

The Swiss government, which had opposed the plan because of the uncertainties it would unleash, said it was pleased with the result.

“Implementing such a scheme, which would have raised so many questions, would have been hardly possible without years of trouble,” Finance Minister Ueli Maurer said.

“Swiss people in general don’t like taking risks, and …the people have seen no benefit from these proposals. You can also see that our banking system functions…The suspicions against the banks have been largely eliminated.”

The vote, called under Switzerland’s system of direct democracy after gathering more than 100,000 signatures, wanted to make the Swiss National Bank (SNB) the only body authorized to create money in the country.

Contrary to common belief, most money in the world is not produced by central banks but is instead created electronically by commercial lenders when they lend beyond the deposits they hold for savers.

This arrangement, underpinned by the belief that most debts will be repaid, has been a cornerstone of the global capitalist system but opponents say it is unstable because the new money created could exceed the rate of economic growth, which could lead to inflationary asset bubbles.

If approved, Switzerland, famed for its banking industry, would have been the first country in the world to introduce such a scheme, leading opponents to brand the plan a dangerous experiment which would damage the economy.

The plan could have had repercussions beyond Switzerland’s borders by removing a practice which underpins most of the world’s bank lending.

Support for reform had grown in the wake of the 2008 economic crisis, with campaigners saying their ideas would make the financial system more secure and protect people’s savings from bank runs.

As well as the Swiss government, opposition came from the Swiss National Bank and business groups.

“We are pleased, this would have been an extremely damaging initiative,” said Heinz Karrer, president of business lobby Economiesuisse.

The SNB acknowledged the result, saying adoption of the initiative would have made it much harder to control inflation in Switzerland.

“With conditions now remaining unchanged, the SNB will be able to maintain its monetary policy focus on ensuring price stability, which makes an important contribution to our country’s prosperity,” it said in a statement.

Campaigners – a group of academics, former bankers and scientists – said they would continue to work on raising their concerns.

“The discussion is only just getting started,” said campaign spokesman Raffael Wuethrich. “Our goal is that money should be in the service of the people and not the other way around and we will continue to work on it.” 
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Italy’s new coalition government has no intention of leaving the euro and plans to focus on cutting debt levels, Economy Minister Giovanni Tria said on Sunday, looking to reassure nervous financial markets.

Italian government bonds have come under concerted selling pressure on fears the government will embark on a spending splurge that Italy can ill-afford and markets are wary that euro-skeptics within the coalition might try to push Italy out of the eurozone.

In his first interview since taking office a week ago, Tria told Corriere della Sera newspaper that the coalition wanted to boost growth through investment and structural reforms.

“Our goal is [to lift] growth and employment. But we do not plan on reviving growth through deficit spending,” Tria said, adding that he would present new economic forecasts and government goals in September.

“These will be fully coherent with the objective of continuing on the path of lowering the debt/GDP ratio,” he said.

The government, comprising the anti-establishment 5-Star Movement and far-right League, initially named as economy minister a man who had called the euro an “historic error”.

He was eventually handed a less important portfolio after the head of state refused to accept his nomination.

Tria, a little-known economics professor who is not affiliated to any party, said the coalition was committed to remaining within the single currency.

“The position of the government is clear and unanimous. There is no question of leaving the euro,” he said.

“The government is determined to prevent in any way the market conditions that would lead to an exit materializing. It’s not just that we do not want to leave, we will act in such a way that the conditions do not get anywhere near to a position where they might challenge our presence in the euro.”

Tria said he had spoken to his German counterpart and was looking for “fruitful dialogue” with the Europe Union, adding that Italian interests chimed with those of Europe.

“Basic choices”

The new government has promised to roll back pension reform, cut taxes and boost welfare spending, measures that are expected to cost tens of billions of euros. It also needs to find an estimated 12.5 billion euros ($14.8 billion) to stave off the threat of an automatic increase in sales taxes because of previously missed deficit targets.

Tria declined to say whether the coalition would hike the deficit target, but said he aimed to meet existing 2018 and 2019 debt reduction goals.

The previous center-left government had forecast a fall in debt to 130.8 percent of gross domestic product (GDP) this year and 128 percent next year against 131.8 percent in 2017.

Tria urged investors to look not just at the hard figures, but also study the content of the forthcoming 2019 budget.

“As part of the debt reduction and deficit reduction goals, the budget will reflect the basic choices on how and when to implement the [government] program,” he said.

“We have a program that focuses on structural reforms and we want it to also act on the supply side, creating more favorable conditions for investment and employment.”

The government has also promised to review a recent shake-up of mutual and co-operative banks, saying the changes risked penalizing domestic lenders. However Tria said the issue “is not the first problem we have to tackle”.

He also distanced himself from calls within the coalition for the government to issue securities to pay off individuals and companies owed money by the state.

“Stop-gap solutions solve nothing,” he said.
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The Shanghai Cooperation Organization (SCO)is holding its first summit since India and Pakistan joined the bloc which is widely seem by observers as a means for blocking American influence in Central Asia. 

The founding members of the alliance are China, Russia, Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan. 

The summit is being held in the eastern Chinese coastal city of Qingdao. 

Chinese President Xi Jingping told the group in opening remarks Sunday, “We should reject selfish, short-sighted, narrow and closed-off policies.We must maintain the rules of the World Trade Organization, support the multilateral trade system and build an open global economy.”

Political analysts see the Chinese leader’s remarks as a thinly veiled reference to the chaos at the recent G-7 summit in Canada where the U.S. and its allies were divided by escalating trade tensions. 

After leaving the G-7 meeting, U.S. President Donald Trump described Canadian Prime Minister Justin Trudeau as “meek and mild” and “dishonest & weak.”

Trump also withdrew his endorsement of the G-7 summit’s communique.
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Canadian Prime Minister Justin Trudeau announced Saturday that nearly $3 billion in pledges has been raised to help fund the education of vulnerable girls and women around the world.

Canada will contribute $300 million to the campaign. Germany, Japan, Britain and the World Bank are among the additional supporters. 

The prime minister made the announcement on the last day of the G-7 summit which was held in Quebec. 

Women’s groups that had met with Trudeau on the sidelines of the summit welcomed the news of the generous pledges that exceeded the groups’ expectations. 

“It gives young women in developing countries the opportunity to pursue careers instead of early marriage and child labor,” said Nobel Prize winner Malala Yousafzai, who was shot in the head in Pakistan because of her campaign for the right of girls to receive an education.

Yousafzai, currently a student at Oxford University, said the pledges give “all of us the chance to create a safer, healthier and wealthier world.” 

According to a government statement, the funds will be used to equip girls and women, including refugees, with the skills needed for the jobs of the future.

David Morley, president of UNICEF Canada, said “UNICEF believes that the right to education is as fundamental as the right to food or shelter, and provides girls with the skills they need to break the cycle of crisis and poverty.” 
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Prime Minister Theresa May will gather together squabbling British ministers at her country residence after this month’s European Union summit

to settle on details of a much-anticipated Brexit policy paper.

May has yet to agree on some of the fundamental details of what type of trading relationship she wants to have with the European Union after Britain leaves next March. As a result, talks with the EU have all but ground to a halt, raising fears among businesses and in Brussels that Britain could end up crashing out of the bloc without an agreed-upon deal.

“There’s going to be a lot happening over the next few weeks. You know, people want us to get on with it, and that’s exactly what we’re doing,” May told reporters on her way to a G-7 summit in Canada.

May will look to the June 28-29 EU summit as a chance to pin down some of the most troublesome details of Britain’s exit agreement and pave the way for more intensive talks on the all-important future economic partnership between the world’s fifth-largest economy and the world’s biggest trading bloc.

But senior ministers are still at odds about what type of post-Brexit customs arrangement will be best for Britain, meaning talks on the future are unlikely to move far in June.

Before leaving for Canada, May was forced into crisis talks with her Brexit minister who had challenged her so-called backstop plan to ensure no hard border on the island of Ireland.

Then her foreign minister, Boris Johnson, was recorded saying there could be a Brexit meltdown.

‘Away day’

With that in mind, May said she was planning to summon ministers to Chequers, her country residence, for an “away day” aimed at ending months of squabbling and agreeing upon the contents of a so-called “white paper” policy document.

The white paper is expected to set out in more detail what Britain wants from its long-term relationship with the EU. May did not give a firm date for when it would be published.

Ministers had said it would be published before the June EU summit, suggesting rows had helped delay the paper.

Jeremy Corbyn, the leader of the opposition Labor Party, criticized the delay. “The government promised a ‘detailed, ambitious and precise’ Brexit white paper this month setting out their negotiating priorities. Once again it’s been postponed. The Tories are botching Brexit and risking jobs and our economy in the process,” he said in an emailed statement.

May said her government and the EU were still working toward an October deadline in talks to secure an agreement on the terms of Britain’s withdrawal and an outline of the future partnership.

“We’re all, both we and the European Union, working to that timetable of October,” May said. “From my point of view, what we’re doing is working to develop that future relationship, because there’s a big prize for the U.K. here at the end of this.”
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French President Emmanuel Macron’s economic policy is viewed as favoring the rich and must change to address inequalities, according to a memo written by three economists who worked on his campaign program, Le Monde newspaper said on Saturday.

The criticism is the latest sign of the trouble created by Macron’s economic reforms among the center-left supporters who propelled him to power last year.

In the confidential memo sent to Macron and plastered across Le Monde’s front page, the economists said his policy was failing to convince “even the most ardent supporters.”

“Many supporters of the then-candidate express their fear of a lurch to the right motivated by the temptation to steal the political space left vacant by a struggling conservative party,” the economists wrote.

Jean Pisani-Ferry, the Sciences Po Paris university professor who coordinated Macron’s economic program and is an influential voice in Franco-German academic circles, is one of the authors. He declined to comment when contacted by Reuters.

The other two, Philippe Martin, a former Macron adviser who heads France’s Council of Economic Analysis (CAE), and Philippe Aghion of the elite College de France, did not return Reuters’ requests for comment.

Macron, who campaigned on a promise to be “neither left nor right”, moved swiftly in his first year to loosen labor rules and slash a wealth tax, earning himself the nickname “president of the rich.”

The economists said there was a risk the French would find these measures unfair and think the government is deaf to the needs of the poorest in society.

“The president must talk about the issue of inequalities and not leave this debate to his opponents,” the economists wrote.

Among proposals to reduce inequalities, the economists suggested a rise in inheritance tax for the richest, scrapping tax credits on property investments, and cancelling Macron’s promise to abolish a housing tax for the wealthiest 20 percent.

Macron’s office confirmed it had received the note, but said it did not foretell government policy. Macron is currently in Canada with other Group of Seven

leaders, locked in a battle over trade tariffs with U.S. President Donald Trump.
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Australia’s Commonwealth Bank has agreed to pay a $530 million fine for breaching anti-money laundering and counterterrorism financing laws. The scandal relates to more than 53,000 suspect transactions that the bank did not immediately report to authorities.

If approved by the Federal Court, this will be the largest civil penalty in Australian corporate history.

At the heart of the case were so-called smart cash machines that allowed customers to anonymously deposit and transfer money. Thousands of suspect transactions of more than $7,600 each were not referred to the authorities as required by law.

An investigation by the Australian Transaction Reports and Analysis Center (AUSTRAC), the federal financial intelligence agency, along with state and federal police found the machines were being used to launder the proceeds of crime. 

Australian Treasurer Scott Morrison says the bank must now rebuild its reputation.

“It is for them to rebuild that trust, it is for them to make these admissions, it is for them to incur these penalties and get on with the job of restoring trust in the conduct of the CBA and this, I think, is another important step toward doing that,” Morrison said.

The Commonwealth Bank said its actions were not deliberate but it understood “the seriousness of the mistakes” it had made. It had reportedly been anticipating a fine of about $285 million.

“For AUSTRAC, it is able to demonstrate that there has been serious failings by Commonwealth Bank (CBA), one of our major financial institutions,” said Ian Ramsey, a director at Melbourne University’s Center for Corporate Law. “I am sure what the bank did not want was a very lengthy trial where every day more evidence is brought before the court and then promptly reported in the media of systemic, serious failings by CBA.”

AUSTRAC said the penalty would send a strong message to Australia’s financial industry. Since February it has been investigated by a Royal Commission, Australia’s highest form of inquiry, which has unearthed widespread misconduct within the banking and financial services sector.
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Pope Francis has told the world’s oil executives that a transition to less-polluting energy sources “is a challenge of epochal proportions.”

On the last day of a two-day conference Saturday, the Roman Catholic leader urged the executives to provide electricity to the one billion people who are without it, but said that process must be done in a way that avoids “creating environmental imbalances resulting in deterioration and pollution gravely harmful to our human family, both now and in the future.”

Reuters reports the unprecedented conference was held behind closed doors at the Pontifical Academy of Sciences.

The news agency says the oil executives, investors and Vatican experts who attended the summit, believe, like the pope does, that science supports the notion that climate change is caused by human activity and that global warming must be curbed.

Pope Francis told the conference, “Our desire to ensure energy for all must not lead to the undesired effect of a spiral of extreme climate changes due to a catastrophic rise in global temperatures, harsher environments and increased levels of poverty.”

 
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The Cambodian rosewood had stood for hundreds of years, but its value finally proved too hard to resist and the giant tree came crashing down — inside a protected forest.

It’s unclear exactly who was behind the felling — nobody has been charged — but it set off a series of events, which culminated in hundreds of villagers rejecting their community forest in favor of cutting more trees.

The incident underscores the challenge of protecting the country’s forests, which researchers say have been rapidly disappearing due to logging and agricultural land concessions granted to companies.

Cambodia has among the highest deforestation rates in the world, according to a study published in the journal Science Advances in 2017.

The Southeast Asian nation lost 1.6 million hectares between 2001 and 2014, including 38 percent of its “intact forest landscape”, which the study defined as “a seamless mosaic of forest and naturally treeless ecosystems.”

Conservationists have fought for years to convince the government and people in remote areas to check deforestation, and the community forest model has been a key strategy.

Local residents agree to preserve a community forest, although they are allowed to continue to farm areas already under cultivation, as well as harvest timber needed for construction — if they receive permission.

That model is broken, according to Ben Davis, who has worked in conservation in Cambodia since 1992 and set up the community forest near Ta Bos village in the province of Preah Vihear.

Davis has helped non-governmental organizations (NGOs) establish other community forests, which he said had ended up being logged as soon as no one was around to enforce protection.

“Unless there’s an NGO that is living there in the forest,” he said, trailing off. “The minute they’re gone…” Davis, an American, and his Australian wife, Sharyn, live with their two children in the community forest where they have set up an ecotourism lodge, and he often accompanies Ministry of Environment forest rangers on patrol.

A year ago, rangers startled some men who had just cut down the ancient rosewood, which Davis said was the biggest in the forest.

Authorities decided to confiscate the tree, but the rainy season delayed them and it lay in the jungle until this past April, said Davis and Pov Samuth, the local commune chief.

After the rangers hauled the rosewood to the village common area, residents protested, demanding that it be turned over to them, Davis and Pov Samuth said.

Davis said villagers recently sold one section of the tree — 1.7 meters long and more than a meter in diameter — for $10,000.

“It’s no wonder this thing set off a firestorm,” he said. “You can see why the villagers are hell bent on taking the forest over.”

About 400 residents demonstrated outside Davis’ house in April, and hundreds have applied their thumbprints to a petition demanding his eviction.

“We are not satisfied, because they said the area should be protected for the next generation, but villagers can’t go into the forest to do our work,” said Rorn Chhang, who added her thumbprint to the petition.

Her sister, Sorum Chhang, said she owned 20 hectares in the forest, which she began clearing in 2001.

“A few years ago, they came and said it belongs to the protected area, so they don’t allow me to do anything on my land,” said Sorum Chhang, who has no ownership documents.

Time to Talk

As the controversy continued, government officials in the capital, Phnom Penh, decided to meet with the villagers to explain the regulations around community forests.

About 300 people crowded into a wooden pagoda in the center of the village to speak to Lay Piden, deputy chief of law enforcement and governance at the Ministry of Agriculture.

“Nowadays, there are restrictions even to walk into the forest,” one man said to nods and murmurs of agreement.

After a heated discussion, Lay Piden said the villagers seemed most interested in figuring out how to keep felling trees, as they had before the community forest was established.

“Now, the officials from the Ministry of Environment prohibit them,” he told the Thomson Reuters Foundation. “That’s why they come here and get mad.”

Meas Nhem, director of the Phnom Tnout Wildlife Sanctuary, where the community forest lies, denied that residents are prevented from entering the protected area.

“We are not strict with the villagers,” he said by phone. “We allow them to take yields from the forest, but what we ban is deforesting for farming land and selling to dealers.”

Debt and Deforestation

Davis said almost the every family in the village has taken out loans, putting up their land as collateral, and they struggle to service the debt.

Pov Samuth, the commune chief, concurred.

“Nearly all villagers take money from the banks,” he said. “Some need to cut the trees to construct houses, and some also sell for paying the bank.”

Debt-driven deforestation in the Phnom Tnout Wildlife Sanctuary has raised fears among conservation groups.

In April, eight organizations, including the World Wildlife Fund, released a statement warning of “the rapid rate of destruction” and urged authorities to “enforce the rule of law.”

Already this month, three villagers have been arrested for cutting down a massive padauk tree, an endangered, luxury hardwood that is carved into furniture and musical instruments.

Davis said the rosewood incident had emboldened residents, as some had gained from the illegal felling.

“They hope to get away with it again,” he said.
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Once reliant on seasonal farming jobs to make ends meet, Aguti Rukia is now a successful entrepreneur in Arubela, eastern Uganda.

With the help of a $150 “micro-grant” last year, Rukia and two women from her village started a business buying petrol from fuel stations and selling it in smaller quantities to motorcycle taxis in the area.

“We buy three jerrycans of petrol per week and we make a profit of up to 15,000 Ugandan shillings ($4) from each,” explained Rukia, adding that each business partner had personally invested 30,000 shillings ($8) to top up the grant.

Uganda is one of the 30 poorest countries in the world, with 2017 government figures showing over one quarter of the population lives in poverty.

Eastern Uganda is particularly affected, with only 6 percent of households with access to electricity, according to the World Bank.

To boost people’s income, a project is helping rural Ugandans set up their own businesses by providing seed funding, training and mentoring.

The initiative, led by U.S. charity Village Enterprise, selects groups of three would-be entrepreneurs based on an assessment of their poverty level, and requires them to raise part of their business capital themselves.

“By giving people ownership of their enterprise we thought they would have a better chance of success,” said Winnie Auma, the charity’s director in Uganda.

Each venture is limited to three people as it reduces the risk of failure — compared to only two partners — while still being a number small enough to manage, she told the Thomson Reuters Foundation.

Weather and Poverty

Poverty in the East African country is exacerbated by increasingly erratic weather linked to climate change, experts say.

Absalom Ragira from the Tree is Life Trust, a Kenyan charity working to protect the environment, said rising temperatures help pests to breed, destroying farmers’ crops and their main source of income.

“At the same time, flash floods can sweep away harvests and livestock,” he said.

Before Rukia set up her business with partners Mary Atim and Mary Alinga, the women’s income largely fluctuated with the weather.

“We used to rush to people’s farms whenever they needed someone to till their land,” recalled Rukia.

But those jobs are becoming increasingly scarce, she added.

Seasonal farming jobs are harder to come by in times of drought or floods, local people say, as there are fewer crops left to harvest.

Money – and Respect

After starting off reselling fuel, Rukia, Atim and Alinga have expanded their business by buying and selling groundnut oil for cooking.

Rukia now earns about 75,000 shillings ($20) per week selling petrol, cooking oil and beans — over five times more than when she took up seasonal jobs. The income comes on top of the 60,000 shillings ($16) her husband makes selling brooms.

She said the help starting her business has not only boosted her family’s income — allowing them to buy a solar pay-as-you-go kit — but has also earned her her husband’s respect.

Atim agrees. “They (men) look at us differently because we can even lend them money or pay our children’s school fees,” said the mother of four.

Their venture is one of 4,000 businesses created each year in Uganda and Kenya through the grants, said Auma, estimating they have benefited over 200,000 people since 2012.

Grants, Not Loans

Hannah McCandless, a program associate at Village Enterprise, said the micro-grant model works because budding entrepreneurs only receive the cash once they have been through nine months of training on business and financial skills — and they must spend it on their venture.

Each team also joins a savings group, which can act as a safety net for the women and allow them to take out loans as needed, she added.

“As a result only about 5 percent of businesses fail six months after having started,” she said.

Hassan Mbaziira, a manager at the Ugandan Ministry of Gender, Labor and Social Development, said micro-grants or cash transfers like the Village Enterprise model are an effective way of tackling poverty.

“Cash transfers allow people to spend money according to their needs, and help them regain a sense of control,” he said.

While the government runs its own entrepreneurship and social protection programs, “it is unlikely that they will wipe out poverty on their own”, he added, calling for more support from NGOs and civil society.
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