Category: Economy and business

In Zimbabwe, white farmers whose land was taken by the government are cautiously hopeful about a promise from President Emmerson Mnangagwa to give them at least partial repayment. The promise came a few days before Zimbabwe celebrates 39 years of independence.

On Sunday, state media quoted President Mnangagwa promising partial compensation for white commercial farmers whose land was seized under former president Robert Mugabe and redistributed to blacks.

He said the government would pay for improvements to the land, such as buildings or dams.

Ex-farmers are now submitting requests for compensation at the offices of the Zimbabwe Commercial Farmers Union.

One of them is Glen Johnston, whose mother, Agnes, was displaced from her farm about 17 years ago. Since then, she has been living in Harare with her son.

Johnston says he is taking the president’s promise with caution.

“Basically, it looks like we’ve been promised that we have steps to be taken. So now, taking the steps, will we get the money at the end of the day? Obviously time will tell,” he said.

The land seizures began in 2000 with the backing of Mugabe, who said they would correct colonial imbalances. Farm production plunged, and critics blamed the seizures for the collapse of Zimbabwe’s economy.

Others blamed the collapse on targeted Western sanctions imposed in 2002, in response to alleged election rigging and human rights abuses.

Douglas Mahiya of the ruling ZANU-PF party does not think Zimbabwe should compensate white farmers, who in his view, took the country’s land at the point of a gun.

“But we are saying that we compensate for their sweat. And when that happens, then the international world must accept Zimbabwe in the global family again economically and politically,” he said.

The Zimbabwe Commercial Farmers Union says it has received nearly 1,000 applications for compensation, which it will submit to the government.

Ben Gilpin, the director of the union, says the possibility for compensation gives his members some hope ahead of Zimbabwe’s Independence Day this Thursday.

“I think for many people (farmers) the last 20 independence days have come and gone without such promises being hinted at, and now the promise is that this is being dealt with seriously, so we appreciate that,” he said.

Meanwhile, Mnangagwa’s government says it hopes Zimbabwe’s cold relations with the West will thaw and that the ailing economy will improve, so that Zimbabweans can fully enjoy their political independence.
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The new Palestinian prime minister on Tuesday accused the United States of declaring “financial war” on his people and said an American peace plan purported to be in the works will be “born dead.”

 

In his first interview with the international media since taking office over the weekend, Mohammad Shtayyeh laid out plans to get through the financial crisis he has inherited and predicted that the international community, including U.S. allies in the Arab world, would join the Palestinians in rejecting President Donald Trump’s expected peace plan.

 

“There are no partners in Palestine for Trump. There are no Arab partners for Trump and there are no European partners for Trump,” Shtayyeh said during a wide-ranging hour-long interview.

 

Shtayyeh, a British-educated economist, takes office at a difficult time for the Palestinians, with his government, the Palestinian Authority, mired in a dire financial crisis. The PA administers autonomous zones in the West Bank.

 

The Trump administration has slashed hundreds of millions of dollars of aid, including all of its support for the U.N. agency for Palestinian refugees.

 

Israel has also withheld tens of millions of dollars of tax transfers to punish the Palestinians for their “martyrs’ fund,” a program that provides stipends to the families of Palestinians imprisoned or killed as a result of fighting with Israel.

 

The Israelis say the fund rewards violence, while the Palestinians say the payments are a national duty to families affected by decades of violence. Furious about the withholding, the Palestinians have in turn refused to accept partial tax transfers from Israel.

Loss of Revenue

 

Without its key sources of revenue, the Palestinian Authority has begun paying only half salaries to tens of thousands of civil servants, reduced services and increased borrowing. In a new report being released Wednesday, the World Bank said the Palestinian deficit will grow from $400 million last year to over $1 billion this year.

 

“Israel is part of the financial war that has been declared upon us by the United States. The whole system is to try to push us to surrender” and agree to an unacceptable peace proposal, Shtayyeh said. “This a financial blackmail, which we reject.”

 

Shtayyeh laid out a number of proposals for weathering the storm. He said he has imposed spending cuts by reducing perks for his Cabinet ministers.

 

He said he would seek to develop the Palestinian agricultural, economic and education sectors and seek ways to reduce the Palestinian economy’s dependence on Israel. For example, he proposed importing fuel from neighboring Jordan, instead of from Israel, and even floating a Palestinian currency. He also said the Palestinians would seek financial backing from Arab and European donors.

 

Despite the tensions with Israel and the U.S., Shtayyeh said the Palestinians remain committed to the establishment of an independent Palestinian state on areas captured by Israel in the 1967 war. That includes establishing a capital in east Jerusalem, which Israel has annexed and claims as part of its eternal capital.

Netanyahu Electoral Victory

 

The two-state solution has enjoyed overwhelming international support for the past two decades. But Israeli Prime Minister Benjamin Netanyahu and his hard-line political allies reject Palestinian independence.

 

Netanyahu secured another term in office in elections last week and is expected to form a new coalition with religious and nationalist parties that oppose the two-state solution. On the campaign trail, Netanyahu even raised the possibility of annexing Israeli settlements in the West Bank, a step that could extinguish any remaining hopes for an independent Palestine.

 

Netanyahu has received a boost from Trump, who has given Netanyahu a number of diplomatic gifts since taking office. Trump has recognized Jerusalem as Israel’s capital and moved the U.S. Embassy to the holy city, slashed aid to the Palestinians and shuttered the Palestinian diplomatic office in Washington.

 

In a departure from Republican and Democratic predecessors, Trump also has notably refused to endorse the two-state solution. His peace team, led by son-in-law Jared Kushner, has repeatedly pushed back the release of a peace plan it says it is preparing, and it remains unclear if or when it will be released.

 

Kushner’s team has said little about their proposal. But their limited public statements have indicated it will call for large amounts of economic investment in the Palestinians, but given no sign that it will include their demand for independence.

 

Shtayyeh said that after all of the U.S. moves in favor of Israel, particularly the recognition of Jerusalem, there is nothing left to negotiate.

 

He said any proposal that ignores key Palestinian demands will be rejected by the international community. The European Union this week reiterated its call for peace talks aimed at establishing a Palestinian state.

 

“Where are we going to have the Palestinian state?” he asked. “We are not looking for an entity. We are looking for a sovereign state.”

 

“Palestinians are not interested in economic peace. We are interested in ending occupation,” he said. “Life cannot be enjoyed under occupation.”
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The government of Brazilian President Jair Bolsonaro announced Tuesday a financial package aimed at staving off a potential truckers’ strike.

 

Chief of Staff Onyx Lorenzoni said the Brazilian Development Bank will be providing $128 million in credit to truckers and that the Ministry of Infrastructure will spend $514 million on improving roads.

 

The announcement is part of a series of recent decisions by the administration aimed at appeasing the sector.

 

Last month Bolsonaro announced via Twitter that he would not be renewing a contract for electronic radars saying that “the vast majority of them only exist for the sole purpose of financial return for the state.” An investigation by newspaper Folha de Sao Paulo found that the radars had resulted in a 21.7% reduction in fatalities on federal roads.

 

On Thursday, Bolsonaro canceled a planned 5.7% increase in diesel prices. The decision caused shares in Brazil’s state oil company Petrobras to drop more than 13%, with many investors fearing that it could signal a more interventionist strategy by the president similar to previous governments.

 

Bolsonaro ran on a platform championing the freedom of the market and criticizing his predecessors from Brazil’s Workers’ Party for their “incompetence.”

 

His decision to cancel the announced price hike received uncommon support from impeached President Dilma Rousseff of the Workers’ Party who Tweeted Sunday that “The management of the largest Brazilian public company cannot be subjected to the short-term logic of financial speculation.”

 

Mauricio Santoro, a political scientist at the State University of Rio de Janeiro, told the Associated Press Tuesday that the decision by Bolsonaro to intervene on behalf of the truckers has left investors worried.

 

“From an economic perspective, the Dilma government should have been an example of what to avoid, but it is very impressive that Bolsonaro hasn’t learned from her errors,” he said.

 

The cost of fuel has been something that has long been contentious for truckers since the decision was made to peg its price to the international market. In the previous two governments, the administration had dictated the price of oil in order to control inflation. This strategy resulted in massive expenditures by the state. Following the economic recession, the ability of the government to subsidize the losses was no longer viable, and when the government floated the commodity with the international market it led to a disastrous combination of inflation during a recession.

 

A truckers’ strike last year caused a national crisis that had an estimated economic impact of $7.7 billion and led to shortages of food, medicine and petrol. Nearly 70% of all goods are transported via highway. The truckers blocked roads and refused to work until their demands for a reduction in the price of oil were answered.
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The European Union has warned Washington that any move to allow U.S. citizens to sue foreign firms doing business in Cuba could lead to a World Trade Organization challenge and a cycle of counter-claims in European courts.

The EU has serious concerns over the decision by U.S. President Donald Trump to end the practice of suspending on a rotating six-month basis a section of the 1996 Helms-Burton Act that would allow such suits, principally from Cuban-Americans.

The comments came in a letter seen by Reuters from EU foreign policy chief Federica Mogherini and EU Trade Commissioner Cecilia Malmstrom to U.S. Secretary of State Mike Pompeo and dated April 10.

The two EU officials called on Washington to adhere to a 1998 agreement to grant a consistent waiver for EU companies and citizens while the bloc suspends a WTO challenge over the issue.

“Failing this, the EU will be obliged to use all means at its disposal, including in cooperation with other international partners, to protect its interests,” the letter said.

“The EU is considering a possible launch of the WTO case.”

The letter also said that EU courts were empowered to allow EU companies to recover any losses caused by claims over Cuba.

It said that an overwhelming majority of the 50 largest claimants, making up more than 70 percent of the value of claims, had assets in the European Union.

“This could trigger a self-defeating cycle of claims that will impair the business climate, without bringing justice to holders of claims, or impacting the situation in Cuba in any positive way,” the two EU officials wrote.

The Trump administration announced on March 4 it would allow lawsuits by U.S. citizens against dozens of Cuban companies on Washington’s blacklist.

However, it stopped short of allowing legal action against foreign firms who had used property confiscated by the Cuban government since the 1959 revolution — though it left the door open to doing so in the future.

Pompeo earlier this month extended to May 1 the waiver for foreign firms. Trump’s move marked an intensification of U.S. pressure on Cuba and also appeared aimed at punishing Havana over its support for Venezuela’s socialist president, Nicolas Maduro.

The European Union said it also wanted to further democracy and human rights in Cuba and to find a peaceful and democratic solution to the crisis in Venezuela.
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The White House is considering other possible candidates for the board of the Federal Reserve although President Donald Trump still backs his two potential nominees, Herman Cain and Stephen Moore, White House economic adviser Larry Kudlow said on Tuesday.

Kudlow, speaking to reporters at the White House, added that Trump’s picks are still going through the nominating process for the seats on the U.S. central bank’s board of governors.

“We are talking to a number of candidates. We always do,” he said when asked if the White House was vetting alternates for Cain and Moore, whose controversial potential nominations have raised concerns among economists as well as some of Trump’s fellow Republicans.

The U.S. Senate must confirm any nominees, and Republicans control the chamber with 53 seats. But four of them have said they oppose Cain, a former pizza company chief executive, effectively sinking his nomination.

Neither candidate’s name has been formally sent to the Senate, but Trump has pledged to do so.

Economists and other critics have raised concerns about two Trump loyalists serving at what has traditionally been a nonpartisan financial entity.

 
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President Donald Trump is offering some unsolicited advice to Boeing, manufacturer of the troubled 737 Max jet.

Trump tweeted Monday that if he were in charge of Boeing, he would “FIX” the plane, “add some additional great features, & REBRAND the plane with a new name.” He adds: “No product has suffered like this one.”

 

Trump — who brands his hotels, golf courses and buildings with the Trump name — tweeted sarcastically, “what the hell do I know about branding, maybe nothing (but I did become President!).”

 

Airlines and countries around the world have grounded the Boeing 737 Max or banned it from airspace after an Ethiopian Airlines crash last month. A crash involving the same model happened off Indonesia in October.

 

Trump once owned a short-lived airline: Trump Shuttle.

 

 
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Ivanka Trump arrived in Addis Ababa, the capital of Ethiopia, Sunday for a summit on African women’s economic inclusion and empowerment.

In addition to attending the summit, the daughter of the U.S. president, who is also an advisor to her father, will meet with female workers in the coffee industry, and tour a female-run textile facility.

President Donald Trump signed a National Security Presidential Memorandum in February, establishing the Women’s Global Development and Prosperity (W-GDP) Initiative. W-GDP says it hopes to “reach 50 million women by 2025, through the work of the the United States Government and its partners.”

It was not immediately clear if the controversy that surrounds the U.S. president will follow his daughter to Africa. The president has not been kind in his remarks about Africa and its migrants.

“I don’t think people will have a good feeling” said Ethiopian journalist Sisay Woubshet, about the president’s daughter visit to the Continent.

Marakle Tesfaye, an activist, said, however, “I think she’s coming genuinely to empower women and it’s good that she’s coming because she will push forward our agenda.”

Trump is also scheduled to an make an appearance at a World Bank policy summit.
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Cryptocurrency exchanges are growing in the Philippines, despite a downturn last year in the value of the virtual currencies, due to growing popular demand and lenience among regulators.

Authorities in the developing Southeast Asian country have permitted at least 29 exchanges of cryptocurrency following three that the central bank said it approved this week, according to domestic media reports. 

That count, which is high for Asia, follows a total of 10 exchanges permitted by the central bank. The Cagayan Economic Zone Authority in the archipelago’s far north has issued 19 additional permits, the zone’s website said in October. 

These exchanges feed into the development of a fast-growing financial technology, or fintech, sector in the Philippines, said Jonathan Ravelas, chief market strategist with Banco de Oro UniBank in Metro Manila.

“Fintech appears to be very advanced in the Philippines,” he said. Consumers, he said, “eventually look at the mobility of having it in mobile wallets, [which] gives them flexibility to use money.”

Uses for cryptocurrency

Cryptocurrency, most notably its standard bearer Bitcoin, became an investment vehicle in much of the world about a decade ago. But a 70% drop in Bitcoin prices last year weakened enthusiasm for crypto overall. 

​Filipinos generally pick more traditional investments such as equities, Ravelas said, but young companies are eyeing cryptocurrency to raise capital, a process called initial coin offerings. Seven in 10 Filipinos have no bank account, he added, so virtual currency gives those consumers a new option for making payments.

That population would be able to jump on a currency source that’s open to anyone and transparent because of its online transaction ledger called the blockchain.

Government support

The central bank governor may see the cryptocurrency trade as part of his bigger plan to advance the country’s electronic payment systems, analysts say.

Cryptocurrency “probably goes toward those efforts at facilitating electronic payments. I think that’s the key point,” said Christian de Guzman, vice president and senior credit officer with Moody’s Sovereign Risk Group in Singapore.

The 2016 National Payment Systems Act, among others, “bolsters the central bank’s capacity to foster the efficiency of payment systems as pipelines of funds in the financial market,” the authority’s governor Benjamin Diokno said in a speech last month.

The central bank and Securities and Exchange Commission are “working towards regulating cryptocurrencies to protect the Filipino people,” domestic Bitcoin and blockchain news website Bitpinas said in November. “This is a positive step towards adoption as this move will give users security and confidence in dealing with it.”

Said de Guzman: “A certain segment of the population is certainly very technically sophisticated.” 

First mover advantage?

The Philippines, though later than much of East Asia in picking up cryptocurrency, would eventually stand out if regulators embrace rather than restrict it.

China and South Korea have placed curbs on certain types of crypto trade. Both banned initial coin offerings in 2017, and China ordered the closure of cryptocurrency exchanges as part of that move. South Korea has at least 21 exchanges.

​Japan is widely seen as Asia’s most liberal place for cryptocurrency. That country, which has let 17 exchanges fully register, overtook China in 2017 as the biggest Bitcoin market in the world with 58 percent of the global volume. Japan declared Bitcoin legal tender in 2017.

The Philippines in its current groove should take a “first mover advantage,” said Kenneth Ameduri, financial analyst and CEO of the crypto-specialized news website Crush the Street in the United States.

“I think the Philippines understand that it’s going to be a very big deal to be involved with cryptocurrency, because it’s going to happen no matter what, and if they’re the ones to treat this capital best, the capital is going to flow there and the other jurisdictions are just going to completely miss out,” Ameduri said.

The Philippines might eventually look harder at the role of cryptocurrency in falsifying tax payments and paying for illegal drugs, de Guzman said. Taxation and drugs are already sticky issues without crypto.

Exchanges contacted for this report declined comment.
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In a twist, China has announced that it has persuaded Malaysia to resume a canceled rail project worth $10.7 billion. The sudden about-face by Kuala Lumpur, which had earlier rejected the Chinese-funded project, will be a big boost for China ahead of a Belt and Road Forum in Beijing later this month, say analysts.

China is hosting its second annual Belt and Road Forum from April 25 to 27 in Beijing. The event is likely to include the heads of state and governments of 40 different countries and officials from 60 others as Beijing tries to win more support for the trillion-dollar infrastructure and investment plan known as the Belt and Road Initiative, or BRI.

In recent months, the initiative has faced tough challenges as Sierra Leone, Bangladesh, Myanmar and Malaysia canceled or reduced the size of previously negotiated deals. Although Malaysia is back on board, it has forced China to accept a 30 percent reduction in the price of the project.

The reworked deal with Malaysia highlights how China is trying to face up to widespread criticism about the financing costs of its projects and concerns expressed by experts and government leaders around the world that the projects are nothing but diplomacy debt traps.

“I think China is trying to make changes. But it is trying to do too much too quickly and with too much skepticism facing it. No wonder it’s having a torrid time,” said Kerry Brown, director of the Lau China Institute at King’s College London.

Analysts said it is likely that the forum will be mostly about optics, but some real deals could be finalized. Given the heavy criticism about the projects, there will be high expectations from participants, which Beijing has said will include 40 heads of states and governments.  

“They will presumably want something more than mere protocol. Even the promise of deals is better than none at all,” Brown said.

Analysts add that, despite the criticism of the plan, which has been loud at times, the BRI has been able to attract dozens of foreign governments and has been backed by institutions like the World Bank because it is offering to build much-needed infrastructure and help foot the cost.

“The reason so many countries are interested in BRI is because China is offering something no one else is and there is genuine demand for what BRI represents,” said Paul Haenle, director of the Carnegie-Tsinghua Center for Global Policy in Beijing.

Still, it has not been easy for Chinese leaders to wade through the skepticism and sometimes strong opposition to the program from the United States’ and China’s neighbor, India. Critics see BRI as China’s attempt to impose financial imperialism on economically weak but strategically located countries. Many have also raised questions because of the lack of transparency surrounding the projects.

Recently however, there have been signs China is modifying the program to suit the needs of its customers, particularly those like Malaysia and Italy, which are not as desperately in need of Beijing’s financial largesse and deep pockets. Italy recently joined the BRI bandwagon after visiting Chinese President Xi Jinping provided the kind of assurances Rome sought.

“Chinese regulators realize they need to be pragmatic if these projects are to be successful, especially where there is local pushback on political and societal levels,” said Andrew Polk, partner at Beijing-based consultancy firm Trivium China.

There are still serious questions about the kind of changes that Beijing is ready to make. Some analysts believe that China might offer better financial terms and stop its practice of flooding foreign projects with Chinese workers; however, they say Beijing is unlikely to make changes in crucial areas like the transparency of deals and Chinese companies involved in overseas projects.

“Beijing could make the terms of deals public, which would be a major signal of change, but no indications of that happening soon,” said Jonathan Hillman, director of the Reconnecting Asia Project at the Center for Strategic and International Studies in Washington.

“Greater transparency would constrain Beijing’s ability to funnel cash through BRI projects to its friends in high places,” he said.

There have been problems even in places where Chinese projects have proven to be successful in terms of implementation. For instance, Chinese companies have ensured the commercial success of the Greek port city of Piraeus. “But its political impact is mixed. Greeks might welcome Chinese investment, but they don’t want China’s environmental or labor practices,” Hillman said.

The U.S. recently described BRI as a “vanity project” and announced it would not send a high-level delegation to the forum. Analysts are wondering if the U.S. will stay away from the meeting altogether.

“The U.S. has made its position clear. It opposes the BRI. Attendance under the current circumstances with the trade war unresolved would be odd,” Brown said.

Haenle said he believes the U.S. should engage with the BRI along with its friends and partners.

“The U.S. is right to point out the flaws in the Belt and Road Initiative, but if it wishes to see them corrected, it must also put forward its own alternatives and refrain from knee-jerk reactions,” he said.
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The latest power outage started another tough week for factory owner Antonello Lorusso in the city of Valencia, once Venezuela’s industrial powerhouse.

For the past month, unprecedented nationwide blackouts paralyzed the factory and the rest of the country, cutting off power, water and cell service to millions of Venezuelans.

Lorusso’s packaging plant, Distribuidora Marina, had already struggled through years of hyperinflation, vanishing client orders, and a flight of employees. Now the situation was worse.

For the whole month of March, Lorusso said, his company produced only its single daily capacity: 100 tonnes of packaged sugar and grains. When Reuters visited on April 8, he was using a generator to keep one of his dozen packaging machines working to fulfill the single order he had received. Power had been on for a few hours, but was too weak to run the machines.

“There is no information, we don’t know if the blackouts will continue or not,” said Lorusso, who has owned the factory for over 30 years. He said the plant had just a day’s worth of power over the previous week.

Power has been intermittent since early March, when the first major blackout plunged Venezuela into a week of darkness.

Electricity experts and the opposition have called the government incompetent at maintaining the national grid. President Nicolas Maduro has accused the opposition and the U.S. government of sabotage.

Venezuela’s industry has collapsed during six years of recession that have halved the size of the economy. What is left is largely outside of the capital Caracas, the only big city that Maduro’s government has excluded from a power rationing plan intended to restrict the load on the system.

In Valencia, a few multinational companies like Nestle and Ford Motor Co cling on. But the number of companies based there has fallen to a tenth of the 5,000 there were two decades ago, when Maduro’s predecessor Hugo Chavez became president, according to the regional business association.

‘The game is over’

The government said on April 4 that the power rationing plan meant Valencia would spend at most 3 hours a day without electricity, but a dozen executives and workers there said outages were still lasting over 10 hours. Generators are costly and can only power a fraction of a business’s operations, they said. Many factories have shut down.

“The game is over. Companies are entering a state of despair due to their inviability,” said an executive of a food company with factories in Valencia, speaking on condition of anonymity.

Industrial companies this year are operating below 25 percent of capacity, according to industry group Conindustria. It estimated companies lost about $220 million during the days in March without power, and would lose $100 million more in April.

Nestle’s factory, which produces baby food, halted during the first blackout in early March and operations again froze two weeks later, with employees sent home until May, according to Rafael Garcia, a union leader at the plant. He blamed the most recent stoppage on very low sales of baby food which cost almost a dollar per package, or about what a person on minimum wage earns in a week.

“My greatest worry is the closure of the factory,” said Garcia, as he sat at a bus stop on Valencia’s Henry Ford avenue, in the city’s industrial outskirts where warehouses sit empty and streets are covered in weeds.

Nestle did not respond to emails seeking comment.

Ford’s plant along the avenue was working at a bare minimum for several months, union leaders said. In December, the carmaker began offering buyouts to staff after it received no orders for 2019, they said. Ford, in December, said it had “no plans to leave the country.”

The outages have idled more than just factories. In the countryside, lack of power has prevented farmers from pumping water to irrigate fields.

Since January, farmers have sown 17,500 hectares of crops, a third of the area seeded last year, and they fear losing the harvest due to the lack of water, according to agricultural associations. In the central state of Cojedes, several rice growers have already lost their crops, farmers said.

“In the rural areas, the blackouts last longer,” said Jose Luis Perez, spokesman for a rice producers federation. Producers of cheese, beef, cured meats and lettuce told Reuters orders had dropped by half in March as buyers worried the food would perish once their freezers lost power in the next blackout.

Back in Valencia, Lorusso was preparing his factory for the new era of scarce power. He has converted one unused truck in his parking lot into a water tank. He plans to sell another to buy a second generator.

“We’ve spent years getting used to things. Then we were dealt this hard blow, and now we’re trying to find ways to cope,” he said.
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