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Sub-Saharan African nations are at growing risk of debt distress because of heavy borrowing and gaping deficits, despite an overall uptick in economic growth, the International Monetary Fund said Tuesday.

The sober assessment came as African countries continue to tap international debt markets and issue record levels of debt in foreign currencies, spurred on by insatiable investor demand for yields.

“What really we’re concerned about is the pace of increase, rather than the average,” IMF Africa Director Abebe Aemro Selassie told Reuters at the launch of its economic outlook for the region in Accra.

“What we’re calling for right now is that those countries are going to need to go through fiscal consolidation,” he said, adding that oil producers and other resource-dependent economies were seeking the sharpest growth in their debt loads.

The Fund projected the rate of economic expansion would rise to 3.4 percent this year, up from 2.8 percent in 2017, boosted by global growth and higher commodity prices.

Slower growth in South Africa and Nigeria — the continent’s two largest economies — weighed on the region-wide average, but the IMF expects growth to pick up in around two-thirds of African nations. However, under current policies, that rate is expected to plateau below 4 percent over the medium term.

Growth seen slowing

Meanwhile, around 40 percent of low-income countries in the region are now in debt distress or at high risk of it, the IMF report said. And refinancing that debt could soon become more costly.

“The current growth spurt in advanced economies is expected to taper off, and the borrowing terms for the region’s frontier markets will likely become less favorable … which could coincide with higher refinancing needs for many countries across the region,” it said.

African governments issued a record $7.5 billion in sovereign bonds last year, 10 times more than in 2016. And they have issued or plan to issue over $11 billion in additional debt in the first half of 2018 alone, the report said.

Foreign currency debt increased by 40 percent from 2010-13 to 2017 and now accounts for about 60 percent of the region’s total public debt on average, IMF data showed. Average interest payments, meanwhile, increased from 4 percent of expenditures in 2013 to 12 percent in 2017.

Six countries — Chad, Eritrea, Mozambique, Congo Republic, South Sudan and Zimbabwe — were judged to be in debt distress at the end of last year. And the IMF’s ratings for Zambia and Ethiopia were changed from moderate to “high risk of debt distress.”

The IMF conceded that Africa’s enormous needs will continue to demand heavy investments to build infrastructure and social development. But to do so while avoiding the risk of a debt trap, the continent, which currently has the lowest revenue-to-GDP ratio in the world, will need to become more self-reliant.

“Borrowing to finance spending is part of the macroeconomic policy tool kits which all countries use,” Selassie said. “But over the medium to long-term they have to rely more on domestic revenues, tax revenues to address their development spending needs.”
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Soon after presenting his credentials to the German president, the new U.S. ambassador to Germany, Richard Grenell, told German companies to start leaving Iran.

“As Donald Trump said, U.S. sanctions will target critical sectors of Iran’s economy. German companies doing business in Iran should wind down operations immediately,” Grenell tweeted Tuesday.

His tweet came as U.S. President Donald Trump announced he is pulling the United States out of the nuclear deal with Iran and reimposing sanctions.

Businesses continuing to work with Iran could be subject to U.S. penalties.

Germany is one of the signatories, and Chancellor Angela Merkel believes the U.S. should have remained in the deal.
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Wooden dhows crammed with secondhand Japanese cars have been sailing unhindered into Yemeni ports for the past three years despite rigid wartime controls on imports of aid and other vital supplies.

Like many Yemeni traders, Ali al-Mahry jumped at this chance to turn a profit by supplying customers at home with cars bought cheaply at auction in the United Arab Emirates.

A Saudi-led military coalition, of which the UAE is part, has been battling Houthi rebels since 2015 with the aim of restoring the Yemeni government in exile.

The coalition has imposed controls to deny arms to the Houthis, fighters aligned with Iran who control the capital Sanaa and Hodeidah, the largest port. The measures have choked off supplies of fuel, food and medicine to Yemen, where millions face starvation and disease.

Yet coalition forces appear to have turned a blind eye to the dhows that regularly carry cars from Port Khaled in the emirate of Sharjah to a small dock at As Shihr, a port in Yemen’s Hadramout province controlled by UAE-backed forces.

“I make this journey around 30 times a year,” Mahry said, surrounded by 180 cars taking up every corner of a dhow he has chartered for the voyage. “I sometimes also ship food and other items, but they require different permits.”

The cars have become a nice earner for traders in both the UAE and Yemen.

Yemeni dealers gather daily at Dubai’s Al-Aweer Auto Market to bid as a big screen flashes prices for Japanese cars, with as many as 80 sold in a day at one auction house.

New rules

Once sold, the automobiles are taken to Port Khaled, where up to 200 vehicles are stacked onto each dhow.

The vessels are searched at Port Khaled and on arrival at As Shihr, but have not been required to obtain permits or pay customs duties for the past three years, in contrast to the obstacles faced by ships delivering other supplies to Yemeni ports.

“The coalition would ask us for the cars’ papers and clear them here,” said Saleh al-Ali, head of the port at As Shihr. “For the past three years, there has been no need to apply for a permit from Riyadh.”

In March, however, the coalition changed the rules, requiring permits to be obtained from Saudi Arabia, according to Ali. He said he was told the new measures were introduced for security reasons.

A coalition spokesman did not reply to requests for comment on why the car-laden dhows have been exempted for so long.

Port officials said the dhows may have been simply an exception to the rule and, in any case, it had taken time to put the car trade on a more formal footing.

Good business

Mustafa al-Jaffrey, who used to send cars to Yemen over land through Oman before the war, said he had doubled his profits by using the sea route.

“It is much cheaper for me to buy and ship,” he said, adding that Japanese cars in particular were a good business for him.

“The Japanese drive their cars only for about 50,000 km (30,000 miles) before they sell them and buy new ones. That’s way less than the 150,000 km (90,000 miles) or more that people in the Gulf drive before they put a car up for sale, so the quality is better as well.”

In Japan, strict safety and pollution regulations force many drivers to sell their cars after a few years, so there are plenty of good-quality vehicles available.

Such cars can sell for as little as $1,000 at online auctions in Japan. A Toyota can be bought by traders for around $1,900 in Dubai and sell in Yemen for more than twice that.

“I buy a Japanese used car from an auction in Japan, sometimes an online auction, and then ship it here,” said Hammad Ali, marketing manager at Jan Japan (Cars 4 U), the top re-exporter at Al-Aweer in Dubai.

Ali has long imported such cars for re-export to places like Somalia and Afghanistan as many other countries that drive on the right, including the UAE, do not allow cars from Japan, where people drive on the left, on safety concerns.

“It is a safety thing … so most of them were going to Afghanistan and Somalia. Then three years ago, Yemen opened up,” he said.

Prior to 2015 in Yemen, where people drive on the right, cars with their steering wheel on the “wrong” side were banned for safety reasons, but road safety has been another casualty of a war that has killed more than 10,000 people.

As fighting continues, the Houthis control the north of Yemen, while coalition forces have seized the southern port of Aden and made gains along the southwest coast along the Red Sea.

“Yemen is a big country and people need to move around. The cars are going into the south, where it is relatively safe, and from there onward to the rest of the country,” said Mahdy al-Mahry, another dhow operator and car dealer.

“People can buy one of these cars and use them to earn money for their families. Others just buy them as a cheap and safe means of transport.”

Not everyone has profited from the trade. The Yemeni government, which has a presence in Aden while the president is in exile in Saudi Arabia, has missed out on customs dues, although it now plans to regulate the car trade.

“While it has largely been unregulated for the past three years, we are slowly coming to it and we will organize the trade as the government prepares to impose a fee,” said Salem Ali Busamir, head of the Arabian Sea Ports Corporation of Yemen. He did not say when this would happen or how much the fee would be.

Traders, however, seem confident the new measures will not disrupt their business unduly.

“This trade employs hundreds at the port now. They can’t ruin that, even if they impose a small tax,” said Ghaleb al-Mahry, who has a car showroom in As Shihr.
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Disney is seeking new frontiers.

The media company launched its $5-a-month sports streaming service, ESPN Plus, last month, and it signed a deal with Twitter this month to create Marvel, ABC and ESPN content on that service. Meanwhile, Disney is trying to buy much of 21st Century Fox, including the Fox television network and the X-Men movie franchise.

The moves come as Disney seeks ways to extend beyond the traditional cable-bundle format as more people watch TV online. Sports network ESPN was once a jewel in Disney’s crown but subscriptions have been falling as people drop cable services.

But the company has found strength elsewhere, notably its movie studio and theme parks.

Disney’s franchises such as Marvel’s Avengers and Star Wars have been raking in money. Avengers: Infinity War has grossed over $1 billion since it opened April 27.

In a statement, CEO Bob Iger said Disney was “very well-positioned for future growth” because of its ability to take advantage of such franchises across all businesses and “the unique value proposition” it’s creating with direct-to-consumer streaming services.

In Disney’s fiscal second quarter, net income rose 23 percent to $2.94 billion, or $1.95 per share, from $2.39 billion, or $1.50 per share a year ago. Excluding one-time items such as a benefit from the U.S. tax overhaul, net income totaled $1.84 per share.

The results surpassed Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $1.68 per share.

Revenue rose 9 percent to $14.5 billion, from $13.3 billion a year ago. Four analysts surveyed by Zacks expected $14.2 billion.

Sports streaming

To prepare for the future, Disney launched a sports streaming service with video not available on the regular ESPN channels. This includes additional baseball and soccer games, and the entire 30 for 30 documentary series on demand.

The Walt Disney Co. is also working on an entertainment streaming service with classic and upcoming movies from the Disney studio, shows from Disney Channel, and the Star Wars, Marvel and Pixar movies. That service will launch in late 2019 and will include movies leaving Netflix, once its deal with Disney expires.

If the $52.4 billion Fox deal goes through, Disney could supplement the entertainment service with Fox properties — such as X-Men movies and National Geographic programming. Disney is still awaiting regulatory approval, and published reports say Comcast is mulling a counterbid.

J.P. Morgan analyst Alexia Quadrani expects the service to break even by 2021 with about 13 million subscribers. Until then, Quadrani said, Disney might lose some licensing fees and see spending increase to acquire content.

Morgan Stanley analyst Benjamin Swinburne said in a client note that the direct-to-consumer businesses like its streaming services could add $6.5 billion to revenue by 2020.
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Some Iranians had been cashing in their savings even before U.S. President Donald Trump’s announcement he would pull out from the international nuclear deal with Iran, straining a banking system weighed down by bad loans and years of isolation.

An official with Iran’s biggest state-owned Melli Bank told Reuters savings had declined by an unspecified amount, although he said this was a temporary phenomenon and that they would recover once the uncertainty over Trump’s decision passed.

“When there is political uncertainty, its psychological impact on people causes a drop in savings. But it will pass after Trump’s deadline,” the official said before the announcement, declining to be named.

Trump said on Tuesday he would quit the deal and impose “the highest level of economic sanctions.”

A senior Iranian central bank official said conditions within the banking system had deteriorated in the past year, and “we have still not passed the danger zone” but added that the central bank had “all the measures ready to prevent any crisis.”

Officials with other leading lenders, Saman, Pasargad and Middle East Bank declined to comment.

The loss of confidence both reflects and contributes to wider problems threatening pragmatist President Hassan Rouhani in Iran’s faction-ridden clerical establishment: Investment has dried up as banks limit lending, growth is slowing and unemployment is at a record high, exposing Rouhani to growing criticism from hardliners.

“I am worried about a war,” said Mina Abdelsalehi, 61, a retired teacher in Tehran. “I have changed all my savings into gold coins that I can cash easily if anything happens.”

The rial currency lost close to half of its value in the six months to April in anticipation of a tougher U.S. approach, forcing Tehran to ban domestic foreign exchange transactions and limit foreign currency holdings to $12,000.

This failed to stop Iranians trying to buy hard currency on Tuesday, promoting a further slide in the rial, according to a foreign exchange website.

“Prices are going up almost every hour,” said Ali Rasti, 45, owner of a real estate agency in Tehran. “People are worried and prefer to keep their money at home.”

A separate Iranian banking official also said Iranians had taken out money. “Fearing a war and more sanctions, many Iranians have withdrawn their cash from banks,” he said.

Mohammad Reza Pourebrahimi, head of parliament’s economic committee, was quoted by the semi-official ISNA news agency in March as saying capital outflows had been $30 billion in recent months. The International Monetary Fund said Iran’s reserves were at nearly $112 billion in 2017/18.

Dashed hopes

Iran had struggled to reap the benefits from the accord, which lifted international sanctions on the central bank and lenders in 2016 in return for curbs on its nuclear program, but left U.S. restrictions in place to assuage fears it would benefit hardliners like the Revolutionary Guards (IRGC).

The IRGC, which reports directly to Iran’s Supreme leader Ayatollah Ali Khamenei, controls vast segments of the economy, including some banking interests as well as everything from ports management to telecommunications.

Iranian banks re-established relationships with more than 200 international counterparts, but any business active in Iran has to ensure there are no ties with IRGC interests to avoid fines or bars on trading in the United States.

“Money is moving but not as freely as governments had hoped,” said Justine Walker, head of sanctions policy with trade association UK Finance, saying complications had multiplied since Trump became president. Euro transactions were taking place, she said, but sterling payments “remain challenging.”

Sources involved in transactions said they rarely exceeded 200 million euros ($240 million) due to difficulties with clearing payments.

Nigel Kushner, chief executive of British law firm W Legal, said his clients exporting consumer goods to Iran had reported a 50 percent drop in purchases over the past two months. “There is a risk of further [bank] liquidity concerns,” he said.

George Bennet, managing partner of financial services advisory firm OSACO Financial, which is active in Iran, said European lenders still in Iran were already nervous and limiting transactions to their largest and most valuable customers.

“The larger of the European banks currently doing business, which themselves are not large, with Iran will pull out of the market altogether,” he said, when asked about the impact of the U.S. withdrawal.

Other constraints

Rouhani gambled on attracting foreign investment to help raise living standards but a raft of deals including plane purchases already have been delayed.

FATF, a global group of government anti-money-laundering agencies, has kept Iran on its blacklist, adding to wariness by Western banks with dealing with Iran due to reputational risks.

Rouhani has struggled to reform the banking system, which, with 30 banks and other credit institutions, is more fragmented than those of other emerging markets and heavily burdened by bad loans.

Finance sources have estimated outstanding loans at around $283 billion and non-performing loans (NPLs) were estimated to have reached 12.5 percent in 2017 by U.S.-based financial industry body the Institute of International Finance (IIF).

The latest official figure, 11.7 percent in 2016, equates to more than $30 billion. Some finance sources say NPLs could be even higher at close to 15 percent.

A textile factory owner in Mashhad said the government wanted to improve the economy but could not support business.

“How can I run my business when the dollar exchange rate is rising and I cannot get loans from the banks because of the high rates?” he said on condition of anonymity, explaining he had laid off around half his 65 employees to try to stay afloat. “I am not sure how long I can keep the factory open.”
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The Trump administration is unveiling a multibillion-dollar roster of proposed spending cuts but is leaving this year’s $1.3 trillion catchall spending bill alone.

 

The cuts wouldn’t have much impact, however, since they come from leftover funding from previous years that wouldn’t be spent anyway.

 

The White House said it is sending the so-called rescissions package to lawmakers Tuesday. Administration officials, who required anonymity because they weren’t authorized to speak publicly on the matter, said the package proposes killing $15 billion in unused funds. A senior official said about $7 billion would come from the Children’s Health Insurance Program, or CHIP, which provides health care to kids from low-income families, though that official stressed the cuts won’t have a practical impact on the popular program.

 

The administration is trying to use its authority to prod Congress to “rescind” spending approved years ago, but even if the package is approved it would only have a tiny impact on the government’s budget deficit, which is on track to total more than $800 billion this year. Some of the cuts wouldn’t affect the deficit at all since budget scorekeepers don’t give credit for rescinded money that they don’t think would have ever been spent.

 

For instance, more than $4 billion in cuts to a loan program designed to boost fuel-efficient, advanced-technology vehicles wouldn’t result in fewer loans since the loans are no longer being made. And $107 million worth of watershed restoration money from the 2013 Superstorm Sandy aid bill is going unused because local governments aren’t stepping up with matching funds. Another $252 million is left over from the 2015 fight against Ebola, which has been declared over.

 

Still, the cuts, if enacted by Congress, would take spending authority off the table so it couldn’t be tapped by lawmakers for other uses in the future. The catchall spending bill, for instance, contained $7 billion in cuts to CHIP that were used elsewhere to boost other programs.

 

“This is money that was never going to be spent,” a senior administration official said on a press call ahead of Tuesday’s submission. “The only thing it would be used for is offsets down the line.”

 

Democrats have supported such cuts in the past, eager to grab easy budget savings to finance new spending. But some Democrats howled over the White House proposal anyway.

“Let’s be honest about what this is: President Trump and Republicans in Congress are looking to tear apart the bipartisan Children’s Health Insurance Program (CHIP), hurting middle-class families and low-income children,” said Senate Minority Leader Chuck Schumer, D-N.Y.

 

Pressure from party conservatives to increase cuts in a tentative $11 billion proposal contributed to a delay from Monday’s original release date.

 

The White House and tea party lawmakers upset by the budget-busting “omnibus” bill have rallied around the plan, aiming to show that Republicans are taking on out-of-control spending. The administration says it will propose cuts to the omnibus measure later in the year.

The spending cuts are also a priority for House Majority Leader Kevin McCarthy, R-Calif., who likens them to “giving the bloated federal budget a much-needed spring cleaning.” But while the package may pass the House it faces a more difficult path — and potential procedural roadblocks — in the Senate.

McCarthy wants to succeed soon-to-retire House Speaker Paul Ryan, R-Wis., and some of his allies view the project as a way to improve his standing with fractious GOP conservatives who blocked his path to the speakership in 2015.

 

The proposal has already had a tortured path even before its unveiling. More pragmatic Republicans, including the senior ranks of the powerful House and Senate Appropriations committees, rebelled against the measure. They argued that it would be breaking a bipartisan budget pact just weeks after it was negotiated. In response, White House budget director Mick Mulvaney cleansed the measure of cuts to the huge omnibus bill.

Last month, Mulvaney told lawmakers the plan could have totaled $25 billion or so. Now he says he’s planning to submit several different packages of spending cuts — and it’s likely they’ll get more conservative with each new proposal.

 

Either way, the idea faces a challenging path in Congress — particularly the Senate, where a 51-49 GOP majority leaves little room for error even though budget rules permit rescissions measures to advance free of the threat of Democratic filibusters. But the cuts to the popular children’s health insurance program probably could still be filibustered because they are so-called mandatory programs rather than annual appropriations.
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Australia’s government is expected to release annual spending plans on Tuesday with a focus on winning votes at elections due within a year. Cheaper craft beer plus personal tax cuts compensated by strengthening company tax revenue have been flagged as well as more investment on roads and rail to stimulate economic growth.

Some media have reported that the government might better its timetable for returning the budget to surplus by the 2020-21 fiscal year by balancing the books 12 months earlier.

New budget starts July 1

Treasurer Scott Morrison, who will reveal to the Parliament later Tuesday his economic blueprint for the year starting July 1, said the government would live within its means.

“The plan for a stronger economy that I will be announcing tonight is about improving the opportunities for all Australians to live in a stronger economy,” Morrison told reporters outside Parliament House.

“It’s a plan to lower taxes and reducing the pressure on households. It’s a plan to back business to create more jobs. … It’s a plan to guarantee the essential services that Australians rely on every day,” he added.

The budget is Morrison’s third since he became treasurer and the last before the next election.

Universal health care

The government recently announced it had abandoned plans announced a year ago to increase the levy that Australians pay for their universal health care system from 2 percent of their income to 2.5 percent to pay for a newly established disability insurance program.

The Senate had refused to endorse the increase, and Morrison said it was no longer needed because the government’s bottom line had improved in the past year through more tax revenue.

Global credit ratings agency Fitch Ratings last week said scrapping the levy increase while committing to fully funding the insurance program “poses a challenge” for the forecast surplus in 2020-21.

The government recently announced it would correct an anomaly that charged craft beer brewers a higher tax rate on alcohol produced than mass beer producers because the craft brewers typically use smaller kegs.

“Why should their business be held back because of tax systems that are out of date?” Morrison asked about the unfair treatment of small breweries that are being set up by the hundreds around Australia.

The government has also flagged modest tax cuts to low and middle income earners.

Rescue plan for reef

The government has already announced AU$500 million ($376 million) for a Great Barrier Reef rescue plan that includes programs to reduce fertilizer runoff from farming, reducing numbers of the destructive crown-of-thorns starfish and to fund research into coral bleaching.

Environmentalists argue that the funding won’t tackle the main threat to the reef, global warming. They have urged the government to take greater action to reduce Australia’s greenhouse gas emissions.

Prime Minister Malcolm Turnbull has said he will call an election early next year. But he could be tempted to call an early election if the budget is well received and his conservative coalition’s standing in opinion polls improves. The government consistently trails the center-left opposition Labor Party in polling.
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U.S. oil giant ConocoPhillips is pressing for control of Venezuela’s key offshore operations in the Caribbean, seeking to recoup $2 billion from a decade-old dispute with the nation struggling to feed its people, a source confirmed Monday.

 

The Houston-based ConocoPhillips is asking a court in the Dutch Antilles for control of facilities that Venezuela’s state-run oil firm PDVSA operates, a person familiar with the claim confirmed to The Associated Press. The person was not authorized to discuss the legal action.

 

PDVSA relies heavily on the facilities on the islands of Curacao, Bonaire and St. Eustatius used to refine and store Venezuela’s heavy crude before shipment to the U.S., China and India, three major global markets.

Dozens of ships that transport oil pumped from Venezuela sat idle Monday docked in the country’s ports, according to an online vessel-tracking website.

 

Venezuela holds the world’s largest underground oil reserves but production has declined under nearly two decades of socialist leadership, casting the once-wealthy nation deep into political and economic crisis.

 

An arbitration panel under the International Chamber of Commerce in late April found that Venezuela under the leadership of then-President Hugo Chavez in 2007 had illegally expropriated joint venture operations with ConocoPhillips.

 

The firm turned to a local court to collect the award, but the petition spelling out its demands has not been made public. The $2 billion award represents the equivalent of more than 20 percent of the cash-strapped government’s foreign currency reserves.

 

“We will pursue all available legal avenues to obtain full and fair compensation for our expropriated investments in Venezuela,” ConocoPhillips said in a statement.

 

Officials at NuStar Energy, a San Antonio-based company that leases PDVSA a facility on St. Eustatius, were aware of the order against PDVSA, company spokesman Chris Cho said, adding that it was evaluating its legal and commercial options.

 

PDVSA leases facilities on two of the islands, so ConocoPhillips cannot take them over even with a court order, but it could seize Venezuela’s oil stored in them and any state-owned ships that dock there, said Russ Dallen, a Venezuela expert.

Oil tankers leaving Venezuela’s shores over the weekend turned around before reaching the Caribbean islands, the tracking website showed.

 

Two of the island storage facilities have the capacity to hold crude valued at $900 million, about half of Venezuela’s monthly production, Dallen said.

 

“It’s a devastating blow to a beleaguered country that can’t even feed its population,” said Dallen, adding that Venezuela owes billions to investors around the world. “We’re going to see a lot more of these in the future.”
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As the United States considers ramping up trade tariffs and other actions in response to China’s economic policies, tensions in another area heated up in recent days: How airlines should refer to Taiwan.

The White House released a statement over the weekend criticizing China for demanding international air carriers not refer to Taiwan, Hong Kong and Macau as countries. Airlines recently reported they had been asked to remove references on their websites that suggest the three are countries independent from China.

China classifies Macau and Hong Kong as “special administrative regions,” and calls Taiwan a renegade province. 

The White House called China’s demand “Orwellian nonsense” and said it is “part of a growing trend by the Chinese Communist Party to impose its political views on American citizens and private companies.” 

China rejected the White House criticism.

“Foreign enterprises operating in China should respect China’s sovereignty and territorial integrity, abide by China’s law and respect the national sentiment of the Chinese people,” Chinese Foreign Ministry spokesman Geng Shuang said Sunday.

The White House statement came as the U.S. trade delegation headed by Treasury Secretary Steven Mnuchin returned from China following a two-day meeting with Chinese counterparts aimed at avoiding a possible trade war.

White House Press Secretary Sarah Sanders told reporters that members of the delegation briefed the president Monday morning and the talks will continue in Washington next week.

“The president has a great relationship with President Xi, and we’re working on something that we think will be great for everybody,” Sanders said, adding, “China’s top economic adviser, the Vice Premier [Liu He] will be coming here next week to continue the discussions with the president’s economic team.”

Trump has threatened to levy new tariffs on up to $150 billion of Chinese imports while Beijing shot back with a list of $50 billion in targeted U.S. goods.

New pressure on Taiwan

Last month, Chinese Civil Aviation Administration sent letters to 36 foreign airlines, including a number of American carriers, and demanded they remove references on their websites or in other material that suggests Taiwan, Hong Kong and Macau are independent territories from China.

Hong Kong and Macau, former British and Portuguese colonies respectively, are now “special administrative regions” of China that maintain separate administrative and judicial systems from the rest of the country.

Taiwan, however, has been self-ruled since the 1949 civil war and has been deemed by Beijing a renegade province.

“We call on all businesses to resist #China’s efforts to mischaracterize #Taiwan,” tweeted Taiwanese President Tsai Ing-wen on Sunday.

Earlier this year, Delta Air Lines issued a formal apology to China for referring to Taiwan, Hong Kong, and Tibet as countries on its website.

Richard Bush, co-director for Center for East Asia Policy Studies at the Brookings Institution and former chairman of American Institute in Taiwan, says Taiwan’s legal and political status is an issue for countries, but not companies.

“It should not be an issue between the Chinese government and American companies or any companies for that matter,” he contended.

Bush pointed out China has been taking a number of steps to intimidate and pressure Taiwan, and it is appropriate for the United States government to push back.

“This is an effort to, in effect, change the status quo in the Taiwan Strait, so it is something the United State government should oppose,” he said, adding, “I’m not sure bringing George Orwell or talking about political correctness are the precise terms I would use.”

The United States switched diplomatic recognition from Taipei to Beijing in the 1979 U.S.-P.R.C. Joint Communique, in which the United States recognized the Government of the People’s Republic of China as the sole legal government of China. As part of that agreement, Washington acknowledged the Chinese position that there is but one China and Taiwan is part of China.

However, U.S. lawmakers have continued to lobby to support Taiwan, and the United States still sells hundreds of millions of dollars of weapons to Taiwan, despite China’s objections. In March, President Donald Trump signed into law a bill that encourages high-level exchanges of officials with Taiwan.
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Egypt’s parliament has approved a law to govern popular ride-hailing apps Uber and Careem, which had faced legal challenges stemming from regulations designed for traditional taxis.

The new law, as described Monday by state news agency MENA, establishes operating licenses and fees. It requires licensed companies to store user data for 180 days and provide it to Egyptian security authorities upon request.

Uber and Careem welcomed the move.

“This is a major step forward for the ride-sharing industry as Egypt becomes one of the first countries in the Middle East to pass progressive regulations,” Uber spokeswoman Shaden Abdellatif said. “We will continue working with the Prime Minister and the Cabinet in the coming months as the law is finalized, and look forward to continuing to serve the millions of Egyptian riders and drivers that rely on Uber.”

Careem called the passage “a remarkable step for Egypt, Careem and our region.” It said it marked the first time in any of its markets “that a regulatory framework for ride-hailing has emerged from a consultative legislative and parliamentary process.”

Both companies provide smartphone apps that connect passengers with drivers who work as independent contractors. An administrative court in Cairo ruled in March that it is illegal to use private vehicles as taxis, but another court overruled it on appeal, and both companies have continued operating.

Data privacy is a major concern for Uber in its dealings with the Egyptian government. A strict new European law called the General Data Protection Regulation comes into effect May 25 and would affect its operations worldwide.

Uber was founded in 2010 in San Francisco, and operates in more than 600 cities across the world. Careem was founded in 2012 in Dubai, and operates in 90 cities in the Middle East and North Africa, Turkey and Pakistan.

The applications took off in Cairo, a city of 20 million people with near-constant traffic and little parking. The services have recently started offering rides on scooters and tuk-tuks, three-wheeled motorized vehicles that can sometimes squeeze through the gridlock.

The apps are especially popular among women, who face rampant sexual harassment in Egypt, including from some taxi drivers. Cairo’s taxi drivers are also notorious for tampering with their meters or pretending the meters are broken in order to charge higher rates.

In 2016, taxi drivers protested the ride-hailing apps. They have complained that Uber and Careem drivers have an unfair advantage because they do not have to pay the same taxes or fees, or follow the same licensing procedures.
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