YCLOAK

A U.S. decision to cut funding for a demining program in Cambodia threatens to further worsen a feud between Phnom Penh and Washington.

On Tuesday, it emerged through local media reports the U.S. had decided to discontinue annual funding in 2018, worth about $2 million, to clear explosive remnants of war in Cambodia.

Prime Minister Hun Sen reportedly responded to the surprise decision by declaring he will stump to raise the money, according to a senior Cambodian demining official.

No public explanation has been given for the cut, and both the Cambodian Mine Action Center (CMAC), the final recipient of the funding, and Norwegian People’s Aid, which administer the money, say they do not know why the funding has been discontinued.

CMAC Director General Heng Ratana said he had no warning of any cut to the funding before he received notification Monday about the decision. The money covered the salaries of about 300 staffers, many of whom were deminers.

“I don’t know what the real dispute [is]. We just present the facts and we work together; they never indicated any dispute that we have had, but suddenly they cut the aid,” he said.

“But we are very lucky that the government, the head, the prime minister, granted approval that he will maintain our operation as usual so that means it has no impact on our operation,” he said, adding that funds for the rest of this year had not been affected.

The United States had a moral obligation to deal with the legacy of its bombing of Cambodia during the Vietnam war, he added.

Ruling Cambodian People’s Party spokesman Sok Eysan told VOA he was unaware of the cut, which seemed peculiar to him.

“I think that it’s an issue which we see that it’s not normal. So, no matter what we answer, it will still be not normal,” he said.

Norwegian People’s Aid country director Aksel Steen-Nilsen said he, too, had been unaware about the reasons for the cut.

“I mean, of course, there is a lot of rhetoric between Cambodia and the U.S. right now,” he said. “But … I don’t see any specific objective related to this because it’s the end of the grant cycle, and then of course, it’s up to the donor if they have funds and interest to continue or not.”

Steen-Nilsen said cooperation had been good thus far over the three years the grant had been running and there was no indication of any special reason it would stop.

In an email, the deputy spokesman of the U.S. embassy in Phnom Penh, David Josar, said demining remained at the top of the State Department’s assistance priorities, but he did not address the specific reason for the cut.

“We will use 2018 resources to put in place a world-class removal program targeting U.S.-origin UXO [unexploded ordnance] in eastern Cambodia,” he wrote. “UXO experts have proposed that the United States devote more attention to clearing such UXO, in addition to our support for clearing the more lethal Chinese, Vietnamese, and Soviet land mines in western Cambodia.”

Next year’s funding would be opened up to competitive bidding with requests for proposals — prepared in consultation with the Cambodian government — to be released this year, he wrote without providing any further details.

For months, Cambodia has accused the U.S. of fomenting a color revolution — a conspiracy plot it has used as the grounds to jail the country’s opposition leader, Kem Sokha, and justify moves to dissolve his party.

They have seized on the continuing impacts of unexploded ordinance left over from the U.S.’s massive illegal bombing campaign during the Vietnam war — a line of attack only bolstered by news of the cut to CMAC funding.

Carl Thayer, an emeritus professor at the Australian Defense Force Academy, said the embassy reports he had read also did not seem to be specific about the reasoning for the cut.

“So we don’t really know the reason why the funding was cut so far, and it’s sheer speculation on Hun Sen’s part and political opportunism on his part to make that linkage,” he said.

Any retaliatory action by the U.S. in response to the decimation of Cambodia’s opposition party would have been made up front, he said.

“There’s an expression, ‘between conspiracy and cock-up, you always go for conspiracy, and that seems to be what the Cambodians are doing, and until I see a better explanation, I’m saying its just a bureaucratic decision probably made in Washington and passed through without much thinking,” he said.  

Josar said the U.S. had spent more than $131 million on the remediation of explosive remnants of war in Cambodia.

In recent years, the main focus of that funding has been on U.S.-dropped unexploded ordnance left in Cambodia’s east. Some experts have complained this diverts resources away from more harmful explosive remnants in the west.

 
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The restive Spanish region of Catalonia faces a potential $500 million financial hit in the fourth quarter as business-related travel dips following the attack in Barcelona and the uncertainty generated by the disputed independence referendum.

 

In an interview Monday with The Associated Press at the World Travel Market in London, Catalonia’s top tourism official Patrick Torrent said the region will likely see a 10-12 percent fall in tourist numbers during the fourth quarter, which would equate to around 450 million euros. The large bulk of that fall is related to a drop-off in business travel to events such as conventions.

 

Despite the anticipated fourth-quarter decline, the executive director at the Catalan Tourist Board, said Catalonia is set to see revenues this year outstrip those last year and that the expectation is that revenues will rise again next.

 

However, more insight will emerge at the turn of the year when the bulk of pre-reservations are made. His staff, he said, are “on alert” about the impact on the main booking season.

 

The worry among many economists is that deteriorating business environment in Catalonia, which has seen around 1,500 firms move their headquarters out of the region, could worsen further amid all the uncertainty. Credit ratings agency Moody’s has warned that the region’s financial recovery is being jeopardized

 

“Moody’s believes that the political instability will negatively affect the region’s economy, in particular foreign investor sentiment and the tourism sector, and add pressure to the region’s already weak finances,” it said last week.

The Catalan tourism industry, a key income generator in what is Spain’s richest region, has had a difficult few months. After the August attacks in Barcelona and a nearby town that saw 16 people killed, the region has been embroiled in a battle of wills with Spain over the disputed independence referendum in early October which prompted Madrid to impose direct rule and seek the arrest of members of the Catalan government, including its leader, Carles Puigdemont, who has fled to Brussels.

 

The impact of the attack in Barcelona on holiday travelers was short-lived, according to Torrent, and “less important” than other cities in Europe, such as Brussels or Paris.

 

“The perception of Barcelona and Catalonia as a safe destination has not suffered any impact,” he said, noting figures showing tourism numbers higher in September.

 

Torrent said he met up with Alvaro Nadal, the Spanish minister of energy, tourism and digital matters, on Monday for the first time since the triggering of Article 155 of the Spanish Constitution which imposed direct rule on Catalonia.

 

Torrent said the Spanish government has made no requirements upon him or his staff and that it is “business as usual” until an early Catalan regional election on Dec. 21.

 

“It’s not intervention. It’s more a kind of coordination,” he said. “It’s easy, it’s not complicated, with good relations without problems, at this moment.”

 

Before direct rule, Torrent would speak with Spanish tourism officials two or three times a month. Now, it’s that amount of times a week.

Torrent urged all participants in upcoming demonstrations in Catalonia before the election, including one this Saturday, to remain peaceful and law-abiding.

 

“It’s important to say that our streets are normal, our restaurants are working as usual, our destination is exactly the same situation,” Torrent said.
…

Two weeks ago the glitzy Ritz Carlton hotel in Riyadh was the site of an international conference promoting Saudi Arabia as an investment destination, with over 3,000 officials and business leaders attending.

Now the hotel is temporarily serving as a luxury prison where some of the kingdom’s political and business elite are being held in a widening crackdown on corruption that may change the way the economy works.

By detaining dozens of officials and tycoons, a new anti-corruption body headed by Crown Prince Mohammed bin Salman is seeking to dismantle systems of patronage and kick-backs that have distorted the economy for decades.

But it is a risky process, because the crackdown is hurting some of the kingdom’s top private businessmen — leaders of family conglomerates who have built much of the non-oil economy over the past few decades.

Many industries could suffer if investment by these families dries up in coming months, at a time when the economy has already fallen into recession because of low oil prices and austerity policies.

New breed of companies

Meanwhile, a new breed of state-backed companies is rising to compete with the old guard; many of the new enterprises are linked to the Public Investment Fund (PIF), the kingdom’s top sovereign wealth fund. But it is not clear how smoothly the transition to these firms will happen.

“The rules of the game are changing. But they’re changing indiscriminately,” said one financial analyst in the region, declining to be named because of political sensitivities. “Even people who thought they were within the rules don’t know if they will still be within those rules tomorrow. There’s just uncertainty.”

Some private businessmen in Saudi Arabia are now trying to move their money out of the country “while they still can,” the analyst said.

For many foreigners, the most shocking aspect of the purge has been the detention of billionaire Prince Alwaleed bin Talal, the flamboyant, internationally known chairman of investment firm Kingdom Holding.

But for Saudis, the names of other detainees have been equally stunning: Nasser bin Aqeel al-Tayyar, founder of the Al Tayyar Travel group; billionaire Saleh Kamel; and Bakr bin Laden, chairman of the huge Saudi Binladin construction conglomerate.

State contracts

The saga of the Binladin group underlines how the business environment is changing. Binladin and another big construction group, Saudi Oger, long enjoyed preferential access to the kingdom’s biggest projects and control over pricing as a result of their close relationships with royal patrons.

But the bottom fell out from under both companies last year, when a cash squeeze resulting from low oil prices caused the government to cancel or suspend projects and delay payments.

The firms faced multi-billion dollar debt restructurings; Binladin has laid off tens of thousands of people while Oger’s bankers say it has essentially stopped operating.

New construction company

At the same time, state oil giant Saudi Aramco is moving to set up a construction company with local and international partners to build non-oil infrastructure in Saudi Arabia — potentially taking billions of dollars of business that would previously have gone to the family conglomerates.

Aramco and PIF, the sovereign fund, have also linked up with U.S. construction firm Jacobs Engineering to form a management company for strategic projects in the kingdom.

Many in the Saudi business world are celebrating the downfall of the old patronage system and the shift toward a “cleaner” business environment.

“It’s great news for the clean ones among us — 99.99 percent are ecstatic,” said one senior executive.

But others express disquiet about the possible economic fallout of the purge. Some are concerned that banks could start calling in loans to families implicated in the probe, using loan clauses that permit this in cases of legal jeopardy; this could collapse companies’ share prices.

Business deals put in limbo?

Many new business deals may be put on hold. A businessman at a foreign technology services firm told Reuters he had been considering a venture with a Saudi partner, but decided against it this week because of the partner’s ties to the detained Bakr bin Laden.

The new anti-corruption commission has broad authority to seize assets at home and abroad. Some businessmen wonder if these powers could be used to pressure firms into participating in Prince Mohammed’s economic development projects.

“It’s the old royal fiefdoms that are not in the Al Salman branch of the royal family that are now being purged,” said a Western analyst. “It’s a further centralising of political and economic power, and a seizing of the private assets that those fiefdoms have accumulated.”

 
…

A revamping of the Federal Reserve’s leadership is widening with the announcement Monday that William Dudley, president of the New York Fed and the No. 2 official on the Fed’s key interest rate panel, will retire next year.

 

Just last week, President Donald Trump chose Fed board member Jerome Powell to replace Janet Yellen as Fed chair in February. The post of Fed vice chair remains vacant. So do two additional seats on the Fed’s seven-member board. And a fourth seat may open as well next year.

The unusual pace of the turnover has given Trump the rare opportunity for a president to put his personal stamp on the makeup of the Fed, which operates as an independent agency. Investors are awaiting signals of how Trump’s upcoming selections might alter the Fed’s approach to interest rates and regulations.

 

Trump has made it known that he favors low interest rates. He has also called for a loosening of financial regulations. The Fed has played a key role in overseeing the tighter regulations that were enacted after the 2008 financial crisis, which nearly toppled the banking system.

 

The uncertainty surrounding the Fed’s top policymakers has been heightened by the slow pace with which the Trump administration has moved to fill openings.

To date, the administration has placed one new person on the Fed board: Randal Quarles, a veteran of the private equity industry who is thought to favor looser regulations, was confirmed as the first vice chairman for supervision. That still left three vacancies on the Fed’s board: Just as Quarles was joining the board last month, Stanley Fischer was stepping down as Fed vice chairman.

 

And Yellen herself could decide to leave the board when her term as chair ends on Feb. 3, even though her separate term on the board runs until 2024.

 

Dudley’s announcement that he plans to retire by mid-2018 also creates an opening on the committee of board members and bank presidents who set interest rate policies. Dudley’s position is particularly crucial: As head of the New York Fed, he is a permanent voting member of the Fed committee that sets interest rates.

 

The committee is composed of the board members and five of the 12 regional bank presidents. Unlike the New York Fed president, the other regional bank presidents vote on a rotating basis. The New York Fed president also serves as vice chairman of the rate-setting panel.

 

Some economists said that while financial markets have so far registered little concern about the number of key open Fed positions, that could change quickly, especially if investors begin to worry that the central bank will accelerate interest rate hikes.

 

“We need to get rid of this uncertainty, and until these seats are filled, there is going to be uncertainty,” said Diane Swonk, chief economist at DS Economics.

 

Analysts are trying to read the two decisions Trump has made — picking Powell for the top job and Quarles for the key post for banking supervision — as signs for where he might be headed. With Powell, the president opted for continuity on rates by selecting someone who for years was the lone Republican on the board but who remained a reliable vote for the gradual approach to rate hikes Yellen favored.

And in the bank supervision post, analysts say Trump might have been signaling that he wants to reverse, or at least weaken, Yellen’s backing of the reforms instituted by the 2010 Dodd-Frank financial overhaul law. During the campaign, Trump argued that Dodd-Frank was harming the economy by constraining back lending.

 

Quarles has been critical of aspects of that law. To a lesser extent, so, too, has Powell, who will be the first Fed chairman in nearly 40 years to lack a degree in economics. Powell, a lawyer by training, amassed a fortune as an investment banker at the Carlyle Group.

 

“With his background, Powell can be expected to work well with Wall Street and the business community in general,” said Sung Won Sohn, an economics professor at California State University, Channel Islands.

 

A senior administration official indicated that one important attribute for the open positions will be a diversity of backgrounds.

 

“We believe the Fed will function best with a wide range of skill sets,” said the official, who spoke on condition of anonymity to discuss personnel decisions. This official would not give a timetable for when the administration’s next nominations for the Fed might occur.

Though Trump will choose officials to fill the openings on the board, the choice of Dudley’s replacement will fall to the board of the New York Fed. The New York Fed said a search committee had been formed to choose a successor to Dudley, who joined the New York Fed in 2007 after more than two decades at Goldman Sachs.

 

The announcement from the New York Fed said Dudley, 64, intended to step down in mid-2018 to ensure that his successor would be in place well before the mandatory end of Dudley’s term in January 2019.

 

After overseeing the New York Fed’s securities operations for two years, Dudley succeeded Timothy Geithner as its president after Geithner was tapped by President Barack Obama to become Treasury secretary in 2009.

 

Dudley won praise for the work he did with Geithner and Fed Chairman Ben Bernanke to contain the fallout from the 2008 financial crisis. Dudley supported Yellen’s cautious approach to raising the Fed’s benchmark rate and the plan the central bank has begun to gradually shrink its $4.5 trillion balance sheet, which is five times its size before the financial crisis.

 

The balance sheet contains $4.2 trillion in Treasurys and mortgage bonds that the Fed bought since 2008 to try to hold down long-term borrowing rates and help the economy recovery from the worst recession since the 1930s.

 

In a statement, Yellen praised Dudley for his “wise counsel and warm friendship throughout the years of the financial crisis and its aftermath.”
…

While President Donald Trump continues an Asia trip with high geo-strategic stakes, Republicans in Washington are promoting an ambitious tax reform bill that could bring enormous fiscal, and political, consequences. VOA’s Michael Bowman reports, a tax cut is Trump’s last hope for a major legislative victory in his first year in office, something Republicans desperately need and something Democrats are determined to deny them.
…

The Republican tax bill unveiled last week in the U.S. Congress could disrupt the global supply chains of large, multinational companies by slapping a 20-percent tax on cross-border transactions they routinely make between related business units.

European multinationals, some of which currently pay little U.S. tax on U.S. profits thanks to tax treaties and diversion of U.S. earnings to their home countries or other low-tax jurisdictions, could be especially hard hit if the proposed tax becomes law, according to some tax experts.

Others said the proposal could run afoul of international tax treaties, the World Trade Organization and other global standards that forbid the double taxation of profits if the new tax did not account for income taxes paid in other countries.

The proposed tax, tucked deep in the 429-page bill backed by President Donald Trump, caught corporate tax strategists by surprise and sent them scrambling to understand its dynamics and goals, as well as whether Congress is likely ever to vote on it.

Reuters contacted seven multinational companies and four industry groups. None would comment directly on the proposal, with most saying they were still studying the entire tax package.

The proposal is part of a broad tax reform bill unveiled by House of Representatives Republicans on Thursday, which promises to lower overall tax burdens and simplify the tax code.

Whether the proposed reforms ever become law is uncertain, with weeks and possibly months of debate and intense lobbying still ahead. The House package overall has drawn criticism for adding too much to the federal budget deficit and too heavily favoring the rich and big business.

However, the corporate tax part, experts said, included some ambitious proposals worthy of further discussion. They said the 20 percent excise tax is one such proposal targeting the abuses of so-called transfer-pricing where multinationals themselves set prices of goods, services and intellectual property rights that constantly move between their national business units.

Under global standards, those prices should resemble those available on the open market. However, if a foreign parent charges U.S. affiliates inflated price, it can reduce its U.S. tax bill and effectively shift profits to a lower-tax country, reducing the entire corporation’s overall tax costs.

Blunt instrument

“Clearly there’s a transfer-pricing issue and something should be done,” said Steven Rosenthal, senior fellow at the Tax Policy Center, a nonpartisan Washington think tank.

“I would view this 20-percent excise tax as a blunt instrument to address the problem. And the problem with blunt instruments is sometimes they hit what you want to hit, and sometimes they hit what you don’t want to hit,” said Rosenthal, former legislation counsel at Congress’s Joint Tax Committee.

Under the proposal, U.S. business units that import products, pay royalties or other tax-deductible, non-interest fees to foreign parents or affiliates in the course of doing business would either pay a 20-percent tax on these or agree to treat the amounts as income connected to their U.S. business and subject to U.S. taxes.

As proposed, the new tax rule would apply only to businesses with payments from U.S. units to foreign affiliates exceeding $100 million. The rule would not take effect until after 2018.

European companies that sell foreign-made products into the U.S. market through local distribution units could be among those most affected, said Michael Mundaca, co-director of the national tax department at the accounting firm Ernst & Young.

Such companies could end up paying tax on the transfers twice — first if they paid the excise tax in the United States and then at home where they are taxed now and where the new U.S. tax would not be accounted for without changes to bilateral tax treaties.

“That would be a structure that would at least initially be hit by the full force” of the excise tax, said Mundaca, a former U.S. Treasury Department assistant secretary for tax policy.

He said European officials would be registering concern. “I am sure they are making calls right now to their counterparts in the U.S. Treasury looking for some explanation… and making the point that this might be contrary to treaty obligations.”

Gavin Ekins, an economist at the Tax Foundation, a conservative think tank, predicted that most multinationals would opt to avoid the excise tax by electing to pay U.S. corporate tax on all the profits related to products sold in the United States. Those include profits on activities conducted overseas, like manufacturing or research, which are also subject to foreign income taxes.

The U.S. corporate tax rate on those profits would drop to 20 percent from 35 percent if the House bill becomes law.

The promise of additional revenue and hopes that the new tax may entice multinationals to locate more production and jobs in the United States, may well outweigh international concerns.

The entire Republican tax package is projected to add $1.5 trillion over 10 years to the $20 trillion federal debt and the planned excise tax is among sources of new revenue needed to avoid an even bigger shortfall. It is expected to bring about $155 billion over 10 years, according to a summary of the Republican proposal distributed last week.

Still, as the tax debate heats up, foreign multinationals are likely to lobby hard against it, with domestic corporations linked to foreign affiliates possibly concerned as well.

There is also uncertainty how the new rules would work in practice.

It was unclear, for example, from the bill’s language how companies should calculate income “effectively connected” to their U.S. business, Tax Foundation’s Ekins said.

“You don’t know what profit is included when you choose ‘effectively connected income’ and don’t know the formula,” he said. “Is it just for that product line? All the income that comes in from every other company or from every other source?”

The House tax committee was scheduled to begin considering amendments to the Republican tax bill on Monday.
…

Wireless carriers Sprint and T-Mobile called off a potential merger, saying the companies couldn’t come to an agreement that would benefit customers and shareholders.

The two companies have been dancing around a possible merger for years, and were again in the news in recent weeks with talks of the two companies coming together after all. But in a joint statement Saturday, Sprint and T-Mobile said they are calling off merger negotiations for the foreseeable future.

“The prospect of combining with Sprint has been compelling for a variety of reasons, including the potential to create significant benefits for consumers and value for shareholders. However, we have been clear all along that a deal with anyone will have to result in superior long-term value for T-Mobile’s shareholders compared to our outstanding stand-alone performance and track record,” said John Legere, president and CEO of T-Mobile US, in a prepared statement.

T-Mobile and Sprint are the U.S.’ third- and fourth-largest wireless carriers, respectively, but they are significantly smaller than AT&T and Verizon, who effectively have a duopoly over U.S. wireless service. The two companies have said they hoped to find a way of merging to make the wireless market more competitive.

Sprint and its owner, the Japanese conglomerate SoftBank, have long been looking for a deal as the company has struggled to compete on its own. But Washington regulators have frowned on a possible merger. D.C. spiked AT&T’s offer to buy T-Mobile in 2011 and signaled in 2014 they would have been against Sprint doing the same thing. But with the new Trump administration, it was thought regulators might be more relaxed about a merger.

Sprint has a lot of debt and has posted a string of annual losses. The company has cut costs and made itself more attractive to customers, BTIG Research analyst Walter Piecyk says, but it hasn’t invested enough in its network and doesn’t have enough airwave rights for quality service in rural areas.

T-Mobile, meanwhile, has been on a yearslong streak adding customers. After the government nixed AT&T’s attempt to buy it in 2011, T-Mobile led the way in many consumer-friendly changes, such as ditching two-year contracts and bringing back unlimited data plans. Consumers are paying less for cellphone service, thanks to T-Mobile’s influence on the industry and the resultant price wars.

“T-Mobile does not need a merger with Sprint to succeed, but Sprint might need one to survive,” Piecyk wrote in an October research note.
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U.S. President Donald Trump urged Saudi Arabia Saturday to list its state-owned oil company on the New York Stock Exchange when the company goes public in what is expected to be the largest-ever initial public offering in which shares of a company are sold to investors.

“Would very much appreciate Saudi Arabia doing their IPO of Aramco with the New York Stock Exchange. Important to the United States!,” Trump tweeted from Hawaii, his first stop ahead of a 13-day trip to Asia.

Saudi officials have reportedly said the government intends to list 5 percent of  the company’s shares on local and global stock exchanges in 2018 but have yet to select an overseas venue. Saudi officials have estimated the IPO will be worth about $100 billion.

The NYSE has had discussions with the Saudis about the upcoming IPO as has the London Stock Exchange. Exchanges in Hong Kong, Singapore, Tokyo, Toronto and the U.S. are also soliciting portions of the public offering.

New York-based NASDAQ, which provides technology to Saudi Arabia’s exchange, has been leveraging that relationship in an attempt to win the listing.

Trump has developed a close relationship with Saudi Arabia. During his visit there last summer, he signed a $110 billion defense agreement with Saudi King Salman.

At a $2 trillion valuation Saudi officials have projected for Aramco, selling five-percent of the company’s shares would reap $100 billion.

The public offering of shares of Aramco, the world’s largest oil producer, is part of Saudi government plans to sell state assets as a recession slows Riyadh’s effort to eliminate a budget deficit caused by low oil prices.

 

 
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The recent flurry of social and economic reform coming out of Saudi Arabia has left some Saudis ecstatic, others more circumspect, and a few conservatives bewildered or even angry.

Saudi Crown Prince Mohammed Bin Salman told a crowd of investors at a conference in late October that he was merely attempting to “return Saudi Arabia to the moderate Islam that once prevailed” before the Iranian Revolution in 1979. He stressed that 70 percent of Saudis are younger than 30 and vowed “not to spend another 30 years of our lives living under extremist ideas.”

The young crown prince also proposed an ambitious plan for a new economic zone on the Red Sea near Jordan and Egypt. In April, he put forward an economic road map for the kingdom, called Vision 2030. Part of the plan calls for privatizing 5 percent of the country’s flagship petroleum company Aramco, in addition to attracting foreign investment capital.

​Too much change too fast

Clarence Rodriguez, who spent 12 years as a French foreign correspondent in Riyadh and recently wrote a book called Saudi Arabia 3.0 on the aspirations of Saudi women and young people, tells VOA that she believes Saudi Arabia “is in crisis, due to the drop in the price of petroleum,” and that it has found itself under pressure to “diversify its economy, which necessitates societal reform involving women and young people, as well.”

Rodriguez points out that the late King Abdallah, who died in 2015, started the reform movement by allowing Saudi women to run for the country’s consultative “Shoura” council and to enter the work force, becoming lawyers, bankers and salespeople.

She worries, however, that some recent moves to change the status of women have angered parts of the kingdom’s mostly conservative population. Traditionalists, she says, are “not used to such quick change” and many “are afraid, because things are moving too fast for them.”

On a recent talk show on an Arabic-language news channel, a conservative Saudi caller told the show’s host that he thinks Saudi King Salman and Crown Prince Mohammed Bin Salman are “violating (Islamic) sharia law” with some of their recent reforms “and should go to jail.”

Saudi commentator Jamal Kashoggi tells VOA that he’s “not optimistic about the reforms,” but that he would “still like to be optimistic … since everyone will suffer if they fail.” Kashoggi worries that the reforms are “not engaging Saudi society, enough.” 

“We wish Mohammed Bin Salman well, and we need economic (and social) reform,” he said, “but, we also need to discuss (these issues). The change,” he said, “is being done in very narrow circles. (Ordinary) people are not feeling engaged.” 

Was Saudi society more moderate?

Hilal Khashan, who teaches political science at the American University of Beirut, is not convinced that Saudi society was more moderate before the Iranian Revolution in 1979. He thinks that parts of Saudi society have always had a conservative streak to them, pointing out that Wahabi conservatives killed many moderate Muslims, including the Shafa’i mufti of Mecca when they overran the city and the nearby resort city of Ta’ef in 1924.

A handful of prominent Saudi conservative clerics have been arrested since Mohammed Bin Salman replaced his cousin, Mohammed Bin Nayef, as crown prince, in June. 

“By weakening the clerical establishment and making clerics simple government workers,” Khashan said, “(Mohammed Bin Salman) will be able to give women more rights, as he is proposing.” Saudi women were allowed to drive, starting in September, and this week were given permission to attend sports matches with their families.

Khashan believes that economic considerations are a key factor in the decision to allow Saudi women to drive. 

“If 10 million women are given the right to drive in Saudi Arabia,” he said, “and if just a fraction of those women buy cars, take driving lessons or buy insurance, that would contribute to stimulating Saudi Arabia’s stagnant economy.” Allowing women to drive will also curtail the expensive practice of hiring foreign chauffeurs to drive women around.

Both Kashoggi and Khashan believe that the Saudi government will eventually prevail in its efforts to reform society. 

“Conservatives,” Kashoggi said, “have already lashed out. They’ve been lashing out since 2003. Al-Qaida, or ISIS, or the radical Wahabis … these are the extremists in Saudi Arabia … and they don’t want change. They have resisted, and will continue to resist. … The only thing stopping them is (government) security.”

Clashes with clerics

Khashan points out that in clashes with conservative clerics back in the 1960s, after King Faisal opened a school for girls in Riyadh, and when the king opened the first TV station in Riyadh in 1965, the government prevailed. 

“Whenever the state clashes with the (conservative) clerical establishment, the state emerges victorious,” he said, “and there’s no reason to believe that things will not be the same, this time.”

Jordanian analyst Shehab Makahleh is less certain about who will come out on top, however. 

“There is a kind of opposition among royal family members who are not happy (about the reforms),” he said, “and they have had a number of meetings to clarify where the country is heading in the coming five to 10 years.”

Makahleh believes that King Salman may soon abdicate in favor of Mohammed Bin Salman “in order to gain more support from the international community” for his ambitious reform program and to promote a more secular model of society.
…

For Yu Kaiguang, harsh new United Nations sanctions on North Korea are a disaster.

The trader in the Chinese border city of Dandong has seen business all but dry up, and he spends his days scrambling to obtain payment from the suddenly broke North Korean state companies to whom he sold on credit.

“They have no money to pay us in cash, and the worst is that because of sanctions they can’t settle the bill with goods such as coal, as they did in the past,” said Yu, reached by telephone at the offices of his Dandong Gaoli Trading Company.

Yu said he’s owed about $1 million in all for deliveries of toothpaste, instant noodles and other household items. He’s trying to avoid laying off staff by continuing to export foodstuffs such as pine nuts and red beans. “If they become unemployed, it would be bad for both the state and society.”

​Common problem for traders

Yu’s plight appears increasingly commonplace across Dandong, where the bulk of the cross-border trade is handled. Interviews with four trading companies and recent media reports indicate Chinese companies are hurting in a city where North Korean trucks used to rumble across the Yalu River bridge several times a week delivering metal scrap and returning with everything from televisions to toilet bowls.

The owner of another firm, Dandong Baoquan Commerce and Trade Co., which used to import iron ore and coal and export basic consumer goods, said he was owed around $200,000 by his North Korea clients.

“I had to lay off about 10 staffers, but I had no other choice because it was the government policy,” Han Lixin said, referring to the sanctions. “I’m still in business hoping to trade with other countries, but it takes a lot of time and efforts to develop customers.”

Large-scale trade involving North Korean resources such as iron ore and coal has been banned entirely under the sanctions, dealing a big blow to Dandong’s port, whose operator defaulted on a $150 million corporate bond this week in part because of cratering revenues.

Both economies hurting

“The sanctions have a broad effect, and both the economies of North Korea and China are suffering a lot,” said Jin Qiangyi, professor at the Institute of Northeast Asia Studies at Yanbian University in Northeast China. “Chinese companies doing business with North Korea may see quite a lot of losses, and the companies that have already invested in North Korea will suffer more.”

Dealing with North Korean companies was never easy. Wang Chengpeng, former manager of Dandong Hongwei Trading Company, quit doing business with the North entirely because of hassles, restrictions and low-profit margins, even before the latest sanctions began to bite.

Despite that, China has long been the North’s biggest economic partner. Beijing accounted for more than 90 percent of its neighbor’s foreign trade of about $6.5 billion in 2016, according to the South Korean-owned Korea Trade Investment Promotion Agency. China continues to be a key source of food and fuel aid to help keep North Korea’s weak economy from collapsing, and Chinese officials say they won’t agree to measures that could cut off basic life necessities and possibly cause Kim Jong Un’s dictatorship to topple.

Sanctions holding

China’s patience with Kim has grown increasingly thin, however, and Beijing has lent its support to increasingly tough resolutions unanimously approved by the Security Council this year that target North Korea’s economy in response to its ballistic missile launches and latest nuclear test.

China has said it sees sanctions purely as a means of inducing North Korea to return to nuclear disarmament talks and has rejected unilateral measures not approved by the Security Council, of which it is one of the five veto-wielding permanent members.

Still, despite some allegations of cheating, China appears to be seeking to enforce the sanctions that also ban exports of lead, textiles and seafood, prohibit joint ventures, and bar any country from authorizing new permits for North Korean workers, all sources of hard currency for Pyongyang.

The sanctions have also blacklisted a number of firms in the extraction and financial industries, imposed travel bans and frozen the assets of some government officials, banned the import of natural gas liquids and condensates, and capped the country’s crude oil imports.

It’s hard to gauge the exact impact of sanctions on the North Korean economy because the crucial food and energy sectors are less likely to be hurt by external conditions, said Lee Seok-ki, a senior researcher at the South Korean government-run Korea Institute for Industrial Economics and Trade.

However, while the North’s economy has been expanding, by 3.9 percent in 2016, according to an estimate by the Bank of Korea in South Korea, that rate almost certainly can’t be sustained if sanctions continue, Lee said.

China for its part is watching North Korea to see how its ally will respond to the new measures, eager for signs of a shift in tactics by Kim and an improvement in relations between Beijing and Pyongyang that have “sunk into a standstill,” as Jin puts it.
…

A solid rebound for the job market in October as the U.S. economy added 261,000 jobs. Job gains were strong across the board, and the unemployment rate fell to 4.1 percent, its lowest level in 17 years. But, as Mil Arcega reports, American workers are not seeing any real growth in their wages.
…

Venezuelan President Nicolas Maduro has announced that the country and state oil company PDVSA will restructure its burgeoning foreign debt, even as he vowed to make a payment of more than $1 billion that came due on Thursday.

The announcement did not put Venezuela or PDVSA into default, but suggests that Maduro’s cash-strapped government may be preparing to do so as heavy debt payments aggravate the country’s crippling economic crisis.

Why is Venezuela so heavily indebted?

Even though the OPEC nation was flush with cash during a decade-long oil boom, Venezuela’s ruling Socialist Party borrowed heavily during the era of late president Hugo Chavez to finance generous social programs that made him popular. The country also dismantled mechanisms meant to ensure Venezuela saved money when oil prices were high, leaving it without sufficient hard currency reserves to import basic goods such as food and medicine after prices crashed in 2014. Hunger and preventable diseases are as a result taking a growing toll on the population of 30 million.

Why can’t Venezuela refinance its debt?

The most common refinancing mechanisms are effectively blocked by U.S. sanctions levied this year, in response to accusations that Maduro was undermining democracy, which prevent U.S. banks from acquiring newly issued Venezuelan debt.

Venezuela and PDVSA cannot carry out “swap” transactions in which they exchange maturing bonds for ones that come due further down the road because financial institutions with U.S. headquarters would not be able to acquire the new debt. Investors also say bondholders would have no interest in renegotiating payment timelines without a cohesive plan to reform the country’s dysfunctional socialist economic model. Maduro has repeatedly balked at carrying out such reforms.

Who are the major holders of Venezuela and PDVSA bonds?

These securities are popular among funds that invest in emerging market bonds. Their high yields – which are close to 10 times higher than those of neighboring Colombia – help increase the overall profitability of the portfolios.

Institutional investors with big holdings include T. Rowe Price Associates Inc., Ashmore Investment Management Ltd., and BlackRock Investment Management Ltd. Goldman Sachs Group Inc came under heavy fire this year for purchasing $2.8 billion in PDVSA bonds at a steep discount, which opposition critics dubbed “hunger bonds.”

What would be the consequences for Venezuela of default?

Creditors could seek to seize assets Venezuela owns in other countries, including refineries such as those operated by PDVSA’s U.S. refining and marketing subsidiary Citgo. A default could also make it more complicated for Venezuela to import products from foreign companies.  Providers of goods such as food and medicine may reduce sales to Venezuela on concern that they will not get paid, or that they could find themselves ensnared in creditor lawsuits.

What is the role of Russia and China in financing

Venezuela?

Venezuela has borrowed heavily from both nations via oil-for-loan agreements in which it pays back in deliveries of crude and fuel. Investors believe support from Moscow and Beijing has been instrumental in allowing Venezuela to keep up with bond payments so far. Russia recently said it was willing to restructure a $3 billion loan.  But both China and Russia have shown impatience with Venezuela’s continued refusal to reform its Byzantine socialist economic regulations that are widely cited as the principal obstacle to growth.

Could multi-lateral institutions such as the International Monetary Fund and the World Bank get involved in the country’s debt restructuring?

Maybe, but substantial obstacles loom. There has been no formal contact between Venezuela and the IMF and World Bank although it does have a representative on each of their boards. Before the fund could get involved again, Maduro’s government would have to agree to an economic and financial assessment – something it has for years refused to do on the grounds that it violates sovereignty. Its current willingness to submit to such a review is unclear.

How would a default affect daily life in Venezuela?

Default would likely further pummel the country’s already bruised bolivar currency, which has depreciated 99 percent on the black market since Maduro took office. Reluctance to do business with Venezuela could make it harder to import goods.
…

California Gov. Jerry Brown and lawmakers asked the U.S. government Friday for $7.4 billion to help rebuild after a cluster of fires tore through the heart of wine country, killing more than 40 people and leaving thousands without housing.

 

In a letter to the White House, Brown joined California’s U.S. senators and 39 members of its congressional delegation to urge President Donald Trump and Congress to quickly adopt a disaster-related appropriations measure to support the state’s recovery.

 

Brown said the funding would go toward cleanup and programs to support housing, transportation, agriculture, environmental protection and other services for those affected by the fires.

A series of blazes that started in Northern California the night of Oct. 8 killed at least 43 people and destroyed about 8,900 homes and other buildings. At the peak, thousands of firefighters battled 21 blazes that burned simultaneously.

Officials have not yet assessed all the damage and effects of the fires, but the governor’s office and the affected counties determined that $7.4 billion in federal funding is needed to help California recover, the letter says.

 

The wildfires significantly damaged farmland, rangeland and watersheds, and more than a third of the funding requested, $3.1 billion, would go toward helping agricultural industries bounce back, including affected wineries, California officials said.

 

“The full economic impact to the agricultural, tourism, hospitality, and wine industries is still not known,” the letter says. “Nine California wineries were destroyed and 21 were damaged in the nation’s most prominent winemaking region.”

Congress last month approved $576.5 million in aid for wildfires earlier this summer in California and the U.S. West. It also has approved billions in relief funding to help states affected by hurricanes and other weather-related disasters this year.

 

Trump pledged aid for California fire victims on Oct. 10, saying he had told Brown that “the federal government will stand with the people of California.”

 

Brown said he has asked the California Department of Finance to expedite doling out $41.5 million to support the immediate needs of victims not eligible for federal aid.

During the wildfires last month, Brown declared a state of emergency for the Northern California counties of Solano, Napa, Sonoma, Yuba, Butte, Lake, Mendocino and Nevada as well as Orange County in the south.
…

The largest port complex in the nation has set goals to drastically reduce air pollution over the next several decades.

The plan approved Thursday at a meeting of the governing boards of the twin ports of Los Angeles and Long Beach outlines strategies for improving equipment and efficiency to eventually move cargo with zero emissions.

The ports estimate that the cost of the efforts ranges from $7 billion to $14 billion, but the plan does not make clear who will pick up the tab. And detailed plans for implementing each program will require approval by each port’s harbor commission.

“Collaboration will be critical to our success,” Long Beach Harbor Commission President Lou Anne Bynum said in a statement. “Moving the needle to zero requires all of us — the ports, industry, regulatory agencies, environmental groups and our communities — to pool our energy, expertise and resources.”

The plan has raised concerns that the enormous cost of the clean air goals could make the two ports less attractive in the face of competition from ports on the East and Gulf coasts.

The Los Angeles Times reported that Pacific Merchant Shipping Association President John McLaurin told commissioners he feared the cost “and its potential negative impacts on port competitiveness and the one in nine jobs in the Southern California region that are reliant on the ports.”

Largest pollution source

The neighboring ports 20 miles south of downtown Los Angeles are the single largest fixed source of air pollution in Southern California, according to the South Coast Air Quality Management District.

Main points of the plan include clean-engine milestones for trucks, creating incentives to speed up fleet turnover to near-zero and zero-emission trucks, and efficiency programs for truck reservations and staging yards. The timeline for achieving a zero-emission truck fleet is 2035.

Other elements include requiring terminal operators to use zero-emission equipment by 2020, if possible, or the cleanest available equipment.

The plan also pursues electrification of terminal equipment and expands on-dock rail, with a goal of moving 50 percent of all cargo out of the ports by train.

The ports of Los Angeles and Long Beach sprawl over more than 23 square miles (60 square kilometers) of land and water. They handle about 40 percent of U.S. container import traffic, about 25 percent of total exports, and together rank as the ninth-largest port complex in the world, according to the ports.
…

A Nigerian militant group whose attacks on energy facilities in the Niger Delta last year helped push Africa’s biggest economy into recession said Friday that it had ended its cease-fire.

The Niger Delta Avengers announced a halt to hostilities in August 2016, although they carried out attacks in October and November last year.

“Niger Delta Avenger’s cease-fire on Operation Red Economy is officially over,” the group said on its website.

“Our next line of operation will not be like the 2016 campaign, which we operated successfully without any casualties; this outing will be brutish, brutal and bloody,” it said in a section of its statement addressed to oil companies.

The move threatens Nigeria’s fragile economic growth and poses a further security challenge for President Muhammadu Buhari, in addition to the jihadist Boko Haram insurgency in the northeast and rising secessionist sentiments in the southeast.

The government has been in talks for more than a year to address grievances over poverty and oil pollution, but local groups have complained that no progress has been made, despite Buhari’s receiving a list of demands at a meeting last November.

Buhari’s office did not immediately comment.

The 2016 attacks cut oil production from a peak of 2.2 million barrels per day (mbpd) to near 1 mbpd, the lowest level in Africa’s top oil producer for at least 30 years.

Result was recession

The attacks, combined with low oil prices, caused the OPEC member’s first recession in 25 years. Crude sales make up two-thirds of government revenue and most of its foreign exchange. Nigeria came out of recession in the second quarter of this year, mostly because of the rise in oil production after attacks stopped and as prices strengthened.

The Niger Delta Avengers, who say they want a greater share of Nigeria’s energy wealth to go to the impoverished swampland region, said they decided to end the cease-fire because they had “lost faith” in local leaders.

“We can assure you that every oil installation in our region will feel the warmth of the wrath of the Niger Delta Avengers,” it said.

There have been no substantial attacks in the region since January.

Eric Omare, president of the Ijaw Youth Council, which represents the largest ethnic group in the Niger Delta, said the government had paid only “lip service” to communities’ concerns.

“The truth is that the federal government has not demonstrated any seriousness towards addressing the issues that led to the Niger Delta agitation,” Omare said, while adding that his group sought a “peaceful dialogue.”

Nigeria’s economy grew 0.55 percent year-over-year in the second quarter, largely on higher oil receipts.

The World Bank cut its 2017 growth forecast in October to 1 percent from 1.2 percent, as the oil production increase was lower than expected and non-oil sector growth was subdued.
…

Venezuela’s cash-strapped government invited creditors to a Nov. 13 meeting in Caracas on Friday, after announcing plans to potentially restructure some $60 billion in bonds that sent the OPEC nation’s debt prices plunging.

President Nicolas Maduro on Thursday vowed to make a $1.2 billion bond payment but said future payments would be refinanced. Investors were unsure about what he meant, because U.S. sanctions has taken refinancing off the table.

Many saw the announcement as paving the way for default – despite Venezuela’s promises to the contrary – because the debt burden has left the country desperately short of basic goods such as food and medicines.

A default could create a sovereign debt crisis of a scale not seen in Latin America since the massive 2001 default in Argentina that shut it out of markets for years.

Investors say a newly created debt negotiation commission has little chance of making progress, in part because it is headed by Vice President Tareck El Aissami – who is blacklisted by the United States for alleged drug dealing.

“This commission will lay the groundwork for true and transparent dialogue between the government and bondholders,” El Aissami, who has no known experience in debt negotiations, said in a televised address.

Investors were bewildered that Maduro, who narrowly won election in 2013 after the death of Hugo Chavez, appeared to be opening the door to default immediately after authorizing more than $2 billion to bond payments.

Market wisdom had been that Venezuela would not make such payments if it expected to end up in default. It will need those funds because it will be locked out of financial markets.

“Nobody has ever paid a bond in full only to announce default the next day,” said an executive from one local brokerage, who asked not to be identified.

In addition to outstanding bonds, Venezuela owes some $26 billion to bilateral and multilateral creditors and $24 billion in commercial loans, according to New York-based Torino Capital.

It put the total public sector debt at $152 billion, though Maduro’s announcement appeared to be focused primarily on bonds.

The government and PDVSA owe some $1.6 billion in bond service and delayed bond interest payments by the end of the year, plus another $9 billion in bond servicing throughout 2018.

‘Zero Possibility’

U.S. President Donald Trump, accusing Maduro of dictatorship, barred U.S. banks from participating in or negotiating new Venezuelan debt deals. That rules out swap operations, which allow investors to voluntarily exchange near-term debt for new securities that mature later.

Restructuring – which generally follows a default – refers to an involuntary arrangement under which creditors agree to change payment conditions. But they usually do so only in exchange for major economic reforms, which Maduro has balked at.

“A restructuring has a very close to zero possibility given U.S. sanctions, time constraints given the payment schedule, and the fact that Venezuela obviously does not have the technical capacity to negotiate,” said Jim Barrineau, co-head of emerging market debt at Schroders.

The International Monetary Fund issued a warning to Venezuela on Friday for failing to provide it with economic data on time and gave it six months to address the problem. The IMF could issue a “declaration of censure” for non-compliance, two sources told Reuters.

Although the IMF’s warning is unrelated to Maduro’s announcement, it added to investor worries about the economy.

Venezuelan bond prices took a beating on Friday.

Near-term maturities were hardest hit. The PDVSA 2021 bond dropped 20 percentage points to a bid price of 27 points.

Longer-dated bonds fared better, with PDVSA’s 2027 bond slipping 4.83 points to bid 25.13. Venezuela’s 2018 bond was down 31 points.

Investors holding longer-dated paper generally expect a default will take place well before maturity, while the profitability of short-term bets is more dependent on the bonds being paid off.

Bank of America on Friday estimated that bond prices would drop to around 20 cents on the dollar if a default took place.

There was no immediate impact on oil exports and production from Maduro’s announcement.

EMTA, a trade association that sets practices for emerging markets, recommended that Venezuelan bonds not under U.S. sanctions continue trading with accrued interest – a sign Venezuela is for now expected to keep up with its payments.

The Washington-based International Institute of Finance (IIF) held an investor call for bondholders in the event talks with the government go ahead, according to two market sources who participated in the call.

Most were not planning to go to Caracas, the sources said. IIF declined to comment.

‘Nobody Trusts His Government’

Leaders of the opposition-led National Assembly said on Friday that any restructuring would be invalid without congressional approval.

“Maduro won’t be able to restructure the debt because nobody in the world trusts his government,” National Assembly head Julio Borges said.

Though there is widespread public disquiet at economic hardship, the opposition coalition is cracking after a disastrous showing at last month’s gubernatorial elections, and there is speculation Maduro may bring forward the presidential vote, which had been expected for the end of 2018.

Vice President El Aissami said a $1.2 billion payment on PDVSA’s 2017N bond that matured on Thursday had already been transferred. The Central Bank’s website showed a drop of $430 million in international reserves, signaling the government may have dipped into reserves to pay the PDVSA bond.

That pushed reserves to $9.7 billion, their lowest level in at least 20 years.

The company spent days trying to make payment on its 2020 bond, which finance industry sources attributed to nervousness by bank officials over possible U.S. sanctions violations.

Principal payments on the two bonds were moving through the clearing system without a problem, a source familiar with the matter said on Friday.

The next hard payment deadline for PDVSA is an $81 million bond payment that was due on Oct. 12 but on which the company delayed payment under a 30-day grace period. Failing to pay that on time would trigger a PDVSA default, investors say.

That would expose Venezuela and PDVSA to lawsuits by creditors seeking to seize assets such as refineries in the United States.
…

In a warehouse outside Paris, university drop-out Celine Galland stacks  palettes and fills out an inventory sheet, part of a logistics apprenticeship she hopes will put a decade of short-term contracts and unemployment behind her.

France’s jobless rate has sat stubbornly above 9 percent for nearly a decade. President Emmanuel Macron blames a notoriously rigid labor market and has two ideas to change it: more vocational training for school leavers and making it easier for workers to retrain and change jobs.

On Nov. 10, his government will open talks with unions, business leaders and the regions on how to reform the apprentice system, cutting through its bureaucracy and financing.

The former investment banker promises an extra 15 billion euros ($17 billion) for professional training over five years, but beyond the money he will need to counter public prejudice if he is to reverse a slide in apprentice numbers.

University did not sit well with Galland, who quit after several weeks. Since then the 31-year-old has worked at menial jobs in McDonald’s and local supermarkets.

“What I love about this is the variety of tasks,” she enthused last week at an AFTRAL logistics and transport training centre in Savigny-le-Temple, east of Paris. “There’s no boredom in this job.”

France’s unemployment rate is more than double Britain’s and several points higher than Germany’s. Particularly troubling for Macron’s centrist government is youth unemployment — nearly one in four 15-24 year olds are without a job, according to official data, a major drag on long-term growth.

Macron has already defied union-led street protests to loosen labor laws, necessary he says to make hiring and firing workers cheaper and easier for small companies.

Leftist opponents and hardline trade unions accuse him of abandoning France’s long-cherished ideals of an egalitarian society to side instead with corporate interests.

But the 39-year-old president is standing firm. He promises greater support for workers through an overhaul of training and a revamped welfare system, pointing to the Nordic model of flexibility in the labor market underpinned by security through the social welfare system.

He will, though, need to overturn a widely-held perception that apprenticeships are a poor alternative to school and university diplomas, which France obsesses over.

“We have to put an end to French defeatism, to people saying that apprenticeships are for those who have failed,” Macron said this month while visiting a college.

Decline in apprenticeships

France’s existing apprenticeship system involves the signing of a contract between the apprentice, the employer and the training institution. Students earn a percentage of the minimum wage and gain workplace experience, while companies can source talent and receive welfare payment waivers.

France lags behind numerous European peers. OECD data from 2016 shows 4.9 percent of French youths aged between 16 and 29 completed apprenticeships in 2012, compared with 8.6 percent in Denmark and 15.1 percent in Germany.

As a recovery in the euro zone’s second biggest economy gathers strength, employers complain they cannot fill vacancies despite the near double-digit jobless rate because of a skills gap — a mismatch Macron says apprenticeships can help fix.

“Our figures have shown a clear trend for several years: 80-95 percent of our apprentices are in jobs within six months of finishing,” said Pierre de Surone, director of the Savigny-Le-Temple training center. “Apprenticeship works!”

While the number of higher education apprentices is rising, the number of youngsters gaining college-level apprenticeship diplomas fell to 260,000 in 2016 from 335,000 a decade ago, Education Ministry data shows.

That presents a challenge for Macron. Data published by Cereq, a French government think-tank, shows apprenticeships boost the employability of individuals with low academic qualifications more than for those at higher education grade.

“We don’t value practical jobs, technical jobs. If we don’t give recognition to these jobs then we’re in trouble,” said Gabriel Schumacher, director at a local distribution company.

 
…

President Donald Trump is making his mark on the US Federal Reserve, naming former investment manager and central bank governor Jerome Powell to replace Janet Yellen, whose term expires in February. If confirmed by the Senate, the next chairman of the Federal Reserve will oversee U.S. monetary policy and maintain the stability of the world’s largest economy. Mil Arcega has more from the nation’s capital.
…

Venezuela on Thursday announced plans to restructure its burgeoning foreign debt, a move that may lead to a default by the cash-strapped OPEC nation whose collapsing socialist economy has left its population struggling to find food and medicine.

President Nicolas Maduro vowed to make a $1.1 billion payment on a bond maturing Thursday, but also created a commission to study “restructuring of all future payments” in order to meet the needs of citizens.

Venezuela has few avenues to do that though because of sanctions by the United States that bar American banks from participating in or even negotiating such deals.

Thus, Maduro’s most readily available recourse to ease payments is unilaterally halting them.

“I am naming a special presidential commission led by Vice President Tareck El Aissami to begin refinancing and restructuring all of Venezuela’s external debt and (begin) the fight against the financial persecution of our country,” Maduro said in a televised speech.

Billions in bonds

Venezuela and state-owned companies have $49 billion in bonds governed by New York Law and promissory notes, according to New York-based Torino Capital.

The government and state oil company PDVSA owe about $1.6 billion in debt service and delayed interest payments by the end of the year, plus another $9 billion in bond servicing in 2018.

The next hard payment deadline for PDVSA is an $81 million bond payment that was due Oct 12 but on which the company delayed payment under a 30-day grace period. Failing to pay that on time would trigger a default, investors say.

That would likely make countries less willing to do business with Venezuela, aggravating shortages of food and medicine and creating further problems for its oil industry, which is hobbled by under-investment.

Wall Street for years pumped billions of dollars into Venezuela by way of bond purchases, passing off the revolutionary rhetoric of the ruling Socialist Party as bluster that belied an iron-clad willingness to pay its debts.

Maduro surprised many by maintaining debt service after the 2014 crash in oil prices, diverting hard currency away from imports of food and medicine toward Wall Street investors.

PDVSA carried out a debt renegotiation in 2016.

But that option was taken off the table after U.S. President Donald Trump levied sanctions blocking the purchase of new debt issued by Venezuela and government-owned entities.

Investors puzzled

Investors seemed puzzled by Maduro’s statements Thursday, which neither clearly declared default nor laid out a path to easing payment burden.

“At no moment did he say they wouldn’t pay, so it’s not a default,” said Alejandro Grisanti of Caracas-based consultancy Ecoanalitica. “But in this environment, Maduro has no way to restructure or refinance as he said today.”

And the mere presence of El Aissami on the new debt commission makes it a non-starter for U.S. financial institution. He was blacklisted this year by U.S. Treasury Department on accusations he is involved in drug trafficking.

The increased pressure of the sanctions has made banks more nervous about working with PDVSA, according to financial industry sources, leading to delays in simple operations.

PDVSA struggled for days to deliver funds for a bond payment due last week amid confusion over which banks were charged with transferring the money.

​Toll on Venezuelans

Critics say Maduro’s decision to put debt above imports has taken a huge toll on the population.

Child malnutrition has reached the scale of a humanitarian crisis in four Venezuelan states, according to a May 2017 report by Caritas Internationalis, a Rome-based nongovernmental organization with links to the Catholic Church. Medicine shortages have also left children dying of preventable diseases.

Officials say ideological adversaries are exaggerating problems for political effect.

But the situation is a stark contrast to the oil boom years of late socialist leader Hugo Chavez, who spent generously on social welfare programs while borrowing profusely to keep spending at full tilt.

Venezuela’s debt is the highest yielding of emerging market bonds measured by JPMorgan’s EMBI Global Diversified Index , paying investors an average of 31 percentage points more than comparable U.S. Treasury notes.

That is nearly double the spread on bonds issued by Mozambique, which is already in default, and more than six times the spread on bonds from war-torn Ukraine.
…

Officials in the U.S. and Puerto Rico gave differing views Thursday on when power will be fully restored to the U.S. territory after Hurricane Maria hit as a Category 4 storm more than a month ago.

Ricardo Ramos, director of the state-owned power company, said the utility has restored 35 percent of the electrical system’s regular output and expects to reach 50 percent by mid-November and 95 percent by mid-December. But Ray Alexander, director of contingency operations at the U.S. Army Corps of Engineers, said the corps’ goal is to have 50 percent restored by the end of November and 75 percent by the end of January.

 

“We are focused on executing the mission we’ve been assigned,” Alexander said at a hearing in Washington, adding that the agency has been working with the U.S. Department of Energy to help develop a more resilient electrical grid for Puerto Rico.

Gov. Ricardo Rossello criticized the Army Corps of Engineers earlier this week for what he said was a lack of urgency in responding to Puerto Rico’s island-wide blackout.

The discrepancy came as President Donald Trump cleared the way for additional federal funding for Puerto Rico by amending a September disaster declaration to increase the share of rebuilding and recovery costs borne by the U.S. government.

Trump had already authorized the Federal Emergency Management Agency to pay 100 percent of some cleanup and emergency costs for 180 days. Washington will now pay 90 percent of the additional cost of rebuilding Puerto Rico, including repair of public infrastructure like hospitals, bridges and roads and restoration of the island’s devastated power grid.

Typically, U.S. states cover 25 percent of those costs, with federal taxpayers covering 75 percent. Puerto Rico’s finances were in shambles even before the storm made landfall in September.

A large swath of the island still has no electricity, and complaints are widespread among business owners who say losses are mounting and from parents who say their children need to start school. Nearly 20 percent of the island remains without water since Maria hit Sept. 20 with winds of up to 154 mph, killing at least 55 people. Tens of thousands have lost their jobs and some say more than 470,000 people could leave the island in upcoming years.

“If we don’t re-establish power and other basic services, the damage to our economy will be even greater,” said Puerto Rico’s public affairs secretary, Ramon Rosario. “We cannot allow that, and we have established clear goals.”

The difference in estimates came two days after the state-owned utility canceled a heavily scrutinized $300 million contract awarded to Whitefish Energy Holdings. The Montana-based company is located in the hometown of U.S. Interior Secretary Ryan Zinke and had only two-full time employees before the storm hit. Crews subcontracted by Whitefish will finish their projects before Nov. 30, officials said.

Ramos continued to praise Whitefish despite local and federal audits of the contract. “They’ve performed very well,” he said.

Ramos said he is recommending that Oklahoma-based Cobra Acquisitions, which has a $200 million contract with the government, subcontract the workers Whitefish had employed if the contract allows for it. Ramos also said Cobra’s contract is “practically” the same as the one awarded to Whitefish.

He said the power company sent letters requesting help and received responses from the American Public Power Association and Edison Electric Institute. In addition, New York Gov. Andrew Cuomo announced Thursday that his state’s power authority would send 350 workers and 220 bucket trucks next week along with special equipment. It also is sending a tactical power restoration team that includes 28 engineers and 15 damage assessment experts.

The Army Corps of Engineers said it also expects about 2,100 workers to arrive by mid-November to help restore power.

 
…

Ivanka Trump, U.S. President Donald Trump’s daughter and informal adviser, told a summit in Tokyo Friday that the world must boost women and minority participation in the fields of science, technology, engineering and math (STEM).

Ivanka Trump, seen as an important influence on her father, has made women’s issues one of her signature policy areas since beginning her role at the White House. Her comments came ahead of her father’s trip to Asia, his first since taking office in January, that begins in Japan on Sunday.

 

WATCH: Ivanka Trump on Women’s Participation in STEM Fields

“Female and minority participation in STEM fields is moving in the wrong direction,” she said at the World Assembly for Women summit. “We must create equal participation in these traditionally male-dominated sectors of our economy.”

She said her father’s tax reforms, unveiled by Republicans in the U.S. House of Representatives on Thursday, would benefit American families.

“We are seeking to simplify the tax code, lower rates, expand the child tax credit, eliminate the marriage penalty, and put more money back in the pockets of hard-working Americans,” she told a meeting room in a Tokyo hotel that had a number of empty seats.

Japanese Prime Minister Shinzo Abe said his government was aiming to mobilize women in Japan’s workforce and boost economic growth, launching policies such as improved childcare in his “Womenomics” program.

“We’ve put our full strength into creating an environment where it’s easy for women to work,” Abe said in an opening address to the conference. “I really feel that Japan has come a long way,” he said. 

Japan’s gender gap remains wide despite such efforts, with little progress made since Abe vowed at the United Nations in 2013 to create “a society where women can shine.”

Japan ranked 114 out of 144 in the World Economic Forum’s 2017 Global Gender Gap report, sandwiched between Guinea and Ethiopia and down 13 places since Abe took power.

Abe appointed only two women to ministerial posts in a Cabinet reshuffle in August, down from three and five respectively in his previous two Cabinets. Only 14 percent of Japan’s lawmakers are women.

Men also dominate decision-making in business in Japan. Only 3.7 percent of Japanese-listed company executives were women at the end of July, according to the Cabinet Office, barely changed from 3.4 percent a year earlier.

 
…

Though the Trump administration has taken steps to undo regulations aimed at cutting greenhouse gas emissions, experts say economic forces are helping to push down U.S. emissions anyway.

U.N. climate negotiators will meet in Bonn, Germany, November 6-17. It will be their first gathering since President Donald Trump announced the United States would withdraw from the Paris climate agreement.

Trump considers efforts to fight climate change a barrier to economic growth. Promising to dominate global energy markets and put struggling U.S. coal miners back to work, he has taken a series of steps to roll back regulations aimed at fighting climate change. They include moving to revoke the Clean Power Plan, former President Barack Obama’s primary tool for cutting carbon emissions from power plants.

Energy transition

Losing those regulations won’t stop the transition in energy sources that’s already underway, according to George Washington University Solar Institute Director Amit Ronen.

“We’re still going to meet the goals of the Clean Power Plan in most states, even if it’s withdrawn,” he said, “just because we’re substituting so much natural gas and renewables for coal.”

Coal-fired power plants — the most climate-polluting source of electricity — are shutting down across the country. More than 500 closed between 2002 and 2016, and additional plants are slated for closure, according to the Department of Energy. Electric utilities are replacing them with cheaper, cleaner natural gas.

And renewable sources, such as wind and solar, are booming. Prices have plummeted. Renewables are beginning to be cost-competitive with fossil fuels.

Solar tariffs

Though electric utilities are choosing natural gas and renewables over coal, the Trump administration may influence energy markets in other ways.

A case before the International Trade Commission will soon give the president the authority to put tariffs on imported solar panels — and nearly all of them are imported.

The case is billed as an effort to help domestic solar manufacturers. While Trump has not embraced renewable energy, he has said he wants to support U.S. manufacturing jobs.

But solar manufacturing is mostly automated. Far more people work in labor-intensive installation. The Solar Energy Industries Association has opposed measures limiting imports, saying it would cost jobs.

The International Trade Commission recommended tariffs smaller than what the plaintiffs asked for. But Trump gets the last word, expected before mid-January.

Even more severe trade restrictions would not extinguish the renewables industry, however.

“[A tariff] certainly adds cost and might stifle solar development,” said Rhodium Group analyst John Larsen. “But the overall clean energy picture doesn’t get hit too hard.”

That’s because many states and cities have policies requiring electric utilities to use renewable energy, Larsen noted. They are stepping up their efforts to cut greenhouse gases, even as the federal government is pulling back. If solar dips, wind may fill in the gap.

Subsidizing coal, nuclear

The proposal that could have a bigger impact on electricity markets comes from the Trump administration’s Department of Energy.

With so many coal plants shut down and eight nuclear plants on the brink of closure, Secretary Rick Perry said the reliability of the U.S. electric grid is in jeopardy.

Because coal and nuclear plants provide constant power and have their fuel supplies on-site, Perry suggested paying them more than other sources for their electricity.

The proposal has made unusual allies of the natural gas, solar and wind industries. They wrote joint comments opposing it. And critics across the political spectrum have blasted it.

“This has no intellectual depth. It’s unprofessional. It’s badly thought out,” said finance director Tom Sanzillo of the Institute for Energy Economics and Financial Analysis.

Sanzillo noted that the Department of Energy study on which Perry based his recommendations does not show that grid reliability is threatened. And Perry himself rejected a similar proposal as governor of Texas, where the growing influx of wind power was pushing coal plants out of business.

Not fast enough

Ultimately, experts say, the Trump administration has limited powers to save the coal industry.

While coal’s decline is helping to reduce greenhouse gas emissions, however, experts say they are not falling fast enough to avoid the worst of climate change.

Under the Paris climate agreement, nations agreed to keep global warming below 2 degrees Celsius above pre-industrial levels. Former President Obama pledged that the United States would reduce its greenhouse gas emissions by 26 percent to 28 percent below 2005 levels by 2025.

Even the Clean Power Plan, plus other Obama-era regulations, still would have left the United States short of that goal, Larsen said.

“The current U.S. trajectory is not in line with Paris, and the U.S. commitment in Paris wasn’t necessarily on track for 2 degrees,” he said. “It was a starting point, a down payment.

“Hopefully, other countries step up to the plate to fill in some of that gap. But that’s a big if.”

The latest report from the U.N. Environment Program says pledged emission cuts worldwide add up to just one-third of what is needed to keep the planet below the 2-degree target.
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Members of the U.S. International Trade Commission on Tuesday made three different recommendations for restricting solar cell and panel imports on Tuesday, giving President Donald Trump a range of choices to address injury to domestic producers.

The recommendations range from an immediate 35 percent tariff on all imported panels to a four-year quota system that allows the import of up to 8.9 gigawatts of solar cells and modules in the first year. The president’s ultimate decision could have a major impact on the price of U.S. power generated by the sun.

Both supporters and critics of import curbs on solar products were disappointed by the proposals, which were unveiled at a public meeting in Washington.

Trade remedies were requested in a petition earlier this year by two small U.S. manufacturers that said they were unable to compete with cheap panels made overseas, mainly in Asia. The companies, Suniva Inc and the U.S. arm of Germany’s SolarWorld AG, said Tuesday’s recommendations did not go far enough to protect domestic producers.

“The ITC’s remedy simply will not fix the problem the ITC itself identified,” Suniva said in a statement. The company, which is majority owned by Hong Kong-based Shunfeng International Clean Energy, filed the rare Section 201 petition nine days after seeking Chapter 11 bankruptcy protection in April. It had sought a minimum price on panels of 74 cents a watt, nearly double their current cost.

One analyst said the stiffest remedy recommended, a 35 percent tariff on solar panels, would add about 10 percent to the cost of a utility-scale project but would have a negligible impact on the price of residential systems because panels themselves make up a small portion of their overall cost.

“It’s not nearly the doomsday impact we were potentially expecting,” said Camron Barati, a solar analyst with market research firm IHS Markit Technology.

But the top U.S. solar trade group, the Solar Energy Industries Association, said in a statement on Tuesday that any tariffs would be “intensely harmful” to the industry. The group has lobbied heavily against import restrictions on the grounds that they would undermine a 70 percent drop in the cost of solar since 2010 that has made the technology competitive with fossil fuels.

Recommendations

The ITC will deliver its report to Trump by Nov. 13. He will have broad leeway to come up with his own alternative or do nothing at all. Since only two members agreed on the same restrictions, there was no majority recommendation from the four-member commission.

“There is still plenty to be worried about,” said MJ Shiao, who follows the U.S. solar market for GTM Research.

Trump has vowed to protect U.S. manufacturers from low-priced imports, and U.S. Commerce Secretary Wilbur Ross has talked about tariff-rate quotas as a flexible way to protect some industries, allowing imports in as needed, but only up to a certain level before high tariffs kick in.

Commissioners David Johanson and Irving Williamson urged the president to impose an immediate 30 percent tariff on completed solar modules, to be lowered in subsequent years, and a tariff-rate quota on solar cells. Imports of cells in excess of one gigawatt would be subject to a 30 percent tariff that would decline after the first year.

ITC Chair Rhonda Schmidtlein recommended an immediate 35 percent four-year tariff on imported solar modules, with a four-year tariff rate quota on solar cells. This would impose a 30 percent tariff on imports exceeding 0.5 gigawatts and 10 percent on imports below that level. These tariffs would decline over a four-year period.

In the most lenient recommendation, Commissioner Meredith Broadbent said the president should impose a four-year quota system that allows for imports of up to 8.9 gigawatts of solar cells and modules in the first year.
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Property damage claims from a series of deadly October wildfires now exceed $3.3 billion, California Insurance Commissioner Dave Jones said Tuesday.

The figure represented claims for homes and businesses insured by 15 companies and was more than triple the previous estimate of $1 billion. Jones said the number would continue to rise as more claims were reported.

The amount of claims now reported means that the fires caused more damage than California’s 1991 Oakland Hills fire, which was previously the state’s costliest, with $2.7 billion in damage in 2015 dollars, according to the Property Casualty Insurers Association of America.

Forty-three people were killed in the October blazes that tore through Northern California, including the state’s renowned winemaking regions in Napa and Sonoma counties. They destroyed at least 8,900 buildings as more than 100,000 people were forced to evacuate. It was the deadliest series of fires in California history.

Several dozen buildings were also damaged or destroyed in fires in Southern California’s Orange County.

“Behind each and every one of these claims … are ordinary people, Californians who lost their homes, lost their vehicles, in some cases whose family members lost their lives,” said Jones, a Democrat who is running for attorney general.

Jones said there were just over 10,000 claims for partial home losses, more than 4,700 total losses and about 700 for business property. There were 3,200 claims for damaged or destroyed personal vehicles, 91 for commercial vehicles, 153 for farm equipment and 111 for watercraft.

The figures do not reflect uninsured losses, including public infrastructure and the property of people who were uninsured or underinsured.

Arson suspect’s warning

Meanwhile, a man facing arson charges for a wildfire that destroyed two homes south of the San Francisco Bay Area had an ominous message for a prosecutor during a court hearing Tuesday: “You’re next.”

Marlon Coy, 54, uttered the words while glaring at Santa Cruz County District Attorney Jeffrey Rosell while he explained four of the felony charges Coy is facing, the Santa Cruz Sentinel reported.

Coy pleaded not guilty to charges of arson of a nondwelling, arson causing bodily injury and being a felon in possession of a firearm, the newspaper reported.

Witnesses saw Coy start the fire on October 16 near a property in Santa Cruz County connected to someone with whom he had a dispute, sheriff’s officials said.

Coy was arrested in possession of jewelry and a bicycle taken from a home that had been burglarized while under evacuation, according to sheriff’s officials.
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