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  • Strike at Canada’s Pacific ports ends with tentative, 4-year deal

    Strike at Canada’s Pacific ports ends with tentative, 4-year deal

    [1/5]Union members with the International Longshore and Warehouse Union Canada (ILWU) remove strike signs from a picket line outside the despatch hall in Vancouver, British Columbia, Canada July 13, 2023. REUTERS/Chris Helgren

    VANCOUVER, British Columbia, July 13 (Reuters) – Dock workers at ports along Canada’s Pacific coast and their employers accepted a tentative wage deal on Thursday, ending a 13-day strike that disrupted trade at the country’s busiest ports and risked worsening inflation.

    “The British Columbia Maritime Employers Association (BCMEA) and International Longshore and Warehouse Union (ILWU) Canada are pleased to advise that the parties have reached a tentative agreement on a new 4-year deal,” the BCMEA said in a statement.

    The ILWU also said there was an agreement, which must now be ratified by both sides. The union had made demands including wage increases and expansion of their jurisdiction to regular maintenance work on terminals.

    Some 7,500 dock workers represented by the ILWU walked off the job on July 1 after failing to reach a new work contract with the BCMEA representing the companies involved.

    The strike upended operations at two of Canada’s three busiest ports, the Port of Vancouver and the Port of Prince Rupert – key gateways for exporting the country’s natural resources and commodities and bringing in raw materials.

    Economists have warned that the strike could trigger more supply-chain disruptions and fuel inflation while the Bank of Canada tries to cool the economy.

    “The scale of the disruption has been significant,” Labour Minister Seamus O’Regan and Transport Minister Omar Alghabra said in a joint statement.

    “We do not want to be back here again. Deals like this, made between parties at the collective bargaining table, are the best way to prevent that.”

    On Tuesday, O’Regan said the differences between the parties were not sufficient to justify a continued work stoppage.

    He offered terms drafted by a federal mediator and gave the union and employers 24 hours to decide if they were satisfied. The deal was reached at 10:20 am PT (1720 GMT), 10 minutes before the deadline, the ILWU said.

    The parties, with help from federal mediators, had been negotiating a new contract since late April.

    More than half of Canadian small business owners in a survey released on Tuesday said the strike at the Port of Vancouver will affect their operations, according to preliminary results from the Canadian Federation of Independent Business.

    The strike is estimated to have disrupted C$6.5 billion of cargo movement at the ports, based on the industry body Canadian Manufacturers & Exporters’ calculation of about C$500 million in disrupted trade each day.

    Reporting by Ismail Shakil and Steve Scherer in Ottawa, editing by Deepa Babington, Alexandra Hudson

    Our Standards: The Thomson Reuters Trust Principles.

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  • Indian PM Modi wraps up Washington trip with appeal to tech CEOs

    Indian PM Modi wraps up Washington trip with appeal to tech CEOs

    WASHINGTON, June 23 (Reuters) – Indian Prime Minister Narendra Modi met with U.S. and Indian technology executives in Washington on Friday, the final day of a state visit where he agreed new defense and technology cooperation and addressed challenges posed by China.

    U.S. President Joe Biden rolled out the red carpet for Modi on Thursday, declaring after about 2-1/2 hours of talks that their countries’ economic relationship was “booming.” Trade has more than doubled over the past decade.

    Biden and Modi gathered with CEOs including Apple’s (AAPL.O) Tim Cook, Google’s (GOOGL.O) Sundar Pichai and Microsoft’s (MSFT.O) Satya Nadella.

    Also present were Sam Altman of OpenAI, NASA astronaut Sunita Williams, and Indian tech leaders including Anand Mahindra, chairman of Mahindra Group, and Mukesh Ambani, chairman of Reliance Industries, the White House said.

    “Our partnership between India and the United States will go a long way, in my view, to define what the 21st century looks like,” Biden told the group, adding that technological cooperation would be a big part of that partnership.

    Observing that there were a variety of tech companies represented at the meeting from startups to well established firms, Modi said: “Both of them are working together to create a new world.”

    Modi, who has appealed to global companies to “Make in India,” will also address business leaders at the Kennedy Center for Performing Arts.

    The CEOs of top American companies, including FedEx (FDX.N), MasterCard (MA.N) and Adobe (ADBE.O), are expected to be among the 1,200 participants.

    NOT ‘ABOUT CHINA’

    The backdrop to Modi’s visit is the Biden administration’s attempts to draw India, the world’s most populous country at 1.4 billion and its fifth-largest economy, closer amid its growing geopolitical rivalry with Beijing.

    Modi did not address China directly during the visit, and Biden only mentioned China in response to a reporter’s question, but a joint statement included a pointed reference to the East and South China Seas, where China has territorial disputes with its neighbors.

    Farwa Aamer, director for South Asia at the Asia Society Policy Institute, in an analysis note described that as “a clear signal of unity and determination to preserve stability and peace in the region.”

    Alongside agreements to sell weapons to India and share with it sensitive military technology, announcements this week included several investments from U.S.-firms aimed at spurring semiconductor manufacturing in India and lowering its dependence on China for electronics.

    White House national security spokesperson John Kirby said the challenges presented by China to both Washington and New Delhi were on the agenda, but insisted the visit “wasn’t about China.”

    “This wasn’t about leveraging India to be some sort of counterweight. India is a sovereign, independent state,” Kirby said at a news briefing, adding that Washington welcomes India becoming “an increasing exporter of security” in the Indo-Pacific.

    “There’s a lot we can do in the security front together. And that’s really what we’re focused on,” Kirby said.

    Some political analysts question India’s willingness to stand up to Beijing over Taiwan and other issues, however. Washington has also been frustrated by India’s close ties with Russia while Moscow wages war in Ukraine.

    DIASPORA TIES

    Modi attended a lunch on Friday at the State Department with Vice President Kamala Harris, the first Asian American to hold the No. 2 position in the White House, and Secretary of State Antony Blinken.

    In a toast, Harris spoke of her Indian-born late mother, Shyamala Gopalan, who came to the United States at age 19 and became a leading breast cancer researcher.

    “I think about it in the context of the millions of Indian students who have come to the United States since, to collaborate with American researchers to solve the challenges of our time and to reach new frontiers,” Harris said.

    Modi praised Gopalan for keeping India “close to her heart” despite the distance to her new home, and called Harris “really inspiring.”

    On Friday evening, Modi will address members of the Indian diaspora, many of whom have turned out at events during the visit to enthusiastically fete him, at times chanting “Modi! Modi! Modi!” despite protests from others.

    Activists said Biden had failed to strongly call out what they describe as India’s deteriorating human rights record under Modi, citing allegations of abuse of Indian dissidents and minorities, especially Muslims. Modi leads the Hindu nationalist Bharatiya Janata Party (BJP) and has held power since 2014.

    Biden said he had a “straightforward” discussion with Modi about issues including human rights, but U.S. officials emphasize that it is vital for Washington’s national security and economic prosperity to engage with a rising India.

    Asked on Thursday what he would do to improve the rights of minorities including Muslims, Modi insisted “there is no space for any discrimination” in his government.

    “There is no end to data that shows Modi is lying about minority abuse in India, and much of it can be found in the State Department’s own India country reports, which are scathing on human rights,” said Sunita Viswanath, co-founder Hindus for Human Rights, an advocacy group.

    Reporting by Steve Holland, Simon Lewis and Jeff Mason; additional reporting by Trevor Hunnicutt, Doina Chiacu, David Brunnstrom and Kanishka Singh; Editing by Don Durfee and Grant McCool

    Our Standards: The Thomson Reuters Trust Principles.

    Jeff Mason

    Thomson Reuters

    Jeff Mason is a White House Correspondent for Reuters. He has covered the presidencies of Barack Obama, Donald Trump and Joe Biden and the presidential campaigns of Biden, Trump, Obama, Hillary Clinton and John McCain. He served as president of the White House Correspondents’ Association in 2016-2017, leading the press corps in advocating for press freedom in the early days of the Trump administration. His and the WHCA’s work was recognized with Deutsche Welle’s “Freedom of Speech Award.” Jeff has asked pointed questions of domestic and foreign leaders, including Russian President Vladimir Putin and North Korea’s Kim Jong Un. He is a winner of the WHCA’s “Excellence in Presidential News Coverage Under Deadline Pressure” award and co-winner of the Association for Business Journalists’ “Breaking News” award. Jeff began his career in Frankfurt, Germany as a business reporter before being posted to Brussels, Belgium, where he covered the European Union. Jeff appears regularly on television and radio and teaches political journalism at Georgetown University. He is a graduate of Northwestern University’s Medill School of Journalism and a former Fulbright scholar.

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  • Cash-loving Germans fret over exploding ATMs as cross-border crime wave hits

    Cash-loving Germans fret over exploding ATMs as cross-border crime wave hits

    RATINGEN, Germany, April 14 (Reuters) – In the German town of Ratingen, exploding cash machines are a hot-button topic.

    Two got blown up early on the same morning last month, at branches of Santander (SAN.MC) and Deutsche Bank (DBKGn.DE) across the street from each other close to the Duesseldorf suburb’s main square.

    A year ago, residents of the apartments above Santander unsuccessfully sued to have the machines removed due to concerns they could be raided – a gesture that might in retrospect be deemed prophetic in other countries.

    But in Germany, thieves are blowing ATMs up at the rate of more than one a day.

    Attacks are up more than 40% since 2019, according to the interior ministry, and investigators say two factors are driving the increase.

    Europe’s largest economy has 53,000 ATM machines, a disproportionately high number that reflects Germans’ preference for cash rather than bank cards. The country also boasts an extensive network of highways, or Autobahns, on much of which no speed limit is enforced.

    Ratingen lies just 70km (40 miles) from the Dutch border, and investigators say gangs from the Netherlands are the prime culprits for the attacks, which send glass flying, cause building facades to crumble and money cartridges to crack open.

    Raiders got away with nearly 20 million euros ($22.1 million) in 2021, when 392 ATM explosions were recorded, a tally that rose to 496 in 2022. Police in the state of North Rhine-Westphalia, where Ratingen lies and which has borne the brunt of the attacks, have recorded 47 incidents so far in 2023, up on last year’s rate.

    Reuters Graphics Reuters Graphics

    DUTCH RAIDERS

    Meanwhile the frequency of ATM attackers is falling in the Netherlands, partly due to security measures such as glue that makes blocks of cash inside ATMs unusable, Dutch police say.

    So Dutch cash machine raiders are crossing the border and, German police estimate, have carried out between 70% to 80% of attacks in Germany since 2018.

    Dutch police suspect around 500 men are responsible, working in ever-evolving groups as new recruits replace those who get caught. Prosecutors in Frankfurt this week charged six Dutch citizens with causing explosions, theft and property damage.

    Reuters Graphics

    Ratingen police are investigating a possible Dutch connection in last month’s twin raid too, having identified a small vehicle that sped from the scene to a nearby Autobahn.

    On Thursday, nearly a month after the attacks, Santander’s facade remained boarded up. Deutsche Bank’s sign was still damaged, and a sign asked for customers’ understanding that ATMs were out of order while under repair.

    In Germany, roughly 60% of everyday purchases are paid in cash, according to a Bundesbank study that found Germans, on average, withdrew more than 6,600 euros annually chiefly from cash machines.

    Germany is also working with officials in Belgium and France and at Europol to combat the cash machine crime wave. The partner authorities did not respond to requests for comment.

    Noting that ATM raids endangered lives, German Interior Minister Nancy Faeser this week urged banks to step up safety measures for ATMs.

    Both Santander and Deutsche said they prioritised safety and were continuously improving ATM security, but banks inside Germany are reluctant to adopt blanket measures, instead advocating a case-by-case approach depending on individual security risk.

    A spokesperson for Deutsche Kreditwirtschaft, a umbrella lobby group for the nation’s financial institutions, said: “Different locations come with different risks. There is currently no one-size-fits-all solution.”

    ($1 = 0.9044 euros)

    Additional reporting by Milan Pavicic; editing by John Stonestreet

    Our Standards: The Thomson Reuters Trust Principles.

    Tom Sims

    Thomson Reuters

    Covers German finance with a focus on big banks, insurance companies, regulation and financial crime, previous experience at the Wall Street Journal and New York Times in Europe and Asia.

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  • No China, no deal: Bid to break sovereign debt logjams gets weary thumbs up

    No China, no deal: Bid to break sovereign debt logjams gets weary thumbs up

    LONDON, April 13 (Reuters) – The latest bid by the world’s leading institutions and creditors to speed up debt restructurings and get bankrupt countries back on their feet has been greeted by a mix of cautious optimism and weary scepticism by veteran crisis watchers.

    Standoffs between major Western-backed lenders like the International Monetary Fund (IMF) and the world’s top bilateral creditor, China, have been blamed for keeping countries such as Zambia mired in default for nearly three years.

    The somewhat loose framework around sovereign restructurings has seen Beijing seek to influence the traditional rules of engagement in these processes.

    The renewed push to overcome the logjams came after a “roundtable” at the IMF Spring Meetings and included pledges from the Fund and World Bank to share assessments of countries’ troubles more quickly, provide more low-interest and grant funding and stricter timeframes on restructurings overall.

    The idea is that Beijing would then drop its insistence that the multilateral lenders take losses, or “haircuts”, on the loans they have provided or underwritten in crisis-hit countries.

    Beijing has not commented directly on the demand for multilateral lender haircuts, but in remarks published on Friday People’s Bank of China Governor Yi Gang reiterated China’s willingness to implement debt talks under the Common Framework, the platform introduced by leading G20 nations in 2020 to streamline talks with all creditors.

    “If the multilateral development banks are now making real commitments to provide fresh grants to distressed countries this is a breakthrough,” said Kevin Gallagher, director of the Boston University Global Development Policy Center.

    But he added that as the new plans lacked specific mention of China’s intentions it suggested the “lack of a strong and clear consensus” in Washington.

    The IMF’s managing director Kristalina Georgieva has stressed that with around 15% of low income countries already in debt distress and dozens more in danger of falling into it, far more urgency is needed.

    Besides members of the Paris Club of creditor nations such as the United States, France and Japan, cash-strapped nations now have to rework loans with lenders such as India, Saudi Arabia, South Africa and Kuwait – but first and foremost China.

    Beijing is now the largest bilateral creditor to developing nations, extending $138 billion in new loans between 2010 and 2021, according to World Bank data, and some estimates put total lending at almost $850 billion.

    Reuters Graphics

    HEADWINDS

    Global headwinds are about to get stronger too.

    Financially weaker countries with “junk”-grade sovereign credit ratings need to repay or refinance $30 billion worth of government bonds next year between them, compared to just $8.4 billion for the remainder of this one.

    The rise in global borrowing costs, though, means that many countries under the greatest stress are now unable to borrow in the international capital markets or, if they can, only at unsustainably high interest rates.

    The Chinese debt, meanwhile, is often opaque and muddied by arguments about whether the loans have been given by “official” entities – i.e by the government – or by “private” entities.

    Authorities in Beijing also prefer to roll over debt payments rather than write them off, and given it is an increasingly dominant creditor, it has little incentive to follow co-operative Paris Club-like principles.

    “It would be great to have China on board (with the push to speed up restructurings) but I don’t really have high hopes because there is a lot of geopolitics involved,” said Viktor Szabo, an emerging market debt manager at Abrdn in London.

    Select IMF loans to low and middle income countries by date of Board approval

    COMMON PROBLEMS

    Recent research by Boston University estimated that up to $520 billion in debt needs to be written off to help developing nations at greatest risk of default return to a sounder fiscal footing.

    But lengthy delays in Zambia, and more recently in Sri Lanka, have elicited widespread criticism of the Common Framework.

    Wednesday’s promises by the IMF to provide its assessments more quickly was an admission that the Common Framework was currently failing, Szabo added.

    “You have to make it functional. The fact that it’s been in place for three years and there is nothing to really show for it, that is really appalling.”

    Anna Ashton, director of China research at Eurasia Group, said this week’s developments underscored the benefits for China to give some ground on some of its concerns.

    “Being willing to compromise and facilitate debt restructuring right now is likely crucial to China’s continued credibility with the developing world writ large,” Ashton said.

    Patrick Curran, senior economist with Tellimer, added that China dropping demands for the big multilateral development banks (MDBs) to swallow losses on their loans could also be “a major breakthrough”.

    “There is likely to be broad support for the alternative proposal that MDBs mobilize their resources more aggressively, especially at a time when most low-income countries are locked out of the market,” Curran said.

    Germany’s finance minister Christian Lindner on Thursday too said all the talk now needed to be converted into action.

    The group that took part in Wednesday’s roundtable plans to meet again in coming weeks to address remaining issues, including how various creditors are treated, principles for cut-off dates and suspending debt payments.

    Ultimately, whether the new terms help Zambia, and countries like Sri Lanka, Ghana and Ethiopia that are also in the midst of bailout talks, finalise deals will be the only proof of whether the new terms work.

    “China is a difficult partner to talk to but we need China at the table for the solution of debt problems, because otherwise we won’t see any progress,” Lindner said.

    Reuters Graphics

    Additional reporting by Rodrigo Campos in New York and Joe Cash in Beijing
    Editing by Mark Potter

    Our Standards: The Thomson Reuters Trust Principles.

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  • Exclusive: India’s Bank of Baroda stops clearing payment for above-cap Russian oil – sources

    Exclusive: India’s Bank of Baroda stops clearing payment for above-cap Russian oil – sources

    NEW DELHI, April 4 (Reuters) – India’s Bank of Baroda (BOB.NS) has stopped clearing payments for Russian oil sold above the price cap set by the West from this month, three sources with direct knowledge of the matter said, a move that could expedite transition to a rupee trade mechanism.

    Some Indian refiners were paying in the United Arab Emirates dirham currency for Russian low-sulphur crude priced above the $60 a barrel cap using Bank of Baroda, mainly to Dubai-based traders, sources said.

    The Group of Seven economies, the European Union and Australia, set the price cap late last year to bar Western services and shipping from trading Russian oil unless sold at an enforced low price to deprive Moscow of funds for its Ukraine war.

    “Bank of Baroda is extremely cautious in settling payments for Russian oil bought (at levels) above the price cap,” one of the sources said.

    “They have told us no for settling payments for above-cap barrels,” the person said.

    The state-run lender told refiners last month that it would not settle payment from Russian barrels bought above the price cap, the three sources said.

    Bank of Baroda did not respond to requests for comment from Reuters.

    Before the Ukraine war, Indian refiners rarely bought oil from Russia due to higher freight costs. After Western sanctions on Moscow for its invasion of Ukraine, Indian refiners have been gorging on discounted Russian oil.

    Russia has replaced Iraq as the top oil supplier to India in the last few months, data from trade sources showed.

    Sources anticipate that prices of Russian sweet crude such as Sokol and ESPO Blend, which was sold near $60 a barrel in recent weeks, could breach the price cap due to a sharp spike in global oil prices triggered by Sunday’s OPEC+ decision to cut output.

    Some refiners, mainly private operators, have been clearing payments in dirhams for Russian crude through private lender Axis Bank (AXBK.NS), sources told Reuters last month. It was not clear if Axis Bank had also stopped settling trades for Russian oil sold above the price cap.

    Axis Bank did not immediately respond to Reuters’ request for comment.

    Although Indian refiners buy Russian oil on a delivered basis, copies of invoices reviewed by Reuters also show shipping charges, which helps in calculating the price of crude at Russian ports.

    Sources said that problems in settling trade for Russian oil could push sellers to accept rupee payments, at least for barrels that exceed the price cap.

    “We have neither stopped nor reduced purchases of Russian oil after Bank of Baroda’s decision … we will consider using rupees to pay for oil purchased above the price cap,” another source said.

    India does not recognise the Western price cap on Russian oil, a senior oil ministry source said last month.

    SETTLEMENT MECHANISM

    India set up a mechanism to settle its international trade in rupees last year. Some Russian banks later opened vostro accounts with banks in India to facilitate rupee trade.

    The mechanism has not yet started given the lack of Russian appetite for rupees and India’s trade deficit with Moscow.

    However, during a visit last week to India, Igor Sechin, chief executive of Russian oil major Rosneft, discussed ways to expand cooperation with India across the hydrocarbons value chain, including the possibility of making payments in national currencies.

    A switch to rupee payments would help wean Russia from dollars and would save foreign exchange for India.

    Reporting by Nidhi Verma; Additional reporting by Siddhi Nayak in Mumbai; Editing by Tony Munroe and Jacqueline Wong

    Our Standards: The Thomson Reuters Trust Principles.

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  • Ukraine’s tech entrepreneurs fight war on a different front

    Ukraine’s tech entrepreneurs fight war on a different front

    PRAGUE, April 4 (Reuters) – Eugene Nayshtetik and his five co-workers shuttered their company developing medical and biotech startups to join the defense forces days after Russia invaded Ukraine. Within two months, their commanders agreed it would be more useful if they swapped their military gear for computers.

    With the government’s blessing, Nayshtetik and his team of engineers moved to neighboring Poland where they raised initial funding from a Polish company, Air Res Aviation, to develop a new drone for the Ukrainian military.

    Jerzy Nowak, president and co-owner of Air Res Aviation, said his company’s initial investment in the drone project amounted to around $200,000.

    The Defender drone, now ready for testing, is designed to withstand strong winds to enable surveillance in bad weather, can fly vertically and carry big payloads. It’s an example of how some startups in Ukraine’s dynamic tech sector are switching to pursue military projects.

    “We had our own portfolio of medical and biotechnology civilian projects before the war,” Nayshtetik told Reuters. “We never dreamt of killing people. We wanted to heal people but the situation changed.”

    Reuters spoke to more than a dozen entrepreneurs, as well as Ukrainian and Western officials who said the shift to military innovation in Ukraine’s once-thriving technology sector has bolstered the country’s out-manned and out-gunned armed forces.

    Military experts and Ukrainian officials told Reuters that innovations developed by these startups are making a difference on the battlefield, ranging from software applications that can target enemy positions more quickly to civilian drones adapted for military use, and systems that integrate data to give commanders more detailed battlefield views.

    “The Ukrainians are outmatched by every numerical scale: in terms of numbers of forces; in terms of numbers when it comes to equipment. And yet they’re holding their own,” said a senior NATO official, who spoke on condition of anonymity. “One of the reasons they’re holding their own is that they have, in a very innovative way, integrated technology into warfighting.”

    Before Russia’s invasion, Ukraine represented one of the fastest growing tech hubs in central and eastern Europe. The enterprise value of startups soared more than 9-fold between 2017 and 2022 to reach 23 billion euros, according to data from Dealroom.com.

    Ukraine offered a host of advantages for emerging technology businesses, including a tradition of producing graduates strong in math and computer science. A low cost base also allowed entrepreneurs to do more with less.

    The country boasted 285,000 software developers in 2021 with an additional 25,000 graduating from tech universities annually, according to software development outsourcing company Softjourn.

    But with most emerging companies in Ukraine focused on the domestic market, many startups suffered a collapse in demand following the war – which has killed tens of thousands of people, reduced cities to rubble and wreaked havoc on infrastructure.

    Pavlo Kartashov, director of the Ukrainian Startup Fund (USF), a government-backed organization that seeds technology startups, told Reuters his group resumed funding in October. It hopes to finance around five to 10 emerging companies a month with grants of up to $35,000.

    Most will focus on military technology, he said.

    The fund also aims to unveil in April a new platform to connect emerging companies more closely with the military to identify the needs on the battlefield and to speed the transformation of ideas into tools that can be used in the conflict.

    “If you have something innovative and efficient it will definitely be used by the army,” he told Reuters. “We need new technology to fight the enemy and can try different approaches in real time.”

    PLOUGHSHARES INTO SWORDS

    Since the war, Western venture capital firms often have required strict term sheets that include having at least one founder and other key parts of the business located outside Ukraine. So the government has become the sole source within the country of early stage funding – the lifeblood of the technology sector – more than half a dozen founders and venture capitalists said.

    Demand from the government has driven the shift to military technology, but most of the entrepreneurs who spoke to Reuters said that patriotic duty also played a role.

    Take Kiev-based efarm.pro, a startup founded in 2016 whose GPS technology attached to tractors helps farmers more precisely monitor how fertilizer has penetrated the ground. Many of its customers are located in parts of Ukraine that became too dangerous to farm after the Russian invasion so the company adapted its product to detect mines.

    The self-driving technology is only aimed at farmers for now but could also work for military vehicles, the company’s founder Alexander Prykhodchenko told Reuters.

    “Clients were calling us in the first days of the war saying they don’t know how they can work in the field,” Prykhodchenko said. “The war started on February 24 and on February 26 we started work on the new project.”

    Currently, only three of the tractors are in use as the autonomous technology remains in the testing and development phase, Prykhodchenko said.

    Ukraine’s Minister of Digital Transformation Mykhailo Fedorov said the intensity of the fighting has meant that some concepts can flow from the drawing board to the battlefield in months, if not days.

    While acknowledging the critical role of weapons supplied by Western nations in helping to fight the Russians, he added that the ability to utilize the know-how of tech-savvy Ukrainians at home and abroad has proved invaluable.

    “One of the few areas where Ukraine has managed to stay consistently ahead of Russia is in the use of innovative military technologies,” he wrote in a February article for the Atlantic Council.

    Russia says its own weapons industry is increasing production and introducing new technology fast to meet the demands of military operations in Ukraine.

    Gregory Allen, a senior fellow at the Center for Strategic & International Studies in Washington DC, highlighted the so-called “Uber for Artillery” application developed by a network of Ukrainian programmers before the Russian invasion that networks together infantry, reconnaissance and artillery units to spot and land an artillery strike more quickly.

    He also said that a pair of anonymous Ukrainian software developers had rapidly created a program in mid-2022 that used machine learning to analyze video feeds from drones to detect more effectively military vehicles camouflaged in forests. Reuters was not able to confirm independently the details of the software.

    “I used to work in the Defense Department, and I have almost never seen high quality military machine learning systems go from an idea in someone’s head to a real system being used in war in a matter of weeks,” Allen told Reuters. “The value of the Ukrainian software systems is impressive but the speed is astonishing.”

    The Pentagon’s chief weapons buyer Bill LaPlante has described Ukraine’s use of technology in the war as a “wake up call.”

    “We are seeing true innovation on the battlefield: new combinations of technologies and concepts being developed and implemented, and the cycle from idea to prototype to a warfighter’s hands collapsed to months, if not weeks,” LaPlante told a U.S. Congressional committee last month.

    ISRAELI MODEL

    While Ukraine’s government and tech founders are focused on war-time innovation to aid the military now, they say these emerging start ups can also underpin Ukraine’s post-war economy — pointing to Israel as an example of how military technology laid the foundation for a booming technology sector.

    Government support and experience working on military projects transformed Israel into a global tech hub and propelled the nation into a leader in cybersecurity and autonomous driving vehicles — a path Ukraine officials and tech leaders like Valery Krasovsky hope to emulate for a country with a pre-war population nearly five times that of Israel.

    “There are much more ideas in military technology,” said Krasovsky, the founder and chief executive of Swedish-Ukrainian Sigma Software Group.

    For now, the scarcity of seed funding in Ukraine has forced some companies to flee to places like to neighboring Poland. Groups like the Polish-Ukrainian Start Up Bridge – a Polish-government backed venture – offer emerging Ukrainian tech companies small grants to fund basic business needs and a co-working space in Warsaw.

    “Startups have had the past year to teach themselves how to survive and adapt to the new reality,” Mykhailo Khaletskyi, an advisor for the Startup Bridge and Ukrainian government, told Reuters.

    Additional Reporting by Andrew Gray and Sabine Siebold in Brussels, Elizabeth Piper in London and Mike Stone in Washington, Editing by Daniel Flynn

    Our Standards: The Thomson Reuters Trust Principles.

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  • Oil slips as banking fears return, offsetting China demand hopes

    Oil slips as banking fears return, offsetting China demand hopes

    • Credit Suisse unease sparks global sell-off
    • Chinese economy shows signs of gradual recovery
    • China reopening expected to boost oil demand -IEA

    LONDON, March 15 (Reuters) – Oil extended losses on Wednesday as unease over Credit Suisse spooked world markets, offsetting hopes of a Chinese oil demand recovery.

    Early signs of a return to calm and stability faded after Credit Suisse’s largest investor said it could not provide the Swiss bank with more financial assistance, sending its shares and broader European stocks sliding.

    “The financial sector in Europe is under significant turmoil today,” said Naeem Aslam, chief investment officer at Zaye Capital Markets.

    Brent crude fell $1.44, or 1.9%, to $76.01 a barrel by 1100 GMT. U.S. West Texas Intermediate crude futures (WTI) were down 33 cents, or 0.5%, at $71.00.

    Oil had rallied earlier on figures showing that China’s economic activity picked up in the first two months of 2023 after the end of strict COVID-19 containment measures.

    On Tuesday both benchmarks shed more than 4% to three-month lows, pressured by fears that the collapse of Silicon Valley Bank (SVB) last week and other U.S. bank failures could spark a financial crisis that would weigh on fuel demand.

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    Wednedsay’s monthly report from the International Energy Agency provided support by flagging an expected boost to oil demand from China a day after OPEC increased its Chinese demand forecast for 2023.

    Investors are now awaiting official U.S. oil inventory data later on Wednesday to see if it confirms the 1.2 million barrel rise in crude stocks reported on Tuesday by the American Petroleum Institute.

    (This story has been refiled to correct typographical error in headline)

    Reporting by Alex Lawler
    Additional reporting by Florence Tan in Singapore and Yuka Obayashi in Tokyo
    Editing by Jason Neely and David Goodman

    Our Standards: The Thomson Reuters Trust Principles.

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  • Analysis: Loans to Russian soldiers fuel calls for European banks to quit

    Analysis: Loans to Russian soldiers fuel calls for European banks to quit

    BERLIN/LONDON, Feb 13 (Reuters) – A Russian scheme to grant loan payment holidays to troops fighting in Ukraine, and for banks to write off the entire debt if they are killed or maimed, has added to growing pressure for the remaining overseas lenders in Russia to leave.

    Almost a year since Moscow launched what it calls a “special military operation” in Ukraine, a handful of European banks, including Austria’s Raiffeisen Bank International (RBIV.VI) and Italy’s UniCredit (CRDI.MI), are still making money in Russia.

    The loan relief scheme has not only triggered criticism from Ukraine’s central bank, which said it had appealed to Raiffeisen and other banks to stop doing business in Russia, but also from investors concerned about any reputational impact.

    Raiffeisen and UniCredit are both deeply embedded in the Russian financial system and are the only foreign banks on the central bank’s list of 13 “systemically important credit institutions”, underscoring their importance to Russia’s economy, which is grappling with sweeping Western sanctions.

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    Their role in supporting the Russian economy at a critical time for President Vladimir Putin has prompted some investors to go public with their misgivings.

    “Companies should be very careful,” said Kiran Aziz, of Norwegian pension fund KLP, cautioning of a major risk that the banks could be used to “in other ways finance the war”. KLP funds hold shares in both Raiffeisen and UniCredit.

    At the time the payment holiday law was going through parliament in September, Vyacheslav Volodin, the influential speaker of the lower house, made clear its importance to Russia.

    “Soldiers and officers ensure the security of our country and we must be sure that they will be taken care of,” he said.

    Eric Christian Pederson of Nordea Asset Management, which has more than 300 billion euros ($320 billion) under management, said he too was concerned about Raiffeisen and UniCredit’s Russian presence and had raised this with them.

    The requirement that the banks grant payment holidays to soldiers “illustrates the dangers of operating in jurisdictions where companies can … be forced into actions that go directly against their corporate values,” he added.

    “We feel that it is right for companies to withdraw from Russia, given its unprovoked attack on Ukraine,” said Pederson. Refinitiv data shows Nordea owns shares in UniCredit.

    Banks restructured a total of 167,600 loans for military personnel or their family members, worth more than 800 million euros, between Sept. 21 and the end of last year, Russian central bank data shows.

    Raiffeisen said that only 0.2% of its Russian loans are affected by the “government-imposed loan moratorium”, a sum it described as “negligible”. The bank has a total of almost 9 billion euros of loans in Russia, where it has been for more than 25 years, including to companies.

    It made a net profit of roughly 3.8 billion euros last year, thanks in large part to a 2 billion euro plus profit from its Russia business.

    UniCredit, which entered the Russian market almost 20 years ago when it acquired an Austrian bank, said that the rule was “mandatory under the federal law … for all banks”, declining to say how many of its loans had been forgiven.

    The Italian bank added that its business in Russia was focused on companies rather than individuals. Of UniCredit’s more than 20 billion euro total revenue last year, Russia accounted for more than 1 billion euros.

    But despite an initial sharp fall, UniCredit’s shares are now significantly higher than before Russia moved its troops into Ukraine on Feb. 24 last year, while Raiffeisen’s, with a more limited free float, have not recovered.

    “Any profiteering on the ongoing war is not acceptable or aligned with our view of responsible investments,” said a spokesperson for Swedbank Robur, one of Scandinavia’s top investors, adding that reputational risk was a worry.

    Swedbank Robur said it has stakes in both banks, but did not disclose figures.

    Larger institutional investors, including France’s Amundi and Norway’s sovereign wealth fund, which advocates responsible investing, declined to comment when asked for their views.

    WINDOW CLOSING?

    Some foreign banks have made relatively quick exits.

    France’s Societe Generale (SOGN.PA) severed its Russia ties in May by selling Rosbank (ROSB.MM) to businessman Vladimir Potanin’s Interros Group.

    But the continued presence of two of Europe’s biggest banks is attracting the attention of regulators at the European Central Bank (ECB), one person familiar with the matter said.

    Andrea Enria, the ECB’s chief supervisor, said the window to quit was “closing a bit” because Russian authorities were taking a more “hostile” approach. But he also voiced support for any bank wanting to reduce their business there or leave.

    Raiffeisen and UniCredit confirmed they were in discussions about Russia with the ECB.

    UniCredit said it kept the ECB “fully and regularly up to date on our strategy of orderly de-risking our exposure to Russia”.

    But with money still to be made, Raiffeisen saw profit from its business in Russia more than triple last year.

    Meanwhile, Russian savers lodged more than 20 billion euros with the bank, which offers a place to deposit funds with fewer sanctions risks.

    This means there is no great impetus for banks to leave Russia, despite regulatory pressure.

    And in Austria, which has close historical and economic ties to eastern Europe and Russia, politicians are largely silent on Raiffeisen’s continuing Russian presence, which in recent months prompted protests outside its headquarters.

    Johann Strobl, Raiffeisen’s CEO, has said he is examining options for the Russian business, although points out that any move is complicated, having earlier said that the bank is not “a sausage stand” that could be closed overnight.

    For some the question is more about morality than money.

    Heinrich Schaller, head of RBI’s third largest shareholder Raiffeisenlandesbank Oberoesterreich and deputy chairman of Raiffeisen, is among those to have aired doubts about staying.

    “Of course it is a question of morals,” he said recently. “No doubt about it.”

    Whatever shareholders may say, a decree by Putin is likely to make getting out of Russia difficult. It banned investors from so-called unfriendly countries from selling shares in banks, unless the Russian President grants an exemption.

    ($1 = 0.9376 euros)

    Additional reporting by Alexandra Schwarz-Goerlich in Vienna and Tom Sims in Frankfurt; Writing by John O’Donnell; Editing by Alexander Smith

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  • Adani’s market losses top $100 bln as crisis shockwaves spread

    Adani’s market losses top $100 bln as crisis shockwaves spread

    • Market rout deepens in Indian tycoon Adani’s shares
    • Adani Enterprises loses $26 bln in value since report
    • Falls after Adani pulled share sale, investors spooked
    • Analysts say signals confidence crisis in Indian market

    NEW DELHI/MUMBAI, Feb 2 (Reuters) – Adani’s market losses swelled above $100 billion on Thursday, sparking worries about a potential systemic impact a day after the Indian group’s flagship firm abandoned its $2.5 billion stock offering.

    Another challenge for Adani on Thursday came when S&P Dow Jones Indices said it would remove Adani Enterprises from widely used sustainability indices, effective Feb. 7, which would make the shares less appealing to sustainability-minded funds.

    In addition, India’s National Stock Exchange said it has placed on additional surveillance shares of Adani Enterprises <ADEL.NS>, Adani Ports <APSE.NS> and Ambuja Cements <ABUJ.NS>. read more

    However, Adani Group Chairman Gautam Adani is in talks with lenders to prepay and release pledged shares as he seeks to restore confidence in the financial health of his conglomerate, Bloomberg News reported on Thursday. read more

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    The shock withdrawal of Adani Enterprises’ share sale marks a dramatic setback for founder Adani, the school dropout-turned-billionaire whose fortunes rose rapidly in recent years but have plunged in just a week after a critical research report by U.S.-based short-seller Hindenburg Research.

    Aborting the share sale sent shockwaves across markets, politics and business. Adani stocks plunged, opposition lawmakers called for a wider probe and India’s central bank sprang into action to check on the exposure of banks to the group. Meanwhile, Citigroup’s (C.N) wealth unit stopped making margin loans to clients against Adani Group securities.

    The crisis marks an dramatic turn of fortune for Adani, who has in recent years forged partnerships with foreign giants such as France’s TotalEnergies (TTEF.PA) and attracted investors such as Abu Dhabi’s International Holding Company as he pursues a global expansion stretching from ports to the power sector.

    In a shock move late on Wednesday, Adani called off the share sale as a stocks rout sparked by Hindenburg’s criticisms intensified, despite it being fully subscribed a day earlier.

    “Adani may have started a confidence crisis in Indian shares and that could have broader market implications,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

    Adani Enterprises shares tumbled 27% on Thursday, closing at their lowest level since March 2022.

    Other group companies also lost further ground, with 10% losses at Adani Total Gas (ADAG.NS), Adani Green Energy (ADNA.NS) and Adani Transmission (ADAI.NS), while Adani Ports and Special Economic Zone shed nearly 7%.

    Since Hindenburg’s report on Jan. 24, group companies have lost nearly half their combined market value. Adani Enterprises – described as an incubator of Adani’s businesses – has lost $26 billion in market capitalisation.

    Adani is also no longer Asia’s richest person, having slid to 16th in the Forbes rankings of the world’s wealthiest people, with his net worth almost halved to $64.6 billion in a week.

    The 60-year-old had been third on the list, behind billionaires Elon Musk and Bernard Arnault.

    His rival Mukesh Ambani of Reliance Industries (RELI.NS) is now Asia’s richest person.

    [1/4] Indian billionaire Gautam Adani addresses delegates during the Bengal Global Business Summit in Kolkata, India April 20, 2022. REUTERS/Rupak De Chowdhuri

    Reuters Graphics

    BROADER CONCERNS

    Adani’s plummeting stock and bond prices have raised concerns about the likelihood of a wider impact on India’s financial system.

    India’s central bank has asked local banks for details of their exposure to the Adani Group, government and banking sources told Reuters on Thursday.

    CLSA estimates that Indian banks were exposed to about 40% of the $24.5 billion of Adani Group debt in the fiscal year to March 2022.

    Dollar bonds issued by entities of Adani Group extended losses on Thursday, with notes of Adani Green Energy crashing to a record low. Adani Group entities made scheduled coupon payments on outstanding U.S. dollar-denominated bonds on Thursday, Reuters reported citing sources.

    “We see the market is losing confidence on how to gauge where the bottom can be and although there will be short-covering rebounds, we expect more fundamental downside risks given more private banks (are) likely to cut or reduce margin,” said Monica Hsiao, chief investment officer of Hong Kong-based credit fund Triada Capital.

    In New Delhi, opposition lawmakers submitted notices in parliament demanding discussion of the short-seller’s report.

    The Congress Party called for a Joint Parliamentary Committee be set up or a Supreme Court monitored investigation, while some lawmakers shouted anti-Adani slogans inside parliament, which was adjourned for the day.

    ADANI VS HINDENBURG

    Adani made acquisitions worth $13.8 billion in 2022, Dealogic data showed, its highest ever and more than double the previous year.

    The cancelled fundraising was critical for Adani, which had said it would use $1.33 billion to fund green hydrogen projects, airports facilities and greenfield expressways, and $508 million to repay debt at some units.

    Hindenburg’s report alleged an improper use of offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about high debt and the valuations of seven listed Adani companies.

    The Adani Group has denied the accusations, saying the allegation of stock manipulation had “no basis” and stemmed from an ignorance of Indian law. It said it has always made the necessary regulatory disclosures.

    Adani had managed to secure share sale subscriptions on Tuesday even though the stock’s market price was below the issue’s offer price. Maybank Securities and Abu Dhabi Investment Authority had bid for the anchor portion of the issue, investments which will now be reimbursed by Adani.

    Late on Wednesday, the group’s founder said he was withdrawing the sale given the share price fall, adding his board felt going ahead with it “will not be morally correct”.

    Reporting by Chris Thomas, Nallur Sethuraman, Tanvi Mehta, Ira Dugal, Aftab Ahmed, Sumeet Chatterjee, Anshuman Daga, Summer Zhen, Ross Kerber and Bansari Mayur Kamdar; Editing by Muralikumar Anantharaman, Jason Neely and Alexander Smith

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  • Adani crisis ignites Indian contagion fears, credit warnings

    Adani crisis ignites Indian contagion fears, credit warnings

    • Both houses of parliament adjourned amid row
    • Flagship Adani firm plunges 35% at one point
    • Moody’s warns will find it harder to raise capital

    NEW DELHI, Feb 3 (Reuters) – Financial contagion fears spread in India on Friday as the Adani Group’s crisis worsened, with ratings agency Moody’s warning the conglomerate may struggle to raise capital and S&P cutting the outlook on two of its businesses.

    Chaotic scenes in both houses of India’s parliament led to their adjournment on Friday as some lawmakers demanded an inquiry after a dramatic meltdown in the stock market values of Indian billionaire Gautam Adani’s companies.

    The crisis was triggered by a Hindenburg Research report last week in which the U.S.-based short-seller accused the Adani Group of stock manipulation and unsustainable debt.

    Adani Group, one of India’s top conglomerates, has rejected the criticism and denied wrongdoing in detailed rebuttals, but that has failed to arrest the unabated fall in its shares.

    In the latest sign of the crisis widening, India’s ministry of corporate affairs has begun a preliminary review of Adani Group’s financial statements and other regulatory submissions made over the years, two government officials told Reuters.

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    Although shares in Adani companies recovered after sharp falls earlier on Friday, the seven listed firms have still lost about half their market value, totalling more than $100 billion since Hindenburg published its report on Jan. 24.

    Moody’s warned the share plunge could hit the Adani Group’s ability to raise capital, although fellow credit ratings agency Fitch saw no immediate impact on its ratings.

    “These adverse developments are likely to reduce the group’s ability to raise capital to fund committed capex or refinance maturing debt over the next 1-2 years. We recognise that a portion of the capex is deferrable,” Moody’s said.

    For Adani, a former school drop-out from Gujarat, the western home state of Indian Prime Minister Narendra Modi, the crisis presents the biggest reputational and business challenge of his life, as his firm struggles to assuage investor concerns.

    Amid fears the turmoil could spill over into the broader financial system, some Indian politicians have called for a wider investigation, and sources have told Reuters the central bank has asked lenders for details of exposure to the group.

    “Contagion concerns are widening, but still limited to the banking sector,” Charu Chanana, a market strategist with Saxo Markets in Singapore, said on Friday.

    The Reserve Bank of India said the country’s banking system remains resilient and stable. State Bank of India said it was not concerned about the exposure to Adani Group, but further financing to its projects would be “evaluated on its own merit”.

    Adani Enterprises shares closed 1.4% higher, after earlier slumping 35% to hit their lowest since March 2021. That low took its losses to nearly $33.6 billion since last week, a 70% fall.

    Shares fell 5% in Adani Total Gas (ADAG.NS), a joint venture with France’s TotalEnergies (TTEF.PA), which said its exposure to Adani companies was limited.

    Traffic moves past the logo of the Adani Group installed at a roundabout on the ring road in Ahmedabad, India, Feb. 2, 2023. REUTERS/Amit Dave

    Adani Ports and Special Economic Zone (APSE.NS) was up 8%, while Adani Transmission (ADAI.NS) and Adani Green Energy (ADNA.NS) were both down 10%.

    “There is a risk that investor concerns about the group’s governance and disclosures are larger than we have currently factored into our ratings,” S&P said, as it cut its outlook on Adani Ports and Adani Electricity to negative from stable.

    India’s divestment secretary Tuhin Kanta Pandey told Reuters that Life Insurance Corp (LIC) shareholders and customers should not be concerned about its exposure to the Adani Group.

    State-run LIC (LIFI.NS) has a 4.23% stake in the flagship Adani Enterprises, while its other exposures include a 9.14% stake in Adani Ports.

    Reuters Graphics

    ‘ONE INSTANCE’

    Adani, 60, has in recent years forged partnerships with, and attracted investment from, foreign giants as he pursued global expansion in industries from ports to power.

    The market and financial crisis means foreign investors, many already underweight on India as they consider its stock market overpriced, are reducing exposure.

    “One instance, however much talked about globally it may be … is not going to be indicative of how well Indian financial markets are governed,” Indian Finance Minister Nirmala Sitharaman told Network18 when asked about the market weakness.

    Reuters Graphics

    Hindenburg’s report said key listed Adani companies had “substantial debt” and shares in the seven listed firms had a downside of 85% due to what it called sky-high valuations.

    The Adani Group has called the report baseless and said over the past decade, its companies have “consistently de-levered”.

    The listed Adani firms now have a combined market value of $107.5 billion, versus $218 billion before the report.

    That has forced Adani to cede the crown of Asia’s richest person to Indian rival Mukesh Ambani of Reliance Industries Ltd (RELI.NS), and he has slid to 17th in Forbes’ list of the world’s wealthiest people.

    He had ranked third, behind Elon Musk and Bernard Arnault.

    Reporting by Aditya Kalra, Chris Thomas, Ankur Banerjee, Bansari Mayur Kamdar, Shivam Patel, Tanvi Mehta and Rae Wee in Singapore; Editing by Clarence Fernandez, Mark Potter and Alexander Smith

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  • U.S. may skirt recession in 2023, Europe not so lucky – Morgan Stanley

    U.S. may skirt recession in 2023, Europe not so lucky – Morgan Stanley

    TOKYO, Nov 14 (Reuters) – Britain and the euro zone economies are likely to tip into recession next year, Morgan Stanley said, but the United States might make a narrow escape thanks to a resilient job market.

    At the same time, China’s expected reopening after almost three years of COVID-19 curbs is set to lead a recovery in its own economy and other emerging Asian markets, the investment bank’s analysts said in a series of reports published on Sunday.

    “Risks are to the downside,” the reports said, projecting the global economy to grow by 2.2% next year, lower than the International Monetary Fund’s latest 2.7% growth estimate. read more

    Next year, Morgan Stanley predicts a sharp split between developed economies “in or near recession” while emerging economies “recover modestly” but said an overall global pickup would likely remain elusive. China’s economy was predicted to grow 5% in 2023, outpacing the average 3.7% growth expected for emerging markets, while the average growth in the Group of 10 developed countries was forecast at just 0.3%.

    Central banks across the globe have raised interest rates this year to curb raging inflation, and in the United States, Morgan Stanley predicted the Federal Reserve to keep rates high in 2023 as inflation remains strong after peaking in the fourth quarter of this year.

    “The U.S. economy just skirts recession in 2023, but the landing doesn’t feel so soft as job growth slows meaningfully and the unemployment rate continues to rise,” the report said, predicting a 0.5% expansion next year.

    “The cumulative effect of tight policy in 2023 spills over into 2024, resulting in two very weak years,” the report added.

    Globally too, the peak in inflation should come in the current quarter, the analysts said, “with disinflation driving the narrative next year”.

    • U.S. core inflation to fall to 2.9% at end-2023, headline inflation to 1.9%
    • Asia growth to dip to 3.4% in 1H23 before recovering to 4.6% in 2H23, fuelled by domestic demand
    • Cross-asset returns – especially in fixed income – will look much better in 2023 than in 2022, driven by cheaper starting valuations
    • High-grade fixed income to outperform global equities
    • EM and Japan stocks to outperform, with U.S. shares lagging

    Reporting by Kevin Buckland, editing by Miral Fahmy

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  • U.S. Supreme Court’s Barrett again declines to block Biden student debt relief

    U.S. Supreme Court’s Barrett again declines to block Biden student debt relief

    Nov 4 (Reuters) – U.S. Supreme Court Justice Amy Coney Barrett on Friday again declined to block President Joe Biden’s plan to cancel billions of dollars in student debt, this time in a challenge brought by two Indiana borrowers, even as a lower court considers whether to lift a freeze it imposed on the program in a different case.

    Barrett denied an emergency request by the Indiana borrowers, represented by a conservative legal group, to bar the U.S. Department of Education from implementing the Democratic president’s plan to forgive debt held by qualified people who had taken loans to pay for college.

    Barrett on Oct. 20 denied a similar request by a Wisconsin taxpayers organization represented by another conservative legal group. The justice acted in the cases because she is the justice assigned to handle certain emergency requests from a group of states that includes Indiana and Wisconsin.

    The St. Louis-based 8th U.S. Circuit Court of Appeals on Oct. 21 put the policy on hold in yet another conservative challenge by six Republican-led states while it considered their request for injunction pending their appeal of their case’s dismissal. That request remains pending.

    Biden’s plan, unveiled in August, was designed to forgive up to $10,000 in student loan debt for borrowers making less than $125,000 per year, or $250,000 for married couples. Borrowers who received Pell Grants to benefit lower-income college students would have up to $20,000 of their debt canceled.

    The non-partisan Congressional Budget Office in September calculated that debt forgiveness would eliminate about $430 billion of the $1.6 trillion in outstanding student debt and that more than 40 million Americans would be eligible to benefit.

    The policy fulfilled a promise Biden made during the 2020 presidential campaign to help debt-saddled former college students. Democrats hope the policy will boost support for them in Tuesday’s midterm elections in which control of Congress is at stake.

    Friday’s case was filed by two borrowers, Frank Garrison and Noel Johnson, represented by the conservative Pacific Legal Foundation, and claimed they would be irreparably harmed if some of their student loans were automatically forgiven because they would face increased state tax liabilities.

    Soon after they sued, the Department of Education created an opt-out option for borrowers. U.S. District Judge Richard Young on Oct. 21 dismissed the case, finding that the debt forgiveness program did not injure Garrison and Johnson.

    The Chicago-based 7th U.S. Circuit Court of Appeals on Oct. 28 declined to block the plan while Garrison and Johnson pursued an appeal, noting that the program is “not compulsory” and that the plaintiffs could avoid tax liability simply by opting out.

    Caleb Kruckenberg, a lawyer at the Pacific Legal Foundation, in a statement expressed disappointment that Barrett declined to block the plan while his clients pursued their appeal but said they will “continue to fight this program in court.”

    “Practically since this program was announced, the administration has sought to avoid judicial scrutiny,” he said. “Thus far they have succeeded. But that does not change the fact that this program is illegal from stem to stern.”

    Reporting by Nate Raymond in Boston; editing by Jonathan Oatis and Rosalba O’Brien

    Our Standards: The Thomson Reuters Trust Principles.

    Nate Raymond

    Thomson Reuters

    Nate Raymond reports on the federal judiciary and litigation. He can be reached at nate.raymond@thomsonreuters.com.

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  • Analysis: Sanctions fail to halt North Korea’s accelerating weapons programs

    Analysis: Sanctions fail to halt North Korea’s accelerating weapons programs

    WASHINGTON, Nov 4 (Reuters) – Economic sanctions, the primary means the United States has used for years to try to exert pressure on North Korea, have abjectly failed to halt its nuclear and missile programs or to bring the reclusive northeast Asian state back to the negotiating table.

    Instead, North Korea’s ballistic missile program has become stronger and it has carried out a record-breaking testing regime of multiple types of weapons this year – including of intercontinental ballistic missiles designed to reach the U.S. mainland. Expectations are that it may soon end a self-imposed five-year moratorium on nuclear bomb testing.

    Now, U.S. policy makers and their predecessors can do little more than pick through the wreckage and seek to determine what went wrong, and who might be to blame.

    “We’ve had a policy failure. It’s a generational policy failure,” said Joseph DeThomas, a former U.S. diplomat who worked on North Korea and Iran sanctions and served in the administrations of Democratic Presidents Bill Clinton and Barack Obama.

    “An entire generation of people worked on this. It’s failed … so alright, now we have to go to the next step, figure out what we do about it.”

    Biden administration officials concede that sanctions have failed to stop North Korea’s weapons programs – but they maintain they have at least been effective in slowing North Korea’s nuclear program.

    “I would disagree with the idea that sanctions have failed. Sanctions have failed to stop their programs – that’s absolutely true,” a senior administration official told Reuters. “But I think that if the sanctions didn’t exist, (North Korea) would be much, much further along, and much more of a threat to its neighbors to the region and to the world.”

    The State Department, U.S. Treasury and White House’s National Security Council did not immediately respond to requests for comment.

    Former officials and experts say sanctions were never imposed robustly enough for long enough and blame faltering U.S. overtures to North Korea as well as pressures like Russia’s war in Ukraine and U.S-China tensions over Taiwan for making them ineffective and easy for North Korea to circumvent.

    North Korea has long been forbidden to conduct nuclear tests and ballistic missile launches by the U.N. Security Council.

    The Security Council has imposed sanctions on North Korea since 2006 to choke off funding for it nuclear and ballistic missile programs. They now include exports bans coal, iron, lead, textiles and seafood, and capping imports of crude oil and refined petroleum products.

    However U.N. experts regularly report that North Korea is evading sanctions and continuing to develop its programs.

    Russia and China backed toughened sanctions after North Korea’s last nuclear test in 2017, but it is not clear what U.N action – if any – they might agree to if Pyongyang conducts another nuclear test.

    CHINESE AND RUSSIAN INFLUENCE

    The senior Biden administration official told Reuters Washington believes China and Russia have leverage to persuade North Korea not to resume nuclear bomb testing. But the Biden administration has accused China and Russia of enabling North Korean leader Kim Jong Un.

    Anthony Ruggiero, who headed North Korea sanctions efforts under former President Donald Trump, said they were only pursued vigorously enough from the last year of the Obama administration to early in Trump’s second year. They then dropped off in the ultimately vain hope of progress in summit negotiations between Trump and Kim.

    Some critics like sanctions expert Joshua Stanton fault both the Trump and Biden administrations for failing to exert maximum pressure to stop China allowing North Korea’s sanctions evasion. They point to the powerful option of imposing sanctions on big Chinese banks that have facilitated this.

    “The sanctions we don’t enforce don’t work, and we haven’t been enforcing them since mid-2018,” Stanton said, noting that history had shown a correlation between stronger enforcement and North Korea willingness to engage diplomatically.

    “The Biden administration’s most significant failure is its failure to prosecute or penalize the Chinese banks we know are laundering Kim Jong Un’s money,” he said.

    Some experts like DeThomas argue that taking what some call the “nuclear option” of going after Chinese banks could exclude huge Chinese institutions from the international financial system and have catastrophic consequences not just for the Chinese, but for the U.S. and global economies – something Stanton considers unfounded.

    “Going full bore against the Chinese over North Korea is always a possibility, but it’s a high-risk option,” said DeThomas, arguing that such a measure should be reserved for an even more pressing scenario, such as deterring any move by China to all-out support for Russia’s war in Ukraine.

    “You want them to be thinking about that. And you can’t fire that gun twice,” he said. “And even if you sanctioned the Chinese banks, you wouldn’t get the North Koreans to change.”

    Some U.S. academic experts argue that Washington should recognize North Korea for what it is – a nuclear power that is never going to disarm – and use sanctions relief to incentivize better behavior.

    “I do think we can buy things other than disarmament with our economic leverage,” Jeffrey Lewis, a non-proliferation expert at the Middlebury Institute of International Studies told a conference in Ottawa this week.

    “I do think we can buy things other than disarmament with our economic leverage,” Jeffrey Lewis, a non-proliferation expert at the Middlebury Institute of International Studies, told a conference in Ottawa this week.

    The senior Biden administration official said maintaining sanctions was not just punitive, but about the international community showing it is united.

    He rejected the idea that Washington should recognize North Korea as a nuclear-armed state.

    “There is an extraordinarily strong global consensus … that the DPRK should not, and must not, be a nuclear nation,” he said. “No country is calling for this … the consequences of changing policy, I think would be profoundly negative.”

    Additional reporting by Steve Holland and Michelle Nichols
    Editing by Alistair Bell

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  • Saudi Arabia ‘maturer guys’ in spat with U.S., energy minister says

    Saudi Arabia ‘maturer guys’ in spat with U.S., energy minister says

    • OPEC+ oil output cut led to U.S., Saudi spat
    • Saudi Arabia and U.S. “solid allies” – minister
    • Big Wall St turnout at flagship Saudi investment summit

    RIYADH, Oct 25 (Reuters) – Saudi Arabia decided to be the “maturer guys” in a spat with the United States over oil supplies, the kingdom’s energy minister Prince Abdulaziz bin Salman said on Tuesday.

    The decision by the OPEC+ oil producer group led by Saudi Arabia this month to cut oil output targets unleashed a war of words between the White House and Riyadh ahead of the kingdom’s Future Investment Initiative (FII) forum, which drew top U.S. business executives.

    The two traditional allies’ relationship had already been strained by the Joe Biden administration’s stance on the 2018 murder of Saudi journalist Jamal Khashoggi and the Yemen war, as well as Riyadh’s growing ties with China and Russia.

    When asked at the FII forum how the energy relationship with the United States could be put back on track after the cuts and with the Dec. 5 deadline for the expected price-cap on Russian oil, the Saudi energy minister said: “I think we as Saudi Arabia decided to be the maturer guys and let the dice fall”.

    “We keep hearing you ‘are with us or against us’, is there any room for ‘we are with the people of Saudi Arabia’?”

    Saudi Investment Minister Khalid al-Falih said earlier that Riyadh and Washington will get over their “unwarranted” spat, highlighting long-standing corporate and institutional ties.

    “If you look at the relationship with the people side, the corporate side, the education system, you look at our institutions working together we are very close and we will get over this recent spat that I think was unwarranted,” he said.

    While noting that Saudi Arabia and the United States were “solid allies” in the long term, he highlighted the kingdom was “very strong” with Asian partners including China, which is the biggest importer of Saudi hydrocarbons.

    The OPEC+ cut has raised concerns in Washington about the possibility of higher gasoline prices ahead of the November U.S. midterm elections, with the Democrats trying to retain their control of the House of Representatives and the Senate.

    Biden pledged that “there will be consequences” for U.S. relations with Saudi Arabia after the OPEC+ move.

    Princess Reema bint Bandar Al Saud, the kingdom’s ambassador to Washington, said in a CNN interview that Saudi Arabia was not siding with Russia and engages with “everybody across the board”.

    [1/3] Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman Al-Saud speaks at the Future Investment Initiative conference, in Riyadh, Saudi Arabia, October 25, 2022. REUTERS/ Ahmed Yosri

    “And by the way, it’s okay to disagree. We’ve disagreed in the past, and we’ve agreed in the past, but the important thing is recognizing the value of this relationship,” she said.

    She added that “a lot of people talk about reforming or reviewing the relationship” and said that was “a positive thing” as Saudi Arabia “is not the kingdom it was five years ago.”

    FULL ATTENDENCE AT FII

    Like previous years, the FII three-day forum that opened on Tuesday saw a big turnout from Wall Street, as well as other industries with strategic interests in Saudi Arabia, the world’s top oil exporter.

    JPMorgan Chase & Co Chief Executive Jamie Dimon, speaking at the gathering, voiced confidence that Saudi Arabia and the United States would safeguard their 75-year-old alliance.

    “I can’t imagine any allies agreeing on everything and not having problems – they’ll work it through,” Dimon said. “I’m comfortable that folks on both sides are working through and that these countries will remain allies going forward, and hopefully help the world develop and grow properly.”

    The FII is a showcase for the Saudi crown prince’s Vision 2030 development plan to wean the economy off oil by creating new industries that also generate jobs for millions of Saudis, and to lure foreign capital and talent.

    No Biden administration officials were visible at the forum on Tuesday. Jared Kushner, a former senior aide to then-President Donald Trump who enjoyed good ties with Prince Mohammed, was featured as a front-row speaker.

    The Saudi government invested $2 billion with a firm incorporated by Kushner after Trump left office.

    FII organisers said this year’s edition attracted 7,000 delegates compared with 4,000 last year.

    After its inaugural launch in 2017, the forum was marred by a Western boycott over Khashoggi’s killing by Saudi agents. It recovered the next year, attracting leaders and businesses with strategic interests in Saudi Arabia, after which the pandemic hit the world.

    Reporting by Aziz El Yaakoubi, Hadeel Al Sayegh and Rachna Uppal in Riyadh and Nadine Awadalla, Maha El Dahan and Yousef Saba in Dubai; Writing by Ghaida Ghantous and Michael Geory; Editing by Louise Heavens, Mark Potter, Vinay Dwivedi, William Maclean

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  • Swiss National Bank monitoring Credit Suisse situation – Maechler

    Swiss National Bank monitoring Credit Suisse situation – Maechler

    ZURICH, Oct 5 (Reuters) – The Swiss National Bank (SNB) is following the situation at Credit Suisse (CSGN.S) closely, SNB Governing Board member Andrea Maechler told Reuters on Wednesday.

    Switzerland’s second-biggest bank saw its shares slide by as much as 11.5% and its bonds hit record lows on Monday, before clawing back some of the losses, amid concerns about its ability to restructure its business without asking investors for more money. read more

    “We are monitoring the situation,” Maechler said on the sidelines of an event in Zurich. “They are working on a strategy due to come out at the end of October.”

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    The SNB has declined to comment in the past about Credit Suisse, which has said it has a strong capital base and liquidity. It is due to announce details of a restructuring plan along with third-quarter results on Oct. 27.

    In July, Credit Suisse announced its second strategy review in a year and replaced its chief executive, bringing in restructuring expert Ulrich Koerner to prune its investment banking arm and cut more than $1 billion in costs. read more

    The bank is considering measures to scale back its investment bank into a “capital-light, advisory-led” business, and is evaluating strategic options for the securitised products business, Credit Suisse has said.

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    Reporting by John Revill
    Editing by Michael Shields and Mark Potter

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  • Dow posts record closing high, stocks gain for 3rd week; dollar dips

    Dow posts record closing high, stocks gain for 3rd week; dollar dips

    • S&P 500, Nasdaq end session lower
    • Evergrande averts default with surprise interest payment
    • U.S. 10-year yields lower

    NEW YORK, Oct 22 (Reuters) – The Dow Jones industrial average registered a record closing high on Friday and major equity indexes posted a third straight week of gains while the U.S. dollar slipped.

    On the day, MSCI’s broadest gauge of global shares (.MIWD00000PUS) was flat, and the S&P 500 (.SPX) and Nasdaq (.IXIC) ended lower.

    Stocks came under pressure after Federal Reserve Chair Jerome Powell said the U.S. central bank was “on track” to begin reducing its purchases of assets. read more

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    Intel’s stock (INTC.O)fell 11.7% and was among the biggest drags on the S&P 500. Late Thursday, Intel reported sales that missed expectations and pointed to shortages of chips holding back sales of its flagship processors. read more

    American Express Co’s stock (AXP.N) gained, boosting the Dow after the company beat profit estimates for the fourth straight quarter.

    Next week brings reports from several key mega-cap names including Amazon (AMZN.O). read more

    The dollar pared losses after Powell’s comments, but the dollar index was last down 0.10% at 93.64, and is off from a one-year high of 94.56 last week. read more

    “There’s a bit of a positioning unwind taking place. We’ve obviously seen a firmer dollar since the September” Fed meeting, said Mazen Issa, senior FX strategist at TD Securities in New York. “That also dovetails with the seasonal tendency for the dollar to soften into the end of the month.”

    Investors also digested news that China Evergrande Group (3333.HK) appeared to avert default with a source saying it made a last-minute bond coupon payment. read more

    The Dow Jones Industrial Average (.DJI) rose 73.94 points, or 0.21%, to 35,677.02, the S&P 500 (.SPX) lost 4.88 points, or 0.11%, to 4,544.9 and the Nasdaq Composite (.IXIC) dropped 125.50 points, or 0.82%, to 15,090.20.

    The pan-European STOXX 600 index (.STOXX) rose 0.46% and MSCI’s gauge of stocks across the globe shed 0.03%.

    The MSCI index posted gains for a third straight week along with the three major U.S. stock indexes.

    In the U.S. bond market, yields on longer-dated U.S. Treasuries slid.

    The yield on 10-year Treasury notes was down 1.6 basis points to 1.659% after rising to a five-month high of 1.7064% late Thursday.

    Oil rose and ended up for the week, near multi-year highs. Brent crude futures rose 92 cents to settle at $85.53 a barrel, and registered its seventh weekly gain. U.S. crude futures gained $1.26, to settle at $83.76, and rose for a ninth straight week. read more

    Spot gold was up 0.6% at $1,793.82 per ounce.

    Among cryptocurrencies, bitcoin last fell 2.21% to $60,841.96.

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    Additional reporting by Simon Jessop in London, and Karen Brettell, Sinead Carew and Herbert Lash in New York and Kevin Buckland in Tokyo
    Editing by Hugh Lawson Mark Potter and David Gregorio

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  • Israel designates Palestinian civil society groups as terrorists, U.N. ‘alarmed’

    Israel designates Palestinian civil society groups as terrorists, U.N. ‘alarmed’

    • Palestinians, rights watchdogs reject the designations
    • Israel accuses groups of funnelling aid to militants

    TEL AVIV, Oct 22 (Reuters) – Israel on Friday designated six Palestinian civil society groups as terrorist organisations and accused them of funnelling donor aid to militants, a move that drew criticism from the United Nations and human rights watchdogs.

    Israel’s defence ministry said the groups had ties to the Popular Front for the Liberation of Palestine (PLFP), a left-wing faction with an armed wing that has carried out deadly attacks against Israelis.

    The groups include Palestinian human rights organisations Addameer and Al-Haq, which document alleged rights violations by both Israel and the Western-backed Palestinian Authority in the occupied West Bank.

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    “(The) declared organizations received large sums of money from European countries and international organizations, using a variety of forgery and deceit,” the defence ministry said, alleging that the money had supported PFLP’s activities.

    The designations authorise Israeli authorities to close the groups’ offices, seize their assets and arrest their staff in the West Bank, watchdogs Human Rights Watch and Amnesty International said in a joint statement.

    Addameer and another of the groups, Defense for Children International – Palestine, rejected the accusations as an “attempt to eliminate Palestinian civil society.”

    The United Nations Human Rights Office in the Palestinian territories said it was “alarmed” by the announcement.

    “Counter-terrorism legislation must not be used to constrain legitimate human rights and humanitarian work,” it said, adding that some of the reasons given appeared vague or irrelevant.

    “These designations are the latest development in a long stigmatizing campaign against these and other organizations, damaging their ability to deliver on their crucial work,” it said.

    Israel’s ally the United States was not given advance warning of the move and would engage Israel for more information about the basis for the designations, State Department spokesperson Ned Price told reporters.

    “We believe respect for human rights, fundamental freedoms and a strong civil society are critically important to responsible and responsive governance,” he said.

    But Israel’s defence ministry said: “Those organizations present themselves as acting for humanitarian purposes; however, they serve as a cover for the ‘Popular Front’ promotion and financing.”

    An official with the PFLP, which is on United States and European Union terrorism blacklists, did not outright reject ties to the six groups but said they maintain relations with civil society organisations across the West Bank and Gaza.

    “It is part of the rough battle Israel is launching against the Palestinian people and against civil society groups, in order to exhaust them,” PFLP official Kayed Al-Ghoul said.

    Human Rights Watch and Amnesty International said the “decision is an alarming escalation that threatens to shut down the work of Palestine’s most prominent civil society organizations.”

    Israel captured the West Bank, Gaza Strip and East Jerusalem in the 1967 Middle East war. Palestinians seek the territories for a future state.

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    Reporting by Rami Ayyub in Tel Aviv; Additional reporting by Ali Sawafta in Ramallah, Nidal al-Mughrabi in Gaza and Stephen Farrell in Jerusalem; Editing by William Maclean and Mark Porter

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