The tiny Marshall Islands is creating its own digital currency in order to raise some hard cash to pay bills and boost the economy.

The Pacific island nation said it became the first country in the world to recognize a cryptocurrency as its legal tender when it passed a law this week to create the digital “Sovereign,” or SOV. In the nation of 60,000, the cryptocurrency will have equal status with the U.S. dollar as a form of payment.

Venezuela last month became the first country to launch its own cryptocurrency when it launched the virtual Petro, backed by crude oil reserves. The Marshall Islands said the SOV will be different because it will be recognized in law as legal tender, effectively backed by the government.

​Israeli partners

The Marshall Islands is partnering with Israeli company Neema to launch the SOV. It plans to sell some of the currency to international investors and spend the proceeds.

The Marshall Islands says the SOV will require users to identify themselves, thus avoiding the anonymity that has kept bitcoin and other cryptocurrencies from gaining support from governments.

“This is a historic moment for our people, finally issuing and using our own currency, alongside the USD (U.S. dollar),” said President Hilda Heine in a statement. “It is another step of manifesting our national liberty.”

The Marshall Islands is closely aligned with the U.S. under a Compact of Free Association and uses the dollar as its currency. Under the compact, the U.S. provides the Marshall Islands with about $70 million each year in assistance. The U.S. runs a military base on Kwajalein Atoll.

Lawmakers passed the cryptocurrency measure Monday following five days of heated debate. It’s unclear when the nation will issue the currency.

Leaders hope the SOV will one day be used by residents for everything from paying taxes to buying groceries.

Initial offering: 24 million

The law states that the Marshall Islands will issue 24 million SOVs in what it calls an Initial Currency Offering. Half of those will go to the government and half to Neema.

The Marshall Islands intends to initially sell 6 million SOVs to international investors. It says it will use the money to help pay the budget, invest in projects to mitigate the effects of global warming, and support those people still affected by U.S. nuclear testing.

The country also intends to hand out 2.4 million SOVs to residents.

Neema Chief Executive Barak Ben-Ezer said the SOV marked a new era for cryptocurrency.

“SOV is about getting rid of the excuses” for not shifting to digital assets, he said in a statement. He said it solved a huge problem with cryptocurrencies, which haven’t previously been recognized as “real” money by banks, regulators and the U.S. Internal Revenue Service.

Some lawmakers expressed concern about the large amount of the new currency that would go to the Israeli company, while others argued the country had urgent needs and the cash would help.

Jehan Chu, the Hong Kong-based co-founder of blockchain platform Kenetic, said he thought it was an amazing move by the Marshall Islands and was the way of the future.

“Physical currency is going by the wayside as an antiquated, obsolete form of transacting,” he said.

But Chu added that he didn’t think the currency would hold much appeal for international investors or be particularly valuable outside the Marshall Islands.

And many people in the Marshall Islands and beyond remain skeptical of cryptocurrencies.

Bank of England Governor Mark Carney this week said a global speculative mania had encouraged a proliferation of the currencies, and that they needed to be held to the same standards as the rest of the financial system.

“The prices of many cryptocurrencies have exhibited the classic hallmarks of bubbles … reliant in part on finding the greater fool,” Carney said in a speech to the Scottish Economics conference in Edinburgh.
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In agitating for a trade war, President Donald Trump may have forgotten William Tecumseh Sherman’s adage that “war is hell.”

The Civil War general’s observation can be apt for trade wars, which may create conditions for a shooting war.

A look at Trump’s spoiling-for-a-fight tweet Friday:

TRUMP: “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!”

THE FACTS: History suggests that trade wars are not easy.

The president’s argument, in essence, is that high tariffs will force other countries to relent quickly on what he sees as unfair trading practices, and that will wipe out the trade gap and create factory jobs. That’s his motivation for announcing that the U.S. will impose tariffs of 25 percent on steel imports and 10 percent on aluminum imports.

The record shows that tariffs, while they may help certain domestic manufacturers, can come at a broad cost. They can raise prices for consumers and businesses because companies pass on at least some of the higher costs of imported materials to their customers. Winning and losing isn’t as simple a matter as tracking the trade gap.

The State Department’s office of the historian looked at tariffs passed in the 1920s and 1930s to protect farms and other industries that were losing their markets in Europe as the continent recovered from World War I. The U.S. duties hurt Europe and made it harder for those countries to repay their war debts, while exposing farmers and consumers in the U.S. to higher prices. European nations responded by raising their tariffs and the volume of world trade predictably slowed by 1934.

The State Department says the tariffs exacerbated the global effects of the Great Depression while doing nothing to foster political or economic cooperation among countries. This was a diplomatic way of saying that the economic struggles helped embolden extremist politics and geopolitical rivalries before World War II.

Nor have past protectionist measures saved the steel industry, as Trump says his tariffs would.

The United States first became a net importer of steel in 1959, when steelworkers staged a 116-day strike, according to research by Michael O. Moore, a George Washington University economist. After that, U.S. administrations imposed protectionist policies, only to see global competitors adapt and the U.S. share of global steel production decline.
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China has warned about the “huge impact” on global trading, if U.S. President Donald Trump proceeds with his plans to impose 25 percent tariffs on imported steel and 10 percent on imported aluminum products.

Wang Hejun, head of China’s commerce ministry’s trade remedy and investigation bureau, said in a statement late Friday the tariffs would “seriously damage multilateral trade mechanisms represented by the World Trade Organization and will surely have huge impact on normal international trade order.”

The Chinese official added, “If the final measures of the United States hurt Chinese interests, China will work with other affected countries in taking measures to safeguard its own rights and interests.”

Allies weigh in

Meanwhile earlier Friday, Canadian Prime Minister Justin Trudeau said Trump’s tariff plans were “absolutely unacceptable.”

Trudeau said Friday he is prepared to “defend Canadian industry.” Canada is the United States’ biggest foreign source of both materials. He warned that the tariffs would also hurt U.S. consumers and businesses by driving up prices.

The European Union was also stung by Trump’s plan, as evidenced by European Commission President Jean-Claude Juncker’s warning that the EU could respond by taxing quintessentially American-made products, such as bourbon whiskey, blue jeans and Harley-Davidson motorcycles.

Juncker told German media Friday that he does not like the words “trade war.” 

“But I can’t see how this isn’t part of warlike behavior,” he said.

Trump had tweeted earlier in the day: “Trade wars are good, and easy to win.”

The director of the World Trade Organization, Roberto Azevedo, responded coolly, saying, “A trade war is in no one’s interests.”

Currency markets 

The currency market responded with a drop in the value of the U.S. dollar against most other major currencies. It ended the day at its lowest level against the yen in two years. The euro gained a half-percent against the dollar Friday.

And the Dow Jones Industrial Average finished the trading week with its fourth decline in as many days, ending at 24,538.06. The Nasdaq and S&P 500, however, rose slightly after a three-day losing streak.

Trump spent Friday defending his threat to impose the tariffs, saying potential trade conflicts can be beneficial to the United States.

A Japanese government official told VOA that Tokyo “has explained several times to the U.S. government our concerns,” but declined to comment further on any ongoing discussions with Washington.

“While we are aware of the president’s statement, we understand that the official decision has not been made yet,” the Japanese official said. “If the U.S. is going to implement any measures, we expect the measures be WTO-rules consistent.”

Trump said Thursday the tariffs of 25 percent on steel and 10 percent on aluminum imports will be in effect for a long period of time. He said the measure will be signed “sometime next week.”

In 2017, Canada, Brazil, South Korea and Mexico accounted for nearly half of all U.S. steel imports. That year, Chinese steel accounted for less than 2 percent of overall U.S. imports.
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Georgia lawmakers’ decision to punish Delta Air Lines for publicly distancing itself from the National Rifle Association was an extraordinary act of political revenge.

By killing a proposed tax break on jet fuel, pro-gun Republicans won a political victory that could pay off in the short term, but other companies won’t soon forget that Georgia allied itself with the NRA over one of its largest private employers, with 33,000 workers statewide.

“When you inject naked politics — and that’s what this is — into the economic equation, I think that it does have the chance of spooking the business community,” said Tom Stringer, a New York-based consultant for the business-advisory firm BDO. “One thing about the business community is that it has a very long memory.”

How it began

The uproar began last Saturday when Delta stopped offering fare discounts to NRA members in the wake of the school massacre in Florida. On Friday, Delta CEO Ed Bastian insisted in a memo to employees that the company was “not taking sides” on gun control and made the decision in hopes of removing itself from the gun debate. He said the company’s “values are not for sale” and “we are proud and honored to locate our headquarters here.”

Delta recently signed a 20-year lease to keep its hub at Hartsfield-Jackson International Airport in Atlanta, and business consultants said other Atlanta-based firms, such as Coca-Cola and UPS, will likely stay put, too. But GOP lawmakers’ willingness to use public money to try to intimidate corporations could damage Georgia’s ability to attract new industry, including Amazon, which recently named metro Atlanta a finalist for its coveted second headquarters.

“I think it’s fair to say that this situation would not be helpful to the state of Georgia in potentially securing the Amazon site,” said Jerry Funaro, Chicago-based vice president for global marketing at TRC Global Mobility, a relocation management company. “They could certainly say that this would be a reason to look elsewhere.”

Amazon didn’t immediately respond to an email seeking comment.

​Stage set with a tweet

Republican Lt. Gov. Casey Cagle, who is running in a crowded primary for governor in May, set the stage for the fight with Delta with a tweet Monday saying conservatives would fight back. He defended the move Friday.

“We cannot continue to allow large companies to treat conservatives differently than other customers, employees and partners,” Cagle wrote in an opinion piece published by The Atlanta Journal-Constitution. “The voters who elected us and believe strongly in our rights and liberties expect and deserve no less.”

Another GOP candidate for governor, Secretary of State Brian Kemp, even suggested using the estimated $38 million the state would save by killing jet fuel tax break to pay for a tax-free “holiday” on purchases of guns and ammunition.

NRA or jobs

Other GOP leaders openly cringed at the combative tone Cagle and others took.

Republican Gov. Nathan Deal, who is term-limited and serving his final year, bemoaned the controversy as an “unbecoming squabble” fueled by election-year posturing. GOP House Speaker David Ralston called it “not one of our finer days” when the firestorm erupted Monday.

Republicans have controlled the governor’s mansion in Georgia since 2003, a deep red streak that makes this year’s GOP gubernatorial nominee a likely favorite in November.

Deal and other governors for decades have made it a priority to ensure Georgia was an attractive location for prospective employers, said Charles Bullock, a political science professor at the University of Georgia. Before the NRA controversy, he said, many GOP lawmakers defended the jet fuel tax break as necessary to protect jobs.

“What this really does is it says, in terms of setting priorities, that taking a stand on the NRA is more significant,” Bullock said. “The jobs thing now is pushed to the back.”

After Delta announced it was cutting ties with the NRA, it took pro-gun Republicans just days to make good on their threats by passing a sweeping tax bill, minus the jet fuel tax break.

Deal, who said an estimated $5.2 billion in overall tax savings was too important to sacrifice, swiftly signed the measure into law Friday. He vowed to keep pursuing the jet fuel exemption as a separate issue.

13 NRA discounts

Delta revealed Friday that the NRA discount that triggered the showdown had barely been used. Offered recently for NRA members flying to the group’s 2018 convention in Dallas, only 13 discounted tickets had been sold, Delta spokesman Trebor Banstetter said.

Delta isn’t the only company to take action since the Feb. 14 slayings of 17 students and educators in Parkland, Florida, by a gunman armed with an AR-15 assault-style rifle. Walmart, Kroger and Dick’s Sporting Goods have tightened their gun sales policies. Meanwhile, MetLife, Hertz and others have joined Delta in ending business ties with the NRA.

The extent of the backlash Georgia might face from businesses is unclear. But firms from outside the South may think twice about Georgia if they see a clash of corporate values on guns and other social issues, said Jon Gabrielsen, a business-strategy consultant who worked 17 years in Georgia before moving recently to Mexico.

“If you’re not there yet, why would you want to subject yourself to that potential grief with what the legislature just pulled?” Gabrielsen said.
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“Absolutely unacceptable” were the words Canadian Prime Minister Justin Trudeau used to describe U.S. President Donald Trump’s statement that he plans to impose 25 percent tariffs on imported steel and 10 percent on imported aluminum products.

Trudeau made the comment Friday, adding that he is prepared to “defend Canadian industry.” Canada is the United States’ biggest foreign source of both materials. He warned that the tariffs would also hurt U.S. consumers and businesses by driving up prices.

The European Union was also stung by Trump’s plan, as evidenced by European Commission President Jean-Claude Juncker’s warning that the EU could respond by taxing quintessentially American-made products, such as bourbon whiskey, blue jeans and Harley-Davidson motorcycles.

Juncker told German media Friday that he does not like the words “trade war.” “But I can’t see how this isn’t part of warlike behavior,” he said.

Trump had tweeted earlier in the day: “Trade wars are good, and easy to win.”

The director of the World Trade Organization, Roberto Azevedo, responded coolly, saying, “A trade war is in no one’s interests.” 

The currency market responded with a drop in the value of the U.S. dollar against most other major currencies. It ended the day at its lowest level against the yen in two years. The euro gained a half-percent against the dollar on Friday.

And the Dow Jones Industrial Average finished the trading week with its fourth decline in as many days, ending at 24,538.06. The Nasdaq and S&P 500, however, rose slightly after a three-day losing streak.

Trump spent Friday defending his threat to impose the tariffs, saying potential trade conflicts can be beneficial to the United States.

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump wrote in a post on the social media site Twitter. “Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore — we win big. It’s easy!” 

A Japanese government official told VOA that Tokyo “has explained several times to the U.S. government our concerns,” but declined to comment further on any ongoing discussions with Washington.

“While we are aware of the president’s statement, we understand that the official decision has not been made yet,” the Japanese official said. “If the U.S. is going to implement any measures, we expect the measures be WTO-rules consistent.” 

China on Friday expressed “grave concern” about the matter. 

Trump said Thursday the tariffs of 25 percent on steel and 10 percent on aluminum imports will be in effect for a long period of time. He said the measure will be signed “sometime next week.” 

In 2017, Canada, Brazil, South Korea and Mexico accounted for nearly half of all U.S. steel imports. That year, Chinese steel accounted for less than 2 percent of overall U.S. imports. 

 William Gallo, Fern Robinson, Wayne Lee contributed to this report
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A tiny Nebraska startup awarded the first border wall construction project under President Donald Trump is the offshoot of a construction firm that was sued repeatedly for failing to pay subcontractors and accused in a 2016 government audit of shady billing practices.

 

SWF Constructors, which lists just one employee in its Omaha office, won the $11 million federal contract in November as part of a project to replace a little more than 2 miles (3.2 kilometers) of a current fence with post-style barriers 30 feet (9.1 meters) high in Calexico, California. The project represents a sliver of the president’s plan that was central to his presidential campaign promise for a wall at the border with Mexico.

 

It remains unclear why SWF was listed on the bid for the wall contract instead of Edgewood, New York-based Coastal Environmental Group, which online government documents list as its owner.

 

Thomas Anderson, an Omaha lawyer who initially represented a subcontractor that sued Coastal in 2011, said he wouldn’t be surprised if it was an attempt to dodge scrutiny of past legal problems. He says such a practice is relatively common in construction projects.

 

“If you kick up a little dust on the trail, it makes the trail harder to follow,” Anderson said.

 

Richard Silva, who is listed in government documents as the primary contact for both SWF and Coastal, did not return numerous phone and email messages left by The Associated Press seeking comment. Messages left with a general voicemail box for Coastal also were not returned.

 

The U.S. Army Corps of Engineers in Fort Worth, Texas, bid the Calexico wall project, according to federal records. The agency told The Associated Press that by Thursday afternoon it would provide information on the process used to vet SWF. It didn’t immediately return a follow-up call Friday seeking that information.

 

In 2011, the federal government sued Coastal on behalf of Anderson’s client as part of a multimillion-dollar lead cleanup project at an EPA Superfund site in northeast Omaha. The lawsuit accused Coastal of failing to pay the subcontractor, Enviroworks Inc., nearly $400,000 in labor and equipment costs and of reneging on a profit-sharing agreement that cheated the subcontractor out of about $1.7 million.

 

Government lawyers said Coastal’s refusal to pay forced the subcontractor to lay off most of its employees. Immediately after employees were notified of the layoffs, the lawsuit alleged, “Coastal hired and used the Enviroworks employees as its own and continued to perform the work that Enviroworks was entitled to do,” the lawsuit alleged.

 

The lawsuit was settled in 2015 for an undisclosed amount.

In 2014, Coastal was again sued by the federal government for failing to pay another subcontractor, SF Marina Systems of Gloucester, Virginia, more than $175,000 for construction of concrete docks at the U.S. Coast Guard facility at Fire Island, New York.

The government said that after repeated requests for payment, Coastal sent SF Marina a photocopy of a check for payment in full, along with a “release and waiver of lien” that Coastal said had to be signed before the check could be sent. But when SF Marina returned the signed release, Coastal still refused to pay and attempted to rely on the signed release to claim SF Marina could not collect on the debt. The lawsuit was settled in 2015, also for an undisclosed amount.

 

A year later, an audit by the U.S. Interior Department found $2 million in questionable spending that should have flagged it as a problem company, but did not.

 

That audit looked at billing by Coastal Environmental for work to clean up two wildlife refuges in the wake of Superstorm Sandy. The report found that Coastal billed the U.S. Fish and Wildlife Service for labor and material, subcontractors, lodging and meals and miscellaneous items without providing supporting documents like timesheets, invoices and receipts.

 

Nancy DiPaolo, with the Interior Department’s Office of the Inspector General, said the department negotiated the repayment of the audit’s findings to $200,000, and Coastal was given five years to pay it back.

 

The audit’s findings required the Interior Department to file a “past performance report” on Coastal that would have flagged it to other government departments, DiPaolo said. But that report was never filed, she said, for reasons she didn’t know.

 

 “It was probably an oversight,” she said.

 

Coastal’s new Omaha company, SWF, is not registered with either the Nebraska Secretary of State’s office or the Nebraska Department of Labor, which is required for any company doing business within the state. Labor department officials are investigating whether SWF violated state registration requirements.
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U.S. President Donald Trump’s threat to impose steep tariffs on steel and aluminum imports sparked concerns of a trade war Friday, with emerging markets trading lower and some world leaders threatening to take retaliatory measures.

Japan’s Nikkei share average fell to a more than two-week low Friday. The Nikkei ended 2.5 percent lower at 21,181.64 points, its lowest closing since Feb. 14.

“Automakers will have to bear the cost, and they may also have to raise prices while auto sales are already sluggish,” said Takuya Takahashi, a strategist at Daiwa Securities. “This isn’t looking good to the auto sector.”

​China, EU, Canada react

China on Friday expressed “grave concern” about the apparent U.S. trade policy but had no immediate response to Trump’s announcement that he will increase duties on steel and aluminum imports.

European Commission President Jean-Claude Juncker denounced Trump’s trade plan as “a blatant intervention to protect U.S. domestic industry.” He said the EU would take retaliatory measures, it Trump implements his plan.

Canada said it would “take responsive measures” to protect its trade interests and workers if the restrictions are imposed on its steel and aluminum products.

Trump said Thursday the tariffs of 25 percent on steel and 10 percent on aluminum imports will be in effect for a long period of time. He said the measure will be signed “sometime next week.”

The trade war talk had stocks closing sharply lower on Wall Street.

The American International Automobile Dealers Association said Trump’s tariff plans would increase prices substantially.

“This is going to have fallout on our downstream suppliers, particularly in the automotive, machinery and aircraft sectors,” said Wendy Cutler, a former U.S. trade official. “What benefits one industry can hurt another. What saves one job can jeopardize another,” she said.

White House press secretary Sarah Huckabee Sanders said the president’s decision “shouldn’t come as a surprise to anyone.” She said Trump had talked about the trade plans “for decades.”

Republicans speak out

Not all of Trump’s fellow Republican politicians agreed with his trade war talk.

Senator Ben Sasse of Nebraska said, “You’d expect a policy this bad from a leftist administration, not a supposedly Republican one.”

A spokesman for House Speaker Paul Ryan said the House majority leader hoped the president would “consider the unintended consequences of this idea and look at other approaches before moving forward.”

Trump posted on Twitter Thursday about trade policy.

At the Thursday meeting, President Trump said the NAFTA trade pact and the World Trade Organization have been disasters for the United States. He asserted “the rise of China economically was directly equal to the date of the opening of the World Trade Organization.”

Trump told officials from steel and aluminum companies that the United States “hasn’t been treated fairly by other countries, but I don’t blame the other countries.”

In 2017, Canada, Brazil, South Korea and Mexico accounted for nearly half of all U.S. steel imports. That year, Chinese steel accounted for less than 2 percent of overall U.S. imports.

President Trump said he has a lot of respect for Chinese President Xi Jinping, and when he was in China, he told President Xi, “I don’t blame you, if you can get away with almost 500 billion dollars a year off of our country, how can I blame you? Somebody agreed to these deals. Those people should be ashamed of themselves for what they let happened.”

Xi’s top economic adviser, Liu He, is set to visit the White House Thursday to meet with top administration officials, including Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Trump’s chief economic adviser Gary Cohn.

A White House official speaking on condition of anonymity told Reuters that they expect a “frank exchange of views” and will focus on “the substantive issues.”

Ryan L. Hass, the David M. Rubenstein Fellow at John L. Thornton China Center and the Center for East Asia Policy Studies at Brookings Institution told VOA he believes in the best-case scenario, Liu’s visit will assure both sides that “they are committed to solving underlying problems in the bilateral trade relationship.” Hass noted, “In such a scenario, both sides would agree on the problems that need to be addressed, the framework for addressing them, and the participants and timeline for concluding negotiations.”

Hass said if Liu’s visit fails to exceed the White House’s expectations, then the probability of unilateral U.S. trade actions against China will go up.

“If the U.S. takes unilateral actions, China likely will respond proportionately, and that could set off a tit-for-tat cycle leading to a trade war,” Hass said.
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Australia’s corporate watchdog is taking mining giant Rio Tinto and two former executives to court over the global miner’s “misleading and deceptive conduct” in reporting the coal reserves of a Mozambique mine purchased for $4 billion.

The Australian Securities and Investments Commission (ASIC) launched the court action Friday against Rio Tinto, former Chief Executive Tom Albanese and former Chief Financial Officer Guy Elliott.

“ASIC alleges that RTL (Rio Tinto Ltd) engaged in misleading or deceptive conduct by publishing statements in the 2011 annual report, signed by Mr. Albanese and Mr. Elliott, misrepresenting the reserves and resources of RTCM (Rio Tinto Coal Mozambique),” the watchdog said in a statement.

Rio Tinto bought the mine in 2011 for $4 billion and wrote off $3.5 billion in loses several years later when it sold the mine. The mining company fired Albanese and Elliott over their involvement with the sale.

ASIC said in a statement, “… by allowing RTL (Rio Tinto Limited) to engage in such conduct, Mr. Albanese and Mr. Elliott failed to exercise their powers and discharge their duties with the care and diligence required by law as directors and officers of RTL.”

ASIC wants the court to fine the two former Rio Tinto executives and bar them from managing corporations “for such periods as the court thinks fit.”

The U.S. Securities and Exchange Commission charged the mining giant and the two executives with fraud last year over similar allegations.

Rio Tinto said last year the U.S. charges were “unwarranted.”

The company did not immediately respond to the Australian charges.
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