The U.S. Securities and Exchange Commission has sent subpoenas to Tesla Inc. regarding Chief Executive Elon Musk’s plans to take the company private and his statement that funding was “secured,” Fox Business Network reported on Wednesday, citing sources.

Subpoenas typically indicate the SEC has opened a formal investigation into a matter. Tesla and the SEC declined to comment.

Musk stunned investors and sent Tesla’s shares soaring 11 percent when he tweeted early last week that he was considering taking Tesla private at $420 per share and that he had secured funding for the potential deal.

The electric carmaker’s shares were last down 1.9 percent at $341.00 on Wednesday. They have erased all their gains following Musk’s tweet last week.

Musk provided no details of his funding until Monday, when he said in a blog on Tesla’s website that he was in discussions with Saudi Arabia’s sovereign wealth fund and other potential backers but that financing was not yet nailed down.

The CEO’s tweet may have violated U.S. securities law if he misled investors. On Monday, lawyers told Reuters Musk’s statement indicated he had good reason to believe he had funding but seemed to have overstated its status by saying it was secured.

The SEC has opened an inquiry into Musk’s tweets, according to one person with direct knowledge of the matter. Reuters was not immediately able to ascertain if this had escalated into a full-blown investigation on Wednesday.

This source said Tesla’s independent board members had hired law firm Paul, Weiss, Rifkind, Wharton & Garrison to help handle the SEC inquiry and other fiduciary duties with respect to a potential deal.
…

U.S. retail sales rose more than expected in July as households boosted purchases of motor vehicles and clothing, suggesting the economy remained strong early in the third quarter.

Other data on Wednesday showed worker productivity growing at its fastest pace in more than three years in the second quarter, but a drop in labor costs pointed to moderate wage inflation. Strong domestic demand supports expectations the Federal Reserve will raise interest rates in September for the third time this year.

The Commerce Department said retail sales increased 0.5 percent last month. But data for June was revised lower to show sales gaining 0.2 percent instead of the previously reported 0.5 percent rise. Economists polled by Reuters had forecast retail sales nudging up 0.1 percent in July. Retail sales in July increased 6.4 percent from a year ago.

Excluding automobiles, gasoline, building materials and food services, retail sales advanced 0.5 percent last month after a downwardly revised 0.1 percent dip in June. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.

Core retail sales were previously reported to have been unchanged in June. Consumer spending is being supported by a tightening labor market, which is steadily pushing up wages. Tax cuts and higher savings are also underpinning consumption.

July’s increase in core retail sales suggested the economy started the third quarter on solid footing after logging its best performance in nearly four years in the second quarter.

Gross domestic product surged at a 4.1 percent annualized rate in the April-June period, almost double the 2.2 percent pace in the first quarter. While the economy is unlikely to repeat the second quarter’s robust performance, growth in the

July-September period is expected to top a 3.0 percent rate.

The Fed increased borrowing costs in June and forecast two more interest rate hikes by December.

Prices of U.S. Treasuries fell and the U.S. dollar added slightly to gains immediately after the release of the data. U.S. stock index futures were trading lower.

Productivity rises

Last month, auto sales rose 0.2 percent after edging up 0.1 percent in June. Sales at clothing stores rebounded 1.3 percent after declining 1.6 percent in June. Receipts at service stations increased 0.8 percent.

Online and mail-order retail sales increased 0.8 percent, likely boosted by Amazon.com Inc’s “Prime Day” promotion. That followed a 0.7 percent rise in June. Americans

spent more at restaurants and bars, lifting sales 1.3 percent.

But receipts at furniture stores fell 0.5 percent and sales at building material stores were unchanged last month. Spending at hobby, musical instrument and book stores declined further in July, falling 1.7 percent.

In a separate report on Wednesday, the Labor Department said nonfarm productivity, which measures hourly output per worker, rose at a 2.9 percent annualized rate in the April-June quarter.

That was the strongest rate since the first quarter of 2015.

Data for the first quarter was revised lower to show productivity increasing at a 0.3 percent pace instead of the previously reported 0.4 percent rate. Economists had forecast productivity growing at a 2.3 percent rate in the second increased at a rate of 1.3 percent.

The government also revised data going back to 1947, which did not materially change the picture of lackluster productivity growth, though unit labor costs were stronger than previously estimated in 2017 because of upward revisions to hourly compensation.

The annual rate of productivity growth from 2007 to 2017 was revised up 0.1 percentage point to a rate of 1.3 percent.

Unit labor costs, the price of labor per single unit of output, fell at a 0.9 percent pace in the second quarter. That was the weakest pace since the third quarter of 2014.

First-quarter growth in unit labor costs was revised up to a 3.4 percent rate from the previously reported 2.9 percent pace.

Labor costs increased at a 1.9 percent rate compared to the second quarter of 2017, pointing to moderate wage inflation.

 
…

Royal Bank of Scotland will pay $4.9 billion to settle U.S. claims that it misled investors on residential mortgage-backed securities between 2005 and 2008, the U.S. Justice Department said Tuesday.

The Justice Department said the penalty was the largest ever imposed on a bank for misconduct leading up to the financial crisis. The bank announced in May that it had reached the settlement in principle.

The government alleges RBS misled investors in underwriting and issuing residential mortgage-backed securities, understating the risks behind many of the loans and providing inaccurate data.

“Despite assurances by RBS to its investors, RBS’s deals were backed by mortgage loans with a high risk of default,” Andrew E. Lelling, U.S. attorney for the District of Massachusetts, said in a statement.

The Justice Department said that RBS disputes the allegations and does not admit wrongdoing, although the bank said in a statement it was happy to move on.

“There is no place for the sort of unacceptable behavior alleged by the DoJ at the bank we are building today,” RBS Chief Executive Ross McEwan said.

Dividend

In conjunction with the settlement, the bank also said it would be paying out an interim ordinary dividend of 2 pence per share on October 12 to shareholders.

The dividend is the bank’s first since its near-collapse and 45.5 billion-pound ($58 billion) state bailout in 2008.

The DOJ settlement and the resumption of dividends were two of the last big milestones in RBS’s decade-long journey back to normality. The looming Justice Department fine had weighed on the bank’s share price and prevented it from paying out to its shareholders.

Together with hefty cuts made to its investment bank and international business, a return to dividends could help shift the bank’s profile with investors from a risky bet into a safe, predictable value stock.

It also expands the market for future government share sales by enabling a broader array of investors to look at buying the bank’s shares.

Tuesday’s announcement marked the latest in a long-running series of massive settlements struck between the U.S. government and large global banks over conduct leading up to the financial crisis.

On August 1, the Justice Department struck a settlement with Wells Fargo, which agreed to pay $2.09 billion to settle similar claims.
…

Alexei Nikolayev, one of more than 56 million Russians who re-elected President Vladimir Putin in March, is already counting the likely cost of a weaker ruble: less spending power abroad, higher prices at home and

another round of belt tightening.

But Nikolayev, 56, a graphic designer who enjoys foreign travel and imported wine, blames the West, not Putin, for the pain and has no regrets about voting for a politician he sees as the right man to guide Russia through trubled times.

“It’s painful and it’s unpleasant, but it won’t change my politics,” Nikolayev said of the ruble shedding 10 percent of its value against the dollar since the end of July, driven down largely by new U.S. sanctions on Russia. “In fact, as strange as it may sound, it will only strengthen my convictions. They [the West] are trying to break Russia.”

Nikolayev’s view that Putin is not to blame is held widely among Russians, according to Stepan Goncharov, a sociologist at the Levada Center pollster.

“People don’t really understand the dynamics behind it and the president, traditionally, is safe from criticism,” Goncharov told Reuters.

The narrative in Russia that the ruble’s slide is the result of a Western plot has direct echoes with Russian ally Turkey, whose lira currency slid to a record low Monday. Turkish President Recep Tayyip Erdogan has said that his country is the target of an economic war and that Turkey will boycott some U.S. imports in retaliation.

In Russia, the falling ruble causes pain for some. The price of imported goods is likely to rise. Foreign vacations have also become more expensive.

Irina Turina, a spokeswoman for the Russian Travel Industry Union, said travel agents saw demand for package holidays fall 10 to 15 percent last week because of the ruble’s volatility.

“People who have not yet paid in full for their holidays are rushing to pay off the rest even if they have no obligation to do so,” Turina told Reuters, saying people were worried that the outstanding balance would be recalculated according to a higher, less favorable exchange rate.

“People who have not yet bought package holidays are also pausing for thought,” she said. “It’s not just about paying for your holiday. You need spending money once you get there, and people take dollars.”

​’Nothing is forever’

Nevertheless, early and anecdotal signs suggest many Russians, long inured to a volatile national currency, are stoic, even defiant, in the face of a falling ruble.

Russian Foreign Ministry spokeswoman Maria Zakharova said last week that the sanctions on Russia had nothing to do with Moscow’s behavior in places like Ukraine or Syria but were motivated by a U.S. need to keep economic rivals down.

That view finds favor with many Russians who have listened via state TV and taken in the Kremlin’s anti-Western rhetoric for years.

Other Russians were simply sanguine about a ruble drop that has taken few by surprise because they have seen worse before.

“Nothing is forever; things will change somehow,” said Moscow resident Gennady Tsurkan. “Everything will always change for the better. I think that these days are not far off, I believe that.”

The fall in the ruble is much less severe than the currency crisis after 2014, when an economic slump coincided with the fallout from Russia’s annexation of Ukraine’s Crimea.

Since that time, Russian companies have reduced their foreign borrowing, the state has cut the amount it needs to raise on Western debt markets, and the country imports fewer goods that it needs to pay for in dollars.

Putin’s still-high approval rating has slipped in the past few months, but pollsters put that down to an unpopular proposed pension reform, not the weakness of the ruble.

Pollsters say while the ruble’s weakness may fuel an emerging sense of discontent among some Russians that was sparked by the pension reform, it is unclear if it will lead to protests or influence a political landscape that Putin has bestrode for over 18 years.

“If it does have an effect, it will be an indirect one, magnifying discontent over falling living conditions,” said Levada Center’s Goncharov.

Nikolayev, the Putin-supporting graphic designer, was philosophical:

“It’s like sunshine or snow. I can’t influence it. Maybe I’ll have to drink a different kind of wine. Or maybe I’ll have to buy one instead of two pairs of shoes. It’s painful, but not that painful.”
…

Sprint said Tuesday it has partnered with phone manufacturer LG Electronics to launch a 5G smartphone in the first half of next year, marking the first 5G device deal for the No. 4 U.S. wireless carrier.

Sprint is working to persuade antitrust regulators to approve its merger with larger rival T-Mobile US Inc in a $26 billion deal, which the companies say will help them more quickly build the next-generation wireless network. That network is expected to eventually pave the way for new technologies like autonomous cars.

The LG phone will be customized to Sprint’s planned 5G network, and will be compatible with T-Mobile only on that carrier’s existing 4G network, John Tudhope, Sprint director of product development, said in an interview.

The price of the phone and exact launch date will be announced later, Sprint said in a news release.

Last month, Sprint introduced new unlimited wireless plans bundled with video streaming platform Hulu and music streaming service Tidal, in an effort to attract more customers with media content.

Tudhope said Sprint will continue to use content as a way to “bring to life the value of 5G,” as one of the benefits of the 5G network will be faster download times of video content on smartphones.

The company had previously announced it would initially launch its 5G network in nine cities in 2019, including New York City and Los Angeles.

Sprint is the fourth-largest cellphone service provider in terms of number of customers, after Verizon Communications, AT&T and T-Mobile.
…

Vienna has dislodged Melbourne for the first time at the top of the Economist Intelligence Unit’s Global Liveability Index, strengthening the Austrian capital’s claim to being the world’s most pleasant city to live in.

The two metropolises have been neck and neck in the annual survey of 140 urban centers for years, with Melbourne clinching the title for the past seven editions. This year, a downgraded threat of militant attacks in western Europe as well as the city’s low crime rate helped nudge Vienna into first place.

Vienna regularly tops a larger ranking of cities by quality of life compiled by consulting firm Mercer. It is the first time it has topped the EIU survey, which began in its current form in 2004.

At the other end of the table, Damascus retained last place, followed by the Bangladeshi capital Dhaka, and Lagos in Nigeria.

The survey does not include several of the world’s most dangerous capitals, such as Baghdad and Kabul.

“While in the past couple of years cities in Europe were affected by the spreading perceived threat of terrorism in the region, which caused heightened security measures, the past year has seen a return to normalcy,” the EIU said in a statement about the report published on Tuesday.

“A long-running contender to the title, Vienna has succeeded in displacing Melbourne from the top spot due to increases in the Austrian capital’s stability category ratings,” it said, referring to one of the index’s five headline components.

Vienna and Melbourne scored maximum points in the healthcare, education and infrastructure categories. But while Melbourne extended its lead in the culture and environment component, that was outweighed by Vienna’s improved stability ranking.

Osaka, Calgary and Sydney completed the top five in the survey, which the EIU says tends to favor medium-sized cities in wealthy countries, often with relatively low population densities. Much larger and more crowded cities tend to have higher crime rates and more strained infrastructure, it said.

London for instance ranks 48th.

Vienna, once the capital of a large empire rather than today’s small Alpine republic, has yet to match its pre-World War I population of 2.1 million. Its many green spaces include lakes with popular beaches and vineyards with sweeping views of the capital. Public transport is cheap and efficient.

In addition to the generally improved security outlook for western Europe, Vienna benefited from its low crime rate, the survey’s editor Roxana Slavcheva said.

“One of the sub-categories that Vienna does really well in is the prevalence of petty crime … It’s proven to be one of the safest cities in Europe,” she said.
…

Venezuela’s heavily subsidized domestic gasoline prices should rise to international levels to avoid billions of dollars in annual losses due to fuel smuggling, President Nicolas Maduro said in a televised address on Monday.

“Gasoline must be sold at an international price to stop smuggling to Colombia and the Caribbean,” Maduro said in a televised address.

Venezuela, like most oil-producing countries, has for decades subsidized fuel as a benefit to consumers. But its fuel prices have remained nearly flat for years despite hyperinflation that the International Monetary Fund has projected would reach 1,000,000 percent this year.

That means that for the price of a cup of coffee, a driver can now fill the tank of a small SUV nearly 9,000 times.

Recently, the average price of a coffee with milk was 2.2 million bolivars, or about 50 cents, local media has reported.

Smugglers do brisk business reselling fuel in neighboring countries.

Maduro said the government would still provide “direct subsidies” to citizens holding the “fatherland card,” a state-issued identification card that the government uses to provide bonuses and track use of social services.

He said the subsidy was only available to those who registered their cars in a vehicle census being conducted by the state.
…

Mexican President-elect Andres Manuel Lopez Obrador said on Monday his administration will invest more than $11 billion to boost refining capacity in order to curb growing fuel imports.

Lopez Obrador, who will take office on Dec. 1, told reporters his government plans to invest $2.6 billion to modernize existing domestic refineries owned and operated by national oil company Pemex, and spend another $8.4 billion to build a new one within three years.

The $8.4-billion figure is higher than a $6 billion estimate provided by a key energy advisor during the campaign.

Lopez Obrador, set to become Mexico’s first leftist president in decades, did not detail how the projects would be financed or whether private capital would be involved, but he has often said he will not raise taxes or grow government debt.

Mexico is among Latin America’s largest crude exporters, but is also the biggest importer of U.S. refined products. The country’s next president has pledged to lift refining capacity, which he says has declined due to corruption and neglect.

Pemex, formally known as Petroleos Mexicanos, has six domestic refineries with a total processing capacity of some 1.6 million barrels per day (bpd), but the facilities are only operating at about 40 percent of capacity so far this year.

Meanwhile, gasoline and diesel imports have sky-rocketed in recent months amid planned and unplanned refinery stoppages.

Pemex has posted losses in its refining division for years but Lopez Obrador aims to boost crude processing enough to halt imports within three years.

Lopez Obrador also said he plans to invest another $4 billion to drill new onshore and shallow-water oil wells in the states of Veracruz, Tabasco and Chiapas.

Pemex production has consistently declined in recent years to fall below 2 million bpd after hitting peak output of 3.4 million bpd in 2004.

President Enrique Pena Nieto passed a reform to open up Mexico’s state-run energy industry to private producers, which has led to a series of competitive auctions that have awarded more than 100 oil exploration and production contracts.

Lopez Obrador has said he will respect those contracts as long as an ongoing review does not find signs of corruption. He is widely expected to slow down the process of offering more contracts to private players.

($1 = 19.1100 Mexican pesos)
…

Iranian Supreme Leader Ayatollah Ali Khamenei said Monday government mismanagement has hurt Iran’s economy more than U.S. sanctions.

U.S. President Donald Trump last week reimposed a set of sanctions that had been lifted as part of the 2015 nuclear deal Iran struck with world powers to limit the country’s nuclear program in exchange for relief from measures that had badly hurt its economy.

Those sanctions target Iran’s automotive sector, its trade in gold and other precious metals, along with its currency, the Iranian rial, and other financial transactions.

Trump has threatened another round of sanctions on November 5 against Iran’s energy-related transactions and business that foreign financial institutions conduct with the Central Bank of Iran.

Khamenei said Monday with better management Iran can resist the U.S. sanctions and overcome them.

Trump has been a frequent critic of the Iran nuclear deal and put the sanctions back in place after pulling the United States from the agreement. He says Iran must change the way it operates, including its activities in Syria and Yemen.

Iran and the other signatories of the nuclear deal have said they intend to continue to abide by the agreement.
…

Asian and European markets were rattled by the Turkish lira’s record low of 7.24 to the dollar overnight. The markets began to recover Monday, however, when Turkey’s Central Bank said it was ready to take “all necessary measures” to help Turkish banks manage their liquidity.

The bank’s announcement followed the finance minister’s disclosure that Turkey has prepared an “action plan” scheduled to roll out Monday that is intended to ease market concerns that led to the slump in the value of Turkish currency.

The lira recovered to 6.61 to the dollar following the Central Bank’s announcement.

Turkish President Recep Tayyip Erdogan, embroiled in a bitter dispute with the U.S., a NATO ally, contended Sunday the plunging value of his country’s lira currency amounted to a “political plot” against Turkey.

Erdogan, speaking to political supporters in the Black Sea resort of Trabzon, said, “The aim of the operation is to make Turkey surrender in all areas, from finance to politics. We are once again facing a political, underhand plot. With God’s permission we will overcome this.”

U.S. President Donald Trump has feuded with Erdogan over several issues, including the detention of an American pastor in Turkey, whom Turkey has held since 2016 and accused of espionage. Turkey last month released the evangelical preacher from a prison, but is still detaining him under house arrest pending his trial, despite the demands of the U.S.

With the dispute intensifying, Trump on Friday doubled steel and aluminum tariffs on Turkey, sending the beleaguered lira plunging 16 percent, part of a 40 percent plummet for the currency this year. In early Asian trading Monday, the lira fell to a record low of 7.06 against the dollar.

“What is the reason for all this storm in a tea cup?” Erdogan said. “There is no economic reason for this … This is called carrying out an operation against Turkey.”

Erdogan renewed his call for Turks to sell dollars and buy lira to boost the currency, while telling business owners to not stockpile the American currency.

“I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars,” he said. “Do not take a stance saying, ‘We are bankrupt, we are done, we should guarantee ourselves.’ If you do that, that would be wrong. You should know that to keep this nation standing is… also the manufacturers’ duty.”

Erdogan signaled he was not looking to offer concessions to the United States, or financial markets.

“We will give our answer, by shifting to new markets, new partnerships and new alliances,” said Erdogan, who in recent years has built closer ties with countries in Latin America, Africa and Asia. “Some close the doors and some others open new ones.”

He indicated Turkey’s relationship with Washington was imperiled.

“We can only say ‘goodbye’ to anyone who sacrifices its strategic partnership and a half century alliance with a country of 81 million for the sake of relations with terror groups,” he said. “You dare to sacrifice 81-million Turkey for a priest who is linked to terror groups?”

American pastor Andrew Brunson, if convicted, faces a jail term of 35 years. Trump has described his detention as a “total disgrace” and urged Erdogan to free him immediately.

 
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American businesses have long been preparing for a cashless economy as the use of credit and debit cards, instead of cash, become more widespread. But the move towards a cashless economy may have hit a snag in the nation’s capital. Some Washington DC council members say the cashless trend has gone too far. And if a new bill, introduced by DC Council member David Grosso, passes — some cashless businesses could end up paying big fines. Mariia Prus has the story narrated by Joy Wagner.
…

France deems unacceptable a European Commission proposal to exclude French ports from a rerouting of a strategic trade corridor between Ireland and mainland Europe after Brexit, the government said.

At the moment much of Ireland’s trade with the continent goes via Britain in trucks. However, with less than eight months to go until Britain leaves the European Union, there is still little clarity on its future trade relations with the bloc and on the nature of the Irish Republic’s border with the British

province of Northern Ireland.

The new route put forward by the commission would connect Ireland by sea with Dutch and Belgian ports, including Zeebrugge and Rotterdam. French ports such as Calais and Dunkirk would be bypassed.

“France and Ireland maintain important trade channels, both overland via Britain and via direct maritime routes. The geographical proximity between Ireland and France creates an obvious connection to the single market,” French Transport Minister Elisabeth Borne wrote to the EU’s transport

commissioner in a letter dated August 10.

“Surprisingly, the commission proposal in no way takes this into account. This proposal therefore is not acceptable to France.”

At stake are jobs, millions of dollars’ worth of port revenues and possibly EU infrastructure funding.

Borne said that French ports had the necessary resources to ensure they could handle the likely increase in trade flows, hinting at concerns about congestion in ports such as Calais, France’s busiest passenger port.
…

By most indicators, the U.S. economy is doing well. An achievement that President Donald Trump has boasted about on many occasions. But whether Americans see it that way, may depend on which side of the political aisle they’re on. This report by White House Correspondent Patsy Widakuswara explores partisanship and the American economy.
…

The White House issued a proclamation Friday evening officially announcing the doubling of steel tariffs on Turkey, slated to go into effect Monday.

Earlier Friday, the Turkish lira suffered its worst one-day loss in a decade after President Donald Trump announced the United States would hike metals tariffs, prompting investor confidence to slump.

Trump announced the doubling of aluminum and steel tariffs in a tweet Friday morning, citing bilateral strains.

Ties between the countries have been strained, as Washington is urging Ankara to release Andrew Brunson. The American pastor is currently held under house arrest on terrorism charges. The White House dismisses the charges as baseless and accused Ankara of hostage taking. Turkey wants Brunson to stand trial.

The Brunson dispute triggered the collapse in the Turkish currency as investors feared U.S. financial sanctions. All week the lira has been under pressure, which accelerated with the failure of diplomatic talks in Washington this week.

‘Just the stick’​

U.S. patience with Turkey is seen to have ended, experts say.

“Most of the actors in the Washington scene think that carrots just don’t work with Turkey, just the stick,” said political analyst Atilla Yesilada of Global Source Partners.

Friday saw the lira falling more than 15 percent, bringing the decline to more than 40 percent since the beginning of the year. Turkish President Recep Tayyip Erdogan addressed supporters in the provincial city of Bayburt.

“We will not lose the economic war,” Erdogan said Friday. “Turkey will fight economic hitmen just as it fought the coup plotters.”

The Turkish president alleged Western powers are seeking to oust him from power through the creation of a financial crisis, after failing to so during a 2016 coup attempt.

“Some countries have engaged in behavior that protects coup plotters and knows no laws or justice,” he said. “Relations with countries who behave like this have reached a point beyond salvaging.”

Analysts suggest Erdogan could have Washington in mind, given Ankara is demanding the extradition of U.S.-based Turkish cleric Fethullah Gulen, who is blamed for masterminding the botched 2016 military take over.

Erdogan’s claim of a Western political plot against him sparked alarm in investors and prompted an acceleration in the currency sell-off.

Ankara is under pressure to adopt orthodox steps to protect the lira by aggressively increasing interest rates to rein in double-digit inflation, a move Erdogan has publicly opposed.

Adding to investors’ concerns, Erdogan pledged a continuation of his debt-fueled construction policy to boost the economy, which is blamed for Turkey’s rampant inflation and has added to currency weakness.

‘A national struggle’

The Turkish president Friday dismissed such concerns and called for people to defend the currency.

“Those who have dollars, euros or gold under their pillows should go and exchange them into (Turkish) lira. This is a national struggle. This will be my nation’s response to those who have declared an economic war,” Erdogan said during a rally of supporters.

The drop in the lira has put increasing pressure on Turkish banks, given that many companies have borrowed heavily in foreign currency. Corporate foreign currency loans are around $250 billion, much of which is due to be repaid in a year.

“I don’t think foreign banks will be willing to lend to Turkish banks. There are so many rumors percolating that large companies are going bankrupt,” said analyst Yesilada. “I am afraid there will be a bank run in Turkey, people rushing to withdraw their deposits.”

The Turkish president his indicated possible support from Beijing and Moscow, but analysts are skeptical given the scale of support the Turkish economy needs.

But the souring in U.S.-Turkey relations could give new strength to Russia-Turkey ties, already a source of concern among Turkey’s Western allies.

“There are historical and geopolitical reasons for limits with relations with Moscow, limits I think we’ve reached,” said international relations expert Soli Ozel of Istanbul’s Kadir Has University. “But if the United States can’t handle relations with Turkey … then a further deepening of relations with Moscow is an option. It may be not the best, but it is an option.”
…

A threat of more U.S. sanctions has sent the ruble tumbling to its weakest since mid-2016 but authorities are not expected to leap to the currency’s defense after weathering a similar storm in April, analysts said.

The ruble crashed to 67.67 versus the dollar on Friday, losing more than 6 percent of its value in just one week, as the United States said it would impose fresh sanctions against Moscow.

The ruble’s slide was akin to its drop in April when, also battered by sanctions from Washington, it lost 12 percent in just a few days.

Lack of action

The lack of action by authorities back then is convincing market players now that they will not intervene this time either.

“When we think about what has happened in April, when sanctions were introduced and we saw a similar reaction in the ruble … this is not a move in the ruble that would make policy makers extremely worried,” said Tilmann Kolb, an emerging market analyst at UBS Global Wealth Management in Zurich.

Liza Ermolenko, an economist at Barclays in London, said that given the central bank refrained from intervening in the market in April, it is clear that a more sudden and deeper drop in the ruble would be required to make it step in now.

The authorities have made few public comments on the latest falls, which started on Wednesday, when the U.S. State Department announced a new round of sanctions that pushed the ruble to two-year lows and sparked a wider sell-off over fears Russia was locked in a spiral of never-ending sanctions.

Last intervention in 2014

On Friday the central bank said it had tools to prevent risks to financial stability, without specifying what they were.

The central bank, which last intervened in the market and raised rates to save the ruble from tanking in 2014, described the ruble’s drop on news about more U.S. sanctions as natural reaction.

As in April, the central bank has reduced its daily buying of foreign currency for state reserves this week to lift extra pressure from the ruble, which has fallen by around 15 percent versus the dollar so far this year.

“Authorities do not set a goal of avoiding a ruble drop at the moment. That’s why they won’t do anything,” said Pyotr Milovanov, currency trader at Metallinvestbank in Moscow.

Analysts say the other possible option to support the ruble would be a hike to the key interest rate, now at 7.25 percent, but this also seems to be off the table for now.

Rate hikes?

“At this stage we don’t expect policymakers to resort to rate hikes,” Ermolenko from Barclays said.

Kolb from UBS said he would “expect a bigger reaction if we got perhaps towards 70 (rubles per dollar) but this also depends on how we get there, if at all.”

“I wouldn’t expect Russian policymakers to use their available tools to support the ruble at current levels,” he said.
…

Chinese state media on Thursday accused the United States of a “mobster mentality” in its move to implement additional tariffs on Chinese goods and warned that Beijing had all the necessary means to fight back.

The comments marked a ratcheting up in tensions between the world’s two largest economies over a trade dispute, which is already affecting industries including steel and autos and is causing unease about which products could be targeted next.

Beijing late on Wednesday said it would slap additional tariffs of 25 percent on $16 billion worth of U.S. imports, in retaliation against news the United States plans to begin collecting 25 percent extra in tariffs on $16 billion worth of Chinese goods beginning August 23.

“The two countries’ trade conflict, which is merely push and shove at the moment, is likely to escalate into more than just a scuffle if the U.S. administration cannot marshal its mobster mentality,” state newspaper China Daily said in an editorial.

“China continues to do its utmost to avoid a trade war, but in the face of the U.S.’s ever greater demand for protection money, China has no choice but to fight back,” it said.

So far, China has now either imposed or proposed tariffs on $110 billion of U.S. goods, representing the vast majority of its annual imports of American products. Big-ticket U.S. items that are still not on any list are crude oil and large aircraft.

“China has confidence in protecting its own interests [and] has many means,” state broadcaster CCTV said on its early-morning news show.

Another commentary, written by China Institute of International Studies research fellow Jia Xiudong and published in the overseas edition of the People’s Daily newspaper, said the United States was trying to “suppress China’s development.”

China should consider “unconventional methods” such as the stimulus plan used by Beijing during the global financial crisis if needed to sustain economic growth, the Global Times newspaper, a tabloid published by the ruling Communist Party’s People’s Daily, said in a commentary.
…

New York’s city council on Wednesday dealt a blow to Uber and other car-for-hire companies, passing a bill to cap the number of vehicles they operate and impose minimum pay standards on drivers.

The city of 8.5 million is the biggest app-ride market in the United States, where public transport woes and astronomical parking costs have helped fuel years of untamed growth by the likes of Lyft, Uber and Via.

But that growth has brought New York’s iconic yellow cabs to their knees. Since December, six yellow cab drivers have committed suicide. Those deaths have been linked, at least in part, to desperation over plummeting income.

The bill stipulates a 12-month cap on all new for-hire-vehicle licenses, unless they are wheelchair accessible, as well as minimum pay requirements for app drivers — regulated by the Taxi and Limousine Commission (TLC).

It makes New York the first major city in the United States to limit the number of app-based rides and to impose pay rules for drivers.

A recent TLC-commissioned study recommended a guaranteed income of $17.22 an hour for drivers — $15, plus a supplement to mitigate against rest time.

New York Mayor Bill de Blasio, a progressive Democrat, vowed to sign the bill into law, proclaiming that it would “stop the influx of cars contributing to the congestion grinding our streets to a halt.”

“More than 100,000 workers and their families will see an immediate benefit from this legislation,” de Blasio said.

Around 80,000 drivers work for at least one of the big four app-based companies in New York, compared to 13,500 yellow cab drivers, according to the recent TLC-commissioned study.

The increased competition has slashed the value of yellow cab taxi licenses, from more than $1 million in 2014 to and less than $200,000 today.
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China and Germany defended their business ties with Iran on Wednesday in the face of President Donald Trump’s warning that any companies trading with the Islamic Republic would be barred from the United States.

The comments from Beijing and Berlin signaled growing anger from partners of the United States, which reimposed strict sanctions against Iran on Tuesday, over its threat to penalize businesses from third countries that continue to operate there.

“China has consistently opposed unilateral sanctions and long-armed jurisdiction,” the Chinese foreign ministry said.

“China’s commercial cooperation with Iran is open and transparent, reasonable, fair and lawful, not violating any United Nations Security Council resolutions,” it added in a faxed statement to Reuters.

“China’s lawful rights should be protected.”

The German government said U.S. sanctions against Iran that have an extra-territorial effect violate international law, and Germany expects Washington to consider European interests when coming up with such sanctions.

The reimposition of U.S. sanctions followed Trump’s decision earlier this year to pull out of a 2015 deal to lift the punitive measures in return for curbs on Iran’s nuclear program designed to prevent it from building an atomic bomb.

Iran’s highest authority, Supreme Leader Ayatollah Ali Khamenei, said meanwhile the country had nothing to be concerned about, a report on his official website said in an apparent reference to the imposition of the U.S. sanctions

“With regard to our situation do not be worried at all. Nobody can do anything,” Khamenei said recently, the website reported. “There is no doubt about this.”

Iranian President Hassan Rouhani, speaking in a meeting with North Korea’s foreign minister, said that America could not be trusted, according to the Islamic Republic News Agency.

“Today, America is identified as an unreliable and untrustworthy country in the world which does not adhere to any of its obligations,” Rouhani said.

Tuesday’s sanctions target Iran’s purchases of U.S. dollars, metals trading, coal, industrial software and the auto sector.

Trump tweeted on Tuesday: “These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level. Anyone doing business with Iran will NOT be doing business with the United States.”

Europeans withdraw

European countries, hoping to persuade Tehran to continue to respect the deal, have promised to try to lessen the blow of sanctions and to urge their firms not to pull out. But that has proved difficult: European companies have quit Iran, arguing that they cannot risk their U.S. business.

Among those that have suspended plans to invest in Iran are France’s oil major Total, its big carmakers PSA and Renault, and their German rival Daimler.

Danish engineering company Haldor Topsoe, one of the world’s leading industrial catalyst producers, said on Wednesday it would cut around 200 jobs from its workforce of 2,700 due to the new U.S sanctions on Iran, which made it very hard for its customers there to finance new projects.

The chief executive of reinsurance group Munich Re said it may abandon its Iran business under pressure from the United States, but described the operation as very small.

Turkey, however, said it would continue to buy natural gas from Iran.

“Simplistic idea”

In Tehran, Iranian Foreign Minister Mohammad Javad Zarif was quoted by an Iranian newspaper as saying that a U.S. plan to reduce Iran’s oil exports to zero would not succeed.

U.S. officials have said in recent weeks that they aim to pressure countries to stop buying oil from Iran in a bid to force Tehran to halt its nuclear and missile programs and involvement in regional conflicts in Syria and Iraq.

“If the Americans want to keep this simplistic and impossible idea in their minds they should also know its consequences,” Zarif told the Iran newspaper. “They can’t think that Iran won’t export oil and others will export.”

Rouhani hinted last month that Iran could block the Strait of Hormuz, a major oil shipping route, if the U.S. attempted to stop the Islamic Republic’s oil exports.

Trump responded by noting that Iran could face serious consequences if it threatened the United States.

“The Americans have assembled a war room against Iran,” Zarif said. “We can’t get drawn into a confrontation with America by falling into this war room trap and playing on a battlefield.”

Iran has dismissed a last-minute offer from the Trump administration for talks, saying it could not negotiate while Washington had reneged on the 2015 deal to lift sanctions.

In a speech hours before the sanctions were due to take effect on Tuesday, Rouhani rejected negotiations as long as Washington was no longer complying with the deal.

“If you stab someone with a knife and then you say you want talks, then the first thing you have to do is remove the knife,” Rouhani said in a speech broadcast live on state television.
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China’s exports to the United States surged last month as its merchants rushed to fill orders ahead of a jump in U.S. tariffs on Chinese goods.

Its shipments to the United States climbed 13 percent in July from a year earlier, to $41.5 billion, after a roughly similar rise in June, customs data show.

At the same time, Beijing’s trade surplus with the United States — a frequent source of anger and threats from President Donald Trump — grew 11 percent to $28 billion.

Chinese exporters appear to be trying to ship their goods to the United States before tariffs that Trump is imposing in a fight over technology policy take full effect. The trade war between the world’s two biggest economies has forced many multinational companies to reschedule purchases and rethink where they buy materials and parts to try to dodge or blunt the effects of tit-for-tat tariffs between Washington and Beijing.

Beijing has warned that its exporters face “rising instabilities” after Washington slapped 25 percent duties on $34 billion of Chinese goods last month in response to complaints that China steals or pressures foreign companies to hand over technology. Beijing has retaliated against the U.S. tariffs with higher duties on a similar amount of American goods.

On Tuesday, the Trump administration announced that it would proceed with previously announced 25 percent tariffs on an additional $16 billion of Chinese imports starting Aug. 23. On Wednesday, China hit back by saying it would impose identical 25 percent punitive duties on $16 billion of U.S. goods, including cars, crude oil and scrap metal, also to take effect Aug. 23.

A Commerce Ministry statement labeled Trump’s decision to go ahead with the latest U.S. tariffs “very unreasonable.” Beijing’s retaliatory move was a “necessary response” to “safeguard its legitimate interests,” the ministry said on its website.

Escalating its tensions with Beijing, the Trump administration has also threatened to impose penalties on an additional $200 billion in Chinese exports to the United States. Beijing says it is ready to retaliate against $60 billion of American imports. (Beijing cannot tax an equal amount of U.S. products, because the United States exports far fewer goods to China than it imports.)

Tariffs are taxes on imports. They are meant to protect homegrown businesses and put foreign competitors at a disadvantage. But the taxes also exact a price on domestic businesses and consumers who buy imports and end up paying more for them.

In July, China’s global exports surged 12 percent, even faster than an 11 percent increase in June. At the same time, overall imports to China jumped 27 percent last month.

Exports to the rest of the world might have been boosted by a weaker Chinese currency. The yuan has declined by 8 percent this year against the dollar and by about 4 percent against a basket of global currencies. A weakening currency makes a nation’s goods more affordable for overseas buyers.

China’s trade conflict with the United States, coupled with weakening global demand, has compounded the challenges for Beijing. Economic growth has slowed since regulators tightened controls on bank lending to rein in surging debt.

The unusually strong July import figures reflected higher prices, according to Julian Evans-Pritchard of Capital Economics.

“We expect export growth to cool in the coming months, though this will primarily reflect softer global growth rather than U.S. tariffs,” Evans-Pritchard said in a report. “Import growth is likely to slow as domestic headwinds continue to weigh on economic activity.”

China’s global trade surplus narrowed by 40 percent from a year earlier to $28 billion. In the meantime, its trade gap with the 28-nation European Union contracted 8 percent to $11.2 billion.

China is running out of American goods to hit with retaliatory tariffs given the two nations’ lopsided trade balance. Last year’s imports from the United States totaled about $130 billion. That leaves only about $20 billion for penalty tariffs after increases that have already been imposed or threatened on U.S. goods are counted.

Beijing has stepped up efforts, so far without success, to recruit governments including Germany and France as allies. Those nations have criticized Trump’s tactics, but they share U.S. complaints about Chinese industrial policy and market barriers.
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New York City’s iconic but imperiled yellow cab industry may be getting help from lawmakers who want to pump the brakes on fast-expanding ride-hailing services like Uber and Lyft.

In what would be a first-in-the-nation step if passed, the City Council on Wednesday is set to vote on proposals that would cap new licenses for car service drivers for one year while officials study the massive changes rippling through the taxi industry.

Other proposals would set minimum pay levels for all drivers and minimum fares, which are now regulated for traditional cabs but not their multitudes of new competitors.

The legislation is a reaction to stories of financial hardship told by drivers, who complain that there are so many Uber cars on the road now that it is getting hard for anyone to make a decent living.

“There has to be a pause button that’s going to give people some breathing room,” said Bhairavi Desai, of the New York Taxi Workers Alliance.

City Council Speaker Corey Johnson said lawmakers aren’t against the ride-hailing newcomers. “We think they’ve actually filled a need,” he said. “We also believe there needs to be a regulatory framework in place.”

For generations, taxi drivers in New York were protected by rules that restricted competition. Around 13,500 yellow cabs had the special licenses, called medallions, needed to pick up passengers on the street. Several thousand more drivers worked for black car companies that dispatched vehicles by phone, mostly in the outer boroughs of Bronx, Queens, Staten Island and Brooklyn, where yellow cabs generally wouldn’t travel.

That system was smashed when the city began allowing passengers to use smartphone apps to hail cars almost anywhere.

The change kicked off a dizzying increase in the number of car service drivers from about 65,000 in 2015 to 100,000 now.

$1 million taxi medallions

One unforeseen development has been plunging value of the traditional taxi medallions. As recently as four years ago, they were changing hands at prices reaching $1 million. They were considered such a ticket to guaranteed income, banks allowed owners to borrow huge sums against them for home mortgages or school loans.

Now, many of those loans are coming due. Drivers no longer have the income to pay them off. And with medallions now trading at $200,000 or less, owners don’t have the collateral to refinance.

Driver Lal Singh said he owes $312,000 on a medallion he thought would be his ticket to middle-class comfort. But he can’t sell at a price high enough to cover his debt. So at age 62, he’s still driving 14-hour shifts, despite having high blood pressure and diabetes, with every penny going to pay off his debt.

“Everybody say, ‘This is my retirement. Some income will come in from the medallion. We will survive,'” he said. “But now we have no hope and I don’t see any place, which direction I should go.”

Six drivers have taken their own lives in the last year, including one who shot himself in his car in front of City Hall after railing against politicians and Uber in a newsletter column.

“I will not be a slave working for chump change,” Douglas Shifter wrote. “I would rather be dead.”

Drivers previously pushed for a cap on new competition in 2015, but were beaten back by ride-hailing companies. The same companies are now pushing back on the new proposals, saying they would prevent them from replacing drivers who quit and lead to reduced service.

“We’re really concerned about the process and the speed with which the council is trying to ram this through,” said Joseph Okpaku, vice president of public policy at Lyft.

Racial profiling argument

Uber spokesman Josh Gold said a cap on new licenses would reverse the progress made extending service to neighborhoods poorly served by traditional taxis.

That argument has gotten support from some civil rights activists like the Rev. Al Sharpton, who have long criticized the yellow cab industry for discrimination and profiling of minorities.

“They’re talking about putting a cap on Uber, do you know how difficult it is for black people to get a yellow cab in New York City?” Sharpton wrote on Twitter.

The level of upheaval in the industry hasn’t been seen on this scale since the first half of the 20th century, when the medallion system was put in place to deal with issues of competition, said Graham Hodges, a professor at Colgate University.

Flaws in that system, like racial profiling and inadequate demand, “made it easy for Uber, Lyft and the others to come in, say, ‘We’re going to provide a much better service,”‘ he said.

“That doesn’t mean those flaws couldn’t be remedied without destroying the system,” he said.
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Venezuela’s state-run oil company PDVSA has limited the damage from an unprecedented slump in crude exports by transferring oil between tankers at sea and loading vessels in neighboring Cuba to avoid asset seizures.

But the OPEC member nation is still fulfilling less than 60 percent of its obligations under supply deals with customers. Venezuela has been pumping oil this year at the lowest rate in three decades after years of underinvestment and a mass exodus of workers. The state-run firm’s collapse has left the country short of cash to fund its embattled socialist government and triggered an economic crisis.

PDVSA’s problems were compounded in May when U.S. oil firm ConocoPhillips began seizing PDVSA assets in the Caribbean as payment for a $2 billion arbitration award. An arbitration panel at the International Chamber of Commerce (ICC) ordered PDVSA to pay the cash to compensate Conoco for expropriating the firm’s Venezuelan assets in 2007.

The seizures left PDVSA without access to facilities such as Isla refinery in Curacao and BOPEC terminal in Bonaire that accounted for almost a quarter of the company’s oil exports. Conoco’s actions also forced PDVSA to stop shipping oil on its own vessels to terminals in the Caribbean, and then onto refineries worldwide, to avoid the risk the cargoes would be seized in international waters or foreign ports.

Instead, PDVSA asked customers to charter tankers to Venezuelan waters and load from the company’s own terminals or from anchored PDVSA vessels acting as floating storage units.

The state-run company told some clients in early June it might impose force majeure, a temporary suspension of export contracts, unless they agreed to such ship-to-ship transfers. PDVSA also requested the customers stop sending vessels to its terminals until it could load those that were already clogging Venezuela’s coastline.

Initially, customers were reluctant to undertake the transfers because of costs, safety concerns and the need for specialist equipment and experienced crew.

But PDVSA has managed to export about 1.3 million barrels per day (bpd) of oil since early July, up from just 765,000 bpd in the first half of June, according to Thomson Reuters data and internal PDVSA shipping data seen by Reuters.

That was still 59 percent of the country’s 2.19 million bpd in contractual obligations to customers for that period, and some vessels are still waiting for weeks in Venezuelan waters to load oil.

There were about two dozen tankers waiting this week to load over 22 million barrels of crude and refined products at the country’s largest ports, according to Reuters data.

“We are not tied to one option or a single loading terminal,” PDVSA President Manuel Quevedo said on Tuesday of the company’s exports. “We have several (terminals) in our country and we have some in the Caribbean, which of course facilitate crude shipping to fulfill our supply contracts.”

Cuban connection 

PDVSA has also used a route through Cuba to ease the impact of the Conoco seizures. That route is for fuel rather than crude.

The Venezuelan company has used a terminal at the port of Matanzas as a conduit mostly for exporting fuel oil, according to two people familiar with the operations and Thomson Reuters shipping data. Venezuela’s fuel oil is burned in some countries to generate electricity.

Two tankers set sail from the Matanzas terminal for Singapore between mid-May and early July, Reuters data showed. Each ship carried around 500,000 barrels of Venezuelan fuel, Reuters data shows.

In recent months, Venezuela has been shipping fuel to Matanzas in small batches, according to the data.

PDVSA and Cuba’s state-run oil firm Cupet have used Matanzas to store Venezuelan crude and fuel in the past but exports from the terminal to Asian destinations are rare.

That is in part because vessels that use Cuban ports cannot subsequently dock in the United States due to the U.S. commercial embargo on Cuba.

Cupet did not respond to requests for comment. PDVSA has also used ship-to-ship transfers to fulfill an unusual supply contract it has with Cuba’s Cienfuegos refinery.

The refinery dates from the 1980s — when Cuba was a close ally of the Soviet Union during the Cold War — and the facility was built to process Russian crude.

PDVSA typically uses its own or leased tankers to bring Russian crude from storage in the nearby Dutch Caribbean island of Curacao to Cienfuegos. But it is now discharging the imported Russian oil at sea in Cayman Islands’ waters via these seaborne transfers.

ConocoPhillips last month ratcheted up its collection efforts by moving to depose officials from Citgo Petroleum, PDVSA’s U.S. refining arm, arguing it had improperly claimed ownership of some PDVSA cargoes. Citgo declined to comment.

ConocoPhillips is also preparing new legal actions to get Caribbean courts to recognize its International Chamber of Commerce arbitration award. If it succeeds in those efforts, it would be able to sell the assets to help satisfy the ruling.
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Already threatened by escalating U.S. taxes on its goods, China is about to find it much harder to invest in U.S. companies or to buy American technology in such cutting-edge areas as robotics, artificial intelligence and virtual reality.

President Donald Trump is expected as early as this week to sign legislation to tighten the U.S. government’s scrutiny of foreign investments and exports of sensitive technology.

The law, which Congress passed in a rare show of unity among Republicans and Democrats, doesn’t single out China. But there’s no doubt the intended target is Beijing. The Trump administration has accused China of using predatory tactics to steal American technology.

“As a policy signal, it speaks with a very loud voice,” said Harry Clark, head of the international trade practice at the law firm Orrick. “Leading decision makers and Congress are very concerned about technology transfer to China.”

The Trump administration has already imposed tariffs on $34 billion in Chinese exports, is preparing taxes on a further $16 billion and has threatened to target an additional $200 billion of Beijing’s exports and maybe still more.

As part of the same punitive campaign, Trump had initially ordered the Treasury Department to draft investment restrictions aimed specifically at China. But in late June, Trump decided instead to back Congress’ effort to tighten existing investment restrictions and export controls on all countries, rather than China alone.

The new law strengthens reviews of foreign investment by the existing Committee on Foreign Investment in the United States, or CFIUS, which is led by Treasury Secretary Steven Mnuchin. The committee can now review any investments that grant foreigners access to a U.S. company’s high-tech trade secrets. Before the change, such reviews were done only when a foreigner gained control of a company.

The new law also gives the committee oversight of real estate deals that are deemed to pose a national security risk by putting foreigners in “close proximity” to government offices and military bases. The legislation will also crack down on deals that appear structured to evade such oversight.

Congress is also directing the committee to go beyond specific cases to identify patterns in foreign investment — if, for example, Chinese companies are acquiring a specific technology — and to work with U.S. allies that share its concerns about Beijing’s high-tech ambitions.

“Treasury can now share information,” said Rod Hunter, a partner at the Baker McKenzie law firm and a former White House economic adviser. “They used to have to do all kinds of backflips and workarounds with allied governments to deal with this sort of issue.”

The new law also strengthens the Commerce Department’s oversight of high-tech exports. Government agencies will identify sensitive “emerging and foundational technologies” that will be subject to tougher export controls.

Hunter said he thought the stricter oversight of high-tech exports could potentially impose a bigger impact on China than the tariffs the Trump administration has imposed on Beijing’s exports to the United States.

Still, the new measures could burden U.S. companies that will find it harder to attract Chinese investment or to share with Chinese partners or customers technology that the U.S. government might deem sensitive.

“It could be that we’re pushing American tech firms out of China,” said Derek Scissors, China specialist at the conservative American Enterprise Institute.

The crackdown reflects a sharp reversal in U.S. attitudes toward Chinese investment. From virtually nothing in 2000, Chinese direct investment in the United States (including new plants and offices and acquisitions of American companies) reached a record $46 billion in 2016, according to the Rhodium Group research firm.

Chinese investors sank money into U.S. companies involved in artificial intelligence, robotics and blockchain technology, which is used to do business in cryptocurrencies. U.S. policymakers began to worry about what the Chinese were up to, especially after leaders in Beijing made their ambitions clear: They intend to nurture homegrown Chinese companies that will contend for global dominance in such fields as electric cars, robotics and medical devices.

In March, the Office of the U.S. Trade Representative reported that Chinese investors were using money provided by Beijing to outbid private companies and pay above-market rates for technology and talent. And last year, a Defense Department report sounded the alarm about China obtaining technology that could have military uses.

“The line demarcating products designed and used for commercial versus military purposes is blurring,” said the report from the Pentagon’s Defense Innovation Unit Experimental.

It noted that virtual-reality gaming was becoming as sophisticated as what the armed forces use for battlefield simulations and that facial recognition technology used in social media can track terrorists.

Even before the new law, U.S. reviews of Chinese investments were becoming stricter. In January, the government effectively blocked the acquisition of the Dallas-based money transfer service MoneyGram by the Chinese firm Ant Financial. Its concern was that the deal would give China access to the financial records of millions of Americans, including members of the military.

The result has been a deepfreeze in direct Chinese investment in the United States: It tumbled 36 percent last year to $29 billion. In the first half of this year, such investment dropped to its lowest level in seven years — $1.8 billion — down 90 percent from the first six months of 2017, according to Rhodium Group.
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The baobab tree dots the dry African savannah from Senegal to Madagascar. It yields a fruit that’s been described as a superfood popular in the United States and Europe. With an increasing global appeal, local farmers say business is booming… but some worry that worldwide sales of the crop are not sustainable. Arash Arabasadi reports.
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President Donald Trump has been busy on the congressional campaign trail lately, eager to tout the strong U.S. economy on behalf of Republican candidates leading up to this year’s midterm elections in November. But the president has also repeatedly launched Twitter attacks over the Russia probe, his border wall, and what he believes is unfair media coverage — attacks Republicans fear will distract from his economic message. VOA national correspondent Jim Malone has more from Washington.
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Chinese state media are reacting to U.S. President Donald Trump’s trade actions against China in diverse ways. While denouncing the U.S. leader’s actions, Beijing is also using its media to calm markets and express concern about the impact on the Chinese economy.

An editorial in the Communist Party’s People’s Daily said that by raising tariffs and then offering negotiations, the Trump administration is trying to use “carrot-and-stick diplomacy to bully China into unilateral trade concessions.” The paper went on to say “China will eventually defeat the trade blackmail of the U.S. and it is impossible to force China into surrender to the U.S. coercion.”

However, a Chinese senior official attached to the country’s Supreme Court recently expressed worry that the trade friction with the U.S. would result in bankruptcies for state-owned companies.

“It is hard to predict how this trade war will develop and to what extent,” Du Wanhua, deputy director of an advisory committee to the Supreme People’s Court said in an article also in the People’s Daily.

“But one thing is sure: if the U.S. imposes tariffs on Chinese imports following an order of $60 billion, $200 billion, or even $500 billion, many Chinese companies will go bankrupt,” he said.

Ineffective retaliation

Beijing recently slapped additional duties ranging from five to 25 percent on $60 billion worth of American goods. This was in response to Trump administration’s proposal of a 25 percent tariff on $200 billion worth of Chinese imports.

Experts said China has realized that retaliatory action would not persuade the U.S. President to stop his trade actions.

“They switched gear a bit because, I think, they realized that they have the weaker hand here in terms of their ability to retaliate, partly because they import far less from the U.S. than the U.S. imports from China, but also [because] a portion of [goods] they import from China is, you know, high-tech that are quite difficult to import from elsewhere,” Julian Evans-Pritchard, senior China economist at Capital Economics told VOA.

Washington says its actions are aimed at correcting the level playing field because the U.S. suffers from a severe trade deficit in its business with China.

Reassuring markets

Chinese officials are trying to reassure markets and the local population that the U.S. moves would have little impact. Huang Libin, a spokesman for the Ministry of Industry and Information Technology recently said there has not been any significant impact on industrial output.

“We hear complaints from [Chinese] companies that U.S. clients have requested a suspension of orders and deliveries, but so far it has had only a limited impact on the industrial sector,” he said.

The state-run Global Times, responded to White House economic adviser Larry Kudlow’s remarks that China should not underestimate Trump’s resolve, saying that China was not afraid of “sacrificing short-term interests”. “China has time to fight to the end. Time will prove that the U.S. eventually makes a fool of itself,” the paper said.

The official China Daily has joined government officials in an effort to reassure the market. “Market participants foresee a relatively stable Chinese currency in the near term, without fear of impacts from the U.S.-China trade dispute. They expect solid economic growth momentum amid policy fine-tuning,” it said.

“Leading China’s economy on a stable and far-reaching path, we have confidence and determination,” another commentary in the main edition of the People’s Daily said.

Another reason China is worried is because Washington’s actions have come when the domestic Chinese economy is going through a bad time. The last three months have seen a series of corporate defaults besmirching China’s reputation for many fewer loan defaults as compared to most developed countries.

“[The] economy is now slowing and balance sheets are coming under strain after they tightened monetary policy last year and pushed up borrowing costs. This is the main reason why we are seeing this uptrend in bankruptcies and uptrend in corporate bond defaults,” Evans-Pritchard said. “I think the main driver is domestic. Obviously, the U.S. tariffs won’t help and they are going to cause some damage,” he said.

In its latest report, Capital Economics said that it would be naive to dismiss the possibility of financial instability given the rapid rise in debt levels in the country over the past decade. Chinese banks face the grave emerging scenario of bad loans and non-performing assets weighing heavily on their balance sheets, it said.

 
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Longtime PepsiCo CEO Indra Nooyi will step down as the top executive and the world’s second-largest food and beverage company.

Nooyi, who was born in India, is a rarity on Wall Street as a woman and a minority leading a Fortune 100 company. She oversaw the company during a turbulent time in the industry that has forced PepsiCo, Coca-Cola Co., Campbell Soup Co. and Mondelez International Inc. to shake up product portfolios that had been the norm for decades as families seek healthier choices.

Nooyi, 62, has been with PepsiCo Inc. for 24 years and has held the top job for 12.

Ramon Laguarta, who has been with the company for more than two decades, will take over as CEO in October, the company said Monday. Nooyi will remain as chairman until early next year.

“Today is a day of mixed emotions for me. This company has been my life for nearly a quarter century and part of my heart will always remain here,” Nooyi said in a prepared statement. “But I am proud of all we’ve done to position PepsiCo for success, confident that Ramon and his senior leadership team will continue prudently balancing short-term and long-term priorities, and excited for all the great things that are in store for this company.”

Nooyi took over as CEO in October 2006. Between 2007 and 2017, revenue at Pepsico has risen about 61 percent.

The 54-year-old Laguarta has held various positions in his 22 years at PepsiCo, which is based in Purchase, New York. He currently serves as president, overseeing global operations, corporate strategy, public policy and government affairs. He previously served as CEO of the Europe Sub-Saharan Africa region. Prior to joining PepsiCO, Laguarta worked at confectionary company Chupa Chups.

Laguarta will be the sixth CEO in PepsiCo’s history, with all of them coming from within the company.

 
…

Russia engaged in more extensive oil exports to North Korea than had been previously reported, by setting up an illicit trade network that is likely still being used today to evade United Nations sanctions, according a South Korean research organization.

A recent report issued by the Asan Institute for Policy Studies in Seoul used Russian customs data to document how “one North Korean state enterprise purchased 622,878 tons of Russian oil worth $238 million,” between 2015 and 2017.”

While China is North Korea’s main oil supplier, the ASAN estimate for Russian oil exports to North Korea is significantly higher than the $25 million in sales for the same period that was reported by the Korea International Trade Association (KITA) in Seoul.

“Smuggling has always been an important element in the cross-border trade between North Korea and it’s important allies. What the Chinese government and the Russian government to a lesser extent have been doing is to turn a blind eye to these activities,” said Go Myong-Hyun, a North Korea analyst with the Asan Institute For Policy Studies in Seoul.

Russian evasions

The Asan report comes amid allegations that Russia potentially violated international sanctions imposed on North Korea by granting thousands of new work permits to North Korean laborers. Moscow had denied any such actions.

The Trump administration also imposed targeted U.S sanctions on a Russian bank for allegedly doing business with a person blacklisted for involvement with North Korea’s nuclear weapons program.

On Friday U.S. Ambassador to the United Nations Nikki Haley called the allegations against Russia, “very troubling.” U.S. Secretary of State Mike Pompeo called on “the Russians and all countries to abide by the U.N. Security Council resolutions and enforce sanctions on North Korea,” while attending the ASEAN Regional Forum in Singapore on Saturday.

United Nations sanctions imposed in September of 2017 prohibit member countries from “providing work authorizations” permits to North Korean workers.

In December of 2017 the U.N. Security Council further strengthened the sanctions to cut North Korean oil imports by a third, and to impose a total export ban on North Korea’s $3 billion coal and other mineral industries, its $800 million clothing manufacturing output, and its lucrative seafood industry.

Shell companies

The ASAN report is centered on the activities of the Independent Petroleum Company (IPC), a Russian firm that the U.S. Treasury Department targeted in June 2017 for violating restrictions on selling oil to North Korea. IPC has since changed its name. 

IPC was found to have sold large quantities of oil to Russian affiliated companies, such as the Pro-Gain Group Corporation (PGGC) that was actually operating on behalf of North Korea’s state owned Foreign Trade Bank. The North Korean bank has been under U.S. sanctions since 2013.

“The entities involved tried to cover up the transactions by falsifying destination countries for the purchases,” said the ASAN report entitled The Rise of Phantom Traders.

The report notes that PGGC is owned by Taiwan citizen Tsang Yung Yuan. Tsang was sanctioned earlier this year by the U.S. for facilitating North Korean coal exports using a Russia-based North Korean broker. PGGC has headquarters listed both in Taipei and Samoa.

North Korea has also been accused of conducting illicit ship-to-ship transfers of oil, and to conceal these operations by disabling the Automatic Identification System (AIS) transponder of vessels in order to hide their location. There have also been reports of North Korea changing vessel names and identification numbers, even painting over or altering the numbers on the ships’ exteriors.

Rajin-Khasan Exemption

A large number of oil shipments were also delivered to the Russian-North Korean border village of Khasan, which is connected by rail to the North Korean port terminal at Rajin.

The Rajin-Khasan rail project was exempted from U.N. sanctions to allow Russia to use the North Korean seaport to export Russian coal.

Trade records show that oil deliveries arriving in Khasan were on their way to China, but the report suggests it is more likely North Korea was the final destination. Since 2015, the ASAN report says, only PGGC and Velmur, two companies with ties to North Korea, listed Khasan as the point of delivery for oil shipments. 

According to the ASAN report, Moscow and Pyongyang are likely exploiting the Rajin-Khasan rail exemption to evade restrictions on North Korean oil imports.

In 2016, South Korea suspended its participation in the Rajin-Khasan rail project to comply with U.S. unilateral sanctions imposed on North Korea trade.

Recently some officials in Seoul have called for these sanctions affecting the Rajin-Khasan Project to be lifted, so that investment can proceed in connecting South Korean rail both to North Korea, and to the intentional railway system beyond that can reach Europe.

Sanctions effectiveness

The sanctions are intended to cut North Korea off from foreign currency and materials needed for weapons production, and to impose economic pain on the leadership to persuade Pyongyang to give up its nuclear and ballistic missile development programs.

Despite increased reports of sanctions evasions, Cheong Seong-chang, a North Korea analyst with the Sejong Institute in South Korea, says the recent report of an 88 percent decline in North Korean trade in the first quarter of this year indicates the economic situation there is in dire condition.

“If the sanctions from the U.N. Security Council continue, economic breakdown in North Korea will be inevitable,” said Cheong.

Talks between Washington and Pyongyang have made little significant progress toward ending the North’s nuclear program since June, when North Korean leader Kim Jong Un reaffirmed his commitment to denuclearization during his meeting with U.S. President Donald Trump in Singapore.

The U.S. insists that the North completely end it nuclear weapons program before any concessions are granted, while Pyongyang wants early sanctions relief.

On Sunday Pompeo said that North Korean Foreign Minster Ri Yong Ho reiterated a “very clear” commitment to denuclearize when the two met at the ASEAN conference in Singapore.

Lee Yoon-jee contributed to this report.
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Washington is observing the latest escalation in tensions between the United States and its trading partners, with China threatening to slap tariffs on more than 5,000 American-made products totaling $60 billion. VOA’s Michael Bowman reports, Beijing’s announcement came after the Trump administration proposed raising tariffs on $200 billion of Chinese goods, continuing a tit-for-tat trade battle that is alarming many in the U.S. business community and dividing the Republican Party.
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British Trade Minister Liam Fox said “intransigence” from the European Union was pushing Britain toward a no-deal Brexit, in an interview published on Saturday by the Sunday Times.

With less than eight months until Britain quits the EU, the government has yet to agree a divorce deal with Brussels and has stepped up planning for the possibility of leaving the bloc without any formal agreement.

Fox, a promiment Brexit supporter in Prime Minister Theresa May’s cabinet, put the odds of Britain leaving the European Union without agreeing upon a deal over their future relationship at 60-40.

“I think the intransigence of the commission is pushing us towards no deal,” Fox told the Times after a trade mission in Japan.

“We have set out the basis in which a deal can happen, but if the EU decides that the theological obsession of the unelected is to take priority over the economic well-being of the people of Europe, then it’s a bureaucrats’ Brexit — not a people’s Brexit — [and] then there is only going to be one outcome.”

It was up to the EU whether it wanted to put “ideological purity” ahead of the real economy, Fox said.

If Britain fails to agree the terms of its divorce with the EU and leaves without even a transition agreement to smooth its exit, it would revert to trading under World Trade Organization rules in March 2019.

Most economists think this would cause serious harm to the world’s No. 5 economy as trade with the EU, Britain’s largest market, would become subject to tariffs.

Supporters of Brexit say there may be some short-term pain for Britain’s $2.9 trillion economy, but that in the long term it will prosper when cut free from the EU, which some of them cast as a failing German-dominated experiment in European integration.

On Friday, Bank of England Governor Mark Carney said the chances of a no-deal Brexit had become “uncomfortably high.”
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Honeybees are essential to our food supply, but bee colonies around the world are declining. Among the main culprits are insecticides containing chemicals known as neonicotinoids, which are highly toxic to honeybees. In Europe, where about 80 percent of crops rely to some degree on insect pollination, the chemical is banned but exceptions allowed. Poland’s agriculture ministry has temporarily approved it for use in rapeseed crops, worrying the country’s beekeepers. VOA’s Julie Taboh has more.
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