Trump Ponders New Head for Federal Reserve

President Donald Trump says he is “very close” to picking a person for the most important economic post in the United States, the head of the Federal Reserve. Current Chair Janet Yellen’s term expires early next year and she is one of at least five candidates for the job.

Besides Yellen, the candidates include Fed board member Jerome Powell, former Fed governor Kevin Warsh, Stanford University economist John Taylor and Trump economic adviser Gary Cohn.

Moody’s Analytics economist Ryan Sweet says a new Fed chief is likely to continue current policy at least for a while because “rocking the boat” could rattle financial markets.

The Fed’s job is to manage the world’s largest economy in ways that maximize employment and maintain stable prices. During recessions, the bank cuts interest rates in a bid to boost economic growth and create more jobs.To cope with the most recent recession, the U.S. central bank slashed interest rates nearly to zero.

The jobless rate fell from 10 percent to the current 4.2 percent, and the economy stopped shrinking and began growing slowly.

Critics of the record-low interest rates said keeping rates too low for too long could spark strong inflation and damage the economy. However, the inflation rate has been below the two percent level that many experts say is best for the economy.

As a member of the Fed’s board and later as Chair, Yellen supported low interest rates and a slow, cautious return to “normal” rates. Experts also say she improved communication between the Fed and financial markets, which reduced uncertainty and reassured investors.

Trump criticized Yellen during the campaign, but then as president, praised her work. Analysts Tom Buerkle of “Reuters Breaking Views” gives the Fed credit for taking effective action during a crisis when Congress was reluctant to act.

Another candidate is former investment banker Gary Cohn, who now heads the National Economic Council at the White House. He has reportedly been working on efforts to reform taxes and boost spending on U.S. infrastructure.

Fed Board member Jerome Powell is also a candidate. He is a Republican with a background in private equity who served in a top Treasury Department post. Powell supported Yellen’s approach of slashing interest rates during the crisis, and returning them to historic levels as the economy recovers.

When rates were cut to nearly zero, Fed officials took the further step of buying huge quantities of bonds in an effort to push down long-term interest rates to give additional economic stimulus. The complex procedure is called “quantitative easing.”

“Ryan Sweet of Moody’s Analytics says when the next recession appears, Powell will be more willing to use tools like quantitative easing than more conservative candidates like Kevin Warsh and John Taylor.

Warsh is a former member of the Fed’s board, a lawyer, and a former executive of a major financial firm with experience at the president’s National Economic Council.

John Taylor of Stanford University and the Hoover Institution is an eminent economist who has served on advisory councils for presidents and congress and written books on economic topics. Taylor came up with an equation, called the “Taylor Rule,” that considers inflation as well as slack in the economy as a way to set interest rates. Some conservatives say the Taylor Rule would improve policymaking.

Critics say the economy is too complex to be managed by a computer, and the Taylor Rule would make the Fed less independent and effective.

Tara Sinclair of Indeed.com says independence is a “key part” of having an effective monetary policy. She says the interest rate-setting process and other decisions need to be separate from Congress and the administration so interest rates and other policies are based on long-run economic needs.

The president is expected to announce his choice in early November.

N. Korean Debt to Sweden Remains Unpaid After Four Decades

More than four decades after selling 1,000 Volvos to North Korea, Sweden is still trying to get paid for the cars.

The vehicles were part of a $131 million trade package delivered to North Korea in 1974, during a period of openness. But Pyongyang never paid anything on the deal, leaving a debt that has now accumulated with interest to $328 million, according to the Swedish Foreign Ministry.

North Korea owes millions elsewhere in Europe from purchases made during the early 1970s, when Pyongyang was expanding economic relations with the West.

“Volvo Car Corporation sold approximately 1,000 of our 144 sedan(s) to North Korea in 1974,” said Per-Åke Fröberg of Volvo Heritage in the company’s press office in Sweden, who added that he did not know what else was included in the deal. The Swedish government was also unable to say what else was included.

Fröberg said the sale of the Volvos was insured through the Swedish Export Credit Agency, or EKN. “When North Korea failed to pay for the cars, EKN stepped in, meaning that Volvo Cars did not suffer financially,” he said. “The deal was closed from our point of view.”

But not for EKN, which twice a year reminds North Korea of its outstanding balance.

“For the most part, we get no response,” Carina Kemp, the EKN press manager, told VOA’s Korean service. However, “EKN’s position is that claims will be recovered.”

Many of the Volvos remain in service, as shown by an October 2016 tweet from the Swedish Embassy in Pyongyang describing “one of the Volvo’s from yr 1974 still unpaid for by DPRK.”

Sweden and North Korea have a long-standing relationship. It was the first Western European nation to establish diplomatic relations with Pyongyang; two years later, in 1975, it was the first to set up an embassy in Pyongyang.

Expanding relations

At the time, North Korea was expanding economic relations with the West. “In 1972-1973, before the global oil crisis, the prices of gold, silver, lead, zinc and other export items of North Korea were rising and Pyongyang must have been confident of its payment capabilities,” said Yang Moon-soo, professor of North Korean economy at the University of North Korea Studies, in the March 2012 issue of the KDI Review of the North Korea Economy, which is published by the Korea Development Institute, a think tank run by the South Korean government.

North Korea, after noting South Korea’s economic development through introduction of Western technologies, decided “to spur development with large-scale buildup of manufacturing plants with Western equipment and financing,” he said.

Of the 16 countries that owe a total of $729 billion to Sweden, North Korea’s share accounts for 45 percent, according to the EKN Annual Report 2016. Cuba, which is the next largest debtor, owes $225 billion as of December 2016 and began making payments that year, the EKN report shows.

Experts on sovereign debt told VOA there aren’t many ways for nations to recover what they are owed by cash-strapped North Korea.

“No payment has been made since 1989,” Katarina Byrenius Roslund, deputy director of the Swedish Foreign Ministry’s press office, told VOA in an email.

“This is the largest claim that Sweden has on a single country,” Roslund wrote. “Responsibility for the claim now lies with the Swedish Export Credits Guarantee Board, which sends a reminder to North Korea every six months.”

Roslund said the Volvos “are no longer a common sight on Pyongyang’s streets, but the odd Volvo 144 is still rolling down the country roads, often as a taxi.”

Paths to spare parts

Volvo’s Fröberg said he did not know whether the original deal included spare parts for the cars. But because the model purchased in bulk by North Korea, the 144, “was sold all over the world, they might have had their ways to get hold of parts through various channels.”

North Korea owes money elsewhere in Europe. The Swiss government reports it has claims for $241 million as of December 2016. North Korea owes Finland and private Finnish businesses more than $35 million, according to a YLE Uutiset report. Pyongyang “ordered paper machines and other assorted equipment” in the 1970s, according to YLE.

Isabel Herkommer, media spokeswoman at Switzerland’s State Secretariat for Economic Affairs (SECO), told VOA via email that “Swiss Export Risk Insurance (SERV) has an agreement with North Korea, which exempts the country from payment at the moment.”

According to the SERV Annual Report 2016, the agency signed a new restructuring agreement with North Korea in October 2011. Herkommer wrote that “there has not been a debt settlement with North Korea,” and when asked whether the Swiss government considered waiving all or part of the debt owed by North Korea as Russia recently did, she said, “No, this has not been considered.”

Outi Homanen of Finnvera, Finland’s export credit agency, said “that although the debts were not paid [on] original due dates, there are no defaulted receivables at the moment.”

However, experts on sovereign debt and the international monetary system say that there aren’t many ways for countries to recover their claims from North Korea. In 2014, Russia forgave 90 percent of the nearly $11 billion in debt that it and the Soviet Union before it was owed by North Korea.

“International debt is typically thought of as having two enforcing mechanisms. The first is that if a country wants to be able to borrow more, it has to be repaying or have repaid its previous debts,” said Dane Rowlands, a professor of international affairs at Carleton University’s Norman Paterson School of International Affairs in Ottawa, Ontario. “Since North Korea seems happy not to engage officially with the international community and capital market, cutting them off is not a useful enforcement tool.”

Asset seizure

He added that seizing exposed assets is another option for lenders but one that would not be effective against North Korea.

Hamid Zangeneh is an economics professor at Widener University in Chester, Pennsylvania. An expert in the debt of economically developing nations, he said that in North Korea’s case, “it really doesn’t matter because it is not part of the international monetary system.”

Rowlands speculated that Switzerland and North Korea might have made a deal when they signed the debt restructuring agreement in 2011.

“Given the relatively few channels of international finances that North Korea has access to, I could see them doing a deal with Switzerland saying we [North Korea] will pay back a portion of the debt. … What that would end up doing is Switzerland forgives the rest of the debt and they don’t have claim on seizing North Korean deposits for example,” he said.

According to the SERV 2016 report, the Swiss agency had claims of 179.1 million Swiss Francs ($210 million) with North Korea as of the end of 2016. However, the report says the claims have been reduced to 17.9 million Swiss Francs ($21 million), or about 10 percent of the original claim.

SECO’s Herkommer said, “There has not been any debt cancellation. We cannot make any further comment.”

A Tale of Tesla Seats Hints at Why So Few Cars Built

Elon Musk was fed up.

The seats on Tesla Inc’s new Model X SUV were a mess. An outside contractor was having trouble executing the complicated design, spurring frustration and finger-pointing between Tesla and its supplier.

How would Tesla ever pull off mass production of the upcoming Model 3, the car intended to catapult the niche automaker into the big leagues, if it could not deliver on something as fundamental as a seat?

Musk made a decision: Tesla would build the seats itself. 

But industry experts say Musk’s insistence on performing much of the work in-house is among the reasons Tesla is nowhere close to its stated goal of building 500,000 vehicles annually by next year, most of them Model 3s.

Missed target

The automaker this month revealed it built 260 of the vehicles between July and September, badly missing its target of 1,500 Model 3s in the third quarter. In a statement, Tesla blamed manufacturing “bottlenecks.” It declined to elaborate, but assured investors “there are no fundamental issues with the Model 3 production or supply chain.”

Tesla has demonstrated a commitment to vertical integration not seen in the auto industry for decades.

The company has so far sunk $2 billion into a sprawling Nevada factory to manufacture its vehicles’ batteries. In-house programmers design the bulk of the complex software that runs the Model 3, which Musk has described as a “computer on wheels.”

Tesla controls its own retail chain, selling its cars directly to customers and bypassing dealers.

But it is Tesla’s 2015 decision to build its own seats that has some industry veterans scratching their heads. Seat making is a low-margin, labor-intensive enterprise that big automakers generally farm out to specialists. Tesla is operating its own seat assembly line inside its factory, and it is hiring engineers and technicians to figure out a way to fully automate the process.

“Is that really the core competency of an auto company? It is not,” said analyst Maryann Keller, who has been tracking the car industry since the early 1970s. “Why would you want to do that?”

Tesla declined requests from Reuters to discuss its seat assembly efforts. The company is expected to reveal more about its production issues Nov. 1, when it announces third-quarter results. There is no indication that the “bottlenecks” mentioned previously by the company are associated with seat production.

Analyst Keller and others suspect Tesla eventually will be forced to farm out seat assembly to suppliers as the company transitions from a niche producer of pricey, hand-built luxury cars to a mass manufacturer. Seat makers including Germany’s ZF Friedrichshafen AG, France’s Faurecia SA and Detroit-based Lear Corp already are trying to win that business.

A lot is riding on Tesla’s ability to scale up operations quickly. Starting at $35,000, the Model 3 is Tesla’s attempt to bring its electric technology to a wider audience. 

More than a half-million customers have put down deposits.

Tesla has never turned an annual profit and it is burning through cash. Yet investors are betting big on its future. It is now the second most valuable U.S. automaker, behind General Motors Co. Tesla shares on Wednesday closed at $325.84, down 3.4 percent.

From stop-gap to strategy

Musk has defended Tesla’s hands-on approach as the way to ensure reliability, as well as an opportunity to rethink industry norms. It is also a reflection of the entrepreneur’s obsession with detail.

“One of the hardest things to design is a good seat,” Musk said at the September 2015 launch of the Model X in Fremont.

Problems first surfaced with the flagship Model S sedan in 2012. Musk complained that the seats made by its contract manufacturer, Australia-based Futuris Group, were not comfortable nor of the quality expected for a car whose price tag started at around $57,400, according to a former Tesla executive who described Musk’s thinking to Reuters.

Troubles accelerated with the Model X, leading Tesla to wrest assembly from Futuris just after the vehicle’s release in late 2015. If seats could be entirely redesigned from the ground up, Musk reasoned, maybe their assembly could be automated in preparation for the high volumes anticipated for the Model 3.

“He saw the opportunity to do it differently and better,” the former Tesla executive said. “The short term was a stop gap, but the long-term idea was to rethink the design of how a seat works to include how a seat is built.”

Futuris did not respond to requests for comment. It continues to supply seat parts to Tesla. Detroit-based seating supplier Adient PLC acquired Futuris for $360 million last month.

Meanwhile, Tesla’s seat woes continue. In all, the automaker has issued four seating-related recalls since 2013. The latest came this month with the recall of 11,000 Model Xs manufactured between Oct. 28, 2016 and Aug. 16, 2017.

Suppliers circling

Making car seats is a complex business. Choosing materials, dying and cutting, shaping foam and metal frames, and adding heaters, recliners and other gadgets can involve nearly a dozen suppliers for top models. Final assembly requires lots of labor.

That’s why most automakers opted decades ago to outsource seats for their lower-cost models to specialty seatmakers whose market is expected to reach $79 billion by 2022, according to market researcher Lucintel.

Although Musk’s philosophy has always been “build it right and then figure out how to get the cost down” later, according to the ex-Tesla executive, observers say Tesla can ill afford more production headaches. 

Philippe Houchois, an auto analyst, wrote in a September note to clients that “scalability” was now the main challenge at Tesla, whose manufacturing prowess is still unproven when it comes to building large numbers of vehicles.

Despite Tesla’s previous battles with Futuris, seat suppliers smell opportunity. ZF Friedrichshafen and Faurecia have opened Silicon Valley labs, in part to woo Tesla.

Lear, which cuts and sews material for Tesla, is likewise pressing to get the automaker’s seat manufacturing business, according to Matthew Simoncini, the company’s chief executive. “In general Tesla has a philosophy: ‘We’ll do it ourselves. We’ll change the mold,’” Simoncini said. “(Outsourcing) is a much more efficient use of capital. That would allow them to focus on what they do best.”

German Coalition Talks Turn to Migration

The three parties exploring a possible coalition in Germany face an early test of their willingness to compromise on Thursday when they try to reach a common stance on deeply divisive immigration and asylum policy.

German Chancellor Angela Merkel is trying to patch together a tricky three-way coalition after her party suffered bruising losses in a national election three weeks ago, losses that even some of her allies blame on her refugee policies.

Germany’s demographic landscape changed overnight in 2015 with her decision, in the face of refugee flows on a scale not seen since World War II, to open the borders to more than a million migrants fleeing war in the Middle East and Africa.

Merkel in middle

While some hailed the move as a humanitarian act, it was less popular in her own conservative camp, where many blame her for the subsequent surge in the anti-immigration Alternative for Germany party, which took seats from her bloc.

Within her conservative bloc, the Bavarian Christian Social Union (CSU) is demanding a cap on refugee numbers, rejected by Merkel as unconstitutional. To her left, the Greens oppose what they see as a populist-driven tightening of asylum rules.

With parties far apart, Christian Lindner, leader of the pro-business Free Democrats (FDP) warned that talks could rapidly descend into conflict with Greens on the sensitive matter of allowing family members to join migrants in Germany.

“The CSU’s talk of an upper limit is empty,” Lindner told Der Spiegel magazine. “But I have sympathy for the CSU’s calls for a change in immigration policy given the need for order,” he added, warning Merkel against compromising with the Greens.

“Once control has been re-established, then we can be more open again on family reunification,” he said. “Until then it must be strictly limited to cases of hardship and to the core family — parents and children.”

First rounds go well

In the first two rounds of coalition talks, the three parties defied expectations by finding substantial common ground on fiscal policy.

But politicians from all parties have said it could take months to clinch agreement on what would be Germany’s first three-way coalition for decades.

Syrian Diplomat’s Outburst at UN a Symptom of Regional Rivalries

Middle Eastern regional rivalries spilled over Wednesday into a U.N. meeting on human rights in Iran, when a Syrian diplomat’s outburst brought the proceedings to a temporary halt.

The meeting, an annual exercise in the U.N. committee that reviews the human rights situation in some of the countries with the worst records, began predictably enough.

Special Rapporteur Asma Jahangir outlined concerns about the rate of executions in Iran — 435 since January this year —  that included some women and juveniles. She also detailed reports she has received about the harassment, intimidation and prosecution of human rights defenders.

Jahangir, who took up her mandate in November last year, addressed the dangerous conditions for journalists, bloggers and social media activists, noting that more than two dozen were in Iranian jails as of June.

 

She went on to address discrimination against women, who must wear garments that cover them in public, are not allowed to watch sporting events at stadiums, are excluded from some occupations and face double the unemployment rates of men. When they do work, they are paid 41 percent less than their male counterparts.

 

She also expressed concern about the situation of ethnic and religious minorities, such as the Baha’is, who face “unabated discrimination” and even arbitrary arrest, torture and prosecution.

Some praise for Iran

 

Jahangir, an independent human rights expert who received her mandate from the U.N. Human Rights Council, also had some positive things to say.

She noted high participation rates in the May presidential and local elections and President Hassan Rouhani’s pledge to address the rights of women in Iran. She also welcomed the relatively good communication she has had with the government in carrying out her mandate, although a request to visit the country has not been granted.

Regional disputes erupt

When the discussion was opened to the floor, regional disputes came into play.

“Iran would like to divert the international community’s attention through stoking tension and instability in other countries and also through fueling hate crimes,” Saudi Arabia’s representative said. “Iran is sponsoring all problems in the Middle East.”

 

Sunni Muslim Saudi Arabia and Shi’ite Iran are arch enemies. They support different sides in the Syrian civil war and are fighting each other directly and indirectly in Yemen. In Lebanon, Saudi Arabia backs the legitimate government, while Iran arms the militant cum political movement Hezbollah.

 

Syrian diplomat Amjad Qassem Agha began by accusing the Special Rapporteur of relying “on fabricated reports provided by intelligence agencies in countries that seek to destabilize Iran.”

 

Agha then suggested that before appointing a Special Rapporteur for Iran, there should be one assigned to look into Saudi Arabia or countries that were involved in Afghanistan, Libya and Yemen.

Saudi Arabia’s representative asked to address the remark about his delegation and the chair allowed it.

 

“We are now discussing the report on human rights in Iran, I do not think it appropriate to refer to other countries in this context,” he said. “I ask the Syrian representative not to address countries that have nothing to do with this item.”

Undiplomatic behavior

“What is his country’s concern to talk about Iran in this way?” Syrian diplomat Agha shouted. “How he has to dare to talk about Iran and he needs other countries not to talk about Iran, to protect Iran!” he yelled. He lost all composure and continued shouting for four minutes.

 

The committee’s secretary, Moncef Khane, could be heard speaking to the chair saying, “He’s completely out of line; it’s never happened (before),” expressing his shock at the undiplomatic outburst.

Syria is Iran’s main regional ally. Iran, along with Russia, intervened militarily in the conflict to save the regime of Syrian President Bashar al-Assad in 2015, when it appeared it might fall to the opposition.

 

The Syrian representative’s microphone was ultimately shut off, but he could still be heard screaming, ultimately provoking the committee secretary to warn that if he continued, U.N. security would be called. Ultimately, the chair suspended the session.

 

After a 10-minute hiatus, that included both the Iranian representative and committee secretary Khane speaking to the Syrian diplomat, the meeting resumed and so did the insults.

“If only one reason was needed to prove how debased the third committee has become to consider country-specific situations, the Saudi intervention provides that,” said Iranian envoy Mohammad Hassani Nejad Pirkouhi.

“Saudi — a bad child killer that has recently upgraded to a good child killer — kills more children in Yemen than al-Qaida, ISIS and al-Nusra put together around the globe,” Pirkouhi said, referring to Saudi Arabia’s listing on a U.N. blacklist of countries that kill and maim children in conflict.

This year, Riyadh was listed for coalition bombings in Yemen, but the U.N. noted it has put in place measures to improve child protection.

Turkey Frees 8 Human Rights Activists, Pending Outcome of Terror Trial

Turkey has freed eight human rights activists, pending the outcome of their trials for alleged terrorism.

Those freed Wednesday included Amnesty International’s Turkey director, Idil Eser, and German and Swiss citizens.

They were arrested in July while attending a digital security workshop on Buyukada Island. They have been behind bars ever since.

A total of 11 activists have been charged with terrorism for allegedly having contact with Kurdish and leftist militants, as well as suspected members of a movement led by exiled Muslim cleric Fetullah Gulen.

Turkey said Gulen and his backers were behind last year’s failed coup, a charge Gulen denies.

Amnesty International said there was not “a shred of evidence” against the defendants. One of them, Ozlem Dalkiran, a member of the group Citizens’ Assembly, told the judge during his court appearance, “I have no idea why we’re here.”

The United States has condemned the arrests and urged Turkey to drop the charges.

Turkey has long had its eyes on joining the European Union. But some in the EU have expressed concern that Turkey may be sliding closer to authoritarianism under President Recep Tayyip Erdogan.

Ivanka Trump Promotes Expansion of Child Tax Credit at Capitol

Ivanka Trump teamed up Wednesday with Republican legislators to try to ensure the tax overhaul package under construction on Capitol Hill includes an expansion of the child tax credit.

The White House adviser and presidential daughter, appearing at a Capitol Hill news conference with GOP lawmakers, framed the tax credit as crucial for working families.

“It is a priority of this administration and it is a legislative priority to ensure that American families can thrive,” she said.

Also attending were Republican Senators Marco Rubio of Florida, Mike Lee of Utah, Tim Scott of South Carolina, Shelly Moore Capito of West Virginia and Dean Heller of Nevada; and GOP Representatives Kristi Noem of South Dakota, Kevin Yoder of Kansas, Claudia Tenney of New York and Martha Roby of Alabama.

Rubio and Lee have worked closely with Ivanka Trump on the issue. Details are still being worked out, but Rubio and Lee would like to see the $1,000 credit doubled and made fully refundable.

The GOP tax plan would cut the corporate tax rate from 36 percent to 20 percent, reduce taxes for most individuals and repeal inheritance taxes on multimillion-dollar estates. The standard deduction would be nearly doubled, to $12,000 for individuals and $24,000 for families; the number of tax brackets would shrink from seven and the child tax credit would be increased.

Democrats and liberal family advocacy groups say the overall plan would provide limited benefits to low-income families while offering major cuts to the wealthy — and they say that any boost to the child tax credit must be viewed in that context.

Speaking to reporters earlier in the day, Rubio expressed optimism about the child tax proposal, saying the provision is needed because without it, people could “see a tax increase, which nobody around here is prepared to justify, because you can’t.”

Rubio praised Ivanka Trump, saying that “having the White House making it a priority of theirs has strengthened our chances.”

Austerity to Hit Jordan as Debt Spikes, Economy Slows

Jordan’s high and rising public debt has worried the International Monetary Fund and prompted a downgrade from Standard & Poor’s. So the government is planning a blast of austerity by year-end.

Tax hikes and subsidy cuts —- likely to be highly unpopular —- are on the agenda as the country’s debt to GDP ratio has reached a record 95 percent, from 71 percent in 2011.

“Postponing problems might increase the popularity of the government but would be a crime against the nation,” Prime Minister Hani Mulki told a group of parliamentarians this week.

After an IMF standby arrangement that brought some fiscal stability, Jordan agreed last year to a more ambitious three-year program of long-delayed structural reforms to cut public debt to 77 percent of GDP by 2021.

The debt is at least in part due to successive governments adopting an expansionist fiscal policy characterized by job creation in the bloated public sector, and by lavish subsidies for bread and other staple goods.

It also hiked spending on welfare and public sector pay in a move to ensure stability in the aftermath of the “Arab Spring” protests in the region in 2011. But the economy has slowed, battered by the turmoil in neighboring Syria and Iraq.

The economic strains reduced local revenue and foreign aid, forcing Jordan to borrow heavily externally and also resort to more domestic financing.

Although there has been some progress this year with improving remittances, tourism and some rebound in exports, there has been no pickup in growth since 2015 — with the officials forecasting 2 percent growth this year from an earlier IMF 2.3 percent target.

“This year we are at a crossroads. Everything I am trying to do is to stop the hemorrhage and start breathing,” Mulki was quoted as saying at another meeting to garner support.

The rising debt accentuated by the protracted regional conflicts on Jordan’s borders was the main reason Standard and Poor last week downgraded its sovereign rating to B+.

Subsidy risk

Economists said Jordan’s ability to maintain a costly subsidy system and a large state bureaucracy was increasingly untenable in the absence of large foreign capital inflows or infusions of foreign aid, which have dwindled as the Syrian crisis has gone on.

Jordanian officials say they expect less donor support next year than any time since the crisis began. They are also concerned that Gulf states, hit by lower oil prices, have so far not committed any support funds given after the “Arab Spring” to be renewed.

Politicians and economists say the government’s fiscal consolidation plan envisages a doubling of bread prices and raising sales taxes on basic food and fuel items.

This should cut into the estimated 850 million dinars ($1.2 billion) the government pays in annual subsidies from bread to electricity to water.

But economists reckon subsidy cuts are bound to worsen the plight of poorer Jordanians, a majority of the country’s population, and removing subsidies has triggered civil unrest in the past.

As well as debt, the IMF has also pointed to the unemployment rate, which has risen sharply in the last two years to 16 percent, and to low tax collection.

The IMF says Jordan stands out among countries in the region with among the lowest tax collections. Personal taxes constituting only 0.4 percent of GDP, with nearly 95 percent of the population not subject to income tax.

Critics say any hikes would extract more from the segment of salaried employees that already pays while leaving influential business tycoons outside the tax net.

“The tax burden in comparison with countries of the region except the oil producers is low… there is big generosity in exemptions,” said Jihad Azour, the IMF’s director of the Middle East and Central Asia department during a recent visit to Jordan.

Economists fear that the IMF’s tax recommendations endorsed by the government that range from expanding corporate income tax to dividends and tougher sanctions for tax evaders will hurt business sentiment in a country whose political stability has turned it a safe haven.

“It’s important to activate growth to bolster stability and ensure a faster drop in debt,” said the IMF’s Azour adding that tackling Jordan debt problem was crucial for its future prosperity in a turbulent region.

Companies in Ukraine, Russia Come Under New Cyberattack

A new strain of malicious software has paralyzed computers at a Ukrainian airport, the Ukrainian capital’s subway and at some independent Russian media.

 

The Odessa international airport in Ukraine’s south, the Kyiv subway and prominent Russian media outlets such as Interfax and Fontanka on Tuesday reported being targeted.

 

The cyberattack appears to be similar to a major attack in June that locked the computers of hospitals, government offices and major multinationals with encryption that demanded a ransom for their release. The software appeared to have originated in Ukraine.

Moscow-based cyber security firm Group-IP said in a statement Wednesday the ransomware called BadRabbit also tried to penetrate the computers of major Russian banks but failed. None of the banks has reported any attacks.

 

Moscow-based cyber security company Kaspersky Lab said it was aware of more than 200 companies in Russia, Ukraine, Turkey and Germany targeted by the ransomware.

 

The Odessa airport said in a statement its information systems have been affected, although it continues to service flights. The subway in the capital, Kyiv, said it cannot process online payments and bank card payments.

 

The operations of Russia’s only privately owned news agency, Interfax, have been paralyzed since Tuesday.

 

 

Kaspersky: We Uploaded US Documents But Quickly Deleted Them

Sometime in 2014, a group of analysts walked into the office of Eugene Kaspersky, the ebullient founder of Russian cybersecurity firm Kaspersky Lab, to deliver some sobering news. The analysts were in possession of a cache of files belonging to the Equation Group, an extraordinarily powerful band of hackers that would later be exposed as an arm of the U.S. National Security Agency. But the analysts were worried; the files were classified.

 

“They immediately came to my office,” Kaspersky recalled, “and they told me that they have a problem.”

According to him, there was no hesitation about what to do with the cache.

 

“It must be deleted,” Kaspersky says he told them.

 

The incident, recounted by Kaspersky during a brief telephone interview on Monday and supplemented by a preliminary timeline provided by company officials, could not be immediately corroborated. But it’s the first public acknowledgement of a story that has been building for the past three weeks — that Kaspersky’s popular anti-virus program uploaded powerful digital espionage tools belonging to the NSA and sent them to servers in Moscow.

 

The account provides new perspective on the U.S. government’s recent move to blacklist Kaspersky from federal computer networks, even if it still leaves important questions unanswered.

 

To hear Kaspersky tell it, the incident was an accident borne of carelessness.

 

Kaspersky was already on the trail of the Equation Group when one of its customers in the United States — Kaspersky referred to them as a “malware developer” — ran at least two anti-virus scans on their home computer after it was infected by a pirated copy of Microsoft Office 2013, according to Kaspersky’s timeline. That triggered an alert for Equation Group files hidden in a compressed archive which was spirited to Moscow for analysis.

 

Kaspersky’s story at least partially matches accounts published in The New York Times, The Washington Post and The Wall Street Journal. All three publications recently reported that someone at the NSA’s elite hacking unit lost control of some of the agency’s powerful surveillance tools after they brought their work home with them, leaving what should have been closely guarded code on a personal computer running Kaspersky’s anti-virus software.

 

But information security experts reading the bits of information dropped by anonymous government officials are still puzzling at whether Kaspersky is suspected of deliberately hunting for confidential data or was merely doing its job by sniffing out suspicious files.

 

Much of the ambiguity is down to the nature of modern anti-virus software, which routinely submits rogue files back to company servers for analysis. The software can easily be quietly tweaked to scoop up other files too: perhaps classified documents belonging to a foreign rival’s government, for example.

Concerns have been fanned by increasingly explicit warnings from U.S. government officials after tensions with Russia escalated in the wake of the 2016 presidential election.

 

Kaspersky denied any inappropriate link to the Russian government, and said in his interview that any classified documents inadvertently swept up by his software would be destroyed on discovery.

 

“If we see confidential or classified information, it will be immediately deleted and that was exactly [what happened in] this case,” he said, adding that the order had since been written into company policy.

 

An AP request for a copy of that policy wasn’t immediately granted.

 

Kaspersky’s account still has some gaps. How did the analysts know, for example, that the data was classified? And why not alert American authorities to what happened? Several reports alleged that the U.S. learned that Kaspersky had acquired the NSA’s tools via an Israeli spying operation.

 

Kaspersky declined to say whether he had ever alerted U.S. authorities to the incident.

 

“Do you really think that I want to see in the news that I tried to contact the NSA to report this case?” he said at one point. “Definitely I don’t want to see that in the news.”

 

So did he alert the NSA to the incident or not?

 

“I’m afraid I can’t answer the question,” he said.

 

Even if some questions linger, Kaspersky’s explanation sounds plausible, said Jake Williams, a former NSA analyst and the founder of Augusta, Georgia-based Rendition InfoSec. He noted that Kaspersky was pitching itself at the time to government clients in the United States and may not have wanted the risk of having classified documents on its network.

 

“It makes sense that they pulled those up and looked at the classification marking and then deleted them,” said Williams. “I can see where it’s so toxic you may not want it on your systems.”

 

As for the insinuation that someone at the NSA not only walked highly classified software out of the building but put it on a computer running a bootleg version of Office, Williams called it “absolutely wild.”

 

“It’s hard to imagine a worse PR nightmare for the NSA,” he said.

UN Expert Says Most of World Lacks Real Religious Freedom

Three-quarters of the world’s people live in countries that either restrict the right to religion or belief or have “a high level of social hostility involving religion or belief,” the U.N. special investigator on religious rights said Tuesday.

Ahmed Shaheed told the General Assembly’s human rights committee that religious intolerance is prevalent globally – and rising around the world.

He said over 70 countries currently have anti-blasphemy laws that can be used to suppress dissenting views, in violation of international human rights standards.

Shaheed, a former politician and human rights expert from the Maldives, urged those countries to repeal the blasphemy laws.

He also called for the repeal of all laws that undermine the exercise of the right to freedom of religion or belief – or discriminate against that right.

Shaheed urged countries to adopt and enforce “adequate criminal sanctions penalizing violent and particularly egregious discriminatory acts perpetrated by state or non-state actors against persons based on their religion or belief.”

He said governments must also pay “particular attention” to uphold the obligation to protect religious minorities.

“Increases in unlawful government restrictions against religious groups remain one of the primary and most fundamental factors resulting in higher levels of religious intolerance in any given society,” Shaheed said.

Some forms of discrimination are direct, such as prohibiting some or all religions or beliefs, he said. But others may be indirect, like zoning laws that prevent construction of certain houses of worship or bans on refugees or immigrants, “ostensibly for national security reasons, from countries where majority populations belong to particular faith communities,” he said.

The special investigator, or rapporteur, on freedom of religion or belief is an independent expert appointed by the Geneva-based U.N. Human Rights Council. Shaheed previously served for almost six years as special rapporteur on the human rights situation in Iran.

Russia Vetoes UN Resolution to Extend Syria Gas Attacks Probe

Russia used its U.N. veto Tuesday to block a resolution extending the mandate of the investigators probing chemical weapons attacks in Syria.

In a Security Council vote, 11 countries supported extending the mission for another year, while Russia and Bolivia voted against the measure, and China and Kazakhstan abstained.

The investigating team, known as the Joint Investigative Mechanism or JIM, is expected to make public a report on Thursday that could identify the party responsible for a deadly April 4 attack in the rebel-controlled town of Khan Sheikhoun in southern Idlib that killed and sickened scores of civilians.

Three days later, the United States launched an airstrike on a Syrian air base which Washington accused the regime of Bashar al-Assad of having used to launch the poison gas attack.

Accountability

While the question of whether sarin or a sarin-like substance is not disputed, who used it still has to be officially confirmed, and it is anticipated the JIM’s report could shed light on the matter.

It would be politically embarrassing for Russia, a staunch ally of President Assad, if evidence shows that the regime — and not, for example, Islamic State militants — are responsible for the attack. In Syria, the government is the only party to the conflict that possesses air capabilities. Russia has previously suggested that the gas was released from a bomb on the ground and not in the air.

Russia’s U.N. envoy, Vassily Nebenzia, first sought to postpone Tuesday’s vote through a procedural measure until after the release of the JIM’s report, saying the hastily-called vote was an effort by Washington to embarrass Moscow.

“You need to show up Russia and show that Russia is guilty of not extending the JIM, in fact you are the one who is begging for confrontation,” Nebenzia said of the U.S. delegation, which drafted the text and pushed for the vote.

While the procedural vote had the support of China, Kazakhstan and Bolivia, it fell short of the required eight-vote majority and failed to prevent the other vote going ahead, forcing Russia to use its veto.

Eighth veto on Syria

“I want to underscore that today’s voting is senseless also, because it won’t have any impact on the future of the JIM,” Nebenzia said after casting his veto — the eighth time Russia has done so on Syria. “We will return to the issue of extension in the future — we have not stopped it.”

The mission’s mandate does not expire until November 16, so the council has three weeks to approve an extension without disrupting the team’s work, as happened last year when consensus could not be reached on the JIM’s extension.

“The question we must ask ourselves is, whether the JIM is being attacked because it has failed in its job to determine the truth in Syria, or because its conclusions have been politically inconvenient for some council members,” said U.S. envoy Michele Sison.

“Russia called for the formation of the JIM, they negotiated its terms, they agreed its mission, and yet when faced with the prospect of the JIM revealing the truth, why has Russia alone chosen to shoot the messenger?” asked British Ambassador Matthew Rycroft.

Some diplomats said the move for the vote now was intended to avoid politicizing whatever conclusions the report draws and avoiding having them affect votes for the extension.

All council members expressed the hope that they could return to the issue and reach consensus on extending the JIM’s mandate before it expires next month.

Turkey Puts More Rights Advocates on Trial, Raising International Concerns

A trial began in Istanbul Tuesday for eleven prominent human rights activists, including two foreign nationals, in a case that is drawing criticism from international human rights organizations who say it is part of a campaign by the government of President Recep Tayyip Erdogan to silence criticism and scrutiny in Turkey in the wake of last year’s coup attempt.  

The defendants face prison sentences of up to 15 years in prison.

Amnesty International’s chairman in Turkey, Taner Kilic, and Idil Eser, Amnesty International’s Turkey director, are among those on trial. The case centers on a digital security seminar that was held on Buyukada, an island on the Sea of Marmara near  Istanbul, that focused on security and coping with stress. In a 15-page indictment, prosecutors allege the meeting was part of a conspiracy to unseat the government by inciting civil unrest

“It’s a completely baseless case, there is not a shred of evidence,” said Andrew Gardner, Amnesty International’s Turkey researcher. “It’s an attempt to scare and silence human rights civil society. That’s why Turkey’s most prominent human rights defenders and human rights organizations have been swept up in this case,” he said.

Key members of the Helsinki Citizens Assembly, one of Turkey’s most respected and oldest human rights groups, are among those on trial Tuesday.

Erdogan has vigorously defended the charges against the activists, portraying the case as an example that no one is above the law and evidence that Turkey faces a threat by international conspirators and unidentified countries following the failed coup. Erdogan on Tuesday lashed out at EU nations whose leaders have been critical of his crackdown and what they see as tightening controls on free speech.   “We expect European leaders to stop targeting Turkey and to return to common sense,” the Turkish leader said at an event in the capital, Ankara, on Monday.  

Mounting tensions with Europe

Tuesday’s trial is likely to further ratchet up tensions between Turkey and Europe. Two of the defendants are European nationals:  Swedish national Ali Gharavri and German Peter Steudtner, both of whom were giving seminars at the meeting where the human rights advocates were arrested.  German Chancellor Angela Merkel has strongly criticized the arrests, saying “Innocent people are caught up in the wheels of justice,” in Turkey.”

“Linking the work of Steudtner and other human rights activists, who are on trial with him, to the support of terrorism, to imprison and prosecute them, is highly absurd,” wrote European Parliamentarian Rebecca Harms in a statement released Tuesday. “The arbitrary detention of foreign citizens in Turkey proves to be more and more a measure by which the Turkish leadership wants to pressure the home countries of those concerned,” she said.

Under emergency rule introduced last year following the botched military coup, more than 50,000 people have been arrested and 150,000 others have lost their jobs.

Critics point to what they see as a lack of evidence to justify many of the prosecutions.

“If you look at the evidence, for example, against Idil Eser, Amnesty International’s director, it’s all to do with an Amnesty International campaign and public documents,” said Gardner. “The prosecutors have had three months of investigations to come up with evidence against human rights defenders and came up with nothing.”

Among the evidence against the defendants is a Tweet telling participants to turn off their phones and “enjoy the boat ride” to the island where the seminar was being held.

Courts as intimidation tool

There is a growing suspicion among observers that the trial is part of a campaign to intimidate wider civil society.

“The arrests of the human rights activists, I think, gives us a very bleak picture of the Turkish civic society, or what the regime means by ‘civic society,'” observes political scientist Cengiz Aktar. “It’s not very different from what we see in Russia, completely curtailed and diminished.”

Tuesday’s prosecution of human rights advocates comes amid a rash of arrests and trials of journalists. Media freedom groups have dubbed Turkey the world’s worst jailor of journalists, claiming more than 150 reporters are imprisoned.

On Tuesday, six more journalists went on trial for reporting on leaked emails that allegedly were written by Berat Albayrak, son-in-law of President Erdogan, and Turkey’s energy minister. The emails are considered to be in the public domain, yet observers note the journalists are being prosecuted for publishing state secrets.

The clampdown on media and freedom of expression is drawing further condemnation among Europeans already skeptical of Turkey’s readiness to continue its bid to some day join the EU.

“There cannot be an effective political debate when journalists cannot report or question political leaders without fear of harassment or arrest,” said Tanja Fajon, a Slovenian politician with the Social Democrats and member of the European Parliament. “As Turkey’s political situation worsens, it remains imperative to offer support to, and speak about, those imprisoned for their journalism.”

 

Aid Group Halts Sea Rescues in Mediterranean

The international aid group Save the Children is suspending its efforts to rescue migrants making the dangerous Mediterranean Sea crossing from Libya.

Tuesday, the organization said the combination of falling numbers of crossings and worsening security forced it to stop sending its ship, the Vos Hestia, out from its port in Italy.

Save the Children said the ship rescued as many as 10,000 migrants over the past year after the smugglers’ vessels they were in foundered at sea.

The announcement comes just a day after Italian authorities searched the Vos Hestia as part of Rome’s efforts to deter people smuggling across the Mediterranean. Save the Children said the decision to suspend operations wasn’t related to the search and it told journalists that Italian prosecutors had given assurances it is not under investigation. It seems the search might be linked, however, to crew members on the boat.

In August, police seized a boat operated by a German aid organization, saying there was evidence some people smugglers escorted migrants to that boat. Save the Children says it has nothing to do with that case.

Save the Children was one of the first aid groups to sign a voluntary code of conduct with the Italian government to ensure they aren’t colluding with or encouraging smuggling.

The number of arriving migrants is down about 25 percent so far this year from last year, to around 110,000. And the drop will get worse as the winter closes in. Very few rescue boats are heading out into the Mediterranean now because of falling need.

Tens of thousands of migrants from Africa, the Middle East and elsewhere have struggled to sail from Libya to Italy over the past few years. Hundreds of thousands of migrants have also trekked through Turkey to Europe.

Thousands have died in the sea crossing, prompting both rescue efforts by private aid groups and efforts by the Italian government to staunch the flow.

Rome, with the EU’s backing, has helped Libya with efforts to police its vast desert land borders and to patrol its coast to prevent migrants from entering.

China Turning Pakistan Port Into Regional Giant

An unprecedented Chinese financial and construction effort is rapidly developing Pakistan’s strategically located Arabian Sea port of Gwadar into one of the world’s largest transit and transshipment cargo facilities.

The deep water port lies at the convergence of three of the most commercially important regions of the world, the oil-rich Middle East, Central Asia, and South Asia.

Beijing is developing Gwadar as part of the China-Pakistan Economic Corridor, known as CPEC. The two countries launched the 15-year joint mega project in 2015 when President Xi Jinping visited Islamabad.

Under the cooperation deal construction or improvement of highways, railways, pipelines, power plants, communications and industrial zones is underway in Pakistan with an initially estimated Chinese investment of $46 billion.

The aim is to link Gwadar to landlocked western China, including its Muslim-majority Xinjiang region, giving it access to a shorter and secure route through Pakistan to global trade. The port will also provide the shortest route to landlocked Central Asian countries, including Afghanistan, through transit trade and offering transshipment facilities.

Chinese fuel imports and trading cargo will be loaded on trucks and ferried to and from Xinjiang through the Karakoram Highway, snaking past snow-caped peaks in northern Pakistan.

‘Qualitative change’

Gwadar will be able to handle about one million tons of cargo annually by the end of the year. Officials anticipate that with expansion plans under way, the port will become South Asia’s biggest shipping center within five years, with a yearly capacity of handling 13-million tons of cargo. And by 2030, they say, it will be capable of handling up to 400-million tons of cargo annually.

China has in recent months begun calling CPEC  the flagship project of its global Belt and Road Initiative, or BRI. The “qualitative change” from an experimental project to flagship project underscores the importance Beijing attaches to CPEC, said Zhao Lijian, the deputy chief of mission at the Chinese embassy in Islamabad.

Out of 39 “early harvest” projects under CPEC, 19 have since been completed or are under construction with a Chinese investment of about $18.5 billion, Lijian told VOA. The progress makes it the fastest developing of all of at least six BRI’s corridors China plans to establish, added the Chinese diplomat.

Gwadar is a “symbol of regional peace and prosperity” because it will connect countries around Pakistan to serve their trading interests, said port Chairman Dostain Khan Jamaldini.

Jamaldini dismissed as “not true” concerns that skilled Chinese laborers, engineers and businesses will flood Pakistan, hurting domestic industries. About 65 percent of the labor force on construction and other projects at Gwadar is Pakistani, and the number of Chinese is currently just over 300, he added.

Security concerns and India’s claims over some of the territory crossed by the massive project remain key challenges for Gwadar and CPEC in general. Pakistani and Chinese officials dismiss reported assertions that Beijing is expanding its presence at Gwadar to be able to handle naval ships and military transport planes.

The collaboration has “no strategic or political” aims against a third country, insisted Lijian. He went on to assert that the purpose of CPEC” is to help our iron brother Pakistan” to improve its economy and to strengthen the bilateral relationship.

Pakistani officials have trained and deployed about 15,000 troops and paramilitary forces to guard CPEC-related projects and the Chinese working on them. Islamabad alleges that the Indian intelligence agency has been tasked to plot subversive acts to derail CPEC.

Sleepy fishing town

Gwadar, with a population of around 100,000, mostly fishermen and boat makers, is often referred to as a sleepy fishing town.

The costal city’s poverty-stricken residents are hoping new employment opportunities will be created for them in the wake of the massive development underway in Gwadar.

But their immediate challenges are shortages of clean drinking water and hours long daily power blackouts.

“We are happy Chinese are building port, hospitals, schools and roads but right now we out of power during most of the day and limited water availability,” said fisherman Khalil Ahmed.

The family, like other fishermen in Gwadar, has been plying unspoiled crystal blue waters of the Arabian Sea for decades with age-old fishing techniques and barely surviving on limited income because financial resources do not allow them to buy modern fishing tools.

However, ongoing massive economic activity will “qualitatively” change the lives of its poverty-stricken residents for the better, says Mushahid Hussain, who chairs a parliamentary committee on CPEC.

He says a fisheries processing plant is being installed at the port and arrangements are being planned to train and equip fishermen to improve and export local fish to other parts of Pakistan and China.

Senator Hussain believes economic projects under construction in Gwadar will help its people and address long-running grievances of the province of Baluchistan, where the port is situated.

The poverty-stricken largest Pakistani province has long been in the grip of a low-level Baluchistan separatist insurgency, which mainly stems from demands from the federal government for local control over Baluchistan’s vast natural resources.

Gwadar’s existing 50-bed government hospital is being extended to 300 beds, a technical and vocational institute is being constructed, a 300-megawatts coal-based power plant and a desalination plant are being installed, a new international airport and a six-lane international standard expressway are being built to connect Gwadar port with the rest of Pakistan and neighboring countries, including Iran and Afghanistan.

Local officials say most of the projects, including the new airport, are being built with Chinese financial grants. The rest of the projects in Gwadar and elsewhere in Pakistan under CPEC are being built with “interest-free” and “soft-loans” from China.

 

US Workforce to Add 11.5 Million Jobs by 2026

The U.S. economy is expected add another 11.5 million jobs by 2026, as an aging population and longer life spans raise the need for health care providers. The total U.S. workforce is expected to grow to 167.6 million people.

Tuesday’s projections come from the U.S. Bureau of Labor Statistics, which says job growth will accelerate slightly from its current pace, but it will not return to the brisk gains seen the over previous decades. The BLS updates its job outlook every two years as new information becomes available.

The percentage of the workforce over age 55 will rise to nearly one-quarter in 2026, a sharp increase from the less than 17 percent back in 2006. People in their 50s and 60s may retire, which is one reason experts expect workforce participation rates (the percentage of working age people who have jobs or are seeking work) to decline.

Over the decade, nine out of 10 new jobs will be in the services sector, particularly health care. Employment by companies that produce goods is expected to grow at a meager one-tenth of one percent a year, with a gain of just 219,000 jobs by 2026.

The workforce is expected to become more diverse as Asian and Hispanic parts of the U.S. population grow more quickly than average. Whoever is in the workforce will find additional education important, as two out of three jobs in the fastest-growing areas require at least some post-secondary education and training.

And the whole economy is predicted to expand at a two percent annual rate. That is faster than the current growth rate, but below the gains seen in previous decades.

 

Amazon Says It Received 238 Proposals for 2nd Headquarters

Amazon said Monday that it received 238 proposals from cities and regions in the United States, Canada and Mexico hoping to be the home of the company’s second headquarters.

The online retailer kicked off its hunt for a second home base in September, promising to bring 50,000 new jobs and spend more than $5 billion on construction. Proposals were due last week, and Amazon made clear that tax breaks and grants would be a big deciding factor on where it chooses to land.

Amazon.com Inc. said the proposals came from 43 U.S. states as well as Washington, D.C., and Puerto Rico, three Mexican states and six Canadian provinces. In a tweet, the company said it was “excited to review each of them.”

Besides looking for financial incentives, Amazon had stipulated that it was seeking to be near a metropolitan area with more than a million people; be able to attract top technical talent; be within 45 minutes of an international airport; have direct access to mass transit; and be able to expand that headquarters to as much as 8 million square feet in the next decade.

Generous tax breaks and other incentives can erode a city’s tax base. For the winner, it could be worth it, since an Amazon headquarters could draw other tech businesses and their well-educated, highly paid employees.

The seven U.S. states that Amazon said did not apply were: Arkansas, Hawaii, Montana, North Dakota, South Dakota, Vermont and Wyoming.

Ahead of the deadline, some cities turned to stunts to try and stand out: Representatives from Tucson, Arizona, sent a 21-foot tall cactus to Amazon’s Seattle headquarters; New York lit the Empire State Building orange to match Amazon’s smile logo.

The company plans to remain in its sprawling Seattle headquarters, and the second one will be “a full equal” to it, founder and CEO Jeff Bezos said in September. Amazon has said that it will announce a decision sometime next year.

UK Says its Democracy is Secure After Suggestion of Foreign Meddling in Brexit

Britain’s democracy is one of the most secure in the world and will remain so, a spokesman for Prime Minister Theresa May said on Monday in response to a question about a suggestion that there may have been foreign interference in the Brexit vote.

Opposition lawmaker Ben Bradshaw last week urged the government to look into reports by an advocacy group suggesting that the origin of some Brexit campaign funds was unclear.

Bradshaw said in parliament the issue should be investigated “given the widespread concern over foreign and particularly Russian interference in Western democracies.”

At a regular briefing with reporters, May’s spokesman was asked if the prime minister was concerned about the reports. “I am not aware of those concerns,” he said.

“More broadly, as we’ve always said, the UK democratic system is amongst one of the most secure in the world and will continue to be so.”

The Electoral Commission, which regulates political finance in Britain, said in April it was investigating campaign spending by pro-Brexit organization Leave.EU, without giving details.

A spokeswoman for the Electoral Commission said on Monday that investigation was still going on and it would not provide any further information until it was complete.

 

Sierra Leone to Auction Multi-Million Dollar Diamond to Benefit Poor

Sierra Leone hopes to raise millions of dollars for development projects by auctioning a huge uncut diamond, believed to be one of the world’s largest, in New York in December.

It will be the government’s second attempt to sell the 709-carat gem, known as the “Peace Diamond”, after it rejected the highest bid of $7.8 million at an initial auction in New York in May.

Over half of the proceeds from the sale will be used to fund clean water, electricity, education and health projects in Sierra Leone, and particularly in the village of Koryardu, in the Kono region in eastern Sierra Leone, where the diamond was discovered.

“There’s a reason God gave these diamonds to the poorest people in the world and made the richest people want them. This is Tikun Olam [Hebrew for correcting the world], this is making the world a better place,” Martin Rapaport, chairman of Rapaport Group, a network of diamond companies which will manage the auction, told Reuters.

The diamond, which the auctioneers described as the 14th largest in the world, was unearthed in Koryardu in March by a Christian pastor who gave it to the government.

Diamonds fuelled a decade-long civil war in Sierra Leone, ending in 2002, in which rebels forced civilians to mine the stones and bought weapons with the proceeds, leading to the term “blood diamonds.”

Toxic Fumes Keep EU Summit Venue Shut for Another Week

The building that houses EU summits, where toxic fumes forced EU leaders to switch venues last week, will be closed for a further week as investigators

seek to resolve the problem.

The fumes leaking from the drains have forced the Europa Building, also known as “The Egg,” to be evacuated twice this month, including before a summit of EU leaders on Thursday and Friday.

The new building was opened in January amid controversy over its 321-million-euro ($378 million) price tag.

Staff and meetings will be temporarily transferred to the next door Justus Lipsius building until the issue is resolved.

About 20 catering staff had to go to hospital on October 13 and an unspecified number on Wednesday. An EU official said the Council and Belgian health and safety agencies believe the two incidents were due to the same source.

Reporting by Lily Cusack; editing by Philip Blenkinsop and Toby Chopra.

Turkish President Attacks Washington

U.S. and Turkish diplomats continue talks on resolving a dispute over recent visa curbs, as Turkish President Recep Tayyip Erdogan steps up his rhetoric against Washington. Bilateral relations are set to be further strained by an upcoming court case over Iranian sanction busting involving Turkish citizens.

Erdogan launched a scathing attack Sunday on the country’s Western allies.

He warned Turkey would respect its strategic alliances with its partners as long as those countries respected the law. Ankara has accused some of its NATO partners of conspiring against it and offering sanctuary to people it accuses of being involved in last year’s coup.

Erdogan specifically targeted Washington.

“They say the United States is the cradle of democracy. This can not be true, this can not be democracy,” he said. ” If the United States issues arrest warrants for my 13 bodyguards in a country where I went upon invitation, I am sorry, but I will not say that country is civilized.”

Erdogan’s body guards are accused by U.S. prosecutors of assaulting peaceful protesters outside the Turkish embassy during his visit to Washington in May.

The Turkish president’s scathing attack comes as diplomats from both countries are continuing efforts to resolve the mutual curbing of visas.

Washington imposed visa restrictions following the arrest on terrorism charges of two local employees working at U.S. diplomatic missions in Turkey.

That move saw Ankara retaliating with its own visa restrictions.

The U.S. State Department described the talks Thursday as productive.

Political columnist Semih Idiz of Al Monitor website said Erdogan’s increasingly tough rhetoric against Washington should be viewed in a wider context of the importance of bilateral relations to both sides.

“He [Erdogan] is a master of coming out with bellicose remarks at unexpected and sensitive moments. But we must realize Erdogan was in New York very recently and had a very chummy meeting with Donald Trump who called him a special friend. So Turkey is aware for all the problems it has with America, [it] too it has to tread carefully,” said Idiz.

Observers point out Erdogan’s tough rhetoric is in part motivated by domestic politics. A tough anti American stance plays well with Turkish nationalists Erdogan is courting for 2019 presidential and general elections.

But U.S. Turkish relations could be further strained with an upcoming Iranian sanction busting court case in the United States that involves Turkish-Iranian businessmen Reza Zarrab and senior members of a Turkish State bank.

Political consultant Atilla Yesilada of Global Source partners warns the case can only add to bilateral tensions.

“This upcoming Reza Zarrab case which we [Turkey] consider a big conspiracy of the American deep state, so the possibility of these political shocks tampering off is almost nil,” said Yesilada.

Washington’s ongoing support of Syrian Kurdish militia fighting the Islamic State, also continues to infuriate Ankara who accuse the militia of being, linked to an armed insurgency in Turkey.

Low Inflation Could Slow Fed, but Fiscal Stimulus Unnecessary

The U.S. Federal Reserve will raise interest rates in December and twice next year, according to a Reuters poll of economists, who now worry that the central bank will slow its tightening because of expectations that inflation will remain low.

Most respondents expected the nation’s economy to determine future rate hikes, but a change in regime at the Fed could also affect monetary policy.

U.S. President Donald Trump could decide this week whether to reappoint Fed Chair Janet Yellen, whose term ends in February, since he has concluded interviews with five candidates for that post.

“There is a greater-than-usual degree of uncertainty around monetary policy next year, with the Fed’s leadership up in the air,” wrote RBC economist Josh Nye.

A Reuters poll of economists published last week showed Fed Board Governor Jerome Powell getting the top job, although most said reappointing Yellen would be the best option.

Still, a vast majority of the more than 100 economists in the latest poll expect rate hikes to depend largely on how the U.S. economy performs.

“Despite intense speculation about the next Fed chair, the path of policy rates is still likely to be driven primarily by the data, regardless of who is nominated,” said Christian Keller, head of economics research at Barclays.

Forty of the 50 economists who answered an extra question also said the U.S. economy, which is on a steady growth path, did not need a big fiscal stimulus in the form of sweeping tax cuts.

The dollar rose on Friday after the Senate approved a budget proposal for the 2018 fiscal year that cleared a critical hurdle for a tax-cut package.

But the need for such a large stimulus to boost the U.S. economy at this late stage of its cycle, when the jobless rate is at more than a 16-year low, remains questionable.

“The U.S. needs to return to a sustainable fiscal path, and I have little faith that sweeping tax cuts will generate enough growth to put us on that path,” said Bank of the West economist Scott Anderson.

While recent U.S. economic data has improved, the closely watched core PCE inflation measure has been below its medium-term target of 2 percent for more than five years, despite strong employment growth.

The latest poll, taken Oct. 16-23, showed scant expectations of economic growth lifting off from its current trend or of inflation reaching the Fed’s target before 2019.

That has divided Fed policymakers and raised doubts about the pace of further rate hikes, according to minutes from the Sept. 19-20 meeting.

Still, economists predicted the Fed would raise rates 25 basis points to 1.25-1.50 percent in December. All 100 economists polled expect it to keep policy on hold at its next meeting.

The central bank is projecting three more rate increases in 2018, while economists expect only two next year, which would take the fed funds rate to 1.75-2.00 percent.

But about two-thirds of 52 economists who answered an extra question said risks to those forecasts were skewed more toward a slower pace of rate hikes. Fifteen of those respondents suspected there could be fewer than two increases next year.

The remaining 17 economists said there was a greater chance of faster rate hikes.

Economic growth probably took a hit from the devastation caused by Hurricanes Harvey and Irma.

The consensus in the latest Reuters poll was for an annualized expansion of 2.4 percent in the third quarter, down from 2.6 percent in last month’s survey. Growth expectations for this quarter remained at 2.5 percent.

The median full-year forecast was 2.2 percent for 2017 and 2.3 percent for next year.

Predictions for core PCE inflation have not changed much from last month, with the consensus now in a 1.4-1.9 percent range through the end of next year even though the jobless rate has fallen well below 5 percent.

 

Orange Is the New White? Unique Amber Wine Creates Buzz

The sloping vineyards of New York’s Finger Lakes region known for producing golden-hued rieslings and chardonnays also are offering a splash of orange wine.

 

The color comes not from citrus fruit, but by fermenting white wine grapes with their skins on before pressing – a practice that mirrors the way red wines are made. Lighter than reds and earthier than whites, orange wines have created a buzz in trendier quarters. And winemakers reviving the ancient practice like how the “skin-fermented” wines introduce more complex flavors to the bottle.  

 

“Pretty outgoing characteristics. Very spicy, peppery.  A lot of tea flavors, too, come through,” winemaker Vinny Aliperti said, taking a break from harvest duties at Atwater Estate Vineyards on Seneca Lake. “They’re more thoughtful wines. They’re more meditative.”

 

Atwater is among a few wineries encircling these glacier-carved lakes that have added orange to their mix of whites and reds. The practice dates back thousands of years, when winemakers in the Caucasus, a region located at the border of Europe and Asia, would ferment wine in buried clay jars. It has been revitalized in recent decades by vintners in Italy, California and elsewhere looking to connect wine to its roots or to conjure new tastes from the grapes. Or both. Clay jars are optional.

 

Aliperti has been experimenting with skin fermenting for years, first by blending a bit into traditional chardonnays to change up the flavor and more recently with full-on orange wines. This fall, he fermented Vignoles grapes with their skins in a stainless steel vat for a couple of weeks before pressing and then aging them in oak barrels.

Orange wines account for “far less than 1 percent” of what is handled by Southern Glazer’s Wine & Spirits, the nation’s largest distributor with about a quarter of the market, according to Eric Hemer, senior vice president and corporate director of wine education.

 

Hemer expects orange wines to remain a niche variety due to small-scale production, higher retail prices _ up to $200 for a premium bottle – and the nature of the wine.

 

“It’s not a wine that’s going to appeal to the novice consumer or the mainstream wine drinker,” Hemer said. “It really takes a little bit more of, I think, a sophisticated palate.”

 

The wines have caught on in recent years among connoisseurs who like the depth of flavors, sommeliers who can regale customers with tales of ancient techniques and drinkers looking for something different. Christopher Nicolson, managing winemaker at Red Hook Winery in Brooklyn, said the wines hit their “crest of hipness” a couple of years ago, though they remain popular.

 

“I think they’re viewed by these younger drinkers as, ‘Oh, this is something new and fresh. And they’re breaking the rules of these Van Dyke-wearing, monocled … fusty old wine appreciators,’” Nicolson said.

 

It’s not for everyone. The rich flavors can come at the expense of the light, fruity feel that some white wine drinkers crave. And first-time drinkers can be thrown by seeing an orange chardonnay in their glasses.

 

“Actually I wasn’t sure because of the color, but it has a really nice flavor,” said Debbie Morris, of Chandler, Arizona, who tried a sip recently at Atwater’s tasting room. “I’m not a chardonnay person normally, but I would drink this.”

2 Wealthy Italian Regions Vote for More Autonomy From Rome

Amid the turmoil in Spain’s separatist-minded Catalonia region, two wealthy Italian regions voted overwhelmingly Sunday for more autonomy from Rome.

Referenda were held in Veneto – the northern region that includes the tourist haven of Venice – and in Lombardy, another northern region with the city of Milan as its main attraction.

The presidents of both regions say more than 90 percent of those who cast ballots voted in favor of more autonomy.

Both referenda are non-binding. But the presidents say the voices of their people give them a strong mandate and more leverage when they open talks with Prime Minister Paolo Gentiloni.

Leaders of both regions want to keep more tax revue and have a greater say over such matters as education, immigration, security, and the environment.

Malta: Newspapers, Citizens Take Up Slain Reporter’s Message

Several thousand Maltese citizens rallied Sunday to honor an investigative journalist killed by a car bomb, but the prime minister and opposition leader who were chief targets of Daphne Caruana Galizia’s reporting stayed away from the gathering.

 

Participants at the rally in Malta’s capital, Valletta, placed flowers at the foot of a memorial to the 53-year-old reporter that sprang up opposite the law court building after her October 16 slaying.  

 

Some wore T-shirts or carried placards emblazoned with words from Caruana Galizia’s final blog post: “There are crooks everywhere you look now. The situation is desperate” in the European Union nation of some 400,000 people.

 

Police removed a banner describing Malta as a “Mafia state.”

Hundreds of participants later held a sit-in outside police headquarters, demanding the resignation of Malta’s police commissioner. Some hurled tomatoes, cakes and coins against an enlarged photograph of the commissioner spread out on the street.

 

The homicide of a journalist who devoted her career to exposing wrong-doing in Malta and raised her three sons there united many of the nation’s oft-squabbling politicians, at least for a day.

 

Caruana Galizia had repeatedly criticized police and judicial officials.

 

Malta’s two dominant political forces, the ruling Labor and opposition Nationalist parties, participated in the rally which was organized to press demands for justice in her slaying.

 

Official no-shows

But Prime Minister Joseph Muscat told his Labor party’s radio station a few hours before the event’s start time that he wouldn’t attend because he knew the anti-corruption reporter’s family didn’t want him to be there.

“I know where I should be and where I should not be. I am not a hypocrite and I recognize the signs,” Muscat said, adding that he supported the rally’s goals of call for justice and national unity.

 

Nationalist leader Adrian Delia also skipped the rally, saying he didn’t want to “stir controversy.”

 

“Today is not about me, but about the rule of law and democracy,” Delia told reporters.

 

Muscat and Delia, while fierce political rivals, have another thing in common:  Both brought libel lawsuits against Caruana Galizia. Delia withdrew his pending libel cases last week after her killing.

 

Caruana Galizia’s family has refused to endorse the government’s offer of a 1 million euro ($1.18 million) reward and full protection to anyone with information that leads to the arrest and prosecution of her killer or killers.

Instead, the family, which includes a son who is an investigative journalist himself, has demanded that Muscat resign. In their quest for a serious and efficient investigation, Caruana Galizia’s husband and children also want Malta’s top police office and attorney general replaced.

“The killers decided to silence her, but they won’t silence her spirit, they won’t silence us,” Christophe Deloire, a French journalist from the journalism advocacy organization Reporters Without Borders, said.  “From us they will not have more than one minute of silence.”

On Sunday morning, all seven national newspapers had their front pages black in Caruana Galizia’s memory. Printed in bold letters against the black backgrounds were the words: “The pen conquers fear.”

‘Crooks everywhere’

Just before her death, Caruana Galizia had posted on her closely followed blog, Running Commentary, that there were ‘crooks everywhere’ in Malta. The island nation has a reputation as a tax haven in the European Union and has attracted companies and money from outside Europe.

The journalist focused her reporting for years on investigating political corruption and scandals, and reported on Maltese mobsters and the island’s drug trafficking. She also wrote about Maltese links to the so-called Panama Papers leaks about offshore financial havens.  

 

After the rally ended, several hundred participants walked to police headquarters, and sat in the street outside shouting “Shame on you!” and “Resign!”

 

Malta President Marie-Louise Coleiro Preca received a delegation from the Civil Society Network, a non-partisan organization of university professors, businessmen, opinion writers and authors in Malta.

 

The car bombing was “an attack on all of us, every single one of us,” Coleiro Preca told them. “We need to see how we are going to work together. We need to unite to have the reform that is needed.”

Slovenian President Wins First Round, Runoff in 3 Weeks

Slovenia’s incumbent president Borut Pahor won the most votes in Sunday’s election, but not enough to avoid a runoff.

With nearly all the ballots counted, Pahor is expected to finish with 47 percent, while his main challenger, former comedian Marjan Sarec, will win about 25 percent.

Pahor said he expects to win the November 12 runoff as he thanked voters for backing him in Sunday’s first round.

Slovenia is a former Yugoslav republic which has frequently been in the news in the past year as the birthplace of U.S. first lady Melania Trump.

The Slovenian presidency is a largely ceremonial office. But the president nominates the prime minister, and presidential opinions greatly influence government policies.

 

South African Bakery Slices Prices and Sees Sales Skyrocket

A bakery in a low-income area of Johannesburg slashed prices of its popular bread, with unexpected results. What started as a way to help feed the community became a recipe for success as the bakery has a lot more business than ever. VOA’s Arash Arabasadi reports.

((NARRATOR))

Spain Makes Moves to Shut Down Catalan Independence

Spanish Prime Minister Mariano Rajoy announced Saturday he would dismiss Catalonia’s separatist government and call for new elections in an attempt to prevent the semi-autonomous region from declaring its independence.

Rajoy made the announcement after an emergency Cabinet meeting to deal with the political crisis caused by secession efforts undertaken by the regional leadership of Catalonia.

Rajoy’s office invoked Article 155 of Spain’s constitution, which gives the government the power to take away some or all of Catalonia’s autonomy. Opposition political parties have agreed to support the imposition of central rule over Catalonia. Rajoy is nearly certain to get the required votes next week from Spain’s upper legislative body, which is ruled by Rajoy’s conservative party.

Carles Puidgemont, Catalonia’s leader, said the prime minister’s move was “the worst attack on institutions and Catalan people” since the era Francisco Franco, and called for a meeting of the Catalan parliament. Franco was Spain’s military dictator from 1939 to his death in 1975.

“Mariano Rajoy has announced a de facto coup d’etat with he goal of ousting a democratically elected government,” said Catalan parliament speaker Carme Forcadell. She said Rajoy’s new move is “an authoritarian blow within a member of the European Union.”

Rajoy said Saturday Puidgemont’s threat to secede “has been unilateral, contrary to the law, and seeking confrontation.”

Barcelona police say 450,000 demonstrators took to the streets in the regional capital Saturday with many waving Catalonia’s red and yellow separatist flag. Some protesters shouted “freedom” and “independence.”

“We are here because the Spanish government made a coup without weapons against the Catalan people and their government institutions,” said Joan Portet, a 58-year-old protester.

Voters in Catalonia voted in favor of independence in the October 1 referendum, but fewer than half of those eligible to cast a ballot took part, with opponents boycotting the process. Rajoy’s government dismissed the referendum as illegal.

Russian Opposition Leader Navalny Leaves Jail, Goes to Rally

Alexei Navalny, Russia’s most prominent opposition figure, has been released from jail after a 20-day sentence for calling an unauthorized demonstration.

 

Navalny was arrested on Sept. 29 as he planned to travel to the city of Nizhny Novgorod for a rally that had been given official permission. But a court sentenced him for calling another rally, an unauthorized protest in St. Petersburg, President Vladimir Putin’s hometown.

 

Navalny, who plans to run for president against Putin in next March’s election, has repeatedly served jail terms connected to rallies. After his release Sunday, Navalny said on social media that he hopes to attend an evening demonstration in the southern city of Astrakhan.

 

The anti-corruption campaigner this year twice called for demonstrations nationwide whose size and extent rattled the Kremlin.

 

 

‘King of Instagram’ Likely to be Re-elected Slovenia’s President

Slovenians are voting in a presidential election Sunday that is expected to be an easy re-election for President Borut Pahor, a veteran politician and former model known for his use of social media.

 

Some 1.7 million voters were choosing among nine presidential candidates, including five women, for the largely ceremonial but influential post. This nation in Central Europe is a member of the European Union and the homeland of U.S. first lady Melania Trump.

 

Slovenia’s presidency holds no executive powers, but the president proposes the prime minister, who runs the government, and the president’s opinion carries weight on important issues.

 

Pre-election surveys say the 53-year-old Pahor could possibly win a majority of votes and avoid a runoff. His main opponent is Marjan Sarec, a former comedian who is the mayor of the northern town of Kamnik. 

 

Pahor has been nicknamed Slovenia’s “King of Instagram” for his frequent presence on social media. He walked about 700 kilometers (420 miles) during the presidential campaign, posting photos and short videos all along the way. 

 

Critics think Pahor has degraded the presidency by turning himself into a celebrity.

 

Sarec starred in Slovenian satirical shows until he mounted an independent bid for mayor in 2010 and won against an established candidate. The 39-year-old is serving his second term as mayor.

 

Other presidential candidates include Romana Tomc, a tax expert backed by the conservatives; Ljudmila Novak, a former teacher who leads the New Slovenia Christian-Democrats; and Angelca Likovic, who is promoting Catholic Christian values.

 

Key topics facing Slovenia include the economy and a border dispute with neighboring Croatia stemming from the 1990s’ breakup of the former Yugoslavia.