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The Federal Reserve on Tuesday proposed new rules that could allow some large banks to reduce the amount of capital they must hold as a cushion against a future economic shock.

The proposal may clear the way for some large banks to reduce their capital levels in the future, but the largest firms on Wall Street are not likely to get such relief, the Fed said.

The proposal is expected to reduce bank paperwork and also make it easier for regulators to monitor the health of banks, said Randal Quarles, the top Fed official in charge of regulations.

“Our regulatory measures are most effective when they are as simple and transparent as possible,” Quarles, the Fed vice chairman for supervision, said in a statement.

The Fed said the proposed changes were likely to somewhat increase the amount of capital required for the 30 largest banks known as GSIBs, or global systemically important banks.

The measures should modestly decrease the amount of capital required for banks smaller than the GSIBs, the Fed said.

“No firm is expected to need to raise additional capital as a result of this proposal,” the Fed said in a statement.

Banks and other stakeholders will have 60 days to comment on the proposal, which is likely to take effect next year, said the Federal Reserve.

The new capital standards would be the first reform of capital standards conceived after the decade-old financial crisis.
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Russian retailers warned of price increase after ruble tumbles

European electronic and household goods manufacturers have warned Russian retailers of a possible 5 to 10 percent rise in prices after the ruble tumbled this week due to U.S. sanctions, retailers said on Tuesday.

Eldorado, which operates over 400 stores in Russia, said the hikes may mean it has to adjust its retail prices.

“Suppliers have already started warning of a possible 5-10 percent adjustment in prices,” a spokesperson for Eldorado told Reuters, adding that the warnings had primarily come from European manufacturers that do not produce goods in Russia.

A spokesperson for M.Video, which operates a network of 424 stores, also said that some of its suppliers had told them of plans to raise prices by between 5 and 10 percent.

The ruble fell sharply on Monday as investors took fright after a new round of U.S. sanctions against Moscow, targeting officials and businessmen around Russian President Vladimir Putin.

The ruble extended its losses on Tuesday, shedding over 3 percent of its value against the dollar, as investors continued a sell-off of assets fueled by fears that Washington could impose more sanctions and a realization that Russian credit and market risks had substantially increased.
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The Turkish lira Tuesday hit another historic low against the U.S. dollar amid growing financial market concerns that the Turkish economy is overheating.

With elections on the horizon, the government is stoking economic growth. The latest figures saw growth running at over 7 percent, making Turkey one of the fastest-growing economies in the developed world.

But international investors are becoming increasingly alarmed at the cost of such growth, with double-digit inflation and a surge in imports widening Turkey’s current account deficit (the difference between imports and exports).

“Investors are disappointed by the fact the government is pushing growth even faster, rather than addressing the imbalances that show up, such as high inflation and wide current account deficit.” said economist Inan Demir of Nomura banking.

“Some people say this: ‘Too much growth is not a good thing,’ ” Turkish President Recep Tayyip Erdogan said in a speech Monday aimed at challenging financial critics. “Why? Because they are jealous. It is nothing else.”

In another move aimed at defying critics, Erdogan also announced a new $34 billion economic stimulus package. Much of Turkey’s rapid growth has been achieved by the government injecting billions of dollars into the economy.

Erdogan further challenged international markets by renewing his strong opposition to increasing interest rates, which orthodox economic theory demands to protect a falling currency.

“If there isn’t an increase in interest rates, the likelihood will be the lira will continue to depreciate,” warned Demir. “More or less, the lira will remain at the mercy of global sentiment. It’s extremely difficult to draw a line where the depreciation stops on its own.”

Since the start of the year, the lira has fallen over 7 percent against the dollar.

​Reports on Simsek

Last week, the lira fell heavily amid reports that Deputy Prime Minister Mehmet Simsek had resigned after a heated telephone conversation with Erdogan over interest rate policy.

Analysts suggest that Simsek, who is responsible for the economy, is key to maintaining the confidence of financial markets in Turkey, having formerly worked for international investment bank Goldman Sachs. According to Ankara sources, Simsek withdrew his resignation only after intense government pressure.

But with presidential and general elections upcoming in 2019, a booming economy is seen as key to Erdogan and his ruling AKP Party’s re-election chances.

“He [Erdogan] knows the way to win the election is by improving the economic situation,” wrote newspaper columnist and presidential insider Abdulkadir Selvi in Monday’s Hurriyet. “That is why he declared 2018 as the year of performance, growth and employment.”

Analyst Atilla Yesilada of Global Source Partners asked, “What is left with AKP’s vision? Ten years ago, it was a big-tent party. It talked about human rights, modern democracy advancement, a humane society. Now, there is only mega-construction projects left and economic growth. So, if they stop stimulating the economy, economic growth will immediately fall off the cliff, and they will have no chance to win in a fair election.”

But a plummeting currency brings its own economic risks. Experts warn that heavy currency decreases usually undermine consumer confidence, leading invariably to a fall in consumption, and ultimately hitting growth.

A more imminent threat faced by Turkey is debt. Turkish companies’ short-term foreign exchange debt stands at $220 billion.

“We hear more and more companies requesting loan restructuring from the banks,” Demir said. “In the coming days as the lira depreciates further, more and more companies will find it more difficult to meet their foreign currency obligations with an overwhelming Turkish cash flow.”

​Banks under scrutiny

In the past few weeks, two of Turkey’s largest companies have sought to restructure nearly $12 billion in bank loans. Turkish banks are now facing increasing scrutiny over their corporate loan exposure and how many of their loans are still performing.

“Clearly there is an understanding between [Turkey’s] regulatory authorities, the banks and major companies that the system must go on,” Yesilada said. “It’s in nobody’s interest to declare these loans nonperforming or the borrowers bankrupt, so everything looks good. But nothing is being sustained, to be perfectly honest.”

Turkish banking stocks have fallen heavily in the past few months and are now trading at nine-year lows. Most analysts claim, despite growing financial pressures, that the integrity of the banking system still remains strong.

But the same analysts warn that banks may curtail future lending, which would likely affect growth. Demir predicts Erdogan and his government’s dash for growth could ultimately become self-defeating.

“If the insistence on pro-growth measures continues, and investors become more and more concerned about the external financing requirements and sell liras, the pro-growth measures may actually turn out to be counterproductive, because the weaker lira could hurt company balance sheets, forcing more of them to seek a restructuring of their loans, and forcing them to cut back on investment and generating new employment,” Demir said.
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Future Russian gas transit flows through Ukraine to Europe may be between 10 and 15 billion cubic metres per year, Alexei Miller, head of Russian gas giant Gazprom, said on Tuesday, which is a significant decline from current levels.

Miller issued his comments after German Chancellor Angela Merkel said that the planned new Nord Stream 2 pipeline between Russia and Germany could not go ahead without clarity on Ukraine’s role as a transit route for gas.

“We have never raised an issue about abandoning the Ukrainian transit. However, the Russian resource base has been moving northward and there won’t be the same resources in the central gas transportation corridor as it was in the past,” Miller said in a statement.

“That’s why a certain transit could still be in place, in the amount of 10-15 bcm per year, but the Ukrainian side has to explain the viability of the new transit contract,” he said.

He did not give a time frame for when the transit could be 10-15 bcm a year.

Ukraine has been a key route for carrying Russian gas to Europe where it supplies around a third of gas needs, but Moscow and Kiev have clashed frequently over energy.

Last year, the transit amounted to more than 93 bcm, while Gazprom’s total exports to Europe and Turkey reached an all-time high of 194 bcm.

Last year, Ukraine earned around $3 billion in Russian gas transit fees.

Gazprom said last month it would terminate its gas contracts with Ukraine after it lost a court case, escalating a dispute which had left Ukraine struggling to stay warm and which the European Union said could threaten gas flows to Europe.

A Stockholm arbitration court ordered Gazprom in February to pay more than $2.5 billion to Ukrainian energy firm Naftogaz – a ruling meant to conclude a long legal battle that has run alongside Ukraine’s broader political stand-off with Russia.

Gazprom wants to bypass Ukraine as an export route and plans to build two more undersea gas pipelines to Europe: TurkStream to Turkey and Nord Stream 2 to Germany.

Eastern European and Baltic states fear Nord Stream 2, planned to run through the Baltic Sea, could increase reliance on Russian gas and undermine Ukraine’s role as a gas transit route.

The plans for the pipelines were given new impetus after relations between Moscow and Kiev plunged as Russia-leaning president Viktor Yanukovich fled Ukraine in 2014 following street protests and a pro-Moscow revolt subsequently flared in eastern Ukraine.

The current deal between Russia and Ukraine on gas purchases and transit expires at the end of 2019 and Kiev has been worrying about losing its transfer fees for shipping the Russian gas westwards to Europe.

 
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China’s President Xi Jinping did not mention U.S. President Donald Trump by name or speak directly about rising trade frictions with Washington during a closely watched speech at the Boao Forum — China’s version of Davos for Asia.

But the pledges Xi made to press forward with economic reforms had everything to do with the trade dispute and President Trump’s threats to levy heavy tariffs on Chinese goods.

In his speech, Xi mentioned the phrase “opening up” 42 times. One of the key messages of his speech was that China was open for business. It was also an effort, one analyst said, to highlight a contrast between Beijing’s approach and Washington.

“I want to clearly tell everyone, China’s door for opening will not close, but will only open wider,” Xi said. “Cold war mentality and zero sum game are more and more old-fashioned and outdated. Isolationism will only hit walls.”

Car imports

In his speech, Xi said China would launch a number of landmark measures this year, including cutting tariffs on car imports, one key trade barrier President Trump has mentioned repeatedly. China places a 25 percent tariff on automobile imports, while Chinese vehicles exported to the United States are taxed by two and half percent.

Xi re-stated a pledge to open up China’s financial sector — easing restrictions — and accelerate the opening up of the insurance industry.

He also said China would restructure its State Intellectual Property Office this year to step up law enforcement, raise fines for violations and strengthen legal protections.

Xi did not give a specific timeframe, but said the reforms would take place “sooner rather than later, faster rather than slower.”

Some analysts said the pledges were nothing new and unlikely to amount to the type of concessions that the Trump administration is expecting. Others, however, said there might be enough there to at least help the two move toward sitting down to talk.

“President Xi gave the outline and the many details and the concrete measures we are still waiting to see what policies will come up in the following days,” said Zhang Yifan, an associate professor at the Chinese University of Hong Kong. “But he mentioned balanced trade, that means that they will address the trade surplus issue, not just with the U.S., but with all other countries.”

The United States has proposed placing tariffs on about 1,300 Chinese imports, which amounts to about $50 billion in trade. Late last week, even as he disagreed with the characterization of the dispute as a trade war, President Trump upped the stakes by asking for $100 billion more in tariffs.

China has responded with a list of its own, some 106 products that target among other things agricultural production in areas where political support for Trump was strong in the 2016 elections.

Beijing has already put a 25 percent tariff in place on pork products, in response to Trump’s earlier tariffs on steel and aluminum. And if Beijing’s recently announced tariffs go forward, soybean imports from the United States could also face a 25 percent tariff.

The impact that could have on American farmers is already raising concerns. So much so that the White House announced Monday it is drafting up a plan to protect farmers and make sure they don’t bear the brunt of Chinese retaliation.

That is why it is hard to predict just how far Xi’s remarks may go in helping the two sides resolve their differences, said Oliver Rui, a professor of international finance and accounting at the China Europe International Business School.

“The issue is very complicated. It is not just the trade imbalances between the two countries, it is also related to political issues. The mid-term elections will definitely play a role here, the attitude of the EU will also play a role here,” Rui said.

Several days ago the White House chief economic adviser Larry Kudlow said that the Trump administration is building a “coalition of the willing” to jointly take on China over its trade practices. Kudlow has not yet said which countries might be a part of that grouping, but the European Union is one likely partner.

Concern about trade practices

The United States is not the only country concerned about China’s trade practices and increasingly analysts who have been arguing against tariffs have noted that working with other countries could have an even stronger impact.

That is something that President Xi appeared to be hinting at in his speech and that might be a point of concern for Beijing.

“We should pursue the path of dialogue, not conflict, building partnerships and not alliances as we forge new paths in relations between countries,” Xi said.

This story was written by VOA’s William Ide in Beijing. Joyce Huang contributed.

 

 
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In war-torn Afghanistan, honey is regarded as a traditional cure-all but for one schoolgirl, the sticky commodity has also created sweet opportunities to work and own a business in a country where few women do so.

Three years ago, Frozan, now 19 years old, obtained a small loan, bought two beehives and learned about apiculture from Hand in Hand International, a non-governmental organization that focuses on poverty.

The bees collected nectar from flowers growing near her home in the Marmul district in the northern Balkh province. Their first harvest produced about 16kg (35lb) of honey, which enabled Frozan to pay back her loan and still have money left over.

She now has 12 beehives and last year collected 110kg of honey, which earned her 100,000 Afghanis ($1,450) in a country where GDP per capita is only about $600.

“The village I live in is a traditional village and women are not allowed to work outside,” says Frozan, who goes by one name. “But when I started beekeeping I realized that it’s an easy task. I told the people about beekeeping and then they accepted it.”

Since the fall of the Taliban in 2001, the lives and status of women in society have improved significantly. But traditions, insecurity and recently a decline in international donors, have slowed progress.

A Human Rights Watch report, quoting government officials, says 85 percent of the 3.5 million children who don’t go to school are girls. Only 37 percent of adolescent girls are literate compared with 66 percent of adolescent boys.

Frozan is now in her final year of school and would like to study economics and grow her business, goals that may now be possible for her and her three siblings thanks to her income stream.

She says looking after tens of thousands of bees can easily be done between studies and household chores and her father, Ismail, who is a farmer like much of Marmul’s population, supports his daughter’s enterprise.

“It has been my dream to have a daughter who could find a job like this and make a future for herself,” he says.

Every few weeks, Ismail takes the fresh honey to Mazar-i-Sharif, the provincial capital, more than 50km away, where it’s sold to shops and consumed mainly by local customers.

While industry data is scant, local media citing government officials say Afghanistan’s honey production has risen in recent years, hitting 2,000 tons in 2015. Several varieties such as acacia, almond flower, and basil are now available.

However, infrastructure constraints mean most of this honey never leaves Afghanistan.
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Iran unified the country’s official and open market exchange rates, state media said, after its currency, the rial, plunged to an all-time low on Monday on concerns over a return of crippling sanctions.

The U.S. dollar jumped in a day from 54,700 rials to 60,000 rials in the open market in Tehran on Monday. A dollar was worth 36,000 rials in mid-September.

After an emergency cabinet meeting, Iran’s First Vice President Eshaq Jahangiri was quoted by the state media as saying that from Tuesday the price of the dollar would be 42,000 rials in both markets, and for all business activities.

Iran has long been trying to unify its open market rate, used for most commercial transactions, with the official rate, which is a subsidized rate that is only available to government departments and some importers of priority goods.

Jahangiri said from Tuesday the government would not recognize any rate but the official rate, and “it would be illegal to trade dollars with an unofficial rate.”

U.S. sanctions lifted under Iran’s nuclear deal with world powers in 2015 will resume unless U.S. President Donald Trump waives them again on May 12. Trump has effectively set that as a deadline for European powers to fix what he called “the terrible flaws” of the deal.

President Hassan Rouhani warned on Monday that Trump will regret it if he pulls out of the nuclear deal.
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Brazil’s government has been told that development projects, including hydropower dams, in protected areas can no longer go ahead without the prior approval of lawmakers.

Last week’s ruling by the supreme court followed the use by the government in recent years of the controversial “provisional measure”, a legal instrument that allowed the president to approve projects by reducing the size of protected areas.

Campaigners said the decision should ensure the country’s forests and reserves, including the Amazon rainforest, were better protected.

“This decision puts an end to a spree of provisional measures in the name of environmental de-protection,” said Mauricio Guetta, a lawyer at Instituto Socioambiental (ISA), an advocacy group.

In recent years, the government has used the measure to open up protected areas for controversial projects, including building two of Brazil’s largest hydropower dams – the Jirau and Santo Antonio – in the Amazon.

The use of the measure to shrink protected areas with immediate effect had brought “irreversible consequences, irreversible damage to the environment,” Guetta told the Thomson Reuters Foundation by phone.

The eight-judge bench ruled unanimously that using the provisional measure to reduce the size of protected areas for any reason was unconstitutional.

 

It followed a lawsuit in which the court heard the measure had been used in 2012 to allow trees in six protected areas of the Amazon to be felled to make way for five hydropower dams.

“The (provisional measure), later converted into law, reduced the level of environmental protection by deactivating due legislative process,” supreme court justice Alexandre de Moraes said in a statement.

The court said the ruling would not affect the five hydropower plants in question because the provisional measure had already been enacted in law, and some are operating.

Guetta said the ruling meant any changes to protected areas must be first approved by law, and local communities should be properly consulted about projects planned on their land.

“The government has been trying to reduce by more than 1 million hectares the area under conservation in the southern part of Amazonas state. Now this initiative is officially vetoed because of the supreme court’s decision,” he said.

Environmentalists say increasing swaths of land, including the Amazon forest, are being felled for grazing and cropland, and for development projects.

Deforestation in the Amazon fell in the August 2016 to July 2017 monitoring period for the first time in three years, although the 6,624 square kilometers (2,557 square miles) cleared of forest remains well above the low recorded in 2012 and targets for slowing climate change.
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Apple on Monday said it had achieved its goal of powering all of the company’s facilities with renewable energy, a milestone that includes all of its data centers, offices and retail stores in 43 countries.

The iPhone maker also said nine suppliers had recently committed to running their operations entirely on renewable energy sources like wind and solar, bringing to 23 the total number to make such a pledge.

Major U.S. corporations such as Apple, Wal-Mart and Alphabet have become some of the country’s biggest buyers of renewable forms of energy, driving substantial growth in the wind and solar industries.

Alphabet’s Google last year purchased enough renewable energy to cover all of its electricity consumption worldwide.

Costs for solar and wind are plunging thanks to technological advances and increased global production of panels and turbines, enabling companies seeking to green their images to buy clean power at competitive prices.

“We’re not spending any more than we would have,” Lisa Jackson, Apple’s vice president for environment, policy and social initiatives, said in an interview. “We’re seeing the benefits of an increasingly competitive clean energy market.”

Renewable energy projects that provide power to Apple facilities range from large wind farms in the United States to clusters of hundreds of rooftop solar systems in Japan and Singapore. The company has also urged utilities to procure renewable energy to help power Apple’s operations.

Encouraging suppliers to follow suit in embracing 100 percent renewable energy is the next step for Apple. The suppliers that pledge to use more clean energy know they will have “a leg up” against competitors for Apple’s business, Jackson said.

“We made it clear that, over time, this will become less of a wish list and more of a requirement,” she said.
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Lawyers representing U.S. President Donald Trump’s family hotel business appealed to Panama’s president for help days before an emergency arbitrator declined to reinstate the Trump management team to a luxury waterfront hotel.

The Britton & Iglesias firm, which has represented the Trump Organization in its fight to continue running the hotel, addressed a letter dated March 22 to President Juan Carlos Varela.

 

A copy of the letter was provided to The Associated Press by contacts who have worked as a liaison to the building’s owners in Panama.

 

The letter asks Varela to intervene, complaining that Panama’s courts denied the organization due process in violation of a bilateral treaty and warning there could be consequences for the country.

 

It “URGENTLY requests his influence in relation to a commercial dispute involving Trump Hotel aired before Panama’s judiciary.”

 

In February, Orestes Fintiklis, the hotel’s majority owner, tried to fire Trump’s hotel management and take control of the property for the owners’ association. Trump’s family company beefed up security, but on March 5, judicial officials sided with Fintiklis. Police officers ordered the Trump management team out of the building.

 

On March 27, an arbitrator in the U.S. ruled that Trump’s company should not have been evicted while arbitration was ongoing with the hotel owners, but said he would not reinstate the previous management.

 

On Monday, Panama’s foreign secretary Isabel de Saint Malo, said her office had also been copied on the letter.

 

“It is a letter that urges Panama’s executive branch to interfere in an issue clearly of the judicial branch,” de Saint Malo said. “I don’t believe the executive branch has a position to take while the issue is in the judicial process.”

 

A source in Varela’s office who was not authorized to comment publicly confirmed Monday receipt of the letter.

 

Alan Garten, general counsel of the Trump Organization, did not respond to questions via email as to whether Trump knew about the appeal to Panamanian authorities.

 

Calls to Britton & Iglesias, as well as to Varela’s communications staff, were not immediately answered.

 

The letter goes on to say that the eviction violates the Bilateral Investment Treaty. “We appreciate your influence in order to avoid that these damages are attributed not to the other party, but to the Panamanian government,” the letter said, suggesting that the government, not the new management team, could be blamed for wrongdoing.

 

The letter raises questions about the president’s family business matter-of-factly requesting another president’s help in a private business matter by invoking a treaty signed by the U.S. and Panama. It essentially asks Panama’s president to ignore that country’s separation of powers and intervene in its judicial process.

 

A headline on the front page of Panama’s La Prensa newspaper Monday said, “Trump Organization Pressures Varela,” and coverage described the letter as a warning that there could be consequences for Panama if the old management team was not reinstated.

 

The letter was copied to Panamanian Cabinet officials, as well as presidents of the Supreme Court and National Assembly, among others.

 

The 70-story property on Panama City’s waterfront has been renamed The Bahia Grand Panama.

 

The emergency arbitration decision late last month said the case should have remained in arbitration and never gone to Panamanian courts.

 

Both sides continue fighting over who violated the hotel management contract.

 

 
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