Despite Payment, Investors Brace for Russia to Default

Prices for Russian credit default swaps — insurance contracts that protect an investor against a default — plunged sharply overnight after Moscow used its precious foreign currency reserves to make a last-minute debt payment Friday.

The cost for a five-year credit default swap on Russian debt was $5.84 million to protect $10 million in debt. That price was nearly half the one on Thursday, which at roughly $11 million for $10 million in debt protection was a signal that investors were certain of an eventual Russian default.

Russia used its foreign currency reserves sitting outside of the country to make the payment, backing down from the Kremlin’s earlier threats that it would use rubles to pay these obligations. In a statement, the Russia Finance Ministry did not say whether future payments would be made in rubles.

Despite the insurance contract plunge, investors remain largely convinced that Russia will eventually default on its debts for the first time since 1917. The major ratings agencies Standard & Poor’s and Moody’s have declared Russia is in “selective default” on its obligations.

Russia has been hit with extensive sanctions by the United States, the EU and others in response to its Feb. 24 invasion of Ukraine and its continuing military operation to take over Ukrainian territory.

The Credit Default Determination Committee — an industry group of 14 banks and investors that determines whether to pay on these swaps — said Friday that they “continue to monitor the situation” after Russia’s payment. Their next meeting is May 3.

At the beginning of April, Russia’s finance ministry said it tried to make a $649 million payment due April 6 toward two bonds to an unnamed U.S. bank — previously reported as JPMorgan Chase.

At that time, tightened sanctions imposed for Russia’s invasion of Ukraine prevented the payment from being accepted, so Moscow attempted to make the debt payment in rubles. The Kremlin, which repeatedly said it was financially able and willing to continue to pay on its debts, had argued that extraordinary events gave them the legal footing to pay in rubles, instead of dollars or euros.

Investors and rating agencies, however, disagreed and did not expect Russia to be able to convert the rubles into dollars before a 30-day grace period expired next week.


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Nepal Second South Asian Country to Grapple with Economic Woes

Nepal has banned imports of cars, alcohol and other luxury goods to conserve foreign exchange reserves as spiraling prices of fuel and food imports stemming from the war in Ukraine strain an economy already battered by the COVID-19 pandemic.

The Himalayan nation between India and China is the second South Asian country, after Sri Lanka, to face a foreign exchange crunch.

The goods that will not be imported include expensive televisions and mobile phones, the government said this week. The ban will remain in force until mid-July.

To conserve fuel, which Nepal imports, the work week in government offices has been shortened to five days.

“This is a short-term measure taken to prevent the economic condition of the country from going bad,” said Narayan Prasad Regmi, a senior official in the Industry, Commerce and Supplies Ministry.

Nepal’s central bank has said foreign exchange reserves are sufficient to cover just over six months of imports, down from 10 months in mid-2021. The landlocked nation of 29 million is heavily dependent on imports.

The government hopes the measures will help stave off a crisis like the one roiling Sri Lanka, where acute foreign exchange shortages have resulted in massive supply shortfalls, runaway price increases of fuel and food and a suspension of payments of its foreign debt.

Experts however call Nepal’s temporary ban on luxury goods and the shortening of the work week “desperate measures” that will not address the root cause of the problem that the economy faces.

“All this is only a quick fix and a Band-Aid over essentially what is a very big crack. The basic problem is that our imports far exceed our exports, so we face a huge balance of payments problem,” according to Santosh Sharma Poudel, co-founder of Nepal Institute for Policy Research.

Nepal’s foreign exchange crunch began during the COVID-19 pandemic. With tourism hit, earnings from foreign visitors plummeted in a country where more than a million tourists used to come before the pandemic.

Remittances sent by an estimated 3 million to 4 million Nepali migrants employed mostly in the Middle East and India have also taken a hit – before the pandemic they added up to as much as one-fourth of the country’s gross domestic product.

The war in Ukraine has added to its woes, as prices of both crude oil and food spiral in global markets — Nepal’s imports most of its essential needs, such as fuel, and food, such as cooking oil.

While Nepal’s economy is not as fragile as Sri Lanka’s, there is apprehension of what lies in store in one of the world’s poorest nations. The World Bank warned this week that the war in Ukraine is set to cause the “largest commodity shock” since the 1970s and “households across the world are feeling the cost-of-living crisis.”

They are households like that of Vijay Thapa, who works as a cook in New Delhi to support his family in a village in Nepal. “They can no longer manage in what I send. Prices of everything have spiked, whether it is cooking oil or wheat. Taxi fares have gone up by 50%.”

The situation is more worrisome for small countries, experts say.

“This is the second example in South Asia of how the war just after the pandemic is affecting us,” said Dhanajay Tripathi, a professor at the South Asian University in New Delhi.

“There are real worries for countries like Nepal because with smaller incomes it is harder for them to absorb the shock of high imports compared to larger countries such as India where the huge economy makes it possible to manage,” he said.

Analysts also warn that fixing the economy could be more difficult because Nepal also has some of the political problems that contributed to Sri Lanka’s crisis.

“We also have crony capitalism; corruption is high and there is political instability. That makes it harder to put long-term efficient policies in place,” Poudel said.

Economic mismanagement that led to the crisis in Sri Lanka has been blamed on the powerful Rajapaksa political dynasty that controls the government. Although some family members have resigned as ministers, President Gotabaya Rajapaksa and his brother Mahinda, who is prime minister, still hold the top posts.

In Nepal constant infighting among political parties has resulted in short-lived governments for the last three decades.  For much of last year, the country was mired in political turmoil and is presently ruled by a fragile five-party coalition.

Plummeting COVID-19 cases, though, have encouraged the country to lift restrictions on tourists. Tourism earnings are up, although still far below prepandemic levels. And as Middle East countries increase crude output after the pandemic, when demand had plunged, jobs are coming back for Nepalese nationals, which could mean remittances will again pick up.


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Foreign Businesses Consider Leaving China Amid Lockdowns

Chris Mei has been stuck in his Shanghai flat for a month save for PCR testing and occasional volunteer work delivering food to neighbors. That will change in a couple of days when he boards his flight for a long-scheduled trip home to Portland, Oregon.

He uses Zoom to do factory inspections for his 2-year-old import-export firm, Shanghai Fanyi Industry, but he can’t complete all the orders for clients overseas. He’s locked down like most of the 26 million people in the city, along with some of the factories where he normally sources goods, such as artificial plants and solar lights.

“In terms of how’s business, it’s definitely affected us,” Mei said. “Clients abroad always have deadlines, especially for some of our products.” He continued, “For example, for a shipment that recently went out, we had a portion of the order canceled due to the fact that the factory, they were on lockdown as well, so we basically could only produce what they could, and then the remaining part of the order basically passed the client’s deadline in South America.”

Leaving a city in lockdown has become an expensive, multistep process. Mei, a U.S. citizen, applied for permission to leave Shanghai by getting a pass from his neighborhood committee. He then found a driver with special permission to take him to the airport during lockdown – for about six times the usual price of that ride.

Shanghai’s residents have been ordered to stay home since early April in response to a spike in COVID-19 infections. Last week, authorities began easing restrictions in parts of the city to restore economic activity.

Mei’s case is typical, analysts who follow China say. Large numbers of foreign businesspeople in China are planning on leaving the country, for now or for good. The lockdowns have hammered an economy already hobbled by the 4-year-old Sino-U.S. trade dispute, capital outflows and last year’s crackdown on tech giants.

On March 18, That’s Shanghai, a local magazine, reported the results of an online survey saying 85% of foreigners in the city would “rethink their future in China” because of the lockdowns. The survey found that 48% of respondents plan to leave China over the next year and that 37% would wait in case anti-pandemic measures improve.

Risk seems to be increasing

Shipments through seaports in Shanghai and the Chinese tech hub Shenzhen, which locked down in March, have slowed because of a lack of workers and a shortage of truckers who are allowed to move imports and exports around the country.

Larger businesses can afford to wait in case lockdowns ease and China resumes its robust economic growth, said Doug Barry, communications vice president with the U.S.-China Business Council, a 265-member advocacy group in Washington.

Smaller companies are having more trouble because they depend on China’s advanced contract manufacturing ecosystem and cannot easily relocate, Barry said. He said some businesses have closed temporarily because so many workers can’t report to their jobs.

Others have spent money to help feed workers and even let them stay overnight at workplaces so they can report to their jobs the next day.

Overseas-based company leaders are staying away from their China projects because of quarantine rules, he said.

“Business in some cases has come to a complete stop,” Barry said. “The risk seems to be increasing, and the unknowns are also increasing and you’re looking at bottom lines and the future of things, and you’re wondering what to do.”

While foreign businesspeople are thinking of leaving, the significance of China to outside companies can be seen in the numbers. Foreign businesses invested $173.5 billion in China last year, up from $163 billion in 2020 and $140 billion a year earlier, according to the United Nations Conference on Trade and Development’s latest report.

Just more than 1 million foreign companies were registered in China at the end of 2020.

Companies normally relocate in China for contract manufacturing – which is seen as professional yet inexpensive – or to sell cars, coffee, phones and fashion apparel to the massive consumer market.

Incentives to stay

Mei will be back in Shanghai after a couple of months at home. By then, he expects there will be a “more solid” response to COVID-19 with clarity about people’s mobility.

Some people he knows have been called back to work in May, he said.

William Frazier, a 58-year-old U.S.-born owner of a business advisory firm in Shanghai, has lived in the city continuously since 2002.  He has no plans to leave the city even though he’s been locked down since March 16. Frazier has a spacious flat in a high-end compound, making life tolerable as he works though emails, phone and video conferences. The economic chaos has caused more clients to call him for information.

“No real significant impact, I would say, not for me,” Frazier said. “I don’t see hiccups. I see opportunities.”

Local officials in China want foreign investors to stay in the country, the U.S.-China Business Council has found. They are willing to meet and hear out American businesspeople, Barry said, though no government body has offered them any economic stimulus.

Sticking around will keep companies competitive after China returns to normal, he said.

If lockdowns in Shanghai end in May, more businesspeople are likely to stay in the city, said Yan Liang, professor and chair of economics at Willamette University in Salem, Oregon. Local and central government policymakers have the economic aftershocks of COVID-19 “on their radar,” she said.

“It’s just so important to be able to have a foothold in a large market like this,” Liang said. “And I think some of the sentiments (are) also that even though there are some maybe temporary or maybe more permanent slowdowns, the Chinese economy is still a really bright spot when you compare with other countries in the world.”

That makes the lure of the largest market in the world worth waiting for, for businesses that can afford to hold out until cities open again.


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Tech Stocks Sink Again; Nasdaq Has Worst Month Since 2008 

The Dow Jones Industrial Average slumped more than 900 points Friday as another sharp sell-off led by technology added to Wall Street’s losses in April, leaving the S&P 500 with its biggest monthly skid since the start of the pandemic.

The benchmark S&P 500 fell 3.6% and finished April with an 8.8% loss, its worst monthly slide since March 2020. The Dow slumped 2.8%.

The Nasdaq composite, heavily weighted with technology stocks, bore the brunt of the damage this month, ending April with a 13.3% loss, its biggest monthly decline since the 2008 financial crisis.

A sharp drop in Amazon weighed on the market after the internet retail giant posted its first loss since 2015.

Major indexes have been shifting between slumps and rallies throughout the week as the latest round of corporate earnings hit the market in force. Investors have been reviewing a particularly heavy batch of financial results from big tech companies, industrial firms and retailers.

Fed medicine

The volatile week caps off a dismal month for stocks as traders fret about the tough medicine the Federal Reserve is using in its fight against inflation: higher interest rates. That will increase borrowing costs across the board for people buying cars, using credit cards and taking out mortgages to buy homes.

The S&P 500 fell 155.57 points to 4,131.93. The Dow dropped 939.18 points to 32,977.21. The Nasdaq slid 536.89 points to 12,334.64.

Big Tech has been leading the market lower all month as traders shun the high-flying sector. Tech had posted gigantic gains during the pandemic and now is starting to look overpriced, particularly with interest rates set to rise sharply as the Fed steps up its fight against inflation.

Internet retail giant Amazon slumped 14%, one of the biggest decliners in the S&P 500, after reporting a rare quarterly loss and giving investors a disappointing revenue forecast. The weak update from Amazon comes as Wall Street worries about a potential slowdown in consumer spending along with rising inflation.

Prices for everything from food to gas have been rising as the economy recovers from the pandemic, and there has been a big disconnect between higher demand and lagging supplies. Russia’s invasion of Ukraine has only added to inflation worries as it drives price increases for oil, natural gas, wheat and corn.

The Commerce Department on Friday reported that an inflation gauge closely tracked by the Federal Reserve surged 6.6% in March compared with a year ago, the highest 12-month jump in four decades and further evidence that spiking prices are pressuring household budgets and the health of the economy.

Europe, too

The latest report on rising U.S. inflation follows a report from statistics agency Eurostat that shows inflation hit a record high in April of 7.5% for the 19 countries that use the euro.

Bond yields rose following the hot readings on inflation. The yield on the 10-year Treasury rose to 2.92% from 2.85%.

Persistently rising inflation has prompted central banks to raise interest rates to temper the impact on businesses and consumers.

Much of the anxiety on Wall Street in April has centered around how quickly the Fed will raise its benchmark interest rate and whether an aggressive series of hikes will crimp economic growth. The chair of the Fed has indicated the central bank may raise short-term interest rates by double the usual amount at upcoming meetings, starting next week. It has already raised its key overnight rate once, the first such increase since 2018, and Wall Street is expecting several big increases over the coming months.

Investors spent much of April shifting money away from Big Tech companies, whose stock values benefit from low interest rates, to areas considered less risky. The S&P 500’s consumer staples sector, which includes many household and personal goods makers, is on track to be the only sector in the benchmark index to make gains in April. Other safe-play sectors, such as utilities, held up better than the broader market, while technology and communications stocks were among the biggest losers.


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Amazon Stock Falls After Company Reports First Quarterly Loss in 7 Years

Amazon share prices fell 11% Friday after the massive online retailer posted its first quarterly loss in seven years.

Amazon lost $3.84 billion during the first quarter of this year after recording a profit of $8.11 billion in the same period last year.

Revenue growth for the quarter was the slowest ever for the company, rising 7.3%.

The company blamed investments in warehouses and more staff for the slowdown. It also said there is uncertainty about consumer spending caused by inflation, supply chain problems and the war in Ukraine.

“With inflation hitting household budgets around the world, spontaneous Amazon purchases are likely to be reined in,” Sophie Lund-Yates, analyst at Britain-based financial services company Hargreaves Lansdown, said.

Another big hit to Amazon’s bottom line came from its stake in electric vehicle maker Rivian, shares of which are down 70% this year.

Amazon Web Services remained a strong point for the company as revenue for the cloud computing service jumped 36.6%.

The value of Amazon stock has dropped 23.2% this year.


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Zelenskyy’s Invite to G20 Not Enough for Biden

Indonesian President Joko Widodo, who holds this year’s Group of 20 (G-20) presidency, announced Friday that he has invited Ukrainian President Volodymyr Zelenskyy to the economic forum’s November summit in Bali.

“We understand the G-20 has a catalyst role in global economic recovery, and when we speak of global economic recovery there are two important factors right now; COVID-19 and the war in Ukraine,” Widodo said in a video outlining the rationale of his invitation to Zelenskyy.

Widodo said he extended the invitation during a call with Zelenskyy Wednesday when he turned down a request for weapons but offered humanitarian assistance to Ukraine. He said he spoke to Vladimir Putin on Thursday and the Russian president informed him that he will be attending the summit.  

“Indonesia wants to unite G-20,” Widodo said. “Peace and stability are the keys to global economic recovery and growth.”

That may be a tall order amid Western leaders’ demands to kick Russia out of the group of the 20 largest economies. U.S. President Joe Biden, Canadian Prime Minister Justin Trudeau and Australian Prime Minister Scott Morrison, among others, have raised concerns about Putin’s participation in the summit and signaled they will not attend if Putin is there.

Not enough for Biden

“The president has been clear about his view, this shouldn’t be business as usual and that Russia should not be a part of this,” White House Press Secretary Jen Psaki said to VOA Thursday when asked if Biden would consider attending with Zelenskyy invited.

It was Biden who suggested that Kyiv be able to attend G-20 meetings should other members disagree to kick out Russia. He made the point following a meeting with NATO members and European allies in Brussels last month, where he said they discussed expelling Putin from the G-20.

With China supporting Moscow to remain in the group, analysts point out that Widodo is in a tough position. Ultimately his government may have to decide whether it is willing to trade Putin’s attendance for several Western leaders’ absence.

“I think the perfect solution for Indonesia would be, they invite Zelenskyy and then the Russians say that Putin decided not to come and then Jokowi doesn’t have to make this decision,” said Gregory Poling to VOA, using Widodo’s nickname. Poling researches U.S. foreign policy in the Asia Pacific at the Center for Strategic and International Studies.

Earlier this month the Biden administration signaled it wants the G-20 to discuss the international economic repercussions of the Russian invasion and potentially Ukraine’s reconstruction.  

That idea is likely to create further rifts in the economic forum. Middle-power G-20 members, including India, Brazil, South Africa, Mexico, Saudi Arabia and others, have their own agenda centered around post-pandemic recovery that do not align with the West’s focus of isolating Putin and helping Ukraine.

Jakarta has set three pillars for its G-20 presidency: global health architecture, sustainable energy transition and digital transformation. It has chosen “Recover Together, Recover Stronger” as the theme of this year’s summit – a proposal that could unravel amid new geopolitical rivalries triggered by Putin’s war.

Eva Mazrieva and Virginia Gunawan contributed to this report.


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Russia Makes Last-Gasp Dollar Bond Payments in Bid to Avoid Default

Russia made what appeared to be a late u-turn to avoid a default on Friday, as it made a number of already-overdue international debt payments in dollars despite previously vowing they would only be paid in rubles.

Whether the money would make it to the United States and other Western countries that sanctioned Russia was still not clear, but it represented another major twist in the game of financial chicken that has developed about a possible default.

Russia’s finance ministry said it had managed to pay $564.8 million on a 2022 Eurobond and $84.4 million on a 2042 bond in dollars – the currency specified on the bonds.

The ministry said it had channeled the required funds to the London branch of Citibank, one of the so-called paying agents of the bonds whose job is to disburse them to the investors that originally lent the money to Moscow.

Russia has not had a default of any kind since a financial crash in 1998 and has not seen a major international or ‘external’ market default since the aftermath of the 1917 Bolshevik revolution.

The risk of another one though is now a flashpoint in the economic tussle with Western countries which have blanketed Russia with sanctions in response to its actions in Ukraine that Moscow has termed a “special military operation.”

The bonds were originally supposed to be paid earlier this month but an extra 30-day ‘grace period’ that government bonds often have in their terms meant Moscow’s final deadline was on May 4.


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Google Adds Ways to Keep Personal Info Private in Searches

Google has expanded options for keeping personal information private from online searches.

The company said Friday it will let people request that more types of content such as personal contact information like phone numbers, email and physical addresses be removed from search results.

The new policy also allows the removal of other information that may pose a risk for identity theft, such as confidential log-in credentials.

The company said in a statement that open access to information is vital, “but so is empowering people with the tools they need to protect themselves and keep their sensitive, personally identifiable information private.”

“Privacy and online safety go hand in hand. And when you’re using the internet, it’s important to have control over how your sensitive, personally identifiable information can be found,” it said.

Google Search earlier had permitted people to request that highly personal content that could cause direct harm be removed. That includes information removed due to doxxing and personal details like bank account or credit card numbers that could be used for fraud.

But information increasing pops up in unexpected places and is used in new ways, so policies need to evolve, the company said.

Having personal contact information openly available online also can pose a threat and Google said it had received requests for the option to remove that content, too.

It said that when it receives such requests it will study all the content on the web page to avoid limiting availability of useful information or of content on the public record on government or other official websites.

“It’s important to remember that removing content from Google Search won’t remove it from the internet, which is why you may wish to contact the hosting site directly, if you’re comfortable doing so,” it said.


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New Kenyan Fish Marketing App Aims to Reduce Sexual Exploitation of Women Fishmongers

An application developed in Kenya to improve the marketing of fish caught in Lake Victoria is helping women fishmongers fend off sex-for-fish exploitation by fishermen. The Aquarech app allows traders to buy fish without having to negotiate with fishermen – as Ruud Elmendorp reports from Kisumu, Kenya.
Videographer: Ruud Elmendorp Produced by: Henry Hernandez


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Iftar Is More Expensive Everywhere This Year. Here’s Why.

However Muslims break their fast this Ramadan, they’re probably paying more for it than last year. Some of the reasons are the same everywhere. Shockwaves from the war in Ukraine, for one. But in economics, there’s rarely just one reason for anything. Here’s what’s raising the cost of five iftar dishes in five countries.


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US Economy Shrinks 1.4% in Last Three Months

The U.S. economy unexpectedly shrank 1.4% in the first three months of 2022 compared to a year ago, the government reported Thursday, raising fears that the world’s largest economy could face a recession. 

After more than a year of rapid growth as the United States recovered from the initial ravages of the coronavirus, the American economy was buffeted in the January-to-March period by the fastest increase in consumer prices in four decades, the new wave of coronavirus omicron variant cases and Russia’s invasion of Ukraine. 

The slowdown is the first since the coronavirus recession ended in April 2020, a period when millions of workers were laid off and many businesses shut their doors or sharply curtailed their operations. 

Most U.S. economists in the U.S., however, believe the U.S. economy is resilient and project that it could resume modest growth in the April-to-June period, although some analysts are suggesting that a recession — two straight quarters of a receding economy — cannot be ruled out. 

Still, hundreds of thousands of jobs are routinely being added to the economy month after month and March’s 3.6% unemployment rate was just a tick above the 3.5%, 50-year-low recorded just before the debilitating pandemic swept into the country. 

But the first-quarter decline reported by the Bureau of Economic Analysis was in marked contrast to the 5.7% growth reported for last year, the fastest full-year advance since 1984, and the 6.9% annualized growth rate in the fourth quarter last year. 

Economic analysts said the first-quarter decline was caused in part by a widening trade deficit, meaning that the U.S. imported far more goods than it exported. Businesses rapidly built up their inventories in the latter part of 2021 but slowed the pace in early 2022. Government aid to combat the effects of the coronavirus and boost the economy has now largely ended as well. 

While job growth has been robust and the unemployment rate steadily dipped, most U.S. consumers are worried about inflation, especially with higher food costs and gasoline prices at service stations pinching family budgets. Year over year, consumer prices were up 8.5% in March, a 40-year high. 

Policymakers at the country’s central bank, the Federal Reserve, have embarked on what they have signaled will be a series of increases in the coming months in their benchmark interest rate to tame inflation. 

The expectation is that the Fed’s interest rate increase will push borrowing costs higher for both businesses and consumers, cooling too-rapid growth of the economy.     

 


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Musk’s Twitter Ambitions Likely to Collide with Europe’s Tech Rules 

A hands-off approach to moderating content at Elon Musk’s Twitter could clash with ambitious new laws in Europe meant to protect users from disinformation, hate speech and other harmful material. 

Musk, who describes himself as a “free speech absolutist,” pledged to buy Twitter for $44 billion this week, with European Union officials and digital campaigners quick to say that any focus on free speech to the detriment of online safety would not fly after the 27-nation bloc solidified its status as a global leader in the effort to rein in the power of tech giants.

“If his approach will be ‘just stop moderating it,’ he will likely find himself in a lot of legal trouble in the EU,” said Jan Penfrat, senior policy adviser at digital rights group EDRi.

Musk will soon be confronted with Europe’s Digital Services Act, which will require big tech companies like Twitter, Google and Facebook parent Meta to police their platforms more strictly or face billions in fines.

Other crackdowns

Officials agreed just days ago on the landmark legislation, expected to take effect by 2024. It’s unclear how soon it could spark a similar crackdown elsewhere, with U.S. lawmakers divided on efforts to address competition, online privacy, disinformation and more.

That means the job of reining in a Musk-led Twitter could fall to Europe — something officials signaled they’re ready for.

“Be it cars or social media, any company operating in Europe needs to comply with our rules — regardless of their shareholding,” Thierry Breton, the EU’s internal market commissioner, tweeted Tuesday. “Mr Musk knows this well. He is familiar with European rules on automotive, and will quickly adapt to the Digital Services Act.”

Musk’s plans for Twitter haven’t been fleshed out beyond a few ideas for new features, opening its algorithm to public inspection and defeating “bots” posing as real users.

France’s digital minister, Cedric O, said Musk has “interesting things” that he wants to push for Twitter, “but let’s remember that #DigitalServicesAct — and therefore the obligation to fight misinformation, online hate, etc. — will apply regardless of the ideology of its owner.” 

EU Green Party lawmaker Alexandra Geese, who was involved in negotiating the law, said, “Elon Musk’s idea of free speech without content moderation would exclude large parts of the population from public discourse,” such as women and people of color. 

Twitter declined to comment. Musk tweeted that “the extreme antibody reaction from those who fear free speech says it all.” He added that by free speech, he means “that which matches the law” and that he’s against censorship going “far beyond the law.” 

The United Kingdom also has an online safety law in the works that threatens senior managers at tech companies with prison if they don’t comply. Users would get more power to block anonymous trolls, and tech companies would be forced to proactively take down illegal content. 

Prime Minister Boris Johnson’s office stressed the need for Twitter to remain “responsible” and protect users. 

“Regardless of ownership, all social media platforms must be responsible,” Johnson spokesman Max Blain said Tuesday. 

Need seen for cleanup

Damian Collins, a British lawmaker who led a parliamentary committee working on the bill, said that if Musk really wants to make Twitter a free speech haven, “he will need to clean up the digital town square.” 

Collins said Twitter has become a place where users are drowned out by coordinated armies of “bot” accounts spreading disinformation and division and that users refrain from expressing themselves “because of the hate and abuse they will receive.” 

The laws in the U.K. and EU target such abuse. Under the EU’s Digital Services Act, tech companies must put in place systems so illegal content can be easily flagged for swift removal. 

Experts said Twitter will have to go beyond taking down clearly defined illegal content like hate speech, terrorism and child sexual abuse and grapple with material that falls into a gray zone. 

The law includes requirements for big tech platforms to carry out annual risk assessments to determine how much their products and design choices contribute to the spread of divisive material that can affect issues like health or public debate. 

“This is all about assessing to what extent your users are seeing, for example, Russian propaganda in the context of the Ukraine war,” online harassment or COVID-19 misinformation, said Mathias Vermeulen, public policy director at data rights agency AWO. 

Violations would incur fines of up to 6% of a company’s global annual revenue. Repeat offenders can be banned from the EU.

More openness 

The Digital Services Act also requires tech companies to be more transparent by giving regulators and researchers access to data on how their systems recommend content to users. 

Musk has similar thoughts, saying his plans include “making the algorithms open source to increase trust.” 

Penfrat said it’s a great idea that could pave the way to a new ecosystem of ranking and recommendation options. 

But he panned another Musk idea — “authenticating all humans” — saying that taking away anonymity or pseudonyms from people, including society’s most marginalized, was the dream of every autocrat.


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Elon Musk Quest to Scrap Deal Over 2018 Tweets is Rejected

Elon Musk’s request to scrap a settlement with securities regulators over 2018 tweets claiming he had the funding to take Tesla private was denied by a federal judge in New York.

Judge Lewis Liman on Wednesday also denied a motion to nullify subpoenas of Musk seeking information about possible violations of his settlement with the Securities and Exchange Commission.

Musk had asked the court to throw out the settlement, which required that his tweets be approved by a Tesla attorney. The SEC is investigating whether the Tesla CEO violated the settlement with tweets last November asking Twitter followers if he should sell 10% of his Tesla stock.

The whole dispute stems from an October 2018 agreement with the SEC in which Musk and Tesla each agreed to pay $20 million in civil fines over Musk’s tweets about having the money to take Tesla private at $420 per share.

The funding was far from secured and the electric vehicle company remains public, but Tesla’s stock price jumped. The settlement specified governance changes, including Musk’s ouster as board chairman, as well as pre-approval of his tweets.

Musk attorney Alex Spiro contended in court motions that the SEC was trampling on Musk’s right to free speech.


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Tesla Value Falls $126 Billion Amid Musk Twitter Deal Funding Concerns 

Tesla lost $126 billion in value on Tuesday amid investor concerns that Chief Executive Elon Musk may have to sell shares to fund his $21 billion equity contribution to his $44 billion buyout of Twitter. 

Tesla is not involved in the Twitter deal, yet its shares have been targeted by speculators after Musk declined to disclose publicly where his cash for the acquisition of Twitter is coming from. The 12.2% drop in Tesla’s shares on Tuesday equated to a $21 billion drop in the value of his Tesla stake, the same as the $21 billion in cash he committed to the Twitter deal. 

Wedbush Securities analyst Daniel Ives said that worries about upcoming stock sales by Musk and the possibility that he is becoming distracted by Twitter weighed on Tesla shares.  

“This (is) causing a bear festival on the name,” Ives said. 

Tesla did not immediately respond to a request for comment. 

To be sure, Tesla’s share plunge came against a challenging backdrop for many technology-related stocks. The Nasdaq closed at its lowest level since December 2020 on Tuesday, as investors worried about slowing global growth and more aggressive rate hikes from the U.S. Federal Reserve.  

Twitter’s shares also slid on Tuesday, falling 3.9% to close at $49.68 even though Musk agreed to buy it on Monday for $54.20 per share in cash. The widening spread reflects investor concern that the precipitous decline in Tesla’s shares, from which Musk derives most of his $239 billion fortune, could lead the world’s richest person to have second thoughts about the Twitter deal. 

“If Tesla’s share price continues to remain in freefall that will jeopardize his financing,” said OANDA senior market analyst Ed Moya. 

As part of the Tesla deal, Musk also took out a $12.5 billion margin loan tied to his Tesla stock. He had already borrowed against about half of his Tesla shares. 

University of Maryland professor David Kirsch, whose research focuses on innovation and entrepreneurship, said investors started to worry about a “cascade of margin calls” on Musk’s loans. 


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US Laboratory Innovating Electronic Vehicle Technology 

Many of the technological advances in lithium ion batteries that now power many electric vehicles began in a laboratory just outside Chicago’s city limits decades ago.  VOA’s Kane Farabaugh reports on new innovations at Argonne National Laboratory preparing for the next-generation needs of drivers.
Camera: Kane Farabaugh, Mike Burke   
Produced by: Kane Farabaugh   


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