YCLOAK

Greece far exceeded its international lenders’ budget demands last year, official data showed on Friday, posting its first overall budget surplus in 21 years even when debt repayments are included.

The primary surplus — the leftover before debt repayments that is the focus of International Monetary Fund-European Union creditors — was more than eight times what they had targeted.

Data released by Greek statistics service ELSTAT — to be confirmed on Monday by the EU — showed the primary budget surplus at 3.9 percent of gross domestic product last year versus a downwardly revised 2.3 percent deficit in 2015.

This was calculated under European System of Accounts guidelines, which differ from the methodology used by Greece’s in bailout deliberations.

Under EU-IMF standards, the surplus was even larger.

Government spokesman Dimitris Tzanakopoulos said the primary budget surplus under bailout terms reached 4.19 percent of gross domestic product last year versus the 0.5 percent of GDP target.

“It is more than eight times above target,” Tzanakopoulos said in a statement. “Therefore, the targets set under the bailout program for 2017 and 2018 will certainly be attained.”

Debt-strapped Greece and its creditors have been at odds for months over the country’s fiscal performance, delaying the conclusion of a key bailout review which could unlock needed bailout funds.

The IMF, which has reservations on whether Greece can meet high primary surplus targets, has yet to decide if it will fund Greece’s current bailout, which expires in 2018.

The 2016 outperformance could lead the fund to revise some of its projections. The IMF’s participation is seen as a condition for Germany to unlock new funds to Greece.

Athens hopes to discuss the fund’s participation and its projections at the sidelines of the IMF’s spring meetings in Washington. EU and IMF mission chiefs are expected to return to Athens on Tuesday to discuss the bailout review.

After meeting Greek Finance Minister Euclid Tsakalotos in Washington, IMF chief Christine Lagarde said: “We had constructive discussions in preparation for the return of the mission to discuss the two legs of the Greece program: policies and debt relief.”

ELSTAT said the overall surplus including debt repayments reached 0.7 percent of GDP compared with a 5.9 percent deficit in 2015.

Analysts attributed the outperformance to the implementation of bailout measures and increased efforts to improve the state’s revenue collection capacity.

“It’s an impressive outperformance versus the bailout program target for the primary surplus,” said Athens-based Eurobank’s chief economist Platon Monokroussos.

“The data suggests that the 2017 fiscal target under the bailout program is fully attainable under the current baseline macroeconomic scenario,” he said.

Athens faces a primary surplus target of 1.75 percent of GDP this year.
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Canadian Prime Minister Justin Trudeau said Friday that he plans to be respectful and engage the United States with a fact-based approach to solving problems a day after Donald Trump called Canada a “disgrace” for policies that hurt American farmers.

 

Trudeau said during a news conference alongside visiting Italian Prime Minister Paolo Gentiloni on Parliament Hill that he will stand up for Canada’s interests and people.

 

“The way to do that is to make arguments in a respectful fashion, based on facts, and work constructively and collaboratively with our neighbors,” said the Liberal leader.

 

The U.S. president took aim at Canada’s dairy industry this week for creating a new lower-priced classification of milk product that he argues hurts U.S. producers. Trump said it has put farmers in Wisconsin and New York state out of business.

 

Canada changed its policy on pricing domestic milk to cover more dairy ingredients, leading to lower prices for Canadian products including ultra-filtered milk that compete with U.S. milk. Canada’s dairy sector is protected by high tariffs on imported products and controls on domestic production as a means of supporting prices that farmers receive.

 

Trump said on Thursday “what they’ve done to our dairy farm workers is a disgrace”.

 

The U.S. president criticized Canadian policies related to a few industries including lumber, timber and energy, adding that officials will have to get to the negotiating table with Canada very quickly.

 

Trump also said this week he would make “some very big changes” to the NAFTA treaty with Canada and Mexico or “we are going to get rid of NAFTA for once and for all.”

 

The threat to get rid of or alter NAFTA is a potential problem for Canada, whose biggest trade partner is the United States.

 

Gentiloni and Trudeau on the other hand were keen to display their support for free trade and open borders, including the Canada-EU free trade pact, amid growing populist opposition.

 

Gentiloni, who had been in Washington on Thursday, said Canada and Italy share a common, pro-trade world view and that they live in “interesting times.” He also said the anti-trade movement is bigger than one single country.

 

“The United States president’s opinions are perfectly legitimate,” the Italian leader said through a translator. “But we have to be aware of the fact that this push goes against free trade as a catalyst for world growth … that is why we need to work politically, culturally and economically to fight against this trend.”

 

Italy is to host the G7 leaders’ summit next month, which will be part of Trump’s entry into the world of multilateral summitry.
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The U.S. government says it will not waive trade sanctions for U.S. companies seeking to drill for oil in Russia, including for U.S. oil giant ExxonMobil.

Treasury Secretary Steven Mnuchin made the announcement Friday, indicating that the United States would maintain a tough stance on sanctions against Russia.

“In consultation with President Donald J. Trump, the Treasury Department will not be issuing waivers to U.S. companies, including Exxon, authorizing drilling prohibited by current Russian sanctions,” he said in a brief statement.

Exxon has sought permission to drill in several areas that are currently off limits because of the Russian sanctions, including in the Black Sea. It sought to resume a joint venture with Rosneft, a Russian state-owned oil company.

Exxon’s former CEO Rex Tillerson, who is now secretary of state in Trump’s Cabinet, has recused himself from the administration’s decision.

Tillerson has established close ties with Russian officials, including President Vladimir Putin, and has previously spoken out against the sanctions.

Crimea-related sanctions

The United States and the European Union imposed sanctions on Russia in 2014 in response to Moscow’s annexation of the Crimea region of Ukraine.

The European Union sanctions do not keep European oil companies from operating in Russia, a fact that has frustrated Exxon.

“We understand the statement today by Secretary Mnuchin in consultation with President Trump,” Exxon spokesman Alan Jeffers said in statement. However, he said the company was hamstrung by the U.S. government’s position.

“Our 2015 application for a license under the provisions outlined in the U.S. sanctions was made to enable our company to meet its contractual obligations under a joint venture agreement in Russia, where competitor companies are authorized to undertake such work under European sanctions,” Jeffers said.

Exxon has said the company previously received several waivers from the sanctions during the Obama administration for limited work with Rosneft.

Friday’s announcement comes as U.S. lawmakers continue to investigate possible ties between some Trump campaign aides and Moscow. It also comes at a time when relations between the United States and Russia have become more strained following a U.S. missile strike in Syria.
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The global flow of remittances declined in 2016 for the second year in a row, potentially reducing access to health care, education and food for millions of families in developing nations.

Friday’s report from World Bank experts says migrants sent $429 billion from wealthy nations back to their home countries during the year. That is a drop of 2.4 percent from the previous year. 

Falling oil prices in commodity exporting nations and weak economic growth in Europe took a toll on the flow of money.

India is the world’s largest receiver of remittances and saw money sent home by its overseas workers fall by nearly $63 billion, a drop of nearly 9 percent. Steep declines were also reported in Bangladesh, Nigeria and Egypt.

The report says it costs about $15 on average to send a $200 remittance home, with even higher costs for destinations in sub-Saharan Africa. World Bank officials would like to cut that fee by more than half, but the effort is complicated by new rules intended to make it harder to launder money and commit other illegal acts.

The report in the Migration and Development Brief also says the number of refugees headed for Europe increased by 273,000 to a total of 1.6 million. Globally, refugee flows rose by 1.4 million to a total of 16.5 million. 

The lead author of the brief says migration will “almost certainly” increase due to large income gaps, widespread youth unemployment, climate change, fragility and conflict. Dilip Ratha of the World Bank says migration is also being driven by aging populations in wealthy nations. As developed nations lose workers to retirement, new employees may be needed to fill those gaps.
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As economic and political leaders gather in Washington for the annual spring meetings of the World bank and International Monetary Fund — new warnings Thursday about the impact of rapid change on the global economy. At issue, the pace of technological advance and its Impact on jobs, particularly in developing economies. Mil Arcega has more.
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U.S. officials are reviewing Venezuela’s seizure of General Motors’ assets in the country, U.S. State Department spokesman Mark Toner said Thursday.

“We are reviewing the details of the case,” Toner said in a statement, saying the United States hoped to resolve the matter “rapidly and transparently.”

GM said Wednesday that Venezuelan authorities had taken over its plant in the industrial hub of Valencia, adding that it was halting operations and laying off 2,700 workers due to the “illegal judicial seizure of its assets.”

The largest U.S. automaker vowed to “take all legal actions” to defend its rights. The seizure comes amid a deepening economic crisis in leftist-led Venezuela that has already roiled many U.S. companies.

The seizure is the result of a civil dispute with a Venezuelan concessionaire dating back to 2000 and does not represent a nationalization as such, according to local media reports.

GM, the market leader in Venezuela for 35 years, said in a statement that in addition to the plant seizure “other assets of the company, such as vehicles, have been illegally taken from its facilities.”

Total auto production in Venezuela fell to a historic low of 2,849 cars in 2016, nearly 75 percent less than the year before, according to Venezuela’s automotive industry group.

In the first two months of 2017, GM has not produced any vehicles, while total Venezuelan auto production was just 240 vehicles, down 50 percent over the same period last year. The New York Times reported the GM plant had been closed for the last six weeks as a result of a takeover by members of one of its unions.

Nearly all vehicles built in Venezuela in the first two months this year were assembled by Toyota Motor Corp, which said Thursday that its plant was operating normally.

But a spokesman added the automaker was “only producing based on orders that come in.”

Venezuela’s car industry has been hit by a lack of raw materials stemming from complex currency controls.

In early 2015, Ford Motor Co wrote off its investment in Venezuela when it took an $800 million pre-tax writedown. The company said Thursday it was not producing vehicles in Venezuela.

The South American nation’s economic crisis has hurt many other U.S. companies, including food makers and pharmaceutical firms. A growing number are removing their Venezuelan operations from their consolidated accounts.
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President Donald Trump has ordered an investigation into whether foreign steel imports are damaging U.S. national security, saying his administration would “fight for American workers and American-made steel.”

The probe is authorized under a rarely used section of a 1962 trade law that allows a president to restrict imports in cases where security interests are at stake.

“This has nothing to do with China,” Trump insisted, adding, “This has to do with worldwide, what’s happening. The dumping problem is a worldwide problem.”

Steel industry

Surrounded by steel industry executives at an Oval Office signing ceremony Thursday, Trump clearly stated the probe was not directed at China, which has long been accused of dumping its excess steel production on U.S. markets.

The president said the investigation could be completed within 50 days, far ahead of the nine months prescribed by law.

Shares of steel companies surged on news of the probe. The price of United States Steel Corporation stock was up more than 8 percent soon after the announcement.

“The important question is protecting our defense needs,” said Commerce Secretary Wilbur Ross, who added the investigation is designed to find a balance between free trade and national security while building up the U.S. military. “And we will do whatever is necessary to do that.”

Ross noted that steel imports rose nearly 20 percent in the first two months of this year, much of it from China, and now make up more than 26 percent of the entire American marketplace.

“Steel imports, despite measures already taken, have continued to rise despite repeated Chinese claims that they were going to reduce their steel capacity,” he said. “Instead, they have actually been increasing it consistently.”

Investigation sought

Steel industry executives attending Thursday’s Oval Office ceremony applauded Trump’s call for an investigation.

Mario Longhi, the CEO of U.S. Steel Corporation, said, “The signing of this executive order clearly demonstrates your understanding of the fundamental importance that our industry has, not just to the national economy, but to the national defense.”

Trade experts and free market advocates, however, were skeptical of Trump’s rationale for the investigation.

“It’s just a bogus attempt to limit imports,” said Dan Griswold, a research fellow at the Mercatus Center at Virginia’s George Mason University.

Griswold said any move to restrict imports would be bad for U.S. industry and consumers because it would drive up prices for products that contain steel, from appliances to automobiles to new houses.

“But it will make certain steel producers and their politically active unions increase their profits and the gains they make by restricting competition,” he said.

Issue of national security

Gary Hufbauer, senior fellow at the Peterson Institute of International Economics in Washington, questions the idea that dependence on foreign steel is a national security issue.

Hufbauer, who served as a senior Treasury Department official under former President Jimmy Carter, said the probe reflects the thinking of Commerce Secretary Ross, a billionaire investor with close ties to the steel industry.

“It’s not coming from the defense industry,” Hufbauer said. “It’s coming from the steelmakers, and key administration figures starting with Ross and others who feel the steel industry has been beset by steel from abroad and that’s weakening the U.S. steel industry. But that’s from a commercial standpoint, not a defense standpoint.”

Ross stepped down from the board of the Luxembourg-based steel giant ArcelorMittal after accepting the job as Trump’s commerce secretary.

A financial disclosure form he filed with the Office of Government Ethics shows Ross served on ArcelorMittal’s board for nearly a decade, and was paid more than $100,000 in director’s fees last year. He was also reported to have divested himself of between $750,000 and $1.5 million in equity holdings in the company, which is described on its home page as “the world’s leading integrated steel and mining company.”

Bloomberg News reported this week that while U.S. steelmakers may be counting on Trump to help business, any regulatory change could take years.

In a note to clients, Bloomberg Intelligence analyst Caitlin Webber wrote that changes would also likely be challenged at the World Trade Organization.
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Former Brazilian Finance Minister Antonio Palocci told a court hearing Thursday that he could provide details of a political kickback scheme, which could threaten former President Luiz Inacio Lula da Silva’s chances of running in the 2018 election.

In the video of the hearing released Thursday, Palocci made the offer directly to Judge Sergio Moro, who has overseen a sweeping three-year-old corruption investigation, known as Operation Car Wash, that has upturned Brazilian politics.

“I could immediately present all the facts, with names, addresses and operations carried out, things that will certainly be of interest to Car Wash,” Palocci said in the video of the hearing.

Operation Car Wash, named for a gas station in what began as a money laundering probe in the capital Brasilia, has uncovered a bribery scheme at the highest levels of Brazilian politics in return for contracts at state-run enterprises.

Palocci, one of the closest advisers to Lula and former President Dilma Rousseff from 2003 to 2011, was jailed in September on charges he ran a bribery scheme funneling money to the Workers Party, which then ruled Brazil.

Newspaper Folha de S.Paulo reported Tuesday, without citing sources, that Palocci met with investigators in recent weeks to discuss the terms of a possible plea bargain deal to give evidence against Lula and other party leaders. Palocci’s lawyer could not be reached to comment.

Several polls show Lula as the favorite in voting intentions for the 2018 presidential election, but he could be barred from running if sentenced for corruption. Lula already faces five court cases related to the investigations.

Folha reported that plea bargain testimony from Palocci, once one of Brazil’s most powerful politicians, could also widen the scope of investigations currently focused on engineering firms, to include banks and other corporations.

Palocci, who has not commented on the Folha story about the plea bargain, said at the hearing that he believed his revelations could give investigators grist to widen the probe.

“I believe I could open the way for what might be another year of work — but work that would be good for Brazil,” Palocci said at the hearing.
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Argentina hopes to have an agreement on a free-trade deal between the European Union and the South American Mercosur bloc by year’s end, its foreign minister said Thursday.

The European Union and Mercosur launched trade negotiations in 1999, but they have faced multiple setbacks, partly because of the leftist rule in Argentina that lasted more than a decade.

That government has now replaced by a more pro-business government since late 2015 that advocates trade.

“We hope that it will be by the end of the year, but it is not a deadline. It could be in the first quarter of the coming year,” Argentine Foreign Minister Susana Malcorra told reporters in Brussels.

“We would like to at least make an announcement at the WTO meeting in Buenos Aires that things are sufficiently close,” she added.

Trade ministers will convene in Buenos Aires in December for a meeting of the World Trade Organization.

Malcorra named issues related to rules of origin as well as food safety measures as important points that still needed to be discussed.

The EU and Mercosur exchanged market access offers in May 2016, including lists of imports that each side was prepared to liberalize.

The full members of the Mercosur trade bloc are Argentina, Brazil, Paraguay, Uruguay and Venezuela, which was suspended in December.
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General Motors said Wednesday that Venezuelan authorities had illegally seized its plant in the industrial hub of Valencia and vowed to “take all legal actions” to defend its rights.

The seizure comes amid a deepening economic crisis in leftist-led Venezuela that has roiled many U.S. companies.

“Yesterday, GMV’s (General Motors Venezolana) plant was unexpectedly taken by the public authorities, preventing normal operations. In addition, other assets of the company, such as vehicles, have been illegally taken from its facilities,” the company said in a statement.

It said the seizure would cause irreparable damage to the company, its 2,678 workers, its 79 dealers and to its suppliers.

Industry in freefall

Venezuela’s Information Ministry did not immediately respond to a request for information.

Venezuela’s car industry has been in freefall, hit by a lack of raw materials stemming from complex currency controls and stagnant local production, and many plants are barely producing at all.

In early 2015, Ford Motor Co. wrote off its investment in Venezuela when it took an $800 million pre-tax writedown.

Many US companies out

The country’s economic crisis has hurt many other U.S. companies, including food makers and pharmaceutical firms. A growing number are taking their Venezuelan operations out off their consolidated accounts.

Venezuela’s government has taken over factories in the past.

In 2014 the government announced the “temporary” takeover of two plants belonging to U.S. cleaning products maker Clorox Co., which had left the country.

Venezuela faces around 20 arbitration cases over nationalizations under late leader Hugo Chavez.
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A federal judge in Miami fined Princess Cruise Lines $40 million Wednesday for illegally dumping oil waste into the Atlantic Ocean and Gulf of Mexico, and for falsifying records.

It is the largest such water pollution fine in U.S. history.

The Miami Herald newspaper says the British engineer who reported the dumping to the U.S. Coast Guard will get a $1 million reward.

According to the Herald, engineers aboard the Caribbean Princess in 2012 and 2013 were ordered to dump the oily water straight into the sea and avoid the ship’s filtration system, in order to save money. It said the ship’s two senior engineers falsified the vessel’s records.

The British engineer recorded the dumping on a cellphone.

Four other Princess ships also were involved in the illegal dumping off the East Coast, and near Florida and Texas.
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Peru’s economy will recover in coming years with investment in construction after recent flooding, likely growing 4.5 percent in 2018 and 5 percent in 2019, Finance Minister Alfredo Thorne said on Wednesday.

Previously, the government had expected growth of 4.3 and 4.1 percent for the next two years.

The estimate for 2017 growth was lowered this month to 3 percent from 3.8 percent previously due to flooding.

“The shock will be temporary,” Thorne said in a presentation at Lima’s Chamber of Commerce.

The floods have damaged 6,000 kilometers (3,728 miles) of roads, destroyed thousands of houses and killed 106 people since December.

Peru’s economy, which has also been hurt by paralyzed infrastructure projects due to a corruption investigation involving Brazil’s Odebrecht, grew at its lowest rate in more than two years in February.
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Over the last six months, the skyline over the sleepy fishing city of Gwadar has been transformed by machines that dredge the Arabian Sea and cranes that set up shipping berths in what is projected to become Pakistan’s biggest international port.

Infrastructure developments have enabled the hammer-shaped Gwadar peninsula to emerge as the centerpiece of China’s determined effort to shorten its trade route to the Persian Gulf and obtain access to the rich oil reserves there.

A mini-“Chinatown” has appeared, with prefabricated living quarters, a canteen and a karaoke center. After hours, the workers have the grounds to play their favorite game, badminton.

A spokesman for the Chinese team in Gwadar said in an interview that his government had invited employment bids in China, then brought the workers here.

He proudly touted the successful test run conducted by China in November when it used Pakistan’s land route from Kashgar to Gwadar to transport a convoy of 60 containers for export to the Middle East and North Africa.

Prior to that, he said, China had sailed materials through the South China Sea and the Indian Ocean to reach Gwadar.

The Chinese propose to cut down that 12,000-kilometer sea route by about one-fourth once they adopt the land route from the northwestern province of Xinjiang to Gwadar.

So eager is China to save on distance, time and expense — and the challenge posed by the U.S. Navy in the South China Sea — that it has weathered Pakistan’s unstable law-and-order situation to build its economic corridor.

Small wonder that the Chinese spokesman omitted an incident — related by locals to VOA — that the test convoy came under fire in Hoshab, Baluchistan, despite protection from a special security force.

Since then, Pakistan has enhanced its 12,000-plus security force to protect the Chinese. That has turned Gwadar into a military zone, with strict checks of vehicles and ID cards, plus an encampment of intelligence officials.

Still, Baluch insurgents use attacks on “soft targets,” like laborers from other provinces, to drive away investors from the China Pakistan Economic Corridor. On April 5, as road workers from Sindh were gunned down in Kharan in targeted killings claimed by the Baluchistan Liberation Front, former army Col. Farooq Ahmed said suspicion fell on militants operating from Afghanistan.

The Chinese, for their part, have taken heart from the security provided by Islamabad to plan ahead. A prefabricated coal plant will be brought from China to Gwadar to fire up its energy needs. Moreover, China will finance Gwadar international airport, according to the spokesman.

Distances inside Pakistan have shortened as the Frontier Works Organization builds a 3,000-km network of roads funded by Chinese investment.

Symbolizing skepticism

Despite Pakistan’s ongoing military operation against the Taliban, sporadic terror attacks are the biggest hurdle to the country’s development. After 9/11, when Pakistan allied with the U.S. in combating terrorism in Afghanistan, militant organizations put down their roots and threatened the nation from inside.

As social indicators fell and Pakistan became one of the world’s most food-insecure nations, it opened its doors to China — one of America’s rivals — to help fight poverty, a key factor in fundamentalism and terrorism.

When U.S. envoy Nikki Haley recently spoke of nations that use their United Nations veto to stop non-state actors from being designated as terrorists, it was seen as a reference to China’s refusal to let Kashmiri militant Masood Azhar be so named. Pakistani analysts interpreted this to mean the U.S. would move closer to India, even while revisiting ties with Pakistan because of its key role in Afghanistan.

Now the road from Karachi to Gwadar is smooth and empty, with awe-inspiring, wind-carved hills and mysterious canyons that dip into golden sands that run for kilometers along the deep blue-green Arabian Sea. It has enabled locals to rediscover their country — even as some marvel at the speed of construction.

But in a country that suffers from grinding poverty, little industry and high unemployment, the benefits of China’s investment are still hard to sell to the average person.

Gwadar symbolizes the skepticism. A miniscule amount has been spent by Islamabad and Beijing on people’s welfare, including a vocational training center, a hospital and school. The peninsula’s natural beauty belies erratic electricity, scarce drinking water and lack of proper sewerage.

Gwadar Port Authority Chairman Dostain Jamaldini explains to delegations arriving daily from across the country that revenue generation is the key to uplifting the area.

He showed off a huge quadrangle in the center of Gwadar that “can even be seen on Google Earth.” There, he has recommended to Islamabad that a multipurpose lighthouse be constructed to guide incoming ships and generate revenue.

Until that happens, the fishermen who build wooden boats along Gwadar beach will likely lose their livelihood as their shanty homes are removed.

Already, the vacant plots in Gwadar’s Sinjhaar area overlooking the sea have been repossessed by the Pakistan Navy and earmarked for sale to military officials and politicians.

For the well-connected, a real estate boom is on the horizon. Trader Abbas Rashanwala said he waited for years for peace to come to Gwadar. Now his real estate business has taken off, with investors flocking in to buy land.

Many realtors are betting on Gwadar as on the stock market — making deals online or on the phone. Several sit in the Punjab, selling property they have never seen in Gwadar, all on speculation that prices will soon skyrocket.

Meanwhile, China’s investment in Gwadar is helping control maritime crime. Officials tell how traffickers from Africa and the Middle East used to dock on the beach at night to swap slaves for narcotics.

In February, 36 nations, including the U.S. and Russia, participated in the Pakistan Navy’s multinational patrolling of the Arabian Sea in a global recognition of China’s role in making the waterways safer.

Still, China’s emerging role in Pakistan has raised many questions. The most prominent criticism is that China will become Pakistan’s “East India Company” — a metaphor for the British empire’s plunder of India.

Notwithstanding the doomsayers, there also is a readiness to accept that development and peace are inextricably linked to Pakistan’s future.
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The Brazilian government on Wednesday agreed to lower the minimum retirement age for police officers in its pension reform proposal, a day after members of their unions stormed Congress to protest the controversial bill.

In the reform draft, congressman Arthur Maia, a government ally in charge of making changes to the original proposal, reduced the minimum retirement age for police to 55 from 60.

After he revealed the details of his proposal on Tuesday, hundreds of police unions dressed in black shirts broke the windows of the main entrance of the legislature in Brasilia and clashed with congressional guards.

The violent clash, during which the guards used pepper spray and stun grenades to disperse the protesters, illustrated the unpopularity of the reform proposal that is central to President Michel Temer’s austerity agenda.

The protest was the latest in what is expected to be months of street demonstrations by workers’ unions even after Temer has repeatedly watered down the proposal, which aims to reduce some of the world’s most generous pension benefits.

Maia is scheduled to read his full reform draft at a special lower house commission later on Wednesday. The initial vote of the proposal, which is a constitutional amendment, has been set for May 2 at the commission.

As it is a constitutional amendment, the measure has to be approved by a three-fifths majority in separate votes by both houses of Congress.

 
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The International Monetary Fund said President Trump’s plans to cut regulations and taxes might encourage companies to make risky investments of the kind that preceded the financial crisis in 2008.

The comment came Wednesday in the newest edition of the IMF’s Global Financial Stability Report, which also said the financial system has gotten more stable in recent months, as economic growth strengthened and interest rates rose, which helped banks.

Trump’s proposals are intended to boost investment, growth and employment and would include changes like reducing taxes on foreign earnings brought back to the U.S. IMF experts say some of the money is likely to flow into sectors with significant debts.Those firms might have difficulty repaying loans if inflation and interest rates rise sharply from their current unusually low levels.

The IMF also warned against slashing banking regulations, which were tightened in the wake of the financial crisis in the hope of preventing future problems. The fund said there is room for “fine-tuning” but urged Washington not to undertake “wholesale” weakening of the rules.

Tuesday, IMF economists said the global economy will grow a bit faster than earlier predictions amid buoyant financial markets and improved manufacturing and trade.They warned that rising protectionism could hurt trade and economic growth.

The reports come as financial and economic officials from around the world gather in Washington for this week’s meetings of the IMF and the World Bank.
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Emirates Airline, the world’s biggest international air carrier by traffic, said Wednesday it is cutting flights to five U.S. cities because of a drop in demand since President Donald Trump sought to curb immigration from several Muslim-majority countries and imposed restrictions on passengers carrying electronic devices on flights to the United States.  

The Dubai-based carrier said that over the last three months, as Trump assumed power in Washington, it has seen “a significant deterioration” in bookings to the U.S.  It said that “as any profit-oriented enterprise would,” it has decided to cut service to the U.S. and instead move flights to other cities across the globe.

The U.S. in March cited terrorism threats as it banned air passengers from several Middle Eastern countries, including the United Arab Emirates, from carrying large electronic devices, such as laptops and tablets, in cabins on flights to the United States.

Earlier, Trump issued two orders, both blocked by U.S. courts, that sought to bar citizens from several majority-Muslim countries from entering the U.S., part of his effort to protect U.S. borders from new terrorist attacks and impose “extreme vetting” on immigrants looking to settle in the country.

The airline said “the recent actions taken by the U.S. government relating to the issuance of entry visas, heightened security vetting and restrictions on electronic devices in aircraft cabins have had a direct impact on consumer interest and demand for air travel into the U.S.”

Emirates said it would trim service next month to two cities in Florida, Fort Lauderdale and Orlando, from daily to five times a week. In June, it plans to cut twice-a-day service to Seattle and Boston to once a day and make the same reduction in flights to Los Angeles in July.
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Nigeria’s president on Wednesday suspended the country’s intelligence chief over the recent discovery of $43 million in cash in a Lagos apartment.

President Muhammadu Buhari has ordered an investigation into how the National Intelligence Agency came to claim the money and whether any laws were broken, a government statement said.

The discovery of the cash in both local and foreign currencies by the country’s anti-corruption commission caused a sensation in this West African nation where graft is rampant.

Buhari has ordered the suspension of the director-general of the intelligence agency, Ambassador Ayo Oke, until the investigation is complete, the statement said.

The investigation has been given two weeks to report to the president.

Separately, Buhari has ordered an investigation into alleged wrongdoing in the award of contracts under the government office that coordinates the humanitarian response in Nigeria’s northeast, which for years has suffered from the Boko Haram Islamic insurgency.

 

The secretary to the federal government, David Babachir Lawal, has been suspended pending that investigation, the statement said.

 Buhari won election in 2015 on a promise to halt corruption.
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Beijing is looking for foreign contractors to help find oil and gas under the South China Sea but expects to meet resistance because other governments contest its claims and any discoveries may bring low returns.

China’s state-run China National Offshore Oil Corp. issued a tender last week for foreign companies to join it in exploring for fossil fuels in 22 tracts south of the country’s coastline. The blocks spanning a combined 47,270 square kilometers cover waters contested by Taiwan and Vietnam. Vietnam has been particularly outspoken since the 1970s about its claims.

Complicated matter

Foreign oil companies eyeing the bids, which close in September, probably worry that their ties to the Chinese maritime claim could spoil their reputation among rival South China Sea claimants or that any oil found would be a disputed asset, analysts say.

“Given the area in question, there are risks around the sovereignty issue,” said Thomas Pugh, commodities economist with Capital Economics in London. “If they enter a deal with China and Chinese firms, they could risk not being allowed to work with other countries in the region who are disputing ownership of the area.”

Disputes over ownership continue

Discoveries themselves could also be contested by other countries, said Raymond Wu, managing director of Taipei-based political risk consultancy e-telligence.

“The other contestant parties do not accept that China has sovereign claims,” Wu said. Foreign contractors, he said, must face “not just only the difficulty or uncertainty of finding oil, but who does the oil belong to? I don’t see many investors willing to get into it at this point.”

Vietnam and China rammed each other’s boats outside the disputed Gulf of Tonkin in May 2014 after Beijing allowed a Chinese oil rig to be placed there.

China has worried Brunei, Malaysia and the Philippines as well over the past decade by increasing its control over about 95 percent of the 3.5 million-square-kilometer, resource-rich sea with artificial islands equipped for combat aircraft and radar systems.

Looking for oil costs big money

Oil and gas exploration also require expensive machinery, tough for some would-be applicants, while no one is sure how much fuel will turn up, said Zhao Xijun, deputy School of Finance dean at Renmin University of China. CNOOC may hope to offset those risks by bringing on foreign partners, he added.

“The first thing is that risk is pretty high and second, the technical requirements are rather high,” Zhao said. “So perhaps the organizations or companies able to participate in this project would face a certain hurdle.”

Falling oil prices further limit the value of exports from any undersea discoveries, analysts say. World oil prices have fallen from more than $100 per barrel in 2013 to about half that now. “The terms will probably have to be pretty good to attract foreign firms,” Pugh said.

Oil riches under the sea

The U.S. Energy Information Agency estimates 11 billion barrels’ worth of oil under the sea and 190 trillion cubic feet of natural gas. Much of that lies under the continental shelves of Southeast Asian claimants and has not been tapped.

The Philippines began more than 40 years ago looking for oil west of Palawan island, at Reed Bank. In 1984, a Philippine company found an oil field off in the same region and it supplies 15 percent of the annual oil consumption in the Philippines. Malaysia has secured about 5 billion barrels of oil and 80 trillion cubic feet of natural gas, more than any other of the five South China Sea claimants.

There is opportunity

CNOOC, which is China’s biggest offshore oil and gas producer, says on its website it will pick foreign partners with a “vision of win-win cooperation” and “flexible and favorable measures in the exploitation in the deep water area.”

The state run Global Times news website quotes Chinese analysts saying that because most exploration blocks are close to China itself, they are stable investments for foreign contractors.

China also has a deal with Vietnam over joint use within the Gulf of Tonkin, site of one oil block being offered for a contract.

“I don’t think that will be a problem, because China and Vietnam have made some compromises or demarcation trying to divide the territorial waters, so if that is the case, I think this kind of exploration will certainly [be] in the Chinese territorial domain,” said Andrew Yang, secretary-general with the Chinese Council of Advanced Policy Studies think tank in Taiwan.

But one expert told the Global Times that large-scale foreign drillers may still use extra caution because of the disputes.
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U.S. President Donald Trump on Tuesday signed an executive order aimed at making it harder for companies to hire temporary foreign workers.

The order, called “Buy American — Hire American,” will take initial steps to reform the H1-B visa program.

H1-Bs allow employers — mostly high-tech firms — to hire skilled foreign workers to work in the U.S. for three years. There are 85,000 slots available each year, 65,000 for applicants with bachelor’s degrees and 20,000 for those with master’s degrees or higher.

“We are going to use a tool you all know very well. It’s called the sledgehammer,” Trump said Tuesday during a speech at Snap-on Tools, a company in Kenosha, Wisconsin.

The administration will require companies to demonstrate that the visas are going only to the most highly skilled workers in their fields.

“They [H1-Bs] should be given to the most skilled and highest-paid applicants and not be used to replace Americans,” Trump said.

WATCH: H1-B Visas Let US Firms Hire Foreigners for Specialized Jobs

Open to abuse

The administration says the visas, which can be renewed once, have contributed to a slide in American wages; 80 percent of H1-B visa holders are paid less than the median wage in their fields.

Howard University political science professor Ron Hira said the Trump administration is right: “The laws are loose, and so what happens is it’s become a way for employers to bring in cheaper, indentured workers as opposed to filling those skills gaps. As a result, the program is oversubscribed, and it’s actually undercutting Americans.”

When the application season opened for H1-Bs this month, federal offices were quickly flooded. As in recent years, there were so many applications that the U.S. government stopped accepting them within a week. Visa winners will be chosen by a computer-generated lottery.

Hira also said the intent of the program is good in serving as a guest worker program for when there are shortages of American workers. What got in the way? Politics.

Companies are making so much money, he said, that they are able to influence Congress to prevent changes in the H1-B program. And it’s all legal.

Fixing H1-Bs

Hira said that if the sledgehammer seemed to be velvet-coated, that’s because the executive order is not really intended to change policy so much as to guide policy changes. Federal agencies will have to implement it.

“The idea behind the executive order is to make it merit-based, that the really highly skilled people get preference over the cheap labor that goes on,” Hira said.

Overwhelmingly, India has been the biggest recipient of H1-B visas. The Department of Homeland Security reports that 71 percent of H1-Bs went to Indians in 2015. China was a distant second with 10 percent of the visas.

India’s success is attributed to its huge outsourcing firms that submit thousands of applications every year, increasing their chances of winning the visa lottery.  

Outsourcing firms, which supply services to other companies, are controversial because they are not subject to a federal requirement that they not displace American workers if they pay the H1-Bs at least $60,000 a year.

Hira said the new policy might help high-tech American companies at the expense of the outsourcing firms that abuse the system.

But “expect the Indian government to lobby against the changes,” he predicted.

The executive order also called on all federal agencies to buy American. It established a 220-day review on waivers and exemptions to government “Buy American” rules.

VOA’s Mil Arcega contributed to this report.
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Not a US citizen? Got skills? Need work? This might be the visa for you.
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A state-backed newspaper in the United Arab Emirates that was bought by an Emirati who oversees the English soccer club Manchester City is undergoing layoffs, those with knowledge of the firings said Monday.

They told The Associated Press that staffers at The National were informed Sunday they had been let go. They spoke to the AP on condition of anonymity for fear of repercussions.

 

It wasn’t clear how wide the layoffs were or what specific plans The National’s new owner had for the daily newspaper. Repeated calls to the newspaper rang unanswered Monday.

 

The layoffs come after months of turmoil at The National, which was founded in 2008 and staffed with top writers and editors from Western newspapers. Its owner, the state-backed firm Abu Dhabi Media, hoped it would become the Mideast’s standard for independent, hard-nosed newspapering.

 

But while the paper broke local stories on skyscraper fire safety and other issues, it largely stayed away from controversial topics in a country with strict laws governing speech.

 

International Media Investments, a subsidiary of Abu Dhabi Media Investment Corp. owned by Sheikh Mansour bin Zayed Al Nahyan of Manchester City, bought The National in November from Abu Dhabi Media. Sheikh Mansour’s media firm has a joint venture with Britain-based Sky to run the Arab satellite news channel Sky News Arabia.

 

In a statement, International Media Investments said: “The National is putting together its team, made of existing and new talent,” and will undergo “a digital transformation while retaining its print product.” It answered no questions from the AP about the layoffs.

 

Although the newspaper sale has yet to finalize, staffers had to reapply for jobs at the paper. All this comes as low global oil prices have pinched the economy of the United Arab Emirates, a federation of seven sheikhdoms on the Arabian Peninsula.

 

Sheikh Mansour is a member of the ruling family of Abu Dhabi, the UAE’s oil-rich capital. He also serves as a deputy prime minister and minister of presidential affairs.
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Mini motorcycle and go-kart maker Monster Moto made a big bet on U.S. manufacturing by moving assembly to this Louisiana town in 2016 from China.

But it will be a long ride before it can stamp its products “Made in USA.”

The loss of nearly one out four U.S. factories in the last two decades means parts for its bike frames and engines must be purchased in China, where the manufacturing supply chain moved years ago.

“There’s just no way to source parts in America right now,” said Monster Moto Chief Executive Alex Keechle during a tour of the company’s assembly plant. “But by planting the flag here, we believe suppliers will follow.”

Monster Moto’s experience is an example of the obstacles American companies face as they, along with President Donald Trump, try to rebuild American manufacturing. U.S. automakers and their suppliers, for example, have already invested billions in plants abroad and would face an expensive and time-consuming transition to buy thousands of American-made parts if President Trump’s proposed “border tax” on imported goods were to become law.

When companies reshore assembly to U.S. soil – in Monster Moto’s case that took two years to find a location and negotiate support from local and state officials – they are betting their demand will create a local supply chain that currently does not exist.

For now, finding U.S.-based suppliers “remains one of the top challenges across our supplier base,” said Cindi Marsiglio, Wal-Mart Stores Inc.’s vice president for U.S. manufacturing and sourcing. Wal-Mart partnered with Monster Moto and several other U.S. companies in a drive to increase spending on American-made goods by $250 billion by 2023 in response to consumer demand for American-made goods.

Their experience has shown Americans’ patriotic shopping habits have limits, namely when it comes to price.

Take Monster Moto’s bikes, which sell for between $249 to $749. Keechle, the CEO, says he can’t raise those prices for fear his price sensitive prospective customers will turn to less expensive rivals made in China.

“Consumers won’t give you a free pass just because you put ‘Made in USA’ on the box,” Keechle says. “You have to remain price competitive.”

Keeping a sharp eye on labor costs in their factory is one thing these U.S. Manufactures can control. They see replacing primarily lower-skilled workers on the assembly line with robots on American factory floors as the only way to produce here in a financially viable, cost-competitive way. It’s a trend that runs against the narrative candidate Donald Trump used to win the U.S. presidency.

 

Since taking office, Trump has continued promises to resurrect U.S. manufacturing’s bygone glory days and bring back millions of jobs. On March 31, Trump directed his administration to clamp down on countries that abuse trade rules in a bid to end to the “theft of American prosperity.”

But it’s more complicated on the ground for companies like Monster Moto.

“It’s almost as if people think you can just unplug manufacturing in one part of the world and plug it in to the U.S. and everything’s going to be fine,” said David Abney, Chief Executive Officer of package delivery company United Parcel Service Inc., which helped Monster Moto reconfigure its supply chain to bring its Chinese-made parts to Ruston.

“It’s not something that happens overnight,” he said.

A White House official said that the Trump administration’s efforts to encourage manufacturers to reshore production will be focused on cutting regulations and programs to provide new skills to manufacturing workers.

“We recognize that the manufacturing jobs that come back to America might not all look like the ones that left,” a White House official said, “and we are taking steps to ensure that the American workforce is ready for that.”

Making robots great again

In Monster Moto’s cavernous warehouse in Ruston, boxes of imported parts that are delivered at one end then become bikes on a short but industrious assembly line of a few dozen workers.

A solitary, long-bearded worker by the name of Billy Mahaffey fires up the bikes to test their engine and brakes before a small group of workers puts them in boxes declaring: “Assembled in the USA.”

Helped by that label, Monster Moto has experienced a recent boom in demand from major customers that include Wal-Mart. The company expects to double production to 80,000 units and increase its assembly workers — who make $13 to $15 an hour — to 100 from around 40 in 2017.

The most likely components Monster Moto could produce in America first are black, welded-metal frames for bikes and go-karts, but they would have to automate production because human welders would be too expensive.

 

“We can’t just blow up our cost structure,” said Monster Moto President Rick Sukkar. “The only way to make it work in America is with robotics.”

The same principle applies for much larger manufacturers, such as automotive supplier Delphi Automotive PLC’s.

Chief Financial Officer Joe Massaro told analysts in February that 90 percent of the company’s hourly workforce is in “best-cost countries.”

When asked about shifting production to the United States from Mexico, Massaro said depending on what happens to trade rules “it would have to be much more of the sort of the automated type manufacturing operations just given… the labor differential there.”

That trend is already showing up in data compiled by Economic Policy Institute, a Washington-based think tank.

According to senior economist Rob Scott, not only did America lose 85,000 factories, or 23.5 percent of the total, from 1997 to 2014, but the average number of workers in a U.S. factory declined 14 percent to 44 in 2014 from 1997. According to Scott, much of the decline in workers was due to automation.

“We’re going to see more automation in this country because it makes good sense economically for every company,” said Hal Sirkin, a managing director at the Boston Consulting Group. “You can spend a lot of time bemoaning it, but that’s not going to change.”

Manufacturers say automated production requires fewer, but more skilled workers such as robot programmers and operators.

The National Association of Manufacturers (NAM) estimates because of the “skills gap” there are 350,000 unfilled manufacturing jobs today in a sector that employs over 12 million people.

In Ruston, Mayor Ronny Walker bet on Monster Moto by guaranteeing the company’s lease because he wants to diversify the city’s economy, and envisions suppliers setting up alongside Monster Moto’s assembly plant.

“Could it take a long time to bring manufacturing back here?

Sure,” he says. “But you have to start somewhere.”
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China’s economic recovery is gaining traction, with growth rising to its fastest pace in over a year in January-March.

The 6.9 percent annual pace of expansion for the world’s second-largest economy, reported Monday, surpassed economists’ forecasts and was an improvement from 6.8 percent growth in the last quarter of 2016.

Growth last was that strong in July-September of 2015.

Analysts said government spending and a property boom spurred by easy credit were the main factors helping to driving stronger demand.

China saw its slowest growth in nearly three decades in 2016, at 6.7 percent. The official full-year economic growth target for 2017 is 6.5 percent.

“Currently, China’s economy is demonstrating good signs of pickup in growth, overall price stability, expansion in employment and improvement in the international balance of payments,” Mao Shengyong, a spokesman for the National Bureau of Statistics, told reporters in Beijing.

Fears of being dragged into a trade and currency war with the U.S. have abated after U.S. President Donald Trump toned down his previously antagonistic comments against Beijing.

A summit earlier this month with Chinese President Xi Jinping ended calmly, and the U.S. Treasury Department did not label China a currency manipulator in its latest assessment.

During the first quarter, investment in fixed assets such as factories expanded 9.2 percent from a year earlier, while retail sales grew 10 percent. Industrial production rose 6.8 percent, including a stronger-than- expected 7.6 percent year-on-year gain in March.

Although exports have also shown sharp improvement, strong lending and investment figures suggest Beijing is relying on its traditional strategy of powering growth through government stimulus. China’s leaders have been trying to shift to an approach based more on consumer demand but tend to open the spending and credit taps at times when growth appears to be slowing too much.

“The question we need to ask is whether this investment-led model is sustainable as the authorities have trouble taming credit,” said Raymond Yeung and David Qu, economists at ANZ.

The latest figures indicate China’s economy is on track to meet its official growth target — a good sign for China’s communist leaders, who don’t like surprises and are preparing for a twice-a-decade party congress in the autumn to appoint new leaders.

“The 6.5 percent target this year, you could say it’s more important than ever, because of the political reshuffle later this year,” said Amy Zhuang, chief Asia analyst at Nordea Markets. “At least being able to maintain the stability in growth is very, very important for Beijing.”

On a quarter-to-quarter basis, which is how other major economies report data, the economy lost steam, expanding just 1.3 percent. That’s slower than 1.7 percent in the fourth quarter of 2016.

The economists at ANZ said such figures should be viewed cautiously because they might reflect changes in how the government made adjustments for seasonal factors.

Economists say they expect the boost from the government’s policies and the property boom to persist for a few more months before fading later in the year.

Real estate plays an outsize role in fueling growth in the wider Chinese economy by spurring knock-on demand in the manufacturing and service sectors.

House prices will likely start cooling this year as tighter restrictions finally kick in, but Beijing will probably take steps to offset that decline with more stimulus to meet its annual growth target, Zhuang said.
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Each day, millions of Americans drink purified water and other beverages from disposable plastic bottles. More than 60 million of those bottles are dumped in landfills or burned in incinerators daily. But a couple of American entrepreneurs are putting some of them to good use by recycling them into shoes.
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