WASHINGTON, July 13 (Reuters) – The U.S. government posted a $228 billion budget deficit for June, up 156% from a year earlier as revenues continued to weaken and July benefit payments were accelerated into June, the U.S. Treasury Department said on Thursday.
The deficit compares to a June 2022 budget gap of $89 billion. June receipts fell $42 billion, or 9% from a year ago, to $418 billion, while June outlays rose $96 billion, or 18%, to $646 billion.
But some $86 billion worth of July benefit payments were made in June because July 1 fell on a weekend, and without these and other calendar adjustments, the June deficit would have been $142 billion — a 66% increase over June 2022.
For the first nine months of the 2023 fiscal year, which ends Sept. 30, receipts fell $423 billion, or 11%, from the year-ago period to $3.413 trillion. The decline was primarily driven by lower non-withheld individual income taxes due to lower capital gains in 2022 and lower year-end salary bonuses, as well as sharply higher individual tax refunds as the Internal Revenue Service cleared a backlog of unprocessed receipts.
The Federal Reserve has earned $93 billion less this year because it is paying higher interest on bank reserves and no longer has positive net income – a situation that a Treasury official said was expected to continue.
Year-to-date outlays rose $455 billion, or 10% from a year earlier to $4.805 trillion. Higher outlays for Social Security this year have been driven by cost-of-living adjustments, while the interest on the public debt so far this year has risen $131 billion, or 25%, to $652 billion due to higher interest rates.
Also driving up outlays were $52 billion in Federal Deposit Insurance Corp costs to resolve failing banks, a Treasury official said.
Reporting by David Lawder; Editing by Andrea Ricci
July 13 (Reuters) – A threatened U.S. strike at United Parcel Service (UPS.N) could be “one of the costliest in at least a century,” topping $7 billion for a 10-day work stoppage, a think tank specializing in the economic impact of labor actions said on Thursday.
That estimate from Michigan-based Anderson Economic Group (AEG) includes UPS customer losses of $4 billion and lost direct wages of more than $1 billion. A 15-day UPS strike in 1997 disrupted the supply of goods, cost the world’s biggest parcel delivery firm $850 million and sent some customers to rivals like FedEx (FDX.N).
Roughly 340,000 union-represented UPS workers handle about a quarter of U.S. parcel deliveries and serve virtually every city and town in the nation. A strike could delay millions of daily deliveries, including Amazon.com (AMZN.O) orders, electronic components and lifesaving prescription drugs, shipping experts warned. They added this also could reignite supply-chain snarls that stoke inflation.
A strike by roughly 340,000 U.S. workers at the world’s biggest package delivery firm threatens to delay millions of shipments, snarl supply chains and send shipping costs higher.
Talks are deadlocked between UPS and the International Brotherhood of Teamsters union.
The Teamsters have vowed to strike if a deal is not ratified before the current contract expires at midnight on July 31.
“Consumers are going to feel this within days,” AEG CEO Patrick Anderson said of a potential strike, adding his analysis does not include the human cost of disruption to shipments of critical and perishable medicines to treat cancer and other life-threatening illnesses.
A sticking point in negotiations is pay increases for part-time workers who account for roughly half the UPS workforce. Tenured part-timers are particularly frustrated because they make just slightly more than new hires whose wages have jumped in a tight labor market.
Anderson said a UPS employee walkout would be a bigger risk to the U.S. economy than a work stoppage by UAW workers at the “Detroit Three” automakers, who started contract talks on Thursday.
He noted that the automaker talks cover fewer workers and have a limited geographic impact. In fiscal 2019, GM’s (GM.N) fourth-quarter profit took a $3.6 billion hit from a 40-day UAW strike that shut down its profitable U.S. operations.
UPS is urging Teamster negotiators to return to the bargaining table, but union officials say UPS needs to sweeten its offer for workers who risked their lives during the pandemic to help the company generate outsized profits.
UPS faces two unappealing choices, Stifel analyst Bruce Chan said in a recent note: Risk a strike and resulting customer losses or acquiesce to Teamster demands that could worsen the company’s labor cost disadvantage versus nonunion rivals in an inflationary environment.
“Both situations would create pain for UPS, so it could just be a question of when and how the company wants to take its medicine,” Chan said.
Reporting by Lisa Baertlein in Los Angeles, additional reporting by Priyamvada C in Bengaluru; Editing by Pooja Desai, Jonathan Oatis and David Gregorio
Lisa Baertlein covers the movement of goods around the world, with emphasis on ocean transport and last-mile delivery. In her free time, you’ll find her sailing, painting or exploring state and national parks.
MEXICO CITY, July 3 (Reuters) – The U.S. wants Mexico’s government to build strong institutions to protect worker rights as companies aiming to avoid supply chain disruptions in far-off production spots bring more jobs to the country, a top U.S. labor official told Reuters.
Mexico has begun to benefit from “nearshoring” in which companies seek to move production closer to the U.S. market while maintaining competitive costs.
The trend is further testing a trade deal known as the U.S.-Mexico-Canada Agreement (USMCA), in effect since July 2020.
The pact has tougher labor rules than its 1994 predecessor and underpins new Mexican laws that empower workers to push for better wages and conditions after years of stagnant salaries and pro-business union contracts.
Three years into the deal, experts say, some workers have begun to benefit but broad impacts are still far off.
“Hopefully that will ensure that Mexico doesn’t become a dumping ground for companies looking for cheap labor and lax regulations,” said Thea Lee, U.S. Deputy Undersecretary for International Labor Affairs who polices USMCA compliance.
She said in an interview that Mexico was working to fulfill its commitments, backed by leadership keen on helping workers.
Mexico’s new regulations favor companies taking on higher ethical standards, she said.
“Maybe 20 years ago it was okay for a multinational corporation to throw up their hands and say, ‘we have no idea what’s in our supply chain, what the labor conditions are,’” she added.
“That doesn’t seem to be acceptable anymore.”
Mexico has made progress improving labor courts, resolving worker complaints faster and easing union organization, but needs to do more, Lee said.
“Our hope is that Mexico will be well-poised to take advantage of nearshoring … if they continue on the path towards really building labor institutions that work, where workers can have confidence.”
Since 2020, several U.S. labor complaints in Mexico have paved the way for independent unions to land pay raises and even expand. Lee said such examples inspire workers who in the past may have feared threats or dismissals for trying to organize.
Yet one employer that faced two USMCA complaints, U.S.-based VU Manufacturing that makes interior car parts in the northern city of Piedras Negras, recently dismissed dozens of employees just months after a new union, La Liga, pressed for better wages. VU did not respond to a request for comment.
Lee said the company risks penalties if it does not uphold an agreement around worker rights. But La Liga members have already been laid off, and fear the company aims to discourage organizing, said union leader Cristina Ramirez, who lost her job.
“It’s very disappointing and frustrating,” Ramirez said. “We wanted to fight for things to improve.”
Reporting by Daina Beth Solomon; Editing by David Gregorio
WASHINGTON, May 24 (Reuters) – The central pillar of any debt-ceiling agreement between President Joe Biden and House Republican Kevin McCarthy is shaping up to be “discretionary spending” – the chunk of the United States’ roughly $6 trillion annual federal budget that is set annually by Congress.
Talks are fluid as Biden and McCarthy work towards a deal to raise the $31.4 trillion debt ceiling and avoid a default as soon as June 1. But cuts to Social Security and Medicare programs that eat up most of the U.S. budget are already off the table.
Instead, funds for programs from education to rail safety to law enforcement could be cut, trims that economists warn will slow U.S. economic growth.
WHAT IS THE US DISCRETIONARY BUDGET?
Congress sets funding levels for discretionary spending every year, which powers a wide swath of military and domestic programs.
In 2022, discretionary spending reached $1.7 trillion, accounting for 27% of the overall $6.27 trillion spent, according to federal figures.
Military spending typically accounts for roughly half of that total, though the amount varies from year to year.
The other half is devoted to domestic programs like law enforcement, transportation, housing and scientific research.
Estimated U.S. government discretionary spending for fiscal year 2023, in billion US dollars
Discretionary spending as a share of U.S. gross domestic product peaked in the late 1970s, and cuts have served as the backbone for several landmark budget deals since the 1980s.
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HOW COULD DISCRETIONARY CUTS WORK?
Biden and Democrats have offered to hold discretionary spending flat from the current 2023 fiscal year, a cut from Biden’s 2024 budget, and then cap spending in future years.
House Republicans passed a plan last month that would save $3.2 trillion by capping growth at 1% annually for 10 years.
Republicans say they will not accept a deal unless it results in the government spending less money than it did in the last fiscal year, and are pushing for cuts to 2022 levels.
Both sides are also at odds over how long any spending caps should last, with Republicans now offering caps for six years, and the White House only two.
Negotiators are avoiding the main driver of U.S. debt: rising retirement and health costs, driven by an aging population.
The Social Security pension program is projected to increase by 67% by 2032, and the Medicare health program for seniors will nearly double in cost during that period, according to the nonpartisan Congressional Budget Office. Together, these programs account for roughly 37% of current federal spending.
U.S. spending on health, retirement and other benefit programs has climbed steadily in recent decades, but negotiators in debt-ceiling talks look to cut other domestic and military spending.
MORE BATTLES AHEAD
If they can hammer out a general agreement on these levels and caps, if could help the United States avoid default, but would likely set up another series of budget battles, as lawmakers would still have to agree on funding levels for everything from fighter-plane construction to border enforcement.
Republicans have said they do not want to cut spending on national defense and veterans’ care, which would require other programs to shoulder steeper cuts.
The Republican-led House Appropriations Committee has unveiled legislation that would boost spending on veterans’ care, border security, and other priorities next year.
That would likely require cuts of more than 13% in other areas like scientific research and environmental protection if they want to keep overall spending at the same level as this year, according to the Center on Budget and Policy Priorities, a left-leaning think tank.
The Democratic-controlled Senate is not likely to accept those figures – which could lead to a government shutdown if the two sides do not reach agreement by Sept. 30, the end of the fiscal year.
POLITICS OF CUTS
While Republicans on the federal level have generally pushed for funding cuts to these discretionary items and Democrats to increase them, Republican-leaning states tend to benefit more from federal domestic spending, according to a Reuters analysis.
“Spending restraint always sounds good in the abstract and sounds less good when you’re talking about specifics,” said Jan Moller, head of the Louisiana Budget Project, a nonpartisan think tank.
Even if Biden and McCarthy agree to spending caps in the years ahead, Congress might not stick to the agreement.
In 2011, Democratic President Barack Obama reached a deal with Republicans to save $1.8 trillion over 10 years through discretionary spending caps. But lawmakers opted to bypass those caps in the years that followed.
In the end, the agreement only saved $1.3 trillion, according to Brian Riedl, a fellow with the conservative Manhattan Institute.
Reporting by Jarret Renshaw and Andy Sullivan; Editing by Heather Timmons and Andrea Ricci
Andy covers politics and policy in Washington. His work has been cited in Supreme Court briefs, political attack ads and at least one Saturday Night Live skit.
Challenge ahead for opposition parties to form government
Move Forward comes close to sweep of capital Bangkok
No alliances with dictator-backed parties – Pita
Military parties down, but not out
Too soon to discuss alliances – Pheu Thai
BANGKOK, May 14 (Reuters) – Thailand’s opposition secured a stunning election win on Sunday after trouncing parties allied with the military, setting the stage for a flurry of deal-making over forming a government in a bid to end nearly a decade of conservative, army-backed rule.
The liberal Move Forward party and the populist Pheu Thai Party were far out in front with 99% of votes counted, but it was far from certain either will form the next government, with parliamentary rules written by the military after its 2014 coup skewed in its favour.
To rule, the opposition parties will need to strike deals and muster support from multiple camps, including members of a junta-appointed Senate that has sided with military parties and gets to vote on who becomes prime minister and form the next administration.
Sunday’s election was the latest bout in a long-running battle for power between Pheu Thai, the populist juggernaut of the billionaire Shinawatra family, and a nexus of old money, conservatives and military with influence over key institutions at the heart of two decades of turmoil.
But the staggering performance by Move Forward, riding a wave of support from young voters, will test the resolve of Thailand’s establishment and ruling parties after it came close to a clean sweep of the capital Bangkok on a platform of institutional reform and dismantling monopolies.
Move Forward came top, followed closely by Pheu Thai, the preliminary results showed. According to a Reuters calculation, both were set to win more than triple the number of seats of Palang Pracharat, the political vehicle of the junta, and the army-backed United Thai Nation party.
Move Forward leader Pita Limjaroenrat, a 42-year-old former executive of a ride-hailing app, described the outcome as “sensational” and vowed to stay true to his party’s values when forming a government.
“It will be anti- dictator-backed, military-backed parties, for sure,” he told reporters. “It’s safe to assume that minority government is no longer possible here in Thailand.”
He said he remained open to an alliance with Pheu Thai, but has set his sights set on being prime minister.
“It is now clear the Move Forward Party has received the overwhelming support from the people around the country,” he said on Twitter.
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MAJOR BLOW
[1/15] Move Forward Party leader and prime ministerial candidate, Pita Limjaroenrat, waves to the crowd during the general election in Bangkok, Thailand, May 14, 2023. REUTERS/Jorge Silva
The preliminary results will be a crushing blow for the military and its allies. But with parliamentary rules on their side and influential figures behind them and involved behind the scenes, they could still have a role in government.
Prime Minister Prayuth Chan-ocha, a retired general who led the last coup, had campaigned on continuity after nine years in charge, warning a change in government could lead to conflict.
On Sunday, he slipped away quietly from his United Thai Nation party headquarters, where there were few supporters to be seen.
A handful of staff sat beside plates of uneaten food as a giant television screen showed a live speech by Move Forward’s leader.
“I hope the country will be peaceful and prosper,” Prayuth told reporters. “I respect democracy and the election. Thank you.”
Pheu Thai had been expected to win having won most votes in every ballot since 2001, including two landslide victories. Three of its four governments have been ousted from office.
Founded by the polarising self-exiled tycoon Thaksin Shinawatra, Pheu Thai remains hugely popular among the working classes and was banking on being swept back to power in a landslide on nostalgia for its populist policies like cheap healthcare, micro-loans and generous farming subsidies.
Thaksin’s daughter Paetongtarn, 36, has been tipped to follow in the footsteps of her father and of her aunt, Yingluck Shinawatra, and become prime minister. Yingluck and Thaksin were both overthrown in coups.
Paetongtarn said she was happy for Move Forward, but it was too soon to discuss alliances.
“The voice of the people is most important,” she said.
Move Forward saw a late-stage rally in opinion polls and was betting on 3.3 million first-time voters getting behind its liberal agenda, including plans to weaken the military’s political role and amend a strict law on royal insults that critics say is used to stifle dissent.
Thitinan Pongsudhirak, a political scientist at Chulalongkorn University, said Move Forward’s surge demonstrated a major shift in Thai politics.
“Pheu Thai fought the wrong war. Pheu Thai fought the populism war that it already won,” he said.
“Move Forward takes the game to the next level with institutional reform. That’s the new battleground in Thai politics.”
Reporting by Chayut Setboonsarng; Writing by Martin Petty; Editing by William Mallard
TORONTO, May 14 (Reuters) – Signs of recovery in Canada’s housing market after a year-long slump, just as higher borrowing costs are expected to slow much of the rest of the economy, could raise inflation and delay a shift by the central bank to interest rate cuts, analysts said.
The housing market’s upturn comes after the Bank of Canada paused its interest rate hiking campaign last month, leaving the benchmark rate at a 15-year high of 4.50% since January.
In addition, analysts say higher borrowing costs have so far caused less financial stress for homebuyers than they had expected, so the market has not had to accommodate a flood of supply from forced sellers.
The BoC is counting on slower economic growth to return inflation to its 2% target. A rebound in the housing market could boost activity and contribute directly to price pressures.
“The Bank of Canada at the end of the day is probably not going to be too thrilled if the housing market really starts to ramp up,” said Robert Kavcic, a senior economist at BMO Capital Markets. “From a shelter cost perspective, you are going to start to see more upward push on inflation in the second half of this year.”
The cost of shelter has the highest weighting in Canada’s consumer price index, accounting for 30%. And, home prices tend to be highly visible, so an increase could have a pronounced impact on inflation expectations, analysts say.
The average price for a home in the Greater Toronto Area, Canada’s most populous metropolitan region, rose in April on a month-over-month basis for a third straight month, while sales also moved higher. Other major markets have also showed gains.
Despite higher borrowing costs, mortgage delinquency rates have remained low for now in Canada after mortgage borrowers were put through a stress test showing they could manage if interest rates were 2 percentage points higher than the rate on their loan.
In addition, variable-rate borrowers have been sheltered from higher interest rates after lenders temporarily extended the period over which their debt is amortized, keeping their payments the same.
“One of the reasons the market has been able to stabilize so quickly is because there’s just no forced selling,” Kavcic said.
Things could change – Royal Bank of Canada recently warned of the risk that mortgage delinquencies rise by more than a third over the coming year.
The other worry is that stress in the U.S. regional banking sector could spill over to Canada. Clues on that front could come from the BoC’s Financial System Review – an annual checkup of financial system tensions – which is due for release on Thursday.
But there are also tailwinds to support a recovery, including supply shortfalls, record immigration and labor market strength, analysts said.
Wage growth could cool over the coming months, helping to lower inflation, but the Bank of Canada “is unlikely to be in a rush to cut interest rates if house prices are roaring higher again,” Stephen Brown, senior Canada economist at Capital Economics, said in a note.
Reporting by Fergal Smith; Editing by Steve Scherer and Jonathan Oatis
WASHINGTON, May 13 (Reuters) – President Joe Biden said on Saturday that talks with Congress on raising the U.S. government’s debt limit were moving along and more will be known about their progress in the next two days.
“I think they are moving along, hard to tell. We have not reached the crunch point yet,” Biden told reporters at Joint Base Andrews.
“We’ll know more in the next two days,” he said.
Biden is expected to meet with Republican House Speaker Kevin McCarthy and other congressional leaders early next week to resume negotiations.
The leaders had canceled a planned meeting on Friday to let staff continue discussions.
Aides for Biden and McCarthy have started to discuss ways to limit federal spending as talks on raising the government’s $31.4 trillion debt ceiling to avoid a catastrophic default creep forward, Reuters has reported.
The Treasury Department says it could run out of money by June 1 unless lawmakers lift the nation’s debt ceiling.
Reporting by Jeff Mason; Writing by Eric Beech; Editing by David Gregorio
WASHINGTON, April 23 (Reuters) – It won’t be a campaign from the basement this time.
As U.S. President Joe Biden gears up for a bruising re-election battle, the realities of the 2024 race and differences with 2020 at the height of the coronavirus pandemic create new challenges for him.
In 2020, Biden kept a low profile as the spread of COVID-19 caused havoc to most aspects of American life, including the election campaign that pitted him against then-President Donald Trump, a Republican.
Trump still spoke at big rallies, but Biden did much of his campaigning virtually from the basement of his home in Wilmington, Delaware, largely avoiding crowds to prevent the spread of disease and reduce his own risk of catching the virus.
That will change this time around. Gone will be the aversion to public events, large and small, likely replaced by traditional campaign stops at diners, factories and union halls with handshakes, selfies, and crowds of people.
The Democratic convention in Chicago will be in-person rather than online. And Biden, who at 80 is already the oldest president in U.S. history, will have his day job to do while he makes the case for four more years in office.
Biden beat Trump in 2020 by winning the Electoral College 306 to 232, winning the close swing states of Pennsylvania and Georgia, and he bested Trump by more than 7 million votes nationally, capturing 51.3 percent of the popular vote to the Republican’s 46.8 percent.
AGE FACTOR
Republicans will watch closely for signs of a diminished schedule to suggest that age has made Biden less fit for the campaign trail, and for the White House.
“It’s quite shocking that Biden thinks he would be able to fill a second term, let alone the rest of this term,” said Republican strategist Scott Reed.
Trump, the early front-runner for the Republican nomination, is himself 76 years old.
Biden’s reply to concerns about his age and running for re-election has been to say “watch me,” and the White House points to his record of legislative accomplishments as a sign of his effectiveness.
“An extensive travel schedule is not the measure of a candidate’s ability to do the job,” said Democratic strategist Karen Finney. “There’s no scenario where the Republicans don’t try to make his age an issue. We know that. And so the focus has to be on … what is the most effective way to reach the American people. Some of that, yes, is going to be in-person events and travel, but there may be other innovations.”
CAMPAIGN REINVENTED
Biden campaign aides reinvented his 2020 campaign as COVID-19 spread across the country.
Some of the innovations were regarded as a success, including star-studded virtual fundraisers done without the need for expensive travel.
But other changes were more controversial, including a months-long prohibition on the use of door-knocking by campaign volunteers and the regular appearances by Biden in his home’s basement, which became a meme panned by right-wing voters.
Having to get out more than in 2020 could help Biden, said Meg Bostrom, co-founder of Topos Partnership, a strategic communications firm.
“Just look at the State of the Union (address.) That was the best I’ve ever seen. When Republicans started heckling him, he just lit up,” she said. Biden sparred ably with Republicans during his speech to Congress in February.
But other issues may trip up the incumbent president on the campaign trail, including his handling of the economy.
“The allure for voting for Biden in 2020 was sort of the quaint notion of getting back to normal,” said Republican strategist Ford O’Connell, referring to the chaos of Trump’s time in office.
“The problem for Biden is that he’s been in power … and things are anything but normal, especially when it comes to the economy and inflation.”
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RECESSION CONCERNS
Biden took office in January 2021 just as COVID vaccines were rolling out, and economic conditions gradually normalized during his early tenure after the shock of nationwide shutdowns. The United States now boasts 3.2 million jobs over the pre-pandemic peak.
But Americans are concerned about a potential recession, and Biden may suffer from being on the wrong side of an economic cycle heading into 2024, with unemployment likely to rise as growth slows, interest rates remaining high and inflation potentially hovering above pre-pandemic levels.
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Trump, who has announced his re-election bid already and could be Biden’s opponent again, is expected to follow the strategy that he employed in 2016 and 2020 with multiple large rallies to energize his base.
But he will first have to win what could be a grueling Republican nomination contest – something that Biden, as an incumbent without major opposition inside his party, will not face.
“We don’t need fire and brimstone. We don’t need rah rah rallies,” said Democratic strategist Joe Lestingi. “We need the strength and conviction of our values and a steadiness not to move on them.”
Biden, he said, would provide that steadiness.
“I think he’ll get out more,” Lestingi said, praising Biden’s skill at traditional “retail” politics. “If you get an opportunity to be with him in a small intimate setting, he can make a real big difference.”
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Reporting by Jeff Mason; additional reporting by Trevor Hunnicutt, Steve Holland, Howard Schneider and Andrea Shalal; editing by Grant McCool
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.
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.
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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
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.
March 24 (Reuters) – Michigan Governor Gretchen Whitmer on Friday signed a package of bills repealing the state’s so-called “right to work” law that allowed workers to opt out of unions, a long-sought victory for labor organizers facing an era of diminished power.
Whitmer became the first governor since the 1960s to roll back right-to-work legislation. Twenty-six other U.S. states and the territory of Guam still have right-to-work laws on the books, according to the National Conference of State Legislatures.
“Michigan workers are the most talented and hard-working in the world and deserve to be treated with dignity and respect,” Whitmer, a two-term Democrat, said in a statement.
Michigan House Bills 4004 and 4007 and Senate Bill 34 passed the Democratic-controlled state legislature earlier this month. House Bill 4007 requires that contractors hired by the state pay a so-called prevailing wage, the amount used when hiring union workers.
The Michigan state legislature, controlled at the time by Republicans, in 2012 passed a right-to-work law over the objections of union activists. It was signed into law by then-Governor Rick Snyder, also a Republican.
Republicans opposed repealing that law this year, arguing that it would hurt businesses and make the state less attractive to companies.
Union membership has declined sharply in the United States since its peak in the 1950s, when more than a third of workers belonged to a union.
Membership dropped to an all-time low of 10.1% in 2022 despite a surge in organizing during the COVID-19 pandemic, according to data released in January by the U.S. Bureau of Labor Statistics.
Reporting by Dan Whitcomb; editing by Grant McCool
RIYADH, March 15 (Reuters) – Saudi Arabia’s Finance Minister Mohammed Al-Jadaan said on Wednesday that Saudi investments into Iran could happen “very quickly” following an agreement to restore diplomatic ties.
“There are a lot of opportunities for Saudi investments in Iran. We don’t see impediments as long as the terms of any agreement would be respected,” Al-Jadaan said during the Financial Sector Conference in Riyadh.
Iran and Saudi Arabia agreed on Friday to re-establish relations and re-open embassies within two months after years of hostility, following talks in China.
“Stability in the region is very important, for the world and for the countries in the region, and we have always said that Iran is our neighbour and we have no interest to have a conflict with our neighbours, if they are willing to cooperate,” Al-Jadaan later told Reuters in an interview.
The hostility between the two Middle Eastern powers had endangered the stability and security of the Middle East and helped fuel regional conflicts including in Yemen, Syria and Lebanon.
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“We have no reason not to invest in Iran, and we have no reason not to allow them to invest in Saudi Arabia. It is in our interest to make sure that both nations benefit from each others resources and competitive advantage,” Al-Jadaan told Reuters.
“If they (Iran) are willing to go through this process, then we are more than willing to go through this process and show them they are welcome and we would be more than happy to participate in their development,” he said.
CHINESE LEVERAGE
The deal, brokered by China, was announced after four days of previously undisclosed talks in Beijing between top security officials from Saudi Arabia and Iran.
China has leverage on Iran and Tehran will find it difficult to explain if it does not honour the agreement signed with Saudi Arabia in Beijing, another Saudi official told reporters, separately, on Wednesday.
The official, who declined to be named, said China is in a unique position as it enjoys exceptional relations with both Iran and Saudi Arabia.
“China is the first trading partner for both countries so the leverage is very important in that regard. And since we are building confidence, that commitment should be made with the presence of Chinese officials,” he said.
Saudi Arabia cut ties with Iran in 2016 after its embassy in Tehran was stormed during a dispute between the two countries over Riyadh’s execution of a prominent Shi’ite Muslim cleric.
The kingdom also has blamed Iran for missile and drone attacks on its oil facilities in 2019 as well as attacks on tankers in Gulf waters. Iran denied the charges.
The most difficult topics in the talks with Iran were related to Yemen, the media, and China’s role, the official said without elaborating.
Both sides have agreed to re-activate a 2001 security agreement, which covers cooperation in fighting drugs, smuggling and organised crime, as well as another earlier pact on trade, economy and investment.
“Resuming diplomatic relations does not mean we are allies… Diplomatic relations are the norm for Saudi Arabia, and we should have them with everybody,” the official said.
Additional reporting by Aziz El Yaakoubi; Writing by Clauda Tanios and Hadeel Al Sayegh; Editing by Christopher Cushing, Jon Boyle and Andrea Ricci
Budget deficit target at 3%, wider than previous 2.8%
BEIJING, March 5 (Reuters) – China set a modest target for economic growth this year of around 5% on Sunday as it kicked-off the annual session of its National People’s Congress (NPC), which is poised to implement the biggest government shake-up in a decade.
China’s gross domestic product (GDP) grew by just 3% last year, one of its worst showings in decades, squeezed by three years of COVID-19 restrictions, crisis in its vast property sector, a crackdown on private enterprise and weakening demand for Chinese exports.
In his work report, outgoing Premier Li Keqiang stressed the need for economic stability and expanding consumption, setting a goal to create around 12 million urban jobs this year, up from last year’s target of at least 11 million, and warned that risks remain in the real estate sector.
Li set a budget deficit target at 3.0% of GDP, widening from a goal of around 2.8% last year.
“We should give priority to the recovery and expansion of consumption,” said Li, who spoke for just under an hour in a speech to open the parliament, which will run through March 13.
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“The incomes of urban and rural residents should be boosted through multiple channels. We should stabilize spending on big-ticket items and promote recovery in consumption of consumer services,” he said.
This year’s growth target of around 5% was at the low end of expectations, as policy sources had recently told Reuters a range as high as 6% could be set. It is also below last year’s target of around 5.5%.
“While the official growth target has been lowered for the second consecutive year, which might be a disappointment to the market, we reckon investors (should) pay attention to the underlying growth momentum to gauge the recovery pace,” said Zhou Hao, economist at Guotai Junan International.
Li and a slate of more reform-oriented economic policy officials are set to retire during the congress, making way for loyalists to President Xi Jinping, who further tightened his grip on power when he secured a precedent-breaking third leadership term at October’s Communist Party Congress.
[1/5] Chinese President Xi Jinping and Li Keqiang talk at the opening session of the National People’s Congress (NPC) at the Great Hall of the People in Beijing, China March 5, 2023. REUTERS/Thomas Peter
During the NPC, former Shanghai party chief Li Qiang, a longtime Xi ally, is expected to be confirmed as premier, tasked with reinvigorating the world’s second-largest economy.
The rubber-stamp parliament will also discuss Xi’s plans for an “intensive” and “wide-ranging” reorganisation of state and Communist Party entities, state media reported on Tuesday, with analysts expecting a further deepening of Communist Party penetration of state bodies.
MILITARY BUDGET RISE
Li said China’s armed forces should devote greater energy to training under combat conditions and boost combat preparedness, and the budget included a 7.2% increase in defence spending this year, a slightly bigger increase than last year’s budgeted 7.1% rise and again exceeding expected GDP growth.
On Taiwan, Li struck a moderate tone, saying China should promote the peaceful development of cross-Strait relations and advance the process of China’s “peaceful reunification”, but also take resolute steps to oppose Taiwan independence.
Beijing faces a host of challenges including increasingly fraught relations with the United States and a worsening demographic outlook, with plunging birth rates and a population drop last year for the first time since the famine year of 1961.
China plans to lower the costs of childbirth, childcare and education and will actively respond to an ageing population and a decrease in fertility, the nation’s state planner said in a work report released on Sunday.
The NPC opened on a smoggy day amid tight security in the Chinese capital, with 2,948 delegates gathered in the cavernous Great Hall of the People on the west side of Tiananmen Square.
During the session, China’s legislature will vote on a plan to reform institutions under the State Council, or cabinet, and decide on a new cabinet line-up for the next five years, according to a meeting agenda.
It is the first NPC meeting since China abruptly dropped its zero-COVID policy in December, following rare nationwide protests. Excluding the pandemic-shortened meetings of the previous three years, this year’s session will be the shortest in at least 40 years, according to NPC Observer, a blog.
Additional reporting by the Beijing newsrooom; Writing by Tony Munroe; Editing by Himani Sarkar, William Mallard and Simon Cameron-Moore
BENGALURU, Feb 22 (Reuters) – India does not want the G20 to discuss additional sanctions on Russia for its invasion of Ukraine during New Delhi’s one-year presidency of the bloc, six senior Indian officials said on Wednesday, amid debate over how even to describe the conflict.
On the sidelines of a G20 gathering in India, financial leaders of the Group of Seven (G7) nations will meet on Feb. 23, the eve of the first anniversary of the invasion, to discuss measures against Russia, Japan’s finance minister said on Tuesday.
The officials, who are directly involved in this week’s G20 meeting of finance ministers and central bank chiefs, said the economic impact of the conflict would be discussed but India did not want to consider additional actions against Russia.
“India is not keen to discuss or back any additional sanctions on Russia during the G20,” said one of the officials. “The existing sanctions on Russia have had a negative impact on the world.”
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Another official said sanctions were not a G20 issue. “G20 is an economic forum for discussing growth issues.”
Spokespeople for the Indian government and the finance and foreign ministries did not immediately respond to requests for comment.
On Wednesday, the first day of meetings to draft the G20 communique, officials struggled to find an acceptable word to describe the Russia-Ukraine conflict, delegates of at least seven countries present in the meetings said.
India tried to form a consensus on the words by calling it a “crisis” or a “challenge” instead of a “war”, the officials said, but the discussions concluded without a decision.
These discussions have been rolled over to Thursday when U.S. Treasury Secretary Janet Yellen will be part of the meetings.
Indian Foreign Minister S. Jaishankar has previously said the war has disproportionately hit poorer countries by raising prices of fuel and food.
India’s neighbours – Sri Lanka, Pakistan and Bangladesh – have all sought loans from the International Monetary Fund in recent months to tide over economic troubles brought about by the pandemic and the war.
U.S. Deputy Treasury Secretary Wally Adeyemo said on Tuesday that Washington and its allies planned in coming days to impose new sanctions and export controls that would target Russia’s purchase of dual-use goods like refrigerators and microwaves to secure semiconductors needed for its military.
The sanctions would also seek to do more to stem the trans-shipment of oil and other restricted goods through bordering countries.
In addition, Adeyemo said officials from a coalition of more than 30 countries would warn companies, financial institutions and individuals still doing business with Russia that they faced sanctions.
Indian Prime Minister Narendra Modi’s government has not openly criticised Moscow for the invasion and instead called for dialogue and diplomacy to end the war. India has also sharply raised purchases of oil from Russia, its biggest supplier of defence hardware.
Jaishankar told Reuters partner ANI this week that India’s relationship with Russia had been “extraordinarily steady and it has been steady through all the turbulence in global politics”.
Additional reporting by Krishn Kaushik; Writing by Krishna N. Das; Editing by Raju Gopalakrishnan and Nick Macfie
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
WARSAW, Jan 3 (Reuters) – Germany has rebuffed the latest push by Poland’s nationalist government for vast reparations over World War Two, saying in response to a diplomatic note that the issue was closed, the foreign ministry in Warsaw said on Tuesday.
A spokesperson for the German foreign ministry said it had responded to a letter sent by Poland on the subject in October and did not comment on the contents of diplomatic correspondence.
Poland estimates its World War Two losses caused by Germany at 6.2 trillion zlotys ($1.4 trillion) and has demanded reparations, but Berlin has repeatedly said all financial claims related to the war have been settled.
“This answer, to sum it up, shows an absolutely disrespectful attitude towards Poland and Poles,” Arkadiusz Mularczyk, Poland’s deputy foreign minister, said in an interview with the Polish Press Agency.
“Germany does not pursue a friendly policy towards Poland, they want to build their sphere of influence here and treat Poland as a vassal state.”
When asked about further dialogue with Germany regarding compensation, Mularczyk said it would continue “through international organisations”.
Some six million Poles, including three million Polish Jews, were killed during the war and Warsaw was razed to the ground following a 1944 uprising in which about 200,000 civilians died.
In 1953, Poland’s then-communist rulers relinquished all claims to war reparations under pressure from the Soviet Union, which wanted to free East Germany, also a Soviet satellite, from any liabilities.
Poland’s ruling nationalist Law and Justice (PiS) party says that agreement is invalid because Poland was unable to negotiate fair compensation. It has revived calls for compensation since it took power in 2015 and has made the promotion of Poland’s wartime victimhood a central plank of its appeal to nationalism.
The combative stance towards Germany, often used by PiS to mobilise its constituency, has strained relations with Berlin.
In a joint press conference with Polish foreign minister Zbigniew Rau last October, German foreign minister Annalena Baerbock said the pain caused by Germany during World War Two was “passed on through generations” in Poland but that the issue of reparations was closed.
($1 = 4.4324 zlotys)
Reporting by Alan Charlish; Additional reporting by Victoria Waldersee;
Editing by Paul Simao and Mark Potter
TORONTO, Dec 4 (Reuters) – As the Bank of Canada considers ditching oversized interest rate hikes, it is dealing with an economy likely more overheated than previously thought but also the bond market’s clearest signal yet that recession and lower inflation lie ahead.
Canada’s central bank says that the economy needs to slow from overheated levels in order to ease inflation. If its tightening campaign overshoots to achieve that objective it could trigger a deeper downturn than expected.
The bond market could be flagging that risk. The yield on the Canadian 10-year government bond has fallen nearly 100 basis points below the 2-year yield, marking the biggest inversion of Canada’s yield curve in Refinitiv data going back to 1994 and deeper than the U.S. Treasury yield curve inversion.
Some analysts see curve inversions as predictors of recessions. Canada’s economy is likely to be particularly sensitive to higher rates after Canadians borrowed heavily during the COVID-19 pandemic to participate in a red-hot housing market.
“Markets think the Canadian economy is about to suffer a triple blow as domestic consumption collapses, U.S. demand weakens and global commodity prices drop,” said Karl Schamotta, chief market strategist at Corpay.
The BoC has opened the door to slowing the pace of rate increases to a quarter of a percentage point following multiple oversized hikes in recent months that lifted the benchmark rate to 3.75%, its highest since 2008.
Money markets are betting on a 25-basis-point increase when the bank meets to set policy on Wednesday, but a slim majority of economists in a Reuters poll expect a larger move.
RESILIENT ECONOMY
Canada’s employment report for November showed that the labour market remains tight, while gross domestic product grew at an annualized rate of 2.9% in the third quarter.
That’s much stronger than the 1.5% pace forecast by the BoC and together with upward revisions to historical growth could indicate that demand has moved further ahead of supply, economists say.
But they also say that the details of the third-quarter GDP data, including a contraction in domestic demand, and a preliminary report showing no growth in October are signs that higher borrowing costs have begun to impact activity.
The BoC has forecast that growth would stall from the fourth quarter of this year through the middle of 2023.
The depth of Canada’s curve inversion is signaling a “bad recession” not a mild one, said David Rosenberg, chief economist & strategist at Rosenberg Research.
It reflects greater risk to the outlook in Canada than the United States due to “a more inflated residential real estate market and consumer debt bubble,” Rosenberg said.
Inflation is likely to be more persistent after it spread from goods prices to services and wages, where higher costs can become more entrenched. Still, 3-month measures of underlying inflation that are closely watched by the BoC – CPI-median and CPI-trim – show price pressures easing.
They fell to an average of 2.75% in October, according to estimates by Stephen Brown, senior Canada economist at Capital Economics. That’s well below more commonly used 12-month rates.
“The yield curve would not invert to this extent unless investors also believed that inflation will drop back down toward the Bank’s target,” said Brown.
Like the Federal Reserve, the BoC has a 2% target for inflation.
“The curve is telling us the Bank of Canada will be forced into a reversal by late 2023, with rates remaining depressed for years to come,” Corpay’s Schamotta said.
Reporting by Fergal Smith; Editing by Andrea Ricci
WASHINGTON, Dec 3 (Reuters) – Chinese leader Xi Jinping is unwilling to accept Western vaccines despite the challenges China is facing with COVID-19, and while recent protests there are not a threat to Communist Party rule, they could affect his personal standing, U.S. Director of National Intelligence Avril Haines said on Saturday.
Although China’s daily COVID cases are near all-time highs, some cities are taking steps to loosen testing and quarantine rules after Xi’s zero-COVID policy triggered a sharp economic slowdown and public unrest.
Haines, speaking at the annual Reagan National Defense Forum in California, said that despite the social and economic impact of the virus, Xi “is unwilling to take a better vaccine from the West, and is instead relying on a vaccine in China that’s just not nearly as effective against Omicron.”
“Seeing protests and the response to it is countering the narrative that he likes to put forward, which is that China is so much more effective at government,” Haines said.
“It’s, again, not something we see as being a threat to stability at this moment, or regime change or anything like that,” she said, while adding: “How it develops will be important to Xi’s standing.”
China’s foreign ministry did not immediately respond to a request for comment sent on Sunday.
China has not approved any foreign COVID vaccines, opting for those produced domestically, which some studies have suggested are not as effective as some foreign ones. That means easing virus prevention measures could come with big risks, according to experts.
China had not asked the United States for vaccines, the White House said earlier in the week.
One U.S. official told Reuters there was “no expectation at present” that China would approve western vaccines.
“It seems fairly far-fetched that China would greenlight Western vaccines at this point. It’s a matter of national pride, and they’d have to swallow quite a bit of it if they went this route,” the official said.
Haines also said North Korea recognized that China was less likely to hold it accountable for what she said was Pyongyang’s “extraordinary” number of weapons tests this year.
Amid a record year for missile tests, North Korean leader Kim Jong Un said last week his country intends to have the world’s most powerful nuclear force.
Speaking on a later panel, Admiral John Aquilino, the commander of the U.S. Indo-Pacific Command, said China had no motivation to restrain any country, including North Korea, that was generating problems for the United States.
“I’d argue quite differently that it’s in their strategy to drive those problems,” Aquilino said of China.
He said China had considerable leverage to press North Korea over its weapons tests, but that he was not optimistic about Beijing “doing anything helpful to stabilize the region.”
Reporting by Michael Martina, David Brunnstrom, Idrees Ali, and Eric Beech; Additional reporting by Martin Quin Pollard in Beijing; Editing by Sandra Maler and Lincoln Feast
Tokyo CPI stays above BOJ’s 2% target for 6th straight month
Data underscores broadening inflationary pressure
TOKYO, Nov 25 (Reuters) – Core consumer prices in Japan’s capital, a leading indicator of nationwide trends, rose at their fastest annual pace in 40 years in November and exceeded the central bank’s 2% target for a sixth straight month, signalling broadening inflationary pressure.
The increase, driven mostly by food and fuel bills but spreading to a broader range of goods, cast doubt on the view of the Bank of Japan (BOJ) that recent cost-push inflation will prove transitory, some analysts said.
The Tokyo core consumer price index (CPI), which excludes fresh food but includes fuel, was 3.6% higher in November than a year earlier, government data showed on Friday. The rise exceeded a median market forecast of 3.5% and the 3.4% increase seen in October
The last time Tokyo inflation was faster was April 1982, when the core CPI was 4.2% higher than a year before.
While the rise was driven mostly by electricity bills and food prices, companies were also charging more for durable goods as the weak yen pushed up the cost of imports, the data showed.
“Price hikes are broadening and suggests the weak yen could keep inflation elevated well into next year,” said Mari Iwashita, chief market economist at Daiwa Securities.
“Core consumer inflation may stay around the BOJ’s 2% target for much of next year, which would make it hard for the bank to keep arguing that the price rises are temporary.”
The Tokyo core-core CPI index, which excludes fuel as well as fresh food, was 2.5% higher in November than a year earlier, picking up from the 2.2% annual gain seen in October.
BOJ AN OUTLIER
The BOJ has kept interest rates ultra-low on the view that inflation will slow back below its target next year when the boost from fuel price gains dissipate. The central bank has therefore remained an outlier from a wave monetary tightening around the world aimed at combating soaring inflation.
Contrary to the experience of some western economies, where wages have surged with inflation, growth in wages and services prices remain muted in Japan.
Of the components making up the Tokyo CPI data, services prices in November were up just 0.7% on a year earlier, after a 0.8% annual increase seen in October. That compared with a 7.7% spike in durable goods prices for November, which followed October’s 7.0% annual gain.
Separate data released by the BOJ on Friday showed the corporate service price index, which measures prices that firms charge each other for services, had been 1.8% higher in October than a year earlier. That was slower than a 2.1% annual gain seen in September.
BOJ Governor Haruhiko Kuroda has repeatedly said that, for inflation to sustainably hit his 2% inflation target, wages must rise enough to offset the rise in goods prices.
Slow wage growth has been among factors delaying Japan’s recovery from the coronavirus pandemic. The world’s third-largest economy unexpectedly shrank an annualised 1.2% in the third quarter, partly because of soft consumption.
The Tokyo CPI data heightens the chance of further rises in nationwide core consumer prices, which in October were 3.6% higher than a year earlier, also marking a 40-year high. The nationwide data for November is scheduled for release on Dec. 23.
Reporting by Takahiko Wada and Leika Kihara; Editing by Sam Holmes and Bradley Perrett
E.Europe arms companies step up production for Ukraine
Hope to find new markets as defence spends rise
Can produce and service Soviet-era and NATO-standard weaponry Poland, Czechs among big suppliers of military aid to Kyiv
Industry’s history stretches from 1800s and through Cold War
PRAGUE/WARSAW, Nov 24 (Reuters) – Eastern Europe’s arms industry is churning out guns, artillery shells and other military supplies at a pace not seen since the Cold War as governments in the region lead efforts to aid Ukraine in its fight against Russia.
Allies have been supplying Kyiv with weapons and military equipment since Russia invaded its neighbour on Feb. 24, depleting their own inventories along the way.
The United States and Britain committed the most direct military aid to Ukraine between Jan. 24 and Oct. 3, a Kiel Institute for the World Economy tracker shows, with Poland in third place and the Czech Republic ninth.
Still wary of Russia, their Soviet-era master, some former Warsaw Pact countries see helping Ukraine as a matter of regional security.
But nearly a dozen government and company officials and analysts who spoke to Reuters said the conflict also presented new opportunities for the region’s arms industry.
“Taking into account the realities of the ongoing war in Ukraine and the visible attitude of many countries aimed at increased spending in the field of defence budgets, there is a real chance to enter new markets and increase export revenues in the coming years,” said Sebastian Chwalek, CEO of Poland’s PGZ.
State-owned PGZ controls more than 50 companies making weapons and ammunition – from armoured transporters to unmanned air systems – and holds stakes in dozens more.
It now plans to invest up to 8 billion zlotys ($1.8 billion)over the next decade, more than double its pre-war target, Chwalek told Reuters. That includes new facilities located further from the border with Russia’s ally Belarus for security reasons, he said.
Other manufacturers too are increasing production capacity and racing to hire workers, companies and government officials from Poland, Slovakia and the Czech Republic said.
Immediately after Russia’s attack some eastern European militaries and manufacturers began emptying their warehouses of Soviet-era weapons and ammunition that Ukrainians were familiar with, as Kyiv waited for NATO-standard equipment from the West.
As those stocks have dwindled, arms makers have cranked up production of both older and modern equipment to keep supplies flowing. The stream of weapons has helped Ukraine push back Russian forces and reclaim swathes of territory.
Chwalek said PGZ would now produce 1,000 portable Piorun manpad air-defence systems in 2023 – not all for Ukraine -compared to 600 in 2022 and 300 to 350 in previous years.
The company, which he said has also delivered artillery and mortar systems, howitzers, bulletproof vests, small arms and ammunition to Ukraine, is likely to surpass a pre-war 2022 revenue target of 6.74 billion zlotys.
Companies and officials who spoke to Reuters declined to give specific details of military supplies to Ukraine, and some did not want to be identified, citing security and commercial sensitivities.
HISTORIC INDUSTRY
Eastern Europe’s arms industry dates back to the 19th Century, when Czech Emil Skoda began manufacturing weapons for the Austro-Hungarian Empire.
Under Communism, huge factories in Czechoslovakia, the Warsaw Pact’s second-largest weapons producer, Poland and elsewhere in the region kept people employed, turning out weapons for Cold War conflicts Moscow stoked around the world.
[1/6] GROT C16 FB-M1, modular assault rifles system is seen at PGZ (Polska Grupa Zbrojna) arms factory Fabryka Broni Lucznikin Radom Poland, November 7, 2022. REUTERS/Kacper Pempel
“The Czech Republic was one of the powerhouses of weapons exporters and we have the personnel, material base and production lines needed to increase capacity,” its NATO Ambassador Jakub Landovsky told Reuters.
“This is a great chance for the Czechs to increase what we need after giving the Ukrainians the old Soviet-era stocks. This can show other countries we can be a reliable partner in the arms industry.”
The 1991 collapse of the Soviet Union and NATO’s expansion into the region pushed companies to modernise, but “they can still quickly produce things like ammunition that fits the Soviet systems”, said Siemon Wezeman, a researcher at the Stockholm International Peace Research Institute.
Deliveries to Ukraine have included artillery rounds of “Eastern” calibres, such as 152mm howitzer rounds and 122mm rockets not produced by Western companies, officials and companies said.
They said Ukraine had acquired weapons and equipment via donations from governments and direct commercial contracts between Kyiv and the manufacturers.
NOT JUST BUSINESS
“Eastern European countries support Ukraine substantially,” Christoph Trebesch, a professor at the Kiel Institute, said. “At the same time it’s an opportunity for them to build up their military production industry.”
Ukraine has received nearly 50 billion crowns ($2.1 billion) of weapons and equipment from Czech companies, about 95% of which were commercial deliveries, Czech Deputy Defence Minister Tomas Kopecny told Reuters. Czech arms exports this year will be the highest since 1989, he said, with many companies in the sector adding jobs and capacity.
“For the Czech defence industry, the conflict in Ukraine, and the assistance it provides is clearly a boost that we have not seen in the last 30 years,” Kopecny said.
David Hac, chief executive of Czech STV Group, outlined to Reuters plans to add new production lines for small-calibre ammunition and said it is considering expanding its large-calibre capability. In a tight labour market, the company is trying to poach workers from a slowing car industry, he said.
Defence sales helped the Czechoslovak Group, which owns companies including Excalibur Army, Tatra Trucks and Tatra Defence, nearly double its first-half revenues from a year earlier, to 13.8 billion crowns.
The company is increasing production of both 155mm NATO and 152mm Eastern calibre rounds and refurbishing infantry fighting vehicles and Soviet-era T-72 tanks, spokesman Andrej Cirtek told Reuters.
He said supplying Ukraine was more than just good business.
“After the Russian aggression started, our deliveries for Ukrainian army multiplied,” Cirtek said.
“The majority of the Czech population still remember times of a Russian occupation of our country before 1990 and we don´t want to have Russian troops closer to our borders.”
($1 = 4.5165 zlotys)
($1 = 23.3850 Czech crowns)
Reporting by Michael Kahn and Robert Muller in Prague and Anna Koper in Warsaw; Editing by Catherine Evans
ACCRA, Nov 24 (Reuters) – Ghana’s government is working on a new policy to buy oil products with gold rather than U.S. dollar reserves, Vice-President Mahamudu Bawumia said on Facebook on Thursday.
The move is meant to tackle dwindling foreign currency reserves coupled with demand for dollars by oil importers, which is weakening the local cedi and increasing living costs.
Ghana’s Gross International Reserves stood at around $6.6 billion at the end of September 2022, equating to less than three months of imports cover. That is down from around $9.7 billion at the end of last year, according to the government.
If implemented as planned for the first quarter of 2023, the new policy “will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency,” Bawumia said.
Using gold would prevent the exchange rate from directly impacting fuel or utility prices as domestic sellers would no longer need foreign exchange to import oil products, he explained.
“The barter of gold for oil represents a major structural change,” he added.
The proposed policy is uncommon. While countries sometimes trade oil for other goods or commodities, such deals typically involve an oil-producing nation receiving non-oil goods rather than the opposite.
Ghana produces crude oil but it has relied on imports for refined oil products since its only refinery shut down after an explosion in 2017.
Bawumia’s announcement was posted as Finance Minister Ken Ofori-Atta announced measures to cut spending and boost revenues in a bid to tackle a spiraling debt crisis.
In a 2023 budget presentation to parliament on Thursday, Ofori-Atta warned the West African nation was at high risk of debt distress and that the cedi’s depreciation was seriously affecting Ghana’s ability to manage its public debt.
The government is negotiating a relief package with the International Monetary Fund as the cocoa, gold and oil-producing nation faces its worst economic crisis in a generation.
Reporting by Cooper Inveen and Christian Akorlie
Writing by Sofia Christensen
Editing by Estelle Shirbon and Elaine Hardcastle
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