State-run Kenya Electricity Generating Company (KenGen) plans to add 1,745 megawatts (MW) of electricity from geothermal sources by 2025, part of a government push to end power generation from fossil fuels.

“You are aware that going forward, the government policy which all generators including KenGen and including independent power producers, is to eliminate generation from fossil fuels,” Moses Wekesa, Business Development Director, said during a visit to KenGen’s geothermal plants last week.

Kenya has an installed generating capacity of 2,370 MW and peak demand of about 1,770 MW. Of this, KenGen, which is 70 percent owned by the government, has an installed capacity of 1,631 MW, with 533 MW from geothermal.

Demand for electricity is growing at about 8 percent per year until 2020, and will rise to 9 percent in 2021, after which it will stabilize at 7 percent, according to the government’s transmission and generation plan.

“First as a rule of thumb, your supply must always be ahead of demand. The reason being, that it takes a while to put up a power plant,” Wekesa said.

The East African nation is ramping up electricity production and investing in its grid to keep up with growing demand for power and to reduce frequent blackouts. It relies heavily on renewables such as geothermal and hydro power.

Kenya is ranked at No.37 worldwide by Ernst and Young’s latest Renewable energy country attractiveness index, issued in October.

The Geothermal Resources Council ranks Kenya at no. 8 worldwide in terms of installed capacity from geothermal.
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Four automakers in Japan, including Mitsubishi and Isuzu, have road-tested a form of driverless technology. The big rigs are all equipped with a type of adaptive cruise-control system as a step toward removing the one feature you’d expect to see in the cab: a driver. Arash Arabasadi reports.
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The Commerce Department is urging President Donald Trump to impose tariffs or quotas on aluminum and steel imports from China and other countries.

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

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

Raise US capacity

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

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

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

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

Three options

Ross is offering the president three options:

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

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

To impose a quota on steel and aluminum imports from all sources, limiting each country 63 percent of the steel and 86.7 percent of the aluminum they shipped to the U.S. last year.
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The uncovering of one of the biggest frauds at a state-owned bank in India has rocked the country’s financial sector and brought scrutiny to a billionaire jeweler who counted Hollywood stars among his customers.

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

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

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

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

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

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

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

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

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

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

Economists have warned that this mountain of bad loans threatens India’s efforts to accelerate its economy as it slows down efforts by banks to lend to potential investors.
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Iraq’s prime minister was in Kuwait this week, selling his country as a promising investment opportunity. After years of war and sectarian violence, Iraq is moving toward stability and wants to attract the private sector to help fund its $88 billion reconstruction and recovery effort. From the Kuwaiti capital, VOA’s Margaret Besheer reports investors are interested.
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Top U.S. and Mexican officials on Thursday expressed cautious optimism that the North American Free Trade Agreement will be renegotiated, speaking ahead of the next round of trade talks later this month.

Asked on local television whether it was more likely the $1.2 trillion trilateral trade pact would survive or die, Mexico’s Foreign Minister Luis Videgaray said there was cause for optimism, though Mexico should be prepared for all eventualities.

“We should be prepared for a future with or without NAFTA,” he said.

In Washington, U.S. Treasury Secretary Steven Mnuchin said it was a priority for the Trump administration to renegotiate NAFTA, declining to speculate on the consequences if the United States withdraws from talks.

The seventh round of negotiations in Mexico City will take place Feb. 25 to March 5, starting and ending a day earlier than initially planned.

There is a “window of opportunity” for concluding the talks in March or April, said Moises Kalach, head of the international negotiating arm of Mexico’s CCE business lobby.

“That’s the objective,” Kalach told reporters.

Talks to renegotiate the 1994 pact have stalled as Canada and Mexico are at loggerheads with the United States over some of the most contentious proposals its negotiators have put on the table.

“I am cautiously hopeful that [U.S. Trade Representative] Ambassador Lighthizer will be renegotiating this deal,” Mnuchin told the House Ways and Means Committee, which has jurisdiction over trade matters in the U.S. Congress.

“It is a major priority of ours,” he added U.S. President Donald Trump has called NAFTA one of the worst deals in history, blaming it for U.S. manufacturing job losses, and has threatened to quit the agreement unless he can rework it to better suit U.S. interests. His remarks have unsettled financial markets.

At the last round in Montreal, Canada made several proposals to address the U.S. insistence on raising the North American content of autos. Washington also wants a clause that would allow any member to withdraw after five years.

The early March deadline for concluding talks has been extended to at least early April, officials have said. But participants have conceded privately it could take months longer.

If talks run past Mexico’s July presidential election, Mexico’s private sector will work with the president-elect to update NAFTA, Kalach said.

The current frontrunner, leftist contender Andres Manuel Lopez Obrador, has said Mexico should suspend talks until after the election.
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Shares in European plane maker Airbus flew higher on Thursday after the company reported improved earnings and was more upbeat about the future following problems to several of its key aircraft programs.

The company said that it surged to a net profit of 1 billion euros ($1.25 billion) in the fourth quarter, from a loss of 816 million euros a year earlier, while revenue was stable around 23.8 billion euros. Airbus delivered a record 718 aircraft last year and expects that figure to rise further in 2018, to 800.

CEO Tom Enders credited “very good operational performance, especially in the last quarter.”

Shares in the company jumped about 10 percent on Thursday in Paris. Investors seem optimistic that the company is putting behind it the worst of its troubles with three airplane production programs.

Airbus, which is based in Toulouse, France, said it took another charge of 1.3 billion euros on its A400 military plane, which has had cost overruns for years. It said, however, that it had reached a deal with the governments that are buying the planes on a new delivery schedule that should rein in any new charges on the program.

The company also acknowledged that it had had more struggles with engines supplied by Pratt & Whitney for the A320neo, a narrow-body plane that’s popular with regional airlines. The supplier had had problems with the engines last year, which it fixed, but reported a new issue more recently that could affect 2018 deliveries, Airbus said.

Another of Airbus’ troubled plane models, the A380 superjumbo jet, now has a more stable outlook after the company reached a deal with Emirates airline that will cover the cost of production for years.

The various problems with these production programs risked overshadowing what was otherwise a strong year for Airbus in terms of earnings, as global demand for commercial aircraft grows. Airbus raised its dividend by 11 percent and said it expects one of its key earnings metrics — earnings before interest and tax — to rise 20 percent in 2018.

 
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Until recently, Javier, a 60-year-old line cook, couldn’t afford a smartphone.

Now, thanks to a Silicon Valley company, Javier has a Galaxy S8, one of Samsung’s high-end smartphones. Javier said he relies on it for everything.

Once a month, he walks into a mobile phone store near San Francisco and makes a cash payment. If he didn’t, the phone would be remotely locked. No YouTube, no Skype calls, no Facebook. He has never missed a payment.

WATCH: Pay-As-You-Go Smartphone Gives the Poor Access to Better Technology

Smartphones out of many people’s reach

Around the world, people rely more and more on their smartphones for connecting to the internet, and yet for many, the device is still cost prohibitive. For the roughly 1 in 10 American consumers without financial identities — no banking history or credit scores — it is difficult to get smartphones on one of the low-cost payment plans offered by the major carriers.

Javier, who declined to give his last name because he is an undocumented immigrant, is on his third phone from PayJoy, a company founded by former Google employees. PayJoy offers a pay-as-you-go model for the smartphone market aimed particularly at customers with little or bad credit histories.

“We work with immigrants from all over the world coming to the U.S., and we work with Americans who are just outside the financial system,” said Doug Ricket, PayJoy’s chief executive, who worked in the pay-as-you-go solar industry in Africa. “They can afford $10 a week, and they can get a great smartphone. And for PayJoy, we say, ‘Welcome to the 21st century and get all the modern apps.’”

A new way to figure out a person’s credit risk

PayJoy figures out a person’s risk differently than most companies. A customer provides a Facebook profile, a phone number and some sort of official government ID. PayJoy decides the person’s risk level before offering him or her credit for a phone. Then, a customer picks a payment plan and makes a down payment. PayJoy’s research has found that a Facebook profile can be useful in establishing a person’s identity.

“We’re starting from this pool of people who have no traditional credit score and we’re saying for most of them, we can actually find something that the credit agencies are not finding,” Ricket said.

No payment means no YouTube

If a customer doesn’t pay by 5 p.m. the day payment is due, PayJoy remotely locks the phone. A customer can only make emergency calls or call PayJoy’s customer service. The customer can see that friends are texting or messaging on Facebook, but cannot open the phone to read the messages.

“Now, when we look internationally, we see more people going from a flip phone to smartphones, and people upgrading from a really basic level to one that can handle Facebook, maps and Instagram,” Ricket said.

If customers stop paying, they can return the phone without penalty. But if they do pay off the phone, they can qualify for an even better one. PayJoy makes its money by charging monthly interest — as high as 50 percent in some cases — on the retail price of the phone.

Expanding into Africa, Asia and India

The company is operating in the United States and Mexico and has plans to expand into Kenya, Tanzania, southeast Asia and India. So far, PayJoy offers only smartphones running Android, the operating system created by Google, but Ricket hopes to offer iPhones one day.

PayJoy’s vision is to be not just a smartphone firm, but a financing company, offering customers a way to use their phones as collateral to pay off televisions and other household goods.

“Once the customer gets the smartphone, they can potentially use that smartphone either by buying the smartphone with PayJoy or just collateralize an existing smartphone to finance a TV or a sofa,” Ricket said.

If PayJoy takes off, people in emerging markets may be able to upgrade their phone choices, and have a new way to finance their purchases.
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A key to any successful business is to provide customers with what they want. For automakers at the 2018 Chicago Auto Show, they say their customers want sport utility vehicles, or SUVs.

“2017 was a record year for Ford SUV sales,” said Dan Jones, Ford’s SUV communications manager for North America. “We sold almost 800,000 SUVs in the year alone. We are actually growing our SUV portfolio 25 percent in the last four years. So, all the signs are there that the Ford SUV portfolio is really booming, and we’re going to capitalize and ride that wave.”

Ford isn’t alone.

“Trucks, SUVs and crossovers — we have grown 15 percent,” said Tiago Castro, Nissan’s director of trucks and commercial vehicles.

His company’s Rogue SUV promotional tie-in with Disney’s Star Wars film franchise comes at a time when the model, with versions equipped with some self-driving features, is one of Nissan’s best-selling vehicles overall.

“Over 400,000 units last year for the Rogue lineup,” Castro said.

High gas prices and poor fuel economy contributed to the dramatic decline of SUV sales in the United States in the mid-2000s. At the time, those customers buying new vehicles opted for smaller, more fuel-efficient sedans, including vehicles with new electric motors and technology.

But today, SUVs dominate the American automobile market, which is easy to see on the floor of the 2018 Chicago Auto Show, billed as the nation’s largest auto show.

“The SUV segment is incredibly hot,” said Trevor Dorchies, product manager for Jeep and Dodge, two brands under the Chrysler/Fiat company with a variety of options in the medium and large-size SUV ranges — which weren’t just on display at the Chicago Auto Show. Potential customers have an opportunity to ride in them on an indoor obstacle course that demonstrates their performance in challenging terrain.

“I think gas prices, where they are at right now, have helped Jeep and Grand Cherokee and Durango sales,” Dorchies said. Gas prices in many parts of the United States remain below $3 a gallon (79 U.S. cents per liter). 

“Cheap gasoline means folks want to get a bigger SUV,” he said.

But aside from affordable fuel prices, today’s offerings are a far cry from the gas-guzzling SUVs of the past.

“One thing that has really changed in the last few years is the competitiveness of fuel economy of SUVs compared to cars,” explained Ford’s Jones. “So, people aren’t seeing a huge warp now, in terms of MPG improvement or a range improvement in a car to an SUV. It’s less of a compromise. So, people are liking the high seating position, more space, the utility to go off road.”

Overall, sedan sales are down in the U.S. by more than 30 percent for some manufacturers as customers flock to SUVs.

But Jones said evolving needs and taste factor as much for customers as gas prices.

“The millennials, the biggest cohort of consumers, were coming to the age where they were having children, starting to have a little more money, wanting to have a higher seating position, preferring all-wheel drive. So, SUVs have really just taken off.”

Jones said he doesn’t see the SUV trend cooling off for Ford either.

“We think 2018 should be another record year for us,” he said.

While automakers retool and shift production lines to keep up with increased SUV demand, the National Automobile Dealers Association predicts overall new vehicle sales for 2018 will trend slightly downward.
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High gas prices and poor fuel economy led to the decline of sport utility vehicle sales in the United States in the mid-2000s, a time when customers preferred smaller, more affordable cars, some with new electric motor technology. But now, SUV’s have made a comeback, as VOA’s Kane Farabaugh reports on the floor of the Nation’s Largest Auto Show in Chicago.
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Is that love in the air or french fries? White Castle, KFC and other fast-food restaurants are trying to lure sweethearts for Valentine’s Day.

It’s an attempt to capture a bit of the $3.7 billion that the National Retail Federation expects Americans to spend on a night out for the holiday. Restaurant analyst John Gordon at Pacific Management Consulting Group says it appeals to people who don’t want to splurge on a pricier restaurant. And some customers enjoy it ironically.

White Castle, which has been offering Valentine’s Day reservations for nearly 30 years, expects to surpass the 28,000 people it served last year. Diners at the chain known for its sliders get tableside service and can sip on its limited chocolate and strawberry smoothie. KFC is handing out scratch-and-sniff Valentine’s Day cards that give off a fried chicken aroma to diners who buy its $10 Chicken Share meals or a bucket full of Popcorn Nuggets.

Panera Bread wants couples to get engaged at its cafes; those who do can win food for their weddings from the soup and bread chain. And Wingstop sold out of its $25 Valentine’s Day kit, which came with a gift card and a heart-shaped box to fill with chicken wings. The company says 1,000 of the kits were gone in 72 hours.
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The U.S. on Wednesday reported its biggest increase in consumer prices in a year, pushing stocks lower in early trading.

The consumer price index, which follows the costs of household goods and services, advanced by a half percentage point in January, up from two-tenths of a point in December.

The January increase pushed the year-over-year inflation rate up by 2.1 percent. It was the same 12-month rate recorded in December, increasing fears among investors that firming inflation, along with increasing wages paid to American workers, could lead policymakers at the country’s central bank, the Federal Reserve, to boost interest rates at a faster pace.

The Labor Department said consumer prices, minus the volatile changes in food and energy costs, rose three-tenths of a percentage point in January, the largest increase since January 2017. Analysts had been expecting an increase of 0.2 percent.

Stock indexes were lower at the start of Wednesday, with the key Dow Jones industrial average falling about a third of a percentage point after a string of recent days with massive swings between losses and gains.
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Electric powered bicycles, known as “e-bikes,” are a common sight among New York’s immigrant delivery workers, who consider the bikes a necessity to make a living wage. The problem is, they’re illegal to operate in the city, creating a dilemma for these immigrants who feel they have no alternative employment options. VOA’s Ramon Taylor and Ye Yuan report.
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Even though the U.S. Postal Service delivers about 46 percent of the world’s total mail, competition is getting tougher every day. The post office is turning to technology to stay current. VOA’s Elizabeth Lee shows how the USPS is using virtual and augmented realities, along with email, to attract business.
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When the Federal Reserve’s policy meeting ended last month, U.S. stock indexes were near record highs, market volatility was almost non-existent and policymakers chatted about the calm waters welcoming incoming central bank chief Jerome Powell.

Now, Janet Yellen’s successor may instead be facing an early test of his leadership as the Fed weighs the significance of a recent market downturn and jump in long-term bond yields as well as the risk the Trump administration’s tax and spending policies may light the fuse of unexpectedly fast inflation.

Powell’s views will become clearer when he testifies separately before lawmakers in the U.S. House of Representatives and Senate during the week of Feb. 28, and holds his first press conference as Fed chief after the March 20-21 policy meeting.

Investors widely expect the central bank to raise interest rates at its March meeting.

New U.S. inflation data on Wednesday may also indicate whether the pace of price increases is accelerating, which will be good news for a central bank that has struggled to hit its 2 percent annual inflation target — unless it comes too fast.

Meanwhile, the market turbulence this month “will worry them and induce considerable hand-wringing,” UBS economist Seth Carpenter said in an essay that asked whether Powell would delay a March rate hike to steady financial markets.

Not likely, said Carpenter, but he added that the selloff put the Fed in the quandary of determining whether the sudden market wobbliness is more important to policy than the recently passed tax cuts or an expected rise in U.S. government deficits.

Last week, the U.S. Congress passed and President Donald Trump signed into law a temporary spending deal expected to push budget deficits past $1 trillion annually with new military and domestic outlays.

On Monday, Trump proposed a budget that called for spending $57 billion less in fiscal year 2019 than mandated in last week’s deal.

‘Upside risks’

Powell’s colleagues at the Fed so far have said the central bank should stay the course, gradually raising rates along the path Yellen set and neither reacting to the recent market turbulence or jumping to conclusions about the impact the tax cuts and higher deficits could have on inflation.

But they’ve also made clear they are looking closely at all of the above, which will make Powell’s first months as Fed chief more complex than they seemed a couple of weeks ago.

“There are more salient upside risks to the forecast than we have seen in quite a while,” Cleveland Fed President Loretta Mester told reporters on Tuesday after a speech in Dayton, Ohio, flagging the possibility the extra spending generated by tax cuts and a rise in budget deficits could throw off the Fed’s outlook for growth, inflation and other aspects of the economy.

“It is going to be important to evaluate how firms and households are responding.”

“Who knows?” Mester said. “The financial markets may be a risk on the downside if we do see a pullback in confidence. We have not seen it so far. I am not anticipating it.”

As stock markets were plummeting last week, San Francisco Fed President John Williams said he felt investors in a sense were playing catch-up — finally accepting the fact that central banks would continue raising rates, and repricing stock and bond investments accordingly.

“I think some of the market reaction is the fact that the economy is doing well,” Williams said, calling the rise in long-term bond yields “maybe delayed recognition” that global economic growth will continue and central banks will raise rates as a result.

 
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Turkish President Recep Tayyip Erdogan is taking a hard line against nations and foreign energy companies exploring for gas in the eastern Mediterranean, warning them not to “step out of line” and encroach on his country’s territorial rights.

“Let them not think that the search for natural gas in Cypriot waters and opportunistic initiatives relating to islets in the Aegean have slipped our attention,” Erdogan said Tuesday as he addressed his ruling AK Party parliamentarians. Both Greece and Turkey claim the islets, known as Imia and Greek and Kardak in Turkish. The two countries nearly went to war in 1996 over ownership of the islets.

Erdogan made his remarks as Turkish warships continued to block an Italian ship from proceeding to search for energy in contested Cypriot waters.

“We warned Italy to not send oil company ENI to Cyprus for offshore drilling,” Turkish Foreign Minister Mevlut Cavusoglu said, adding that Ankara would defend what he said were Turkish Cypriot rights. Turkey claims as its own a part of the area designated by Cyprus for exploration. The government in Nicosia says Cyprus has a sovereign right to drill.

“The Turkish side made clear, what is unilaterally done [by Greek Cypriots] is totally unacceptable. The [exploration] blocks declared by the Greek Cypriot side overlap the blocks by Turkish Cypriot side,” said former Turkish Ambassador Mithat Rende, who had responsibility for energy issues in his country’s Foreign Ministry.

The latest dispute also has embroiled Egypt, with Cairo criticizing Ankara’s actions. Egypt and the Greek Cypriots have a partnership to search for energy together. The Egyptian Foreign Ministry’s official spokesperson, Ahmed Abu Zeid, said in a statement that no party can dispute the legality of the agreement on the demarcation of the maritime borders between Egypt and Cyprus.

In a related development, Greece says a Turkish coast guard vessel collided with a Greek coast guard boat off the disputed islets late Monday. No injuries were reported. The Greek vessel, however, was damaged. The Reuters news agency says Greece protested to Turkey over the incident and that the Turkish prime minister, Binali Yildirim, told his Greek counterpart, Alexis Tsipras, that Athens must  take steps to decrease tension in the Aegean.

Earlier this month, the U.S. ambassador to Greece, Geoffrey Pyatt, warned of the danger of an “accident” between Greece and Turkey in the Aegean. The warning came as Athens claimed there had been a major surge in Turkish fighter jets infringing on its airspace over the waters.  

“What we are seeing is an aggressive [Turkish] nationalist rhetoric, backed by action, exactly like Russia. Its quite likely to result in a confrontation,” warned political scientist Cengiz Aktar. “Turkey’s foreign policy is a return to the 19th century, based on the affirmation of the power. It’s a muscle-flexing policy. This aggressive foreign policy feeds the nationalist feelings in the country. It’s very functional for the regime in the upcoming elections.”

Turkey is due to hold local, general and presidential elections by 2019.

The potent combination of electoral politics shaping foreign policy makes Ankara unpredictable, analysts say, in a region bereft of unresolved disputes. “This all has a history; it’s very much embedded in concepts on national causes, both on the Greek side and the Turkish side,” said political columnist Semih Idiz of Al Monitor website. “So Erdogan has to appear determined. This is one issue he has to be seen protecting Turkey’s rights in the Aegean and Cyprus; in effect he is playing to the nationalist gallery.”

“Anything can happen at any time – a [Turkish] adventure in the Aegean [Sea] would mean occupation of a small island. For Cyprus, it would mean the annexation of the northern part of the island,” said political scientist Aktar. Northern Cyprus is administered by a Turkish Cypriot government and recognized internationally only by Ankara. The rest of the island is ruled by a Greek Cypriot administration. Cyprus was partitioned after a 1974 Turkish invasion of the island following a Greek-inspired coup.

The past couple of decades have seen diplomatic flareups among Ankara, Athens and Nicosia. The trouble occasionally has involved Ankara using strong rhetoric. Analysts point out that such disputes were contained by Turkey’s bid to join the European Union, given that Ankara was aware any spilling over of diplomatic tensions into violence or even the very threat, likely would end its membership aspirations.

Given that Turkey’s EU bid is widely considered dead for the foreseeable future, the region could be entering a new era, according to Aktar. “There are no more checks and balances that a future [Turkish] membership of the European Union is providing – owing to the difficult bilateral relations between the two countries [Greece and Turkey] and this is new, and that opens the door to a very dangerous future,” Aktar underscored.
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General Motors said Tuesday it will close an underutilized factory in Gunsan, South Korea, by the end of May as part of a restructuring of its operations.

The move is a setback for the administration of President Moon Jae-in, who has made jobs and wages a priority.

A GM statement said Monday the company has proposed to its labor union and other stakeholders a plan involving further investments in South Korea that would help save jobs.

“As we are at a critical juncture of needing to make product allocation decisions, the ongoing discussions must demonstrate significant progress by the end of February, when GM will make important decisions on next steps,” Barry Engle, GM executive vice president and president of GM International, said in the statement.

The company’s CEO Mary Barra has said GM urgently needs better cost performance from its operations in South Korea, where auto sales have slowed.

South Korea’s government expressed “deep regret” over the factory’s closure. It said it plans to study the situation at the business and will continue talks with GM.

Korea’s finance ministry said earlier this month that GM had sought government help. The government has denied reports that South Korea will raise the issue in trade talks with the U.S.

The factory in Gunsan, a port city about 200 kilometers (125 miles) southwest of Seoul, has been making the Cruze, a sedan, and the Orlando model SUV. It employs about 2,000 workers, and only used about 20 percent of its full production capacity in 2017, rolling out 33,982 vehicles.

GM Korea has made 10 million vehicles since it was set up in 2002. In 2017, it sold 132,377 units in Korea and exported 392,170 vehicles to 120 markets around the world.
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Companies selling some of the most lucrative prescription painkillers funneled millions of dollars to advocacy groups that in turn promoted the medications’ use, according to a report released Monday by a U.S. senator.

The investigation by Missouri’s Senator Claire McCaskill sheds light on the opioid industry’s ability to shape public opinion and raises questions about its role in an overdose epidemic that has claimed hundreds of thousands of American lives. Representatives of some of the drugmakers named in the report said they did not set conditions on how the money was to be spent or force the groups to advocate for their painkillers.

The report from McCaskill, ranking Democrat on the Senate’s homeland security committee, examines advocacy funding by the makers of the top five opioid painkillers by worldwide sales in 2015. Financial information the companies provided to Senate staff shows they spent more than $10 million between 2012 and 2017 to support 14 advocacy groups and affiliated doctors.

The report did not include some of the largest and most politically active manufacturers of the drugs.

The findings follow a similar investigation launched in 2012 by a bipartisan pair of senators. That effort eventually was shelved and no findings were ever released.

While the new report provides only a snapshot of company activities, experts said it gives insight into how industry-funded groups fueled demand for drugs such as OxyContin and Vicodin, addictive medications that generated billions in sales despite research showing they are largely ineffective for chronic pain.

‘Pretty damning’

“It looks pretty damning when these groups were pushing the message about how wonderful opioids are and they were being heavily funded, in the millions of dollars, by the manufacturers of those drugs,” said Lewis Nelson, a Rutgers University doctor and opioid expert.

The findings could bolster hundreds of lawsuits that are aimed at holding opioid drugmakers responsible for helping fuel an epidemic blamed for the deaths of more than 340,000 Americans since 2000.

McCaskill’s staff asked drugmakers to turn over records of payments they made to groups and affiliated physicians, part of a broader investigation by the senator into the opioid crisis. The request was sent last year to five companies: Purdue Pharma; Insys Therapeutics; Janssen Pharmaceuticals, owned by Johnson & Johnson; Mylan; and Depomed.

Fourteen nonprofit groups, mostly representing pain patients and specialists, received nearly $9 million from the drugmakers, according to investigators. Doctors affiliated with those groups received another $1.6 million.

Most of the groups included in the probe took industry-friendly positions. That included issuing medical guidelines promoting opioids for chronic pain, lobbying to defeat or include exceptions to state limits on opioid prescribing, and criticizing landmark prescribing guidelines from the U.S. Centers for Disease Control and Prevention.

“Doctors and the public have no way of knowing the true source of this information and that’s why we have to take steps to provide transparency,” said McCaskill in an interview with The Associated Press. The senator plans to introduce legislation requiring increased disclosure about the financial relationships between drugmakers and certain advocacy groups.

‘Front groups’

A 2016 investigation by the AP and the Center for Public Integrity revealed how painkiller manufacturers used hundreds of lobbyists and millions in campaign contributions to fight state and federal measures aimed at stemming the tide of prescription opioids, often enlisting help from advocacy organizations.

Bob Twillman, executive director of the Academy of Integrative Pain Management, said most of the $1.3 million his group received from the five companies went to a state policy advocacy operation. But Twillman said the organization has called for non-opioid pain treatments while also asking state lawmakers for exceptions to restrictions on the length of opioid prescriptions for certain patients.

“We really don’t take direction from them about what we advocate for,” Twillman said of the industry.

The tactics highlighted in Monday’s report are at the heart of lawsuits filed by hundreds of state and local governments against the opioid industry.

The suits allege that drugmakers misled doctors and patients about the risks of opioids by enlisting “front groups” and “key opinion leaders” who oversold the drugs’ benefits and encouraged overprescribing. In the legal claims, the governments seek money and changes to how the industry operates, including an end to the use of outside groups to push their drugs.

U.S. deaths linked to opioids have quadrupled since 2000 to roughly 42,000 in 2016. Although initially driven by prescription drugs, most opioid deaths now involve illicit drugs, including heroin and fentanyl.

Companies and their contributions

Purdue Pharma, the maker of OxyContin, contributed the most to the groups, funneling $4.7 million to organizations and physicians from 2012 through last year.

In a statement, the company did not address whether it was trying to influence the positions of the groups it supported, but said it does help organizations “that are interested in helping patients receive appropriate care.” On Friday, Purdue announced it would no longer market OxyContin to doctors.

Insys Therapeutics, a company recently targeted by federal prosecutors, provided more than $3.5 million to interest groups and physicians, according to McCaskill’s report. Last year, the company’s founder was indicted for allegedly offering bribes to doctors to write prescriptions for the company’s spray-based fentanyl medication.

A company spokesman declined to comment.

Insys contributed $2.5 million last year to a U.S. Pain Foundation program to pay for pain drugs for cancer patients.

“The question was: Do we make these people suffer, or do we work with this company that has a terrible name?” said U.S. Pain founder Paul Gileno, explaining why his organization sought the money.

Depomed, Janssen and Mylan contributed $1.4 million, $650,000 and $26,000 in payments, respectively. Janssen and Mylan told the AP they acted responsibly, while calls and emails to Depomed were not returned.
…

U.S. prosecutors on Monday announced charges against five former Venezuelan officials accused of soliciting bribes in exchange for helping vendors win favorable treatment from state oil company PDVSA, the latest case to stem from a $1 billion graft probe.

The indictment by the U.S. Justice Department was filed in federal court in Houston, Texas, and was made public after Spain on Friday extradited one of the former officials, Cesar Rincon, who was a general manager at PDVSA’s, procurement unit Bariven.

Others charged included Nervis Villalobos, a former Venezuelan vice minister of energy; Rafael Reiter, who worked as PDVSA’s head of security and loss prevention; and Luis Carlos de Leon, a former official at a state-run electric company.

Those three like Rincon were arrested in Spain in October at the request of U.S. authorities amid a foreign bribery investigation into the financially struggling PDVSA, or Petroleos de Venezuela SA.

De Leon, Villalobos and Reiter remain in Spanish custody.

The indictment also charged Alejandro Isturiz Chiesa, who was an assistant to Bariven’s president and remains at large.

All five face conspiracy and money laundering charges. De Leon and Villalobos were also charged with conspiring to violate the U.S. Foreign Corrupt Practices Act.

Fred Schwartz, a lawyer for Rincon, said he expected his 50-year-old client would plead not guilty when he is arraigned on March 6. Lawyers for the other defendants could not be immediately identified.

The case flowed out of a U.S. investigation into what prosecutors have previously called a $1 billion bribery plot involving payments to PDVSA officials that became public with the arrest of two businessmen in 2015.

The indictment announced on Monday said that from 2011 to 2013, the five Venezuelans sought bribes and kickbacks from vendors in exchange for helping them secure PDVSA contracts and gain priority over other vendors for outstanding invoices during its liquidity crisis.

The indictment said the five Venezuelans then used various companies and bank accounts in Switzerland, Curaçao and elsewhere to launder the money they received.

Among the vendors that they promised to help in exchange for bribes were Roberto Rincon, who was president of Tradequip Services & Marine, and Abraham Jose Shiera Bastidas, the manager of Vertix Instrumentos, the indictment said.

Both pleaded guilty in 2016 to conspiring to pay bribes to secure energy contracts. Eight other people have also pleaded guilty in connection with the U.S. investigation.
…

The invention of a machine that removes pumpkin seeds from the shell and sorts them is being celebrated in Cameroon as traders hope to boost production of the commodity in the Central African Country. Mariama Diallo reports.
…

Federal investigators are still looking at how CSX railway crews routed an Amtrak train into a parked freight train in Cayce, South Carolina, last weekend. But even if CSX should bear sole responsibility for the accident, Amtrak will likely end up paying crash victims’ legal claims with public money.

Amtrak pays for accidents it didn’t cause because of secretive agreements negotiated between the passenger rail company, which receives more than $1 billion annually in federal subsidies, and the private railroads, which own 97 percent of the tracks on which Amtrak travels.

Both Amtrak and freight railroads that own the tracks fight to keep those contracts secret in legal proceedings. But whatever the precise legal language, plaintiffs’ lawyers and former Amtrak officials say Amtrak generally bears the full cost of damages to its trains, passengers, employees and other crash victims — even in instances where crashes occurred as the result of a freight rail company’s negligence or misconduct.

​No ‘iron in the fire’

Railroad industry advocates say that freight railways have ample incentive to keep their tracks safe for their employees, customers and investors. But the Surface Transportation Board and even some federal courts have long concluded that allowing railroads to escape liability for gross negligence is bad public policy.

“The freight railroads don’t have an iron in the fire when it comes to making the safety improvements necessary to protect members of the public,” said Bob Pottroff, a Manhattan, Kansas, rail injury attorney who has sued CSX on behalf of an injured passenger from the Cayce crash. “They’re not paying the damages.”

Beyond CSX’s specific activities in the hours before the accident, the company’s safety record has deteriorated in recent years, according to a standard metric provided by the Federal Railroad Administration. Since 2013, CSX’s rate of major accidents per million miles traveled has jumped by more than half, from 2 to 3.08 — significantly worse than the industry average. And rail passenger advocates raised concerns after the CSX CEO at the time pushed hard last year to route freight more directly by altering its routes.

CSX denied that safety had slipped at the company, blaming the change in the major accident index on a reduction of total miles traveled combined with changes in its cargo and train length.

“Our goal remains zero accidents,” CSX spokesman Bryan Tucker wrote in a statement provided to The Associated Press. CSX’s new system of train routing “will create a safer, more efficient railroad resulting in a better service product for our customers,” he wrote.

Amtrak’s ability to offer national rail service is governed by separately negotiated track usage agreements with 30 different railroads. All the deals share a common trait: They’re “no fault,” according to a September 2017 presentation delivered by Amtrak executive Jim Blair as part of a Federal Highway Administration seminar.

No fault means Amtrak takes full responsibility for its property and passengers and the injuries of anyone hit by a train. The “host railroad” that operates the tracks must only be responsible for its property and employees. Blair called the decades-long arrangement “a good way for Amtrak and the host partners to work together to get things resolved quickly and not fight over issues of responsibility.”

Amtrak declined to comment on Blair’s presentation. But Amtrak’s history of not pursuing liability claims against freight railroads doesn’t fit well with federal officials and courts’ past declarations that the railroads should be held accountable for gross negligence and willful misconduct.

​Maryland crash, backlash

After a 1987 crash in Chase, Maryland, in which a Conrail train crew smoked marijuana then drove a train with disabled safety features past multiple stop signals and into an Amtrak train — killing 16 — a federal judge ruled that forcing Amtrak to take financial responsibility for “reckless, wanton, willful, or grossly negligent acts by Conrail” was contrary to good public policy.

Conrail paid. But instead of taking on more responsibility going forward, railroads went in the opposite direction, recalls a former Amtrak board member who spoke to the AP. After Conrail was held responsible in the Chase crash, he said, Amtrak got “a lot of threats from the other railroads.”

The former board member requested anonymity because he said that Amtrak’s internal legal discussions were supposed to remain confidential and he did not wish to harm his own business relationships by airing a contentious issue.

Because Amtrak operates on the freight railroads’ tracks and relies on the railroads’ dispatchers to get passenger trains to their destinations on time, Amtrak executives concluded they couldn’t afford to pick a fight, the former Amtrak board member said.

“The law says that Amtrak is guaranteed access” to freights’ tracks, he said. “But it’s up to the goodwill of the railroad as to whether they’ll put you ahead or behind a long freight train.”

A 2004 New York Times series on train crossing safety drew attention to avoidable accidents at railroad crossings and involving passenger trains — and to railroads’ ability to shirk financial responsibility for passenger accidents. In the wake of the reporting, the Surface Transportation Board ruled that railroads “cannot be indemnified for its own gross negligence, recklessness, willful or wanton misconduct,” according to a 2010 letter by then-Surface Transportation Board chairman Dan Elliott to members of Congress.

That ruling gives Amtrak grounds to pursue gross negligence claims against freight railroads — if it wanted to.

“If Amtrak felt that if they didn’t want to pay, they’d have to litigate it,” said Elliott, now an attorney at Conner & Winters.

Same lawyers

The AP was unable to find an instance where the railroad has brought such a claim against a freight railroad since the 1987 Chase, Maryland, disaster. The AP also asked Amtrak, CSX and the Association of American Railroads to identify any example within the last decade of a railroad contributing to a settlement or judgment in a passenger rail accident that occurred on its track. All entities declined to provide such an example.

Even in court cases where establishing gross negligence by a freight railroad is possible, said Potrroff, the plaintiff’s attorney, he has never seen any indication that the railroad and Amtrak are at odds.

“You’ll frequently see Amtrak hire the same lawyers the freight railroads use,” he said.

Ron Goldman, a California plaintiff attorney who has also represented passenger rail accident victims, agreed. While Goldman’s sole duty is to get the best possible settlement for his client, he said he’d long been curious about whether it was Amtrak or freight railroads which ended up paying for settlements and judgments.

“The question of how they share that liability is cloaked in secrecy,” he said, adding: “The money is coming from Amtrak when our clients get the check.”

Pottroff said he has long wanted Amtrak to stand up to the freight railroads on liability matters. Not only would it make safety a bigger financial consideration for railroads, he said, it would simply be fair.

“Amtrak has a beautiful defense — the freight railroad is in control of all the infrastructure,” he said. But he’s not expecting Amtrak to use it during litigation over the Cayce crash.

“Amtrak always pays,” he said.
…

Increasing demand for long-haul truckers in the United States is drawing more African immigrants onto America’s roads. VOA’s Arzouma Kompaoré hitched a ride with African truckers whose routes to success stretch across the United States.
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It’s been a tough week on Wall Street. The Dow Jones Industrial average closed more than 300 points higher Friday, after plunging more than 1,000 points the day before, the second steepest decline in history. The biggest dive happened Monday when the blue chip index fell more than 1,100 points. It’s enough to make even the most experienced investors swoon. But does this mean the end of the nine-year bull market? Is it time to worry? Mil Arcega spoke with economic analysts to get some answers.
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Ride-sharing giant Uber and the self-driving car company Waymo have agreed to settle their legal battle over allegedly stolen trade secrets.

The surprise agreement Friday came as lawyers for the companies prepared to wrap up the first week of the case’s jury trial in San Francisco, California.

As part of the agreement, Uber will pay $245 million worth of its own shares to Waymo.

Waymo sued Uber last year, saying that one of its former engineers who later became the head of Uber’s self-driving car project took with him thousands of confidential documents.

After the lawsuit was filed, Uber fired the employee and fell behind on its plans to roll out self-driving cars in its ride-sharing service.

Waymo, a company hatched from Google, says the settlement also includes an agreement that Uber cannot use Waymo confidential information in its technology.

“We have reached an agreement with Uber that we believe will protect Waymo’s intellectual property now and into the future. We are committed to working with Uber to make sure that each company develops its own technology,” Waymo said in a statement.

Uber’s new CEO, Dara Khosrowshahi, expressed regret for the company’s actions in a statement Friday.

“While we do not believe that any trade secrets made their way from Waymo to Uber, nor do we believe that Uber has used any of Waymo’s proprietary information in its self-driving technology, we are taking steps with Waymo to ensure our Lidar and software represents just our good work,” Khosrowshahi said in a statement.

Lidar is a laser-based system that helps self-driving cars to navigate their surroundings.

The trial so far included testimony from former Uber chief executive Travis Kalanick, who denied any attempt to steal trade secrets from Waymo.

Uber has faced a series of recent struggles, including public accusations of sexual harassment at the company and accusations it used software to thwart government regulators.
…

There are growing fears that Britain could be headed for a so-called “cliff-edge” exit from the European Union, as big differences remain between Brussels and London over the shape of any future deal. 

The European Union’s chief negotiator, Michel Barnier, voiced frustration Friday that London has yet to detail what type of relationship it wants with the EU after Brexit.

“We had agreed with the British team on an agenda this week covering Ireland, the governance of the withdrawal agreement, and of course the transition,” Barnier told reporters in Brussels. “We had also planned an update by the United Kingdom on the future relationship. That update could not take place as planned this morning due to a scheduling issue on the British side.”

He also warned that both sides must agree on precise legal terms on the future border arrangements between Northern Ireland and the Republic of Ireland.

“Once again, ladies and gentlemen, it is important to tell the truth. A U.K. decision to leave the single market and to leave the customs union would make border checks unavoidable,” Barnier said.

That would mean the return of a physical border along the frontier, which many fear could reignite sectarian violence. Analyst Jonathan Portes of the U.K. in a Changing Europe program at Kings College London said the Ireland issue could determine the success of any overall Brexit deal.

“We have to work out how to translate the political fudge on the Northern Irish border that was agreed at the end of December into hard legal language,” he said. “And at the moment, no one really has any idea how to do that.” 

Britain says it wants frictionless trade with the EU after Brexit, but also the freedom to strike trade deals with other countries. But analyst Portes said the government is deeply divided over the shape of Britain’s future relationship with Europe, making negotiations difficult. A leaked government analysis suggests that economic growth in Britain will be reduced by up to 8 percent after it leaves the bloc.

Warning from Japan

Meanwhile, Tokyo’s ambassador to Britain warned that Japanese businesses might pull out of Britain if they faced higher costs after Brexit.

“If there is no profitability of continuing operations in the U.K., not Japanese only, no private company can continue operation. So, it’s as simple as that, and this is all high stakes that I think all of us need to keep in mind,” Ambassador Koji Tsuruoka told reporters Thursday, ahead of a meeting between British Prime Minister Theresa May and bosses of Japanese firms.

Japan has invested billions of dollars in Britain, lured by the promise of a tariff-free gateway to Europe. Carmakers Nissan, Honda and Toyota produce almost half of Britain’s cars, while pharmaceutical firms, tech companies and banks employ thousands of people.

Britain’s competitors, notably France, are eyeing that investment keenly. French Foreign Minister Jean-Yves Le Drian visited Tokyo last week and said any hopes that Britain might reverse course and stay in the EU were unfounded.

“It’s our choice, and our move, to tell the Japanese companies that, yes, the U.K. as part of the EU is over, but here is what we can offer you,” Le Drian told reporters.

‘Difficult pill’

Britain and Europe both want a transition period to ease the changeover for businesses. 

“Which is likely going to mean that the U.K. accepts that the EU makes all the rules, and we continue to pay, but we get no say. That’s going to be quite a difficult pill to swallow,” said Portes.

As the one-year Brexit countdown approaches, pressure is growing from Britain’s global and European partners for clarity over what future it wants after the European Union.
…

Stocks lurched lower again in midday trading on Wall Street Thursday, extending a streak of losses and putting the market on track for its second big weekly decline in a row.

The market got off to a mixed start but fell steadily as the morning wore on. Technology companies, the leading sector over the past year, and banks fell the most.

The Standard & Poor’s 500 index, the benchmark for many index funds in 401(k) accounts, is now down 7.7 percent from the latest record high of 26,616 it set January 26. It’s still up 15.5 percent over the past year.  

Stock trading turned volatile over the last several days, breaking an unusually long period of calm, and the market is on track for its fifth loss in the last six days. European markets were also lower after the Bank of England said it could raise interest rates in the coming months.

After huge gains in the first weeks of this year, stocks tumbled Friday after the Labor Department said workers’ wages grew at a fast rate in January. That’s good for the economy, but investors worried it will hurt corporate profits and that rising wages are a sign of faster inflation. It could prompt the Federal Reserve to raise interest rates at a faster pace, which would act as a brake on the economy.

The S&P 500 shed 30 points, or 1.1 percent, to 2,651 as of noon Eastern time.

The Dow Jones industrial average lost 342 points, or 1.4 percent, to 24,550. Boeing and Caterpillar took some of the worst losses. The Nasdaq composite fell 89 points, or 1.3 percent, to 6,962.

The losses were broad. Three stocks fell for every one that rose on the New York Stock Exchange, and nine out of the 11 industry sectors in the S&P 500 index were down.

Bond prices recovered most of an early loss, sending yields slightly higher. The yield on the 10-year Treasury note rose to 2.85 percent from 2.84 percent.

Mixed bag for companies

High-dividend stocks including phone companies fell. Those stocks are often seen as substitutes for bonds because they tend not to fluctuate that much in price and provide steady income. Those stocks fall out of favor when bond yields rise, as they have been for the past few months, and many expect the trend to continue. The yield on the 10-year note was as low as 2.04 percent as recently as September.

The market didn’t get much help Thursday from company earnings reports, several of which disappointed investors. While U.S. companies mostly did well at the end of 2018, a number of them had a weak finish to the year.

Hanesbrands, which makes underwear, T-shirts and socks, reported a smaller profit than investors expected, and its forecast for the current year didn’t live up to analysts’ estimates either. The company also said it will pay $400 million to buy Australian retailer Bras N Things. The stock dropped $2.02, or 9.2 percent, to $19.94.

IRobot, which makes Roomba vacuums, plummeted 30 percent after projected a smaller annual profit than Wall Street was expecting. The stock dropped $26.64 to $61.40.

Twitter had a banner day, soaring 16 percent after turning in a profit for the first time. Its fourth-quarter revenue was also better than expected. The stock rose $4.55, or 15.9 percent, to $31.46.

Online delivery company GrubHub soared after it announced a partnership with Yum Brands, the parent of Taco Bell and KFC. GrubHub will provide the delivery people and technology to let people order food from those restaurants. GrubHub jumped $19.46, or 27.8 percent, to $89.37, while Yum Brands dipped 77 cents, or 1 percent, to $79.36.

After a sharp loss Wednesday, benchmark U.S. crude lost 97 cents, or 1.6 percent, to $60.82 a barrel in New York. Brent crude, the international standard for oil prices, gave up 85 cents, or 1.3 percent, to $64.66 per barrel in London.

Stocks in Europe declined and bond yields increased after the Bank of England said could raise interest rates in coming months because of the strong global economy. That also sent the pound higher. Britain’s FTSE 100 fell 1.6 percent and the French CAC 40 lost 2.4 percent. Germany’s DAX declined 2.6 percent.

In Tokyo the Nikkei 225 index rose 1.1 percent. South Korea’s Kospi gained 0.5 percent and the Hang Seng of Hong Kong rose 0.4 percent.

 
…

China’s export growth accelerated in January amid mounting trade tension with Washington while imports surged as factories stocked up ahead of the Lunar New Year holiday.

Exports rose 11.1 percent compared with a year earlier to $200.5 billion, up from December’s 10.9 percent growth, trade data showed Thursday. Imports surged 36.9 percent to $180.1 billion, up from the previous month’s 4.5 percent.

China’s politically sensitive trade surplus with the United States widened by 2.3 percent from a year ago to $21.9 billion, while its global trade gap narrowed by 60 percent to $20.3 billion.

“Export growth remained robust in January, indicating steady global demand momentum,” said Louis Kuijs of Oxford Economics in a report.

“While we expect the favorable external setting to continue to support China’s exports, rising U.S.-China trade friction remains a key risk,” Kuijs said. “We expect the U.S. administration to scale up on measures impeding imports from China.”

US import duties

Beijing’s steady accumulation of multibillion-dollar trade surpluses with the United States has prompted demands for import controls.

President Donald Trump’s administration has increased duties on Chinese-made washing machines, solar modules and other goods it says are being sold at improperly low prices. It is set to announce results of a probe into whether Beijing improperly pressures foreign companies to hand over technology, which could lead to further penalties.

Exports to the United States rose 12.1 percent in January from the same time last year to $37.6 billion while imports of U.S. goods rose 26.5 percent to $15.7 billion, according to the General Administration of Customs of China.

Exports to the European Union, China’s biggest trading partner, rose 11.6 percent to $33.7 billion while purchases of European goods rose 44.4 percent to $23.8 billion. China reported a $9.9 billion trade surplus with the EU but that was down 29.8 percent from a year earlier.

Trade war accusations

Chinese authorities have accused Trump of threatening the global trade regulation system by taking action under U.S. law instead of through the World Trade Organization. Beijing has filed a challenge in the WTO against Washington’s latest trade measures.

Beijing announced an anti-dumping investigation last weekend of U.S. sorghum exports. In response to suggestions the move was retaliation for Trump’s increase tariffs, Chinese government spokespeople say it is a normal regulatory step.

January’s import growth was driven in part by demand from factories that are restocking before shutting down for the two-week holiday. Each year, the holiday falls at different times in January or February, distorting trade data.

Forecasters expect Chinese demand to weaken this year as Beijing tightens controls on lending to slow a rise in debt. That is a blow to its Asian neighbors, for which China is the biggest export market, and for suppliers of iron ore and other commodities such as Brazil and Australia.
…

Dutch lender Rabobank’s California unit agreed Wednesday to pay $369 million to settle allegations that it lied to regulators investigating allegations of laundering money from Mexican drug sales and organized crime through branches in small towns on the Mexico border.

The subsidiary, Rabobank National Association, said it doesn’t dispute that it accepted at least $369 million in illegal proceeds from drug trafficking and other activity from 2009 to 2012. It pleaded guilty to one count of conspiracy to defraud the United States for participating in a cover-up when regulators began asking questions in 2013.

The penalty is one of the largest U.S. settlements involving the laundering of Mexican drug money, though it’s still only a fraction of the $1.9 billion that Britain’s HSBC agreed to pay in 2012. It surpasses the $160 million that Wachovia Bank agreed to pay in 2010.

Three execs behind cover-up

Under the agreement, the company will cooperate with investigators. The federal government agreed not to seek additional criminal charges against the company or recommend special oversight.

The settlement describes how three unnamed executives ignored a whistleblower’s warnings and orchestrated the cover-up. Two of the executives were fired in 2015 and one retired that year.

“Settling these matters is important for the bank’s mission here in California,” said Mark Borrecco, the subsidiary’s chief executive.

In 2010, Mexico proposed new limits on cash deposits at the country’s banks, resulting in more tainted deposits at Rabobank branches in Calexico and Tecate, according to the plea agreement. Accounts in the two border towns soared more than 20 percent after Mexico’s crackdown, and bank officials knew the money was likely tied to drug trafficking and organized crime.

Risky customers escaped scrutiny, including one in Calexico who funneled more than $100 million in suspicious transactions. Customers in Tecate withdrew more than $1 million in cash a year from 2009 to 2012, often in amounts just under federal reporting requirements.

“The cartels probably thought these were sleepy towns, no one’s going to notice,” said Dave Shaw, head of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in San Diego. “When you bring in $400 million, someone is going to notice. The bank should have known and they just chose not to report any suspicious activity.”

Punishment for cover-up, not crime

Heather Lowe, legal counsel and government affairs director at research and advocacy group Global Financial Integrity, said the illegal activity bore similarities to what happened with HSBC and Wachovia.

But those banks were charged with laundering Mexican drug proceeds, while Rabobank only acknowledged covering it up.

“It seems in this case we have the bank taking the hit for lying but not for the violations themselves,” said Lowe, who expects the three unnamed executives will be prosecuted.

A whistleblower alerted two of the three executives to suspicious activity in 2012 and shared her concerns with the bank’s “executive management group,” according to the plea agreement. She also spoke with regulators amid concerns in the company that the government scrutiny could endanger a pending merger. She was fired in July 2013.

The government has a cooperating witness in former compliance officer George M. Martin, who agreed in December to cooperate with authorities in a deal that delayed prosecution for two years.

Martin, a vice president and anti-money laundering investigations manager, acknowledged he oversaw policies and practices that blocked or stymied probes into suspicious transactions and said he acted at the direction of supervisors, or at least with their knowledge.

Martin told investigators that he and others allowed millions of dollars to pass through the bank.

Rabobank, based in Utrecht, Netherlands, said last month that it set aside about 310 million euros ($384 million) to settled allegations against its subsidiary. Sentencing is scheduled May 18.
…

In the heartland of the tequila industry, in Mexico’s western state of Jalisco, a worsening shortage of agave caused by mounting demand for the liquor from New York to Tokyo has many producers worried.

The price of Agave tequilana, the blue-tinged, spiky-leaved succulent used to make the alcoholic drink, has risen six-fold in the past two years, squeezing smaller distillers’ margins and leading to concerns that shortages could hit even the larger players.

In front of a huge metal oven that cooks agave for tequila, one farmer near the town of Amatitan said he had been forced to use young plants to compensate for the shortage of fully grown agave, which take seven to eight years to reach maturity.

He asked not to be identified because he did not want his clients to know he was using immature plants.

The younger plants produce less tequila, meaning more plants have to be pulled up early from a limited supply – creating a downward spiral.

“They are using four-year-old plants because there aren’t any others. I can guarantee it because I have sold them,” said Marco Polo Magdaleno, a worried grower in Guanajuato, one of the states allowed to produce tequila according to strict denomination of origin rules.

More than a dozen tequila industry experts interviewed by Reuters said that the early harvesting will mean the shortage is even worse in 2018.

Already, the 17.7 million blue agaves planted in 2011 in Mexico for use this year fall far short of the 42 million the industry needs to supply 140 registered companies, according to figures from the Tequila Regulatory Council (CRT) and the National Tequila Industry Chamber (CNIT).

The shortages are likely to continue until 2021, as improved planting strategies take years to bear fruit, according to producers.

The result is agave prices at 22 pesos ($1.18) per kilo – up from 3.85 pesos in 2016.

Those higher prices mean that low-cost tequila producers, which make a cheaper, less pure drink that once dominated the market, find it harder to compete with premium players.

“It doesn’t make sense for tequila to be a cheap drink because agave requires a big investment,” said Luis Velasco, CNIT’s president.

Small-scale distillers of quality tequilas are also feeling the pinch and some warn that drinkers are seeking alternative tipples.

“At more than 20 pesos per kilo, it’s impossible to compete with other spirits like vodka and whisky,” said Salvador Rosales, manager of smaller producer Tequila Cascahuin, in El Arenal, a rural town in Jalisco.

“If we continue like this a lot of companies will disappear,” he said.

Exports to the United States of pure tequila jumped by 198 percent over the past decade, while cheaper blended tequila exports rose by just 11 percent, CNIT data shows.

Over the same time, Mexican production declined 4 percent, with blended tequila leading the fall.

Global Demand

As it sheds its image as a fiery booze drunk by desperados and fratboys, while moving into the ranks of top-shelf liquors, the tequila industry has seen a flurry of deals in recent years.

In January, Bacardi Ltd. said it would buy fine tequila maker Patron Spirits International for $5.1 billion.

In 2017, after years of speculation, Mexico’s Beckmann family launched an initial public offering of Jose Cuervo, raising more than $900 million.

And Britain’s Diageo Plc swapped its Bushmills Irish whiskey label for full ownership of the high-end Don Julio tequila in 2014.

The question posed by many distillers is how to keep pace with tequila’s success.

“The growth has overtaken us. It’s a crisis of success of the industry,” said Francisco Soltero, director of strategic planning at Patron, which buys agave under various contracts.

“We thought that we were going to grow a certain amount, and we’re growing double,” he said.

Large sellers such as Patron and Tequila Sauza say they have not experienced problems paying for agave, and forecast that their inventories will keep growing.

“If you sell value, the costs don’t worry you,” Soltero said.

Tequila Sauza, which mostly grows its own agave, does not foresee supply problems, chief executive Servando Calderon said.

But some think it is simply a matter of time before the higher production costs and scarcity pressures bigger players.

“We are sure this will have a strong impact on the big firms such as Cuervo or Sauza,” said Raul Garcia, President of the National Committee for Agave Production in Tequila, a group that includes most agave producers in the country.

“We don’t see that the problem will be resolved soon, and that’s what worries us.”

Demand is also being driven by other, fashionable agave-derived products, including agave syrup and health supplement inulin, which use the equivalent of 20 percent of the plants needed in 2018, the CRT said.

And rising prices are leading to growing theft, driving out smaller producers, said Jose de Jesus, a producer of blue agave in Tepatitlan. Criminals come to the area with large trucks in the middle of the night to steal agave, he said.

According to the CRT last year 15,000 plants were reported stolen, more than triple the number in 2016.

($1 = 18.7096 Mexican pesos)
…

Peru’s trade minister defended China as a good trade partner on Tuesday, after U.S. Secretary of State Rex Tillerson warned Latin American countries against excessive reliance on economic ties with the Asian powerhouse.

Eduardo Ferreyros said Peru’s 2010 trade liberalization deal with China had allowed the Andean nation of about 30 million people to post a $2.74 billion trade surplus with Beijing last year.

“China is a good trade partner,” Ferreyros told foreign media, as Tillerson met with President Pedro Pablo Kuczynski in Lima, a stop on Tillerson’s five-nation Latin American tour.

“We’re happy with the results of the trade agreement.”

The remarks were the Peruvian government’s first signal since Tillerson’s warning that it does not share Washington’s concerns about growing Chinese influence in the region.

Before kicking off his trip to Latin America on Friday, Tillerson suggested that China could become a new imperial power in the region, and accused it of deploying unfair trade practices.

“I appreciate advice, no matter where it comes from. But we’re careful with all of our trade relations,” Ferreyros said, when asked about Tillerson’s remarks.

Ferreyros also praised Peru’s trade relationship with Washington, despite a trade deficit with the United States. “I’m not afraid of trade deficits,” Ferreyros said.

Since China first overtook the United States as Peru’s biggest trade partner in 2011, thanks mostly to its appetite for Peru’s metals exports, bilateral trade has surged and diplomatic ties have tightened.

Kuczynski, a former Wall Street banker, made a point of visiting China before any other nation on his first official trip abroad as president in 2016.

Under former president Barack Obama, the United States had hoped to counter China’s rise in the fast-growing Asia-Pacific region, which includes large parts of Latin America, with the sweeping Trans-Pacific trade deal known as the TPP.

While President Donald Trump withdrew the United States from the TPP upon taking office, the 11 remaining signatories, including Peru and Japan, have struck a similar deal that they plan to sign without the United States in March.

Tillerson, who left Peru for Colombia on Tuesday, said on Monday that Trump was open to evaluating the benefits of the United States joining the so-called TPP-11 pact in the future, which Ferreyros called “a good sign.”

All countries in the Asia-Pacific region, including China, were welcome to join TPP-11, Ferreyros said. “But the deal has closed and countries that want to join obviously can’t renegotiate the whole agreement,” he added.
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