China Calls Trump Threat of More Tariffs ‘Blackmail’

China calls President Donald Trump’s threat to slap more tariffs on Chinese exports to the U.S. “extreme pressure and blackmail” and threatens to retaliate.

Beijing reacted Tuesday to Trump’s plan to impose tariffs on another $200 billion of Chinese goods “if China refuses to change its practices.”

“China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology,” a presidential statement said late Monday. “Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong.”

The president has ordered Trade Representative Robert Lighthizer to identify a list of $200 billion in additional Chinese goods subject to a 10 percent tariff — a move that would bring on another round of Chinese penalties on American products.

Trump has already ordered 25 percent tariffs on $50 billion in Chinese products. Those penalties are scheduled to take effect next month and will likely be followed by Chinese countermeasures.

The U.S. has long accused China of stealing U.S. technology secrets, requiring U.S. firms to share intellectual property as a condition for doing business in joint ventures in China. China denies such theft and accuses Washington of “deviating from the consensus reached by both parties.”

The Director of White House National Trade Council, Peter Navarro, told reporters Tuesday the White House has given China every opportunity to change its “aggressive behavior.”

Trump and Chinese President Xi Jinping held a summit last year at Trump’s Mar-a-Lago resort. But that meeting and several rounds of trade talks between high-level officials in the past year have not yielded any progress.

“It is important to note here that the actions President Trump has taken are purely defensive in nature. They are designed to defend the crown jewels of American technology from China’s aggressive behavior,” Navarro contended. 

U.S. stock market tumbled on Tuesday following the latest salvos between Washington and Beijing. The Dow Jones Industrial Average lost more than 1.1 percent at the close of trading and other major indexes posted losses as well. 

But Navarro dismissed concerns about how the administration’s trade policy would affect the financial markets and global economy, saying it will have only a “relatively small effect.” He argued the U.S. steps will ultimately benefit the country and global trading system. 

Navarro did not reveal plans for further trade talks between Washington and Beijing, but added, “our phone lines are open, they have always been open.”

Trump has said he has an excellent relationship with Chinese President Xi Jinping, but has also said “the United States will no longer be taken advantage of on trade by China and other countries in the world.”

He has imposed tariffs on aluminum and steel imports from Canada, Mexico, and the European Union and is feuding over trade with some of the United States’ closest allies.

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Trump’s Tariffs: What They Are and How They Would Work

Is this what a trade war looks like?

The Trump administration and China’s leadership have threatened to impose tariffs on $50 billion of each other’s goods. Trump has proposed imposing duties on $400 billion more if China doesn’t further open its markets to U.S. companies and reduce its trade surplus with the United States. China, in turn, says it will retaliate.

In recent years, tariffs had been losing favor as a tool of national trade policy. They were largely a relic of 19th and early 20th centuries that most experts viewed as mutually harmful to all nations involved. But President Donald Trump has restored tariffs to a prominent place in his self-described America First approach.

Trump enraged U.S. allies Canada, Mexico and the European Union earlier this month by slapping tariffs on their steel and aluminum shipments to the United States. The tariffs have been in place on most other countries since March.

Trump has also asked the U.S. Commerce Department to look into imposing tariffs on imported cars, trucks and auto parts, arguing that they pose a threat to U.S. national security.

Here is a look at what tariffs are, how they work, how they’ve been used in the past and what to expect now.

Are we in a trade war?

Economists have no set definition of a trade war. But with the world’s two largest economies aggressively threatening each other with punishing tariffs, such a war appears perilously close. All told, the White House has threatened to hit $450 billion of China’s exports to the U.S. with punitive tariffs. That’s equivalent to 90 percent of the goods that China shipped to the United States last year.

It’s not uncommon for countries — even close allies — to fight over trade in specific products. The United States and Canada, for example, have squabbled for decades over softwood lumber.

But the U.S. and China are fighting over much broader issues, such as China’s requirements that American companies share advanced technology to access China’s market, and the overall trade deficit the U.S. has with China. So far, neither side has shown any sign of bending.

What are tariffs?

Tariffs are a tax on imports. They’re typically charged as a percentage of the transaction price that a buyer pays a foreign seller. Say an American retailer buys 100 garden umbrellas from China for $5 apiece, or $500. The U.S. tariff rate for the umbrellas is 6.5 percent. The retailer would have to pay a $32.50 tariff on the shipment, raising the total price from $500 to $532.50.

In the United States, tariffs — also called duties or levies — are collected by Customs and Border Protection agents at 328 ports of entry across the country. Proceeds go to the Treasury. The tariff rates are published by the U.S. International Trade Commission in the Harmonized Tariff Schedule, which lists U.S. tariffs on everything from dried plantains (1.4 percent) to parachutes (3 percent).

Sometimes, the U.S. will impose additional duties on foreign imports that it determines are being sold at unfairly low prices or are being supported by foreign government subsidies.

Do other countries have higher tariffs than the United States?

Most key U.S. trading partners do not have significantly higher average tariffs. According to an analysis by Greg Daco at Oxford Economics, U.S. tariffs, adjusted for trade volumes, on goods from around the world average 2.4 percent, above Japan’s 2 percent and just below the 3 percent for the European Union and 3.1 percent for Canada.

The comparable figures for Mexico and China are higher: Both have higher duties that top 4 percent.

Trump has complained about the 270 percent duty that Canada imposes on dairy products. But the United States has its own ultra-high tariffs — 168 percent on peanuts and 350 percent on tobacco.

What are tariffs supposed to accomplish?

Two things: Raise government revenue and protect domestic industries from foreign competition. Before the establishment of the federal income tax in 1913, tariffs were a big money raiser for the U.S. government. From 1790 to 1860, for example, they produced 90 percent of federal revenue, according to Clashing Over Commerce: A History of US Trade Policy by Douglas Irwin, an economist at Dartmouth College. By contrast, last year tariffs accounted for only about 1 percent of federal revenue.

In the fiscal year that ended Sept. 30, the U.S. government collected $34.6 billion in customs duties and fees. The White House Office of Management and Budget expects tariffs to fetch $40.4 billion this year.

Those tariffs are meant to increase the price of imports or to punish foreign countries for committing unfair trade practices, like subsidizing their exporters and dumping their products at unfairly low prices. Tariffs discourage imports by making them more expensive. They also reduce competitive pressure on domestic competitors and can allow them to raise prices.

Tariffs fell out of favor as global trade expanded after World War II.

The formation of the World Trade Organization and the advent of trade deals like the North American Free Trade Agreement among the U.S., Mexico and Canada reduced tariffs or eliminated them altogether.

Why are tariffs making a comeback?

After years of trade agreements that bound the countries of the world more closely and erased restrictions on trade, a populist backlash has grown against globalization. This was evident in Trump’s 2016 election and the British vote that year to leave the European Union — both surprise setbacks for the free-trade establishment.

Critics note that big corporations in rich countries exploited looser rules to move factories to China and other low-wage countries, then shipped goods back to their wealthy home countries while paying low tariffs or none at all. Since China joined the WTO in 2001, the United States has shed 3.1 million factory jobs, though many economists attribute much of that loss not to trade but to robots and other technologies that replace human workers.

Trump campaigned on a pledge to rewrite trade agreements and crack down on China, Mexico and other countries. He blames what he calls their abusive trade policies for America’s persistent trade deficits — $566 billion last year. Most economists, by contrast, say the deficit simply reflects the reality that the United States spends more than it saves. By imposing tariffs, he is beginning to turn his hard-line campaign rhetoric into action.

Are tariffs a wise policy?

Most economists — Trump’s trade adviser Peter Navarro is a notable exception — say no. The tariffs drive up the cost of imports. And by reducing competitive pressure, they give U.S. producers leeway to raise their prices, too. That’s good for those producers — but bad for almost everyone else.

Rising costs especially hurt consumers and companies that rely on imported components. Some U.S. companies that buy steel are complaining that Trump’s tariffs put them at a competitive disadvantage. Their foreign rivals can buy steel more cheaply and offer their products at lower prices.

More broadly, economists say trade restrictions make the economy less efficient. Facing less competition from abroad, domestic companies lose the incentive to increase efficiency or to focus on what they do best.

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Dreaming of Farming Empire, Kazakhs Seek Management Tips from Genghis Khan

Kazakhstan is taking management lessons from warrior-emperor Genghis Khan as it seeks to conquer neighboring countries’ food markets, Deputy Agriculture Minister Arman Yevniyev said Tuesday.

The Central Asian nation, whose territory was once part of the Mongol Empire, wants to more than double exports of foodstuffs and other agricultural products over the next five years, Yevniyev told a government meeting.

He said meat production was a particularly promising area that could generate up to $2.6 billion in annual export revenue and presented his ministry’s plans to overhaul the industry’s management and subsidy system.

“Genghis Khan can be considered the founder of project management,” he said unexpectedly, livening up the meeting which was broadcast online.

Yevniyev then recalled the organizational structure of the Mongol army, divided into three wings and units of tens, hundreds, thousands and tens of thousands.

“Using this approach, Genghis Khan conquered half of the world with his army,” he said. “We will conquer [markets] with meat and other agricultural products.”

According to Yevniyev’s presentation, the biggest potential markets for Kazakh meat are China, Iran, Saudi Arabia, Vietnam and Russia — which are, coincidentally, the directions of the medieval Mongol conquest.

Breeding livestock was the main occupation of the ancestors of today’s Kazakhs — when they were not busy shooting arrows from horseback at opposing armies. Yevniyev said this nomadic heritage was another competitive advantage.

Prime Minister Bakytzhan Sagintayev urged caution with the use of bellicose metaphors.

“You’ve mentioned Genghis Khan — I hope we do not scare our neighbors,” he said with a laugh.

The Mongol ruler is a revered figure in the former Soviet republic of 18 million, where a significant number of people trace their lineage directly to him.

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US Patent and Trademark Office Issues 10-Millionth Patent

The 10 millionth patent has been issued in the United States, almost 228 years after President George Washington signed the first one.

The United States Patent and Trademark Office issued the newest patent Tuesday to the Raytheon Company, a defense contractor. Raytheon received the patent based on an invention by Joseph Marron, who works for the firm as an optical engineer.

Marron created a system, known as LADAR, which improves laser detection and ranging. Patent officials say it has applications in areas that include autonomous vehicles, medical imaging devices, military defense systems and space and undersea exploration. Raytheon says the concept involves delivering real time data from a laser radar.

“Innovation has been the lifeblood of this country since its founding,” Commerce Secretary Wilbur Ross said in a statement issued by the patent office. “Our patent system’s importance to the daily lives of every American has never been greater. Given the rapid pace of change, we know that it will not take another 228 years to achieve the next 10-million-patent milestone,” he added.

The real deal

“The issuance of patent 10 million is an exceptional milestone,” PTO spokesman Paul Fucito told VOA. “It is a timely and relevant opportunity to promote the importance of innovation, the ubiquity of intellectual property, and the history of America’s patent system.”

For his part, Marron said in a statement the 10 millionth patent is “equivalent to a guy who buys a lottery ticket every month.” He added, “Eventually, it hits.”

Back in March, at the South by Southwest Interactive Festival, patent officials revealed a new cover design to mark the issuance of the milestone license.

Among the 10 million patents are inventions by Thomas Edison, Henry Ford and Apple founder Steve Jobs. For every well-known inventor, however, there are many other, less recognizable individuals whose innovative products have greatly affected our world.

Fifteen of those trailblazing men and women recently were honored for their unique contributions, in a special ceremony at the National Inventors Hall of Fame Museum in Alexandria, Virginia.

On July 31, 1790, President Washington signed the first patent. The patent office said the document was issued for “a process of making potash, an ingredient used in fertilizer.”

VOA’s Julie Taboh contributed to this report.

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Russia’s Record-Breaking $15 Billion World Cup Price Tag: What Does It Buy?

The World Cup in Russia is the most expensive ever – with the official price tag around $15 billion. The result: several huge new stadiums, railroads and upgraded airports, plus the chance to reboot Russia’s global image. So, will the tournament represent a good value for Russians? As Henry Ridgwell reports from Moscow, the government appears to have used the World Cup to bury some bad economic news.

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China Warns US of ‘Countermeasures’ Against Possible New Tariffs

China says it will take appropriate countermeasures if the United States follows through with additional tariffs on Chinese goods. 

U.S. President Donald Trump announced Monday that he had asked the U.S. trade representative to identify a list of products to subject to 10 percent tariffs on $200 billion worth of goods. The president said the move was in retaliation to Beijing’s decision to impose tariffs on $50 billion in U.S. goods, matching the first set of tariffs imposed by Trump.

In a statement issued Tuesday, China’s commerce ministry criticized Trump’s latest move as nothing more than “extreme pressure and blackmail” that “deviates from the consensus reached by both sides” during multiple talks. 

“China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology,” Trump said in his statement Monday. “Rather than altering those practices, it is now threatening United States companies, workers and farmers who have done nothing wrong.”

He threatened even more tariffs if Beijing again hits back with tit-for-tat duties on American goods.

Trump’s comments came hours after Secretary of State Mike Pompeo told a Detroit business meeting that China was engaging in “predatory economics 101” and an “unprecedented level of larceny” of intellectual property.

He said China’s recent claims of “openness and globalization” are “a joke.” 

Pompeo said he raised the issue last week in a meeting with Chinese President Xi Jinping, saying, “I reminded him that’s not fair competition.”

Trump said he has an “excellent relationship” with Xi, “but the United States will no longer be taken advantage of on trade by China and other countries in the world.”

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Trump’s Tariff War Threatens to Erode Support of Farmers

President Donald Trump’s tariff battle with key buyers of U.S. apples, soybeans and corn threatens the support of some of his biggest backers – U.S. farmers now seeing their livelihoods in jeopardy.

Farmers overwhelmingly supported Trump in the 2016 election, welcoming how he championed rural economies and vowed to repeal estate taxes that often hit family farms hard.

Now those same farmers are seeing crop prices fall and export markets shrink after Trump’s tariffs triggered a wave of retaliation from buyers of U.S. apples, cheese, potatoes, bourbon and soybeans.

“A lot of people in the ag community were willing to give President Trump the benefit of the doubt,” said Brian Kuehl, executive director of Farmers for Free Trade. “The reason you are seeing people increase the pressure now is because thepressure is increasing on them. Now the impact is really starting to hit. It is not something you can just take lightly.”

His group, along with the U.S. Apple Association, will start running television ads on Tuesday attacking Trump’s tariffs in Pennsylvania and Michigan, apple-growing states that could play a role in which party controls Congress after the November elections.

Trump, a Republican, has said farmers will not become a casualty in any trade war, floating ideas like subsidizing those hurt by tariffs.

Even before trading partners imposed tariffs, U.S. farmers were facing a tough year. Net farm income was expected to fall 6.7 percent to $59.5 billion in 2018, according to the U.S. Agriculture Department.

Now an even more bearish tone hangs over agricultural markets due to trade spats with NAFTA partners Canada and Mexico, plus mounting tensions with China and Europe.

After Trump imposed tariffs on steel and aluminum imports, Mexico imposed a 20 percent tariff on imports of U.S. apples, potatoes and cranberries.

Last week, Trump imposed $50 billion in tariffs on China.

Beijing retaliated with a 25 percent tariff on U.S. soybeans and other goods starting July 6, sending soybean futures to a two-year low and throwing into doubt forecasts for U.S. soybean exports to rise 11 percent this marketing year.

China’s tariffs could contribute to a 30 percent drop in income for Ohio corn and soybean farmers this year, said Ben Brown, manager of an Ohio State University farm program.

If the tariffs stay in place, net farm income in Ohio could drop as much as 63 percent in 2019, he said.

Last week, the American Soybean Association said it was disappointed and for weeks had implored the Trump administration to “find non-tariff solutions to address Chinese intellectual property theft and not place American farmers in harm’s way.”

The group added that the White House has ignored its requests for meetings.

The timing also hurts farmers, as it is too late in the season for farmers to adjust planting plans.

“Crops are in the ground and will soon be ready for harvest,” said Casey Guernsey with Americans For Farmers and Families. “We need the certainty of knowing that there will be market availability in order to sell them.”

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South American Trade Bloc Eyes New Deals as EU Talks Drag On

Leaders of South American trade bloc Mercosur pushed for trade deals with Asian and other Western Hemisphere countries during a summit on Monday, as roadblocks remained in talks with the European Union (EU) despite optimism earlier this year.

European officials said earlier this month that talks for a long-delayed trade agreement with the Mercosur bloc of Argentina, Brazil, Paraguay and Uruguay were nearing a close.

But Uruguay’s President Tabare Vazquez, who assumed the bloc’s rotating presidency, criticized delays in negotiations.

“We are not prepared to waste time in eternal negotiations,” Vazquez said in a speech. “Nor are we prepared to sign a watered-down version.”

Vazquez reiterated that Uruguay was keen to sign a free-trade deal with China, its top trade partner, even if it had to sign it alone rather than as part of Mercosur. China is the main market for many of the raw materials the bloc produces, but its manufacturing exports also compete with domestic industries.

The last round of EU-Mercosur talks in April ended with limited progress and finger-pointing about who was holding up a deal. Key gaps remain on how far to open each other’s markets to industrial goods and farm products, such as Latin American beef and EU cars and dairy.

The Mercosur countries emphasized in a joint statement on the need to “have the political support from both parties” to reach a deal.

“We should not abandon the idea of this alliance,” Brazilian President Michel Temer told reporters. “Closing the doors now would impede negotiations which recently have had reasonable success.”

Temer also pushed for trade talks with the neighboring Pacific Alliance countries of Chile, Colombia, Mexico and Peru, which are generally far more open to international trade than their Mercosur counterparts. A meeting between the two blocs is scheduled for next month.

In the joint statement, the bloc described recently launched trade talks with Canada and South Korea as an “assertive response against protectionist tendencies.” Argentine Vice President Gabriela Michetti also called on the bloc to “advance quickly” in talks with Singapore, India and North Africa.

In separate statements, the Mercosur members also condemned violence in Nicaragua, where a wave of anti-government protests have left 170 dead. The bloc also expressed concern about the humanitarian and migrant crisis in Venezuela, which was formerly a Mercosur member but got kicked out last year.

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Laos Announces Another Controversial Dam on the Mekong

The Laos government has announced plans for a fourth major dam on the Mekong mainstream just months after the feasibility of another of its hydroelectric projects was thrown into question by a delayed power deal.

Laos notified the Mekong River Commission (MRC) last week of its intention to build a 770 megawatt dam at Pak Lay in Xayaburi province, where it has already constructed another highly controversial mainstream dam.

The notification follows Thailand’s decision in February to delay signing a power purchase agreement for Laos’ 912 megawatt Pak Beng. Bangkok is said to be reconsidering its energy strategy in light of a reported electricity surplus.

Maureen Harris, Southeast Asia director at International Rivers, an environmental watchdog group, said the government’s notification on the Pak Lay dam is unusual.

“Firstly, the construction on the project in scheduled to start in 2022, which is over three years away. So that’s initiating the process significantly sooner than has been the case for the other projects that have gone through the procedure to date,” Harris said.

“There’s also no developer or power purchaser who has been identified in the notification,” she added.

Impact concerns

Harris suspects there could be some concerns in Laos over the environmental impact of the dams. 

At a major summit in Cambodia in April, MRC representatives presented the findings of a landmark $4.7 million, scientific assessment of planned developments on a river crucial to fish stocks and food supplies across Southeast Asia. 

That study found that if current development plans went ahead, 39 to 40 percent of the entire fish biomass — about $4.3 billion worth — would be wiped out by 2040 in the Lower Mekong Basin, where about 200 million people rely on the river.

Harris suggested the notification looked like a purposeful distraction from unresolved questions over Laos’ existing dams, how to apply the MRC Council Study’s findings and proposed reforms to the prior notification process itself.

The MRC secretariat wrote in an emailed response to VOA that the fact that Laos had engaged in notification and consultation on all its mainstream projects demonstrates it has not disregarded such concerns.

“One shall recognize Laos’ constructive intent in submission of the project to the prior consultation instead of taking it as inflaming tensions, witnessing a case in the modern time when one state threatens to bomb a dam being built in the upstream area,” the secretariat wrote, invoking a hypothetical situation.

“The submission is to prevent barbarian conflicts that the [sic] mankind experienced in its past,” it wrote.

Te Navuth, secretary general of the Cambodia National Mekong Committee, echoed those sentiments, saying that though all of Laos’ mainstream dams raised serious issues, those concerns are being handled through the established MRC mechanisms.

“The first one was a serious case already. So our concern is a concern overall on fish migrations, on sediment, blocking flow, river regime changing, these more common concerns.

“We could not say yes or no to the projects directly, so we have to talk to each other first using the findings from the council study, from any other sources that we have,” he said.

Nuanlaor Wongpinitwarodom, director of Thailand’s Mekong Management Bureau, said she could not comment until she had seen the Laos government submission while representatives of Vietnam’s National Mekong Committee did not respond to VOA inquires.

The four member countries of the MRC — Cambodia, Thailand, Vietnam and Laos — will now have six months to review the Laos government proposal for Pak Lay and urge strategies to mitigate its impacts but have no authority to stop it being constructed.

Economically viable?

Conservationists and renewable energy proponents at the April MRC summit heralded the Pak Beng power purchase delay as a “tipping point” in the transition from hydropower to renewables such as solar and wind.

It came after a January report from the International Renewable Energy Agency found the so-called “levelized” price of solar generated electricity had plummeted by 73 percent from 2010 to 2017, predicting the cost would halve again by 2020 to become cheaper than hydropower competitors.

Pak Lay would not come online until 2029, and the projected cost of the dam is thus far not known.

Han Phoumin, a senior energy economist at the Economic Research Institute for ASEAN and East Asia in Jakarta, said for now, hydro remains a more cost-competitive option, especially given its capacity to provide baseload power and comparative ease of integration into existing infrastructure.

“But if the timeline’s until 2029, I think the development of storage for solar and wind could be viable. In that case, I think it will provide a very important role as baseload power. In that case, I think they could, to some point, beat the hydro,” Phoumin said.

Selling the power generated by Pak Lay would not be a problem, he said, given that energy demand in the region is expected to increase over that time frame by about two to three times while ASEAN grid interconnectivity will continually expand to available markets.

Securing upfront investment first though might be another story.

“The investor must have very strong backup already, perhaps we need to explore because the project cannot go ahead without a strong kind of PPA (power purchasing agreement) or off-taker agreement,” he said.

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Ukraine ‘Corruption Park’ Shows Ill-Gotten Gains

A pop-up “Corruption Park” has opened in Ukraine to highlight the scale of the problem with interactive exhibits and displays of ill-gotten gains including a $46,000 crystal falcon.

One of the first things visitors see in the EU-funded show is a tent shaped like the gold loaf of bread found in the house of ex-president Viktor Yanukovych after he fled Ukraine in 2014.

Elsewhere, they can inspect a $300,000, limited-edition BMW seized from a corrupt official, and a copy of a 8-million-euro chandelier that, the display says, could have paid for a family’s electricity bill for 64,000 years.

In another tent, visitors lie back in a four-poster bed and watch a multimedia film of the imagined nightmares of a guilty government functionary.

The EU Anti-Corruption Initiative, which staged the show in Kiev’s botanical gardens, said it was meant to show the scale of corruption in Ukraine, and what it costs governments and citizens.

Ukraine’s Western-backed government has accused Yanukovych and his pro-Russian administration of widespread abuses and excesses.

But activists have also accused the current authorities of failing to crack down on graft, which is estimated to cost the country about 2 percent of its economic growth, according to the International Monetary Fund.

“For the kids, it’s a good example and revealing about the scale it all happens at,” Kyiv resident Lyuba said, as she queued with her children to don goggles and join a virtual reality anti-corruption investigation.

‘Corruption has taken so much’

The chandelier appears in a mock-up of an official’s room, decked out with the fruits of his corruption.

Other exhibits explain different schemes used for illegal enrichment.

“Corruption concerns everyone. This is one of the main ideas and goals of the project – to explain the direct relation between top level corruption and ordinary Ukrainians,” said Volodymyr Solohub, spokesman for the EU Anti-Corruption Initiative, which paid for the 140,000 euro ($162,000) park.

“A lot of people just come out disappointed that corruption has taken so much from the country,” he said.

One tent called ‘The Fight’ explains what the current authorities have done to combat graft, including the establishment of anti-corruption agencies.

Depicting the various government bodies as pieces in a puzzle, the exhibit illustrates that there is one missing piece: an independent court dedicated to prosecuting corruption cases, whose creation has been repeatedly pushed back.

Earlier in June, parliament voted to establish the court, but activists have said the law contains an amendment that would undermine the court’s effectiveness and Ukraine’s commitments to external backers such as the International Monetary Fund.


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