YCLOAK

Jury selection began Monday in the trial of a Chinese billionaire accused of bribing United Nations diplomats to gain their approval of a U.N. conference center he wanted to build.

Ng Lap Seng has pleaded not guilty. He has posted $50 million bail, but is restricted to a luxury New York City apartment that he owns, where he is under guard around the clock. He is allowed to leave his apartment only to visit his doctors or his lawyers.

Ng, who is 69, is accused of paying hundreds of thousands of dollars in bribes for the center he planned to build in Macau.

Prosecutors say some of the money reached former General Assembly president John Ashe and a former diplomat from the Dominican Republic, Francis Lorenzo.

Ashe died last year in a freak accident while lifting weights at his home.

Lorenzo pleaded guilty and agreed to cooperate with U.S. prosecutors in the case against Ng.

Ng’s lawyers contend the charges are politically motivated, aimed at trying to curb China’s influence over developing countries that might have used the Macau conference center.

If prosecutors and defense lawyers can agree on selection of a jury without delay, the judge in the case estimated the trial would last a month or perhaps longer.
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Thirteen EU nations voiced support on Monday for a proposal to empower the bloc’s executive to negotiate with Russia over objections to a new Russian gas pipeline to Germany, despite opposition from Berlin.

At an informal debate among EU energy ministers, Germany’s partners in the 28-nation bloc spoke out against Russia’s Nord Stream 2 pipeline plan to pump more gas directly from Russia’s Baltic coast to Germany.

EU nations are expected to vote in the autumn on the European Commission’s request for a mandate to negotiate with Russia on behalf of the bloc as a whole.

Germany, the main beneficiary of the pipeline, sees it as a purely commercial project, with Chancellor Angela Merkel last week saying she saw no role for the Commission.

The plan taps into divisions among the bloc over doing business with Russia, which covers a third of the EU’s gas needs, despite sanctions against Moscow over its military intervention in Ukraine.

In private, EU officials say they hope direct talks with Russia would delay the project past 2019, depriving Russian state gas exporter Gazprom of leverage in talks over transit fees for Ukraine, the current route for most gas supplies to Europe.

Germany, Austria and France – which have firms partnering with Gazprom on the project – declined to take the floor on Monday, EU diplomats said.

“We had 13 delegations intervening, with all of them being supportive of the Commission’s approach,” Commission Vice President Maros Sefcovic told Reuters by telephone after presenting the EU executive’s case to member states. “I am definitely optimistic about getting the mandate, but I know this is just the beginning of the debate.”

The Commission found support from Italy as well as Nordic, Eastern European and Baltic states, EU sources told Reuters.

“Germany has commercial interests, but it needs to explain itself,” one senior EU official said.

With the pipeline expected to reroute Russian gas supplies around Ukraine to the north, Italy voiced concerns it would increase gas prices for customers further down the line.

Eastern European and Baltic states fear it will increase their dependence on Gazprom and undercut Ukraine.

Nordic nations, meanwhile, have security concerns over the pipeline being laid near their shores under the Baltic Sea, where Russia has bolstered its military presence.

However, many EU nations have yet to take a stand.

“It is quite toxic. Many member states are quite wary of advertising their position,” one diplomat told Reuters.

There are also differences among EU member states over what aims to pursue in potential talks with Russia.

Speaking in Paris on Monday, Ukraine’s foreign minister said the draft EU proposal did not go far enough to secure guarantees from Russia, warning Nord Stream 2 would have “dangerous consequences” for the bloc.

Adding to tensions is the threat of new U.S. sanctions on Russia that would penalize Western firms involved in Nord Stream 2: Uniper, Wintershall, Shell, OMV and Engie.

Several EU diplomats said the measures proposed by the U.S. Senate have already backfired against their stated aim of bolstering European energy security.

“It’s a divisive measure,” one senior official said. “It’s easy for the U.S. to go after Russian gas of course, they don’t use it. … We are trying to make the best of a bad thing by balancing the interest of different member states.”
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More than half of Cuba’s arable land remains fallow nearly a decade after a government pledge to cultivate it, and food production is sluggish, according to a government report.

Cuba has yet to publish an overall figure for last year’s agricultural output. But the report released over the weekend by the National Statistics Office indicated only minor improvement in 2016 over the previous year.

The state owns 80 percent of the land and leases most of that to farmers and cooperatives. The remainder is owned by private family farmers and their cooperatives.

Despite the leasing of small parcels of land to some 200,000 would-be-farmers over the last decade, the report said just 2.7 million hectares (6.7 million acres) out of the 6.2 million hectares (15.3 million acres) of arable land available were under cultivation.

The Cuban government often blames bad weather, a lack of labor and capital for poor land use and production, while critics charge it is due to a lack of private property and foreign investment, rickety infrastructure and the Soviet-style bureaucracy.

President Raul Castro made increased food production and reducing the Communist-run Caribbean island’s dependence on imports his top priority after taking office in 2008 from his then ailing and now deceased brother, Fidel.

Castro began leasing land, decentralizing decision-making and introducing market mechanisms into the sector. But most of the effort has faltered and the state has backtracked on market reforms, once more assigning resources, setting prices and controlling most distribution.

Cash-strapped Cuba imports more than 60 percent of the food it consumes at a cost of around $2 billion annually, mainly for bulk cereals and grains such as rice, corn, soy and beans, as well as other items such as powdered milk and chicken.

Last year, $232 million of the imports came from the United States under an exception to the trade embargo that allows agricultural sales for cash.

The country does not produce wheat or soybeans, though experiments are underway to produce the latter. Over the last decade the government has poured millions of dollars into corn, rice, beans, meat and milk production in hopes of reducing imports, but with little success.

Unprocessed rice production was 514,000 tons in 2016, up more than 20 percent from the previous year. But that figure, representing just a third of national consumption, barely surpassed the 436,000 tons reported in 2008 and was less than the 642,000 produced five years ago.

Beans weighed in at 137,000 tons, up more than 15 percent from the previous year and compared with 117,000 in 2012, but little changed from the 2008 figure of 127,000 tons.

Corn, at 404,000 tons last year, was up some 10 percent over 2015 and the 360,000 output of 5 and 10 years ago, but again just a third of national consumption.

Pork and beef production have increased, while milk, chicken and egg production have stagnated.

Export crops, from coffee and citrus to tobacco and sugar cane, have not increased significantly, and in some cases declined.

Tonnage for root and garden vegetables has improved some 15 percent over the decade and reached 5.3 million tons last year, an increase of 200,000 tons. Bananas and plantains increased some 15 percent to a million tons in 2016 compared with an average of around 850,000 tons over the decade.
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The American company which made cladding used London’s Grenfell Tower, where 79 people died after the building caught fire, has said it will stop global sales of the product.

U.S.-based Arconic cited “inconsistencies in building codes around the world” for stopping the sales. The company’s shares fell over 11 percent after it was linked to the blaze in London.

Hours after the announcement from Arconic, the Department for Communities and Local Government said that samples from 75 high-rises in England had failed fire safety tests.

The tests were initiated following the Grenfell Tower fire. Grenfell’s exterior insulation is thought to have been responsible for the rapid acceleration of the blaze, resulting in the deaths of at least 79 people, fire officials said.

Grenfell Tower and many of the buildings tested are all part of government-run, low-cost, public housing developments.
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The promotion of Saudi Arabia’s top economic reformer to crown prince has cheered business leaders who believe it will open up new opportunities. But they worry about officials’ ability to implement reforms and about geopolitical tensions in the region.

The Saudi stock market jumped 7 percent in the two days after Mohammed bin Salman, previously deputy crown prince, was appointed last week to be first in line for the throne.

Part of the market’s rise was due to a decision by index compiler MSCI to consider upgrading Riyadh to emerging market status. But much of the euphoria was political; shares in companies closely linked to Prince Mohammed’s reforms were the top performers.

National Commercial Bank, the biggest lender, which is expected to play a big role handling financial transactions related to the reforms, surged 15 percent.

Miner Ma’aden soared 20 percent; Prince Mohammed has labelled mining a key sector in his drive to cut Saudi Arabia’s reliance on oil exports. Emaar the Economic City, builder of an industrial zone which the prince hopes

to develop as an export industry base, gained 16 percent.

Solid political move

Business leaders said the promotion of Prince Mohammed, 31, removed political uncertainty by confirming a smooth shift of power from an older generation of Saudi leaders to a young generation represented by the prince.

“The political transition was very smooth — we expect the reforms to continue,” Muhammad Alagil, chairman of Jarir Marketing, a top retailing chain, told Reuters.

He said Jarir, which has 47 stores, some 39 of which are in Saudi, would open at least six this year and a similar number next year, mostly inside Saudi Arabia.

Fresh opportunity

To some in business, Prince Mohammed represents fresh opportunity in the form of a $200 billion privatization program and state investment to help kick start new industries such as shipbuilding, auto parts making and tourism.

Some executives predicted the progress of these plans, which are still largely on the drawing board a year after Prince Mohammed announced them, would accelerate after his promotion.

“I didn’t see a risk of the reforms stalling or being reversed before, given the political backing behind them. But now the reforms can go ahead with more strength,” said Hesham Abo Jamee, chief executive at Alistithmar Capital.

He added that social initiatives in the reforms would help the economy by stimulating consumer spending.

For example, developing an entertainment sector, in a conservative society which has so far shunned many forms of public entertainment, would create jobs. The government plans an entertainment zone south of Riyadh with sports, cultural and recreational facilities.

Increasing the role of women in the workforce would boost family incomes and could accelerate creation of small businesses such as restaurants, Abo Jamee said.

Repatriation

Prince Mohammed is also architect of a tough austerity policy, including spending cuts and tax rises, that aims to abolish by 2020 a budget gap which totaled $79 billion in 2016.

The austerity has slowed private sector growth almost to zero.

But many in business see austerity as inevitable in an era of low oil prices and are pleased by the prince’s willingness to moderate it to avoid a worse slowdown. To mark his promotion, Riyadh retroactively restored civil servants’ allowances at a cost it estimated at around $1.5 billion.

Privately, many executives expect Prince Mohammed to persuade or pressure wealthy Saudis to repatriate some of the billions of dollars which they are believed to have transferred overseas for safe-keeping.

Other issues

It is not clear what tools he would use — moral suasion, legal action or financial incentives — but his promotion may have given him the political capital for such a sensitive step. Businesses remain worried by two other issues, however.

One is the competence of the bureaucracy to carry out the complex reforms. The government talks of partnerships between the public and private sectors to finance projects, for example, but has not released legal frameworks for such deals.

“Many of the reforms are in name only — nothing has happened. They’re struggling with the details,” said a foreign economist who advises the Saudi government.

Military intervention

The other big worry is rising tensions around Saudi Arabia — tensions in which Prince Mohammed has been closely involved in his role as defense minister for two years.

In addition to its military intervention in Yemen, Saudi Arabia is locked in a diplomatic confrontation with Iran, its allies are struggling in Syria’s civil war, and early this month it cut diplomatic and transport ties with Qatar.

For some in business, these tensions are at best a distraction for the government at a time when it needs to focus on the economy, and at worst risk a more serious regional crisis that could deter foreign investment and endanger the reforms.

 
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Embattled Japanese auto parts manufacturer Takata said Monday it has filed for bankruptcy protection.

Takata also announced that rival Key Safety Systems is purchasing Takata for $1.5 billion. 

Takata has been overwhelmed with the costs of lawsuits and recalls related to defective airbags linked to the deaths of 16 people and scores of injuries worldwide.

The defective airbags led to a global recall of tens of millions of automobiles. The chemicals that power the airbags were found to deteriorate spontaneously with prolonged exposure to high humidity, causing the airbags to deploy far more forcefully than normal and sending metal and plastic shrapnel into drivers and passengers.

Takata has already agreed to pay a billion-dollar fine to settle with U.S. safety regulators.  Former U.S. Transportation Secretary Anthony Foxx has said that Takata engaged in a pattern of “delay, misdirection and refusal to acknowledge the truth.”

Jason Luo, president  and CEO of Key Safety Systems, said, “Although Takata has been impacted by the global airbag recall, the underlying strength of its skilled employee base, geographic reach, and exceptional steering wheels, seat belts and other safety products have not diminished.” 

The Tokyo Stock Exchange suspended trading of Takata shares Monday and said it would delist Takata stock Tuesday.
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The global economy has picked up and prospects for the next few months are the best in a long time.

 

But the recovery is maturing and faces risks from populist rejection of free trade and from high debt that could burden consumers and companies as interest rates rise.

 

Those were key takeaways from a review of the global economy released Sunday by the Bank for International Settlements, an international organization for central banks based in Basel, Switzerland.

 

The report said that “the global economy’s performance has improved considerably and that its near-term prospects appear the best in a long time.” Global growth should reach 3.5 percent this year, according to a summary of forecasts, not quite what it was before the Great Recession but in line with long-term averages. Meanwhile, financial markets for stocks and bonds have been unusually buoyant and steady.

 

On top of that, forecasts by governments and international organizations as well as by private analysts point to “further gradual improvement” in coming months.

 

Key risks include a possible weakening of consumer spending across different economies. So far, the recovery has been largely fueled by people being willing and able to spend more. But that trend could fall victim to higher levels of debt as interest rates rise in some countries and as the amount people need to spend to service their debts takes a bigger chunk of income.

 

Countries that were slammed by collapsing real estate markets during the Great Recession seem less vulnerable now, such as the United States, the U.K., and Spain. But debt burdens are more worrisome in a range of other countries mentioned in the report, including China, Australia and Norway.

 

Another risk comes from weak business investment, typically the second stage of recovery after consumers start spending more; yet that kind of spending has lagged its pre-recession levels for reasons that aren’t always clear to economists.

 

The BIS urged governments around the world to take advantage of the economic recovery as an opportunity to make growth more resistant to trouble by implementing pro-business and pro-growth measures.

 

In particular, the report warned against a backlash against globalization, saying that trade and interconnected financial markets had led to higher standards of living and lifted large parts of the world’s population out of poverty. It called for domestic policies to address inequality and lost jobs, saying that changing technology was often to blame, not free trade. “Attempts to roll back globalization would be the wrong response to these challenges,” it said.

 

 

 
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