For generations, farmers planted the lush earth of Awedai and nearby areas in eastern Ethiopia with coffee trees, earning a livelihood from a crop that is now the country’s main export.

But the centuries-long practice is now being abandoned in favor of khat, a leafy plant chewed as a stimulant in the Horn of Africa and the Arabian Peninsula.

“Coffee comes only once a year. But you can harvest khat twice a year,” said Jemal Moussa, a 45-year-old farmer and father of six who depends on the narcotic leaf for income. “Khat is much more useful.”

He said it was in the early 2000s that farmers in the Awedai area started planting khat as its popularity rose and coffee prices remained stagnant.

One kg of coffee sells for between 50 and 60 birr. A bunch of khat, while not measured in kilograms, goes for 100 birr. Jemal said by this year, the entire economy of Awedai, a small town 35 km outside the ancient city of Harar, relied on the leaf.

Trucks piled with khat head out of the town every 30 minutes, dispersing their produce to the nearby Ethiopian Somali Region and Hargeisa, in the neighboring semi-autonomous region of Somaliland.

Illegal in several Western nations, the leaf is immensely popular in the region, giving the chewer a mild amphetamine-like high.

In addition to cash incentive of khat, coffee growing is being affected by dwindling forest coverage as well as drought.

Farmers believe the characteristic flavor of Ethiopian coffee is derived from growing it in the shade of larger trees — leaving it vulnerable if trees are stunted or removed.

And in 2015/16, a drought induced by the El Nino phenomenon — the warming of surface sea temperatures in the Pacific — ravaged the country’s east, before below average autumn rains in the southern and southeastern parts of the country led to a new drought in lowland pastoralist areas the following year.

Indeed, some 5.6 million people required emergency food assistance in the country in 2017.

“The harvesting is already delayed by three and a half weeks. By now we would have processed 85-plus percent. But now we have not even picked that much as you can see,” said Aman Adinew, chief executive of Metad Agricultural Development, which processes coffee in Yirgacheffe in southern Ethiopia.

Yirgacheffe is one of the best known coffee brands for Africa’s biggest producer of the bean.

“The coffee is still green on the tree — it needs rain to turn red. We are hoping it comes soon,” said Aman. “But if this trend continues, it is going to adversely impact the farmers and businessmen like us the growers like us and the country.”

While coffee is heavily dependent on rain, Khat needs less, making it a more attractive option for some farmers.
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A United Nations agency said on Tuesday an “unjust” U.S. financial and trade embargo on Cuba had cost the country’s economy $130 billion over nearly six decades, coming up with the same estimate as the island’s communist government.

Although many U.S. allies join Washington in criticizing Cuba’s one-party system and repression of political opponents, the United States has lost nearly all international support for the embargo since the collapse of the Soviet Union.

The U.N. has adopted a non-binding resolution calling for an end to the embargo with overwhelming support every year since 1992. In a report ahead of the vote last year, Cuba estimated total damage from the embargo at $130 billion.

“This country which welcomes us today .. is testing its own ways to face the brutal human costs that it has sustained during an unjust blockade,” the head of the U.N.’s regional economic body for Latin America, ECLAC, Alicia Barcena told its biennial meeting in Havana on Tuesday.

“We evaluate it every year as an economic commission and we know that this blockade costs the Cuban people more than $130 billion at current prices and has left an indelible mark on its economic structure,” she said, without detailing how the organization came to that estimate.

After agreeing to a historic U.S.-Cuban detente in 2014, former U.S. President Barack Obama eased the embargo, which was fully put into place in 1962. But U.S. President Donald Trump last year tightened travel and trade restrictions again. Only the U.S. Congress can lift it in full.

“Despite the difficulties the Cuban economy is faced with, particularly due to the intensification of the blockade imposed on Cuba… we will continue to focus on the development goals set,” Cuban President Miguel Diaz-Canel said in his opening remarks at the meeting, attended also by U.N. Secretary-General Antonio Guterres.

Cuba’s Soviet-style, centralized economy has grown just 2.4 percent on average per year over the past decade, official statistics show, much less than the 7 percent annual expansion the government has estimated it needs in order to develop.

Cuba hoped market reforms introduced in the last decade would boost growth, but they have so far borne mixed results.

The ruling Communist Party earlier this year admitted implementation had been harder than expected.

ECLAC will support Cuba’s reform program, Barcena said.
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President Donald Trump will allow year-round sales of renewable fuel with blends of 15 percent ethanol as part of an emerging deal to make changes to the federal ethanol mandate.

 

Republican senators and the White House announced the deal Tuesday after a closed-door meeting, the latest in a series of White House sessions on ethanol.

 

The Environmental Protection Agency currently bans the 15-percent blend, called E15, during the summer because of concerns that it contributes to smog on hot days. Gasoline typically contains 10 percent ethanol. Farm-state lawmakers have pushed for greater sales of the higher ethanol blend to boost demand for the corn-based fuel.

 

Iowa Sen. Chuck Grassley called the agreement good news for farmers and drivers alike, saying it would increase ethanol production and consumer choice at the pump.

 

Texas Sen. Ted Cruz said the deal will save the jobs of thousands of blue-collar workers at refineries in Texas, Pennsylvania and other states.

 

“Terrific final decision from @POTUS meeting,” Cruz tweeted. “This is a WIN-WIN for everyone.”

 

The decision allowing E15 to be sold year-round will provide “relief to refiners” and “protect our hardworking farmers and refinery workers,” White House spokeswoman Lindsay Walters said. “The president is satisfied with the attention and care that all parties devoted to this issue.”

 

Trump met Tuesday with Grassley, Cruz, Iowa Sen. Joni Ernst and Pennsylvania Sen. Pat Toomey, as well as EPA Administrator Scott Pruitt and Agriculture Secretary Sonny Perdue.

 

The EPA oversees the decade-old Renewable Fuel Standard, commonly known as the ethanol mandate, which sets out how much corn-based ethanol and other renewable fuels refiners must blend into gasoline. The program’s intent was to address global warming, reduce dependence on foreign oil and bolster the rural economy by requiring a steady increase in renewable fuels over time.

 

The mandate has not worked as intended, and production levels of renewable fuels, mostly ethanol, routinely fail to reach minimum thresholds set in law.

 

Environmental groups criticized the deal, saying it would worsen air pollution during summer months.

 

“Waiving clean-air standards at the behest of one favored industry would not only set a precedent for bad policy, it could cost lives,” a coalition of environmental groups said in a statement.

 

Ernst said allowing year-round sale of E15 “will drive up domestic ethanol production and consumption” while helping to “maintain already low prices” for fuel credits that oil refiners must buy if they can’t blend ethanol into their fuels.

 

She and Grassley also said they were encouraged that the Trump administration will take a closer look at “hardship” waivers that have been granted to small refineries, a practice they say has hurt biofuels and undermined the RFS.

 

The EPA has reportedly granted a waiver to a refinery owned by billionaire Carl Icahn, a former Trump adviser, as well as other small refineries. The agency has not disclosed which refineries received the waivers, saying it did not want to reveal private business information.

 

Cruz said the president also agreed to consider his proposal to include fuel credits for ethanol that is produced domestically and exported. The proposal is meant to make it easier for the industry to meet annual sales volumes required under the renewable-fuel mandate.

 

“This is good for farmers, refiners and America,” Cruz said in a statement.

 

But the Renewable Fuels Association, an industry group, said allowing exports to qualify for RFS compliance could dramatically reduce domestic demand and result in retaliatory trade barriers from countries that import U.S. ethanol.

 

The group’s president, Bob Dinneen, called the export idea a “disgrace” and said ethanol producers and farmers would bear the brunt of any retaliatory tariffs.
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Sub-Saharan African nations are at growing risk of debt distress because of heavy borrowing and gaping deficits, despite an overall uptick in economic growth, the International Monetary Fund said Tuesday.

The sober assessment came as African countries continue to tap international debt markets and issue record levels of debt in foreign currencies, spurred on by insatiable investor demand for yields.

“What really we’re concerned about is the pace of increase, rather than the average,” IMF Africa Director Abebe Aemro Selassie told Reuters at the launch of its economic outlook for the region in Accra.

“What we’re calling for right now is that those countries are going to need to go through fiscal consolidation,” he said, adding that oil producers and other resource-dependent economies were seeking the sharpest growth in their debt loads.

The Fund projected the rate of economic expansion would rise to 3.4 percent this year, up from 2.8 percent in 2017, boosted by global growth and higher commodity prices.

Slower growth in South Africa and Nigeria — the continent’s two largest economies — weighed on the region-wide average, but the IMF expects growth to pick up in around two-thirds of African nations. However, under current policies, that rate is expected to plateau below 4 percent over the medium term.

Growth seen slowing

Meanwhile, around 40 percent of low-income countries in the region are now in debt distress or at high risk of it, the IMF report said. And refinancing that debt could soon become more costly.

“The current growth spurt in advanced economies is expected to taper off, and the borrowing terms for the region’s frontier markets will likely become less favorable … which could coincide with higher refinancing needs for many countries across the region,” it said.

African governments issued a record $7.5 billion in sovereign bonds last year, 10 times more than in 2016. And they have issued or plan to issue over $11 billion in additional debt in the first half of 2018 alone, the report said.

Foreign currency debt increased by 40 percent from 2010-13 to 2017 and now accounts for about 60 percent of the region’s total public debt on average, IMF data showed. Average interest payments, meanwhile, increased from 4 percent of expenditures in 2013 to 12 percent in 2017.

Six countries — Chad, Eritrea, Mozambique, Congo Republic, South Sudan and Zimbabwe — were judged to be in debt distress at the end of last year. And the IMF’s ratings for Zambia and Ethiopia were changed from moderate to “high risk of debt distress.”

The IMF conceded that Africa’s enormous needs will continue to demand heavy investments to build infrastructure and social development. But to do so while avoiding the risk of a debt trap, the continent, which currently has the lowest revenue-to-GDP ratio in the world, will need to become more self-reliant.

“Borrowing to finance spending is part of the macroeconomic policy tool kits which all countries use,” Selassie said. “But over the medium to long-term they have to rely more on domestic revenues, tax revenues to address their development spending needs.”
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Soon after presenting his credentials to the German president, the new U.S. ambassador to Germany, Richard Grenell, told German companies to start leaving Iran.

“As Donald Trump said, U.S. sanctions will target critical sectors of Iran’s economy. German companies doing business in Iran should wind down operations immediately,” Grenell tweeted Tuesday.

His tweet came as U.S. President Donald Trump announced he is pulling the United States out of the nuclear deal with Iran and reimposing sanctions.

Businesses continuing to work with Iran could be subject to U.S. penalties.

Germany is one of the signatories, and Chancellor Angela Merkel believes the U.S. should have remained in the deal.
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Wooden dhows crammed with secondhand Japanese cars have been sailing unhindered into Yemeni ports for the past three years despite rigid wartime controls on imports of aid and other vital supplies.

Like many Yemeni traders, Ali al-Mahry jumped at this chance to turn a profit by supplying customers at home with cars bought cheaply at auction in the United Arab Emirates.

A Saudi-led military coalition, of which the UAE is part, has been battling Houthi rebels since 2015 with the aim of restoring the Yemeni government in exile.

The coalition has imposed controls to deny arms to the Houthis, fighters aligned with Iran who control the capital Sanaa and Hodeidah, the largest port. The measures have choked off supplies of fuel, food and medicine to Yemen, where millions face starvation and disease.

Yet coalition forces appear to have turned a blind eye to the dhows that regularly carry cars from Port Khaled in the emirate of Sharjah to a small dock at As Shihr, a port in Yemen’s Hadramout province controlled by UAE-backed forces.

“I make this journey around 30 times a year,” Mahry said, surrounded by 180 cars taking up every corner of a dhow he has chartered for the voyage. “I sometimes also ship food and other items, but they require different permits.”

The cars have become a nice earner for traders in both the UAE and Yemen.

Yemeni dealers gather daily at Dubai’s Al-Aweer Auto Market to bid as a big screen flashes prices for Japanese cars, with as many as 80 sold in a day at one auction house.

New rules

Once sold, the automobiles are taken to Port Khaled, where up to 200 vehicles are stacked onto each dhow.

The vessels are searched at Port Khaled and on arrival at As Shihr, but have not been required to obtain permits or pay customs duties for the past three years, in contrast to the obstacles faced by ships delivering other supplies to Yemeni ports.

“The coalition would ask us for the cars’ papers and clear them here,” said Saleh al-Ali, head of the port at As Shihr. “For the past three years, there has been no need to apply for a permit from Riyadh.”

In March, however, the coalition changed the rules, requiring permits to be obtained from Saudi Arabia, according to Ali. He said he was told the new measures were introduced for security reasons.

A coalition spokesman did not reply to requests for comment on why the car-laden dhows have been exempted for so long.

Port officials said the dhows may have been simply an exception to the rule and, in any case, it had taken time to put the car trade on a more formal footing.

Good business

Mustafa al-Jaffrey, who used to send cars to Yemen over land through Oman before the war, said he had doubled his profits by using the sea route.

“It is much cheaper for me to buy and ship,” he said, adding that Japanese cars in particular were a good business for him.

“The Japanese drive their cars only for about 50,000 km (30,000 miles) before they sell them and buy new ones. That’s way less than the 150,000 km (90,000 miles) or more that people in the Gulf drive before they put a car up for sale, so the quality is better as well.”

In Japan, strict safety and pollution regulations force many drivers to sell their cars after a few years, so there are plenty of good-quality vehicles available.

Such cars can sell for as little as $1,000 at online auctions in Japan. A Toyota can be bought by traders for around $1,900 in Dubai and sell in Yemen for more than twice that.

“I buy a Japanese used car from an auction in Japan, sometimes an online auction, and then ship it here,” said Hammad Ali, marketing manager at Jan Japan (Cars 4 U), the top re-exporter at Al-Aweer in Dubai.

Ali has long imported such cars for re-export to places like Somalia and Afghanistan as many other countries that drive on the right, including the UAE, do not allow cars from Japan, where people drive on the left, on safety concerns.

“It is a safety thing … so most of them were going to Afghanistan and Somalia. Then three years ago, Yemen opened up,” he said.

Prior to 2015 in Yemen, where people drive on the right, cars with their steering wheel on the “wrong” side were banned for safety reasons, but road safety has been another casualty of a war that has killed more than 10,000 people.

As fighting continues, the Houthis control the north of Yemen, while coalition forces have seized the southern port of Aden and made gains along the southwest coast along the Red Sea.

“Yemen is a big country and people need to move around. The cars are going into the south, where it is relatively safe, and from there onward to the rest of the country,” said Mahdy al-Mahry, another dhow operator and car dealer.

“People can buy one of these cars and use them to earn money for their families. Others just buy them as a cheap and safe means of transport.”

Not everyone has profited from the trade. The Yemeni government, which has a presence in Aden while the president is in exile in Saudi Arabia, has missed out on customs dues, although it now plans to regulate the car trade.

“While it has largely been unregulated for the past three years, we are slowly coming to it and we will organize the trade as the government prepares to impose a fee,” said Salem Ali Busamir, head of the Arabian Sea Ports Corporation of Yemen. He did not say when this would happen or how much the fee would be.

Traders, however, seem confident the new measures will not disrupt their business unduly.

“This trade employs hundreds at the port now. They can’t ruin that, even if they impose a small tax,” said Ghaleb al-Mahry, who has a car showroom in As Shihr.
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Disney is seeking new frontiers.

The media company launched its $5-a-month sports streaming service, ESPN Plus, last month, and it signed a deal with Twitter this month to create Marvel, ABC and ESPN content on that service. Meanwhile, Disney is trying to buy much of 21st Century Fox, including the Fox television network and the X-Men movie franchise.

The moves come as Disney seeks ways to extend beyond the traditional cable-bundle format as more people watch TV online. Sports network ESPN was once a jewel in Disney’s crown but subscriptions have been falling as people drop cable services.

But the company has found strength elsewhere, notably its movie studio and theme parks.

Disney’s franchises such as Marvel’s Avengers and Star Wars have been raking in money. Avengers: Infinity War has grossed over $1 billion since it opened April 27.

In a statement, CEO Bob Iger said Disney was “very well-positioned for future growth” because of its ability to take advantage of such franchises across all businesses and “the unique value proposition” it’s creating with direct-to-consumer streaming services.

In Disney’s fiscal second quarter, net income rose 23 percent to $2.94 billion, or $1.95 per share, from $2.39 billion, or $1.50 per share a year ago. Excluding one-time items such as a benefit from the U.S. tax overhaul, net income totaled $1.84 per share.

The results surpassed Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $1.68 per share.

Revenue rose 9 percent to $14.5 billion, from $13.3 billion a year ago. Four analysts surveyed by Zacks expected $14.2 billion.

Sports streaming

To prepare for the future, Disney launched a sports streaming service with video not available on the regular ESPN channels. This includes additional baseball and soccer games, and the entire 30 for 30 documentary series on demand.

The Walt Disney Co. is also working on an entertainment streaming service with classic and upcoming movies from the Disney studio, shows from Disney Channel, and the Star Wars, Marvel and Pixar movies. That service will launch in late 2019 and will include movies leaving Netflix, once its deal with Disney expires.

If the $52.4 billion Fox deal goes through, Disney could supplement the entertainment service with Fox properties — such as X-Men movies and National Geographic programming. Disney is still awaiting regulatory approval, and published reports say Comcast is mulling a counterbid.

J.P. Morgan analyst Alexia Quadrani expects the service to break even by 2021 with about 13 million subscribers. Until then, Quadrani said, Disney might lose some licensing fees and see spending increase to acquire content.

Morgan Stanley analyst Benjamin Swinburne said in a client note that the direct-to-consumer businesses like its streaming services could add $6.5 billion to revenue by 2020.
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Some Iranians had been cashing in their savings even before U.S. President Donald Trump’s announcement he would pull out from the international nuclear deal with Iran, straining a banking system weighed down by bad loans and years of isolation.

An official with Iran’s biggest state-owned Melli Bank told Reuters savings had declined by an unspecified amount, although he said this was a temporary phenomenon and that they would recover once the uncertainty over Trump’s decision passed.

“When there is political uncertainty, its psychological impact on people causes a drop in savings. But it will pass after Trump’s deadline,” the official said before the announcement, declining to be named.

Trump said on Tuesday he would quit the deal and impose “the highest level of economic sanctions.”

A senior Iranian central bank official said conditions within the banking system had deteriorated in the past year, and “we have still not passed the danger zone” but added that the central bank had “all the measures ready to prevent any crisis.”

Officials with other leading lenders, Saman, Pasargad and Middle East Bank declined to comment.

The loss of confidence both reflects and contributes to wider problems threatening pragmatist President Hassan Rouhani in Iran’s faction-ridden clerical establishment: Investment has dried up as banks limit lending, growth is slowing and unemployment is at a record high, exposing Rouhani to growing criticism from hardliners.

“I am worried about a war,” said Mina Abdelsalehi, 61, a retired teacher in Tehran. “I have changed all my savings into gold coins that I can cash easily if anything happens.”

The rial currency lost close to half of its value in the six months to April in anticipation of a tougher U.S. approach, forcing Tehran to ban domestic foreign exchange transactions and limit foreign currency holdings to $12,000.

This failed to stop Iranians trying to buy hard currency on Tuesday, promoting a further slide in the rial, according to a foreign exchange website.

“Prices are going up almost every hour,” said Ali Rasti, 45, owner of a real estate agency in Tehran. “People are worried and prefer to keep their money at home.”

A separate Iranian banking official also said Iranians had taken out money. “Fearing a war and more sanctions, many Iranians have withdrawn their cash from banks,” he said.

Mohammad Reza Pourebrahimi, head of parliament’s economic committee, was quoted by the semi-official ISNA news agency in March as saying capital outflows had been $30 billion in recent months. The International Monetary Fund said Iran’s reserves were at nearly $112 billion in 2017/18.

Dashed hopes

Iran had struggled to reap the benefits from the accord, which lifted international sanctions on the central bank and lenders in 2016 in return for curbs on its nuclear program, but left U.S. restrictions in place to assuage fears it would benefit hardliners like the Revolutionary Guards (IRGC).

The IRGC, which reports directly to Iran’s Supreme leader Ayatollah Ali Khamenei, controls vast segments of the economy, including some banking interests as well as everything from ports management to telecommunications.

Iranian banks re-established relationships with more than 200 international counterparts, but any business active in Iran has to ensure there are no ties with IRGC interests to avoid fines or bars on trading in the United States.

“Money is moving but not as freely as governments had hoped,” said Justine Walker, head of sanctions policy with trade association UK Finance, saying complications had multiplied since Trump became president. Euro transactions were taking place, she said, but sterling payments “remain challenging.”

Sources involved in transactions said they rarely exceeded 200 million euros ($240 million) due to difficulties with clearing payments.

Nigel Kushner, chief executive of British law firm W Legal, said his clients exporting consumer goods to Iran had reported a 50 percent drop in purchases over the past two months. “There is a risk of further [bank] liquidity concerns,” he said.

George Bennet, managing partner of financial services advisory firm OSACO Financial, which is active in Iran, said European lenders still in Iran were already nervous and limiting transactions to their largest and most valuable customers.

“The larger of the European banks currently doing business, which themselves are not large, with Iran will pull out of the market altogether,” he said, when asked about the impact of the U.S. withdrawal.

Other constraints

Rouhani gambled on attracting foreign investment to help raise living standards but a raft of deals including plane purchases already have been delayed.

FATF, a global group of government anti-money-laundering agencies, has kept Iran on its blacklist, adding to wariness by Western banks with dealing with Iran due to reputational risks.

Rouhani has struggled to reform the banking system, which, with 30 banks and other credit institutions, is more fragmented than those of other emerging markets and heavily burdened by bad loans.

Finance sources have estimated outstanding loans at around $283 billion and non-performing loans (NPLs) were estimated to have reached 12.5 percent in 2017 by U.S.-based financial industry body the Institute of International Finance (IIF).

The latest official figure, 11.7 percent in 2016, equates to more than $30 billion. Some finance sources say NPLs could be even higher at close to 15 percent.

A textile factory owner in Mashhad said the government wanted to improve the economy but could not support business.

“How can I run my business when the dollar exchange rate is rising and I cannot get loans from the banks because of the high rates?” he said on condition of anonymity, explaining he had laid off around half his 65 employees to try to stay afloat. “I am not sure how long I can keep the factory open.”
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