Iran is studying ways to keep exporting oil and other measures to counter U.S. economic sanctions, state news agency IRNA reported Saturday.

Since last month, when U.S. President Donald Trump pulled out of the nuclear deal that lifted most sanctions in 2015, the rial currency has dropped up to 40 percent in value, prompting protests by bazaar traders usually loyal to the Islamist rulers.

Speaking after three days of those protests, supreme leader Ayatollah Ali Khamenei said the U.S. sanctions were aimed at turning Iranians against their government.

Other protesters clashed with police late Saturday during a demonstration against shortages of drinking water.

“They bring to bear economic pressure to separate the nation from the system … but six U.S. presidents before him [Trump] tried this and had to give up,” Khamenei said on his website Khamenei.ir.

With the return of U.S. sanctions likely to make it increasingly difficult to access the global financial system, President Hassan Rouhani has met with the head of parliament and the judiciary to discuss countermeasures.

“Various scenarios of threats to the Iranian economy by the U.S. government were examined and appropriate measures were taken to prepare for any probable U.S. sanctions, and to prevent their negative impact,” IRNA said.

One such measure was seeking self-sufficiency in gasoline production, the report added.

Looking for buyers

The government and parliament have also set up a committee to study potential buyers of oil and ways of repatriating the income after U.S. sanctions take effect, Fereydoun Hassanvand, head of the parliament’s energy committee, was quoted as saying by IRNA.

“Due to the possibility of U.S. sanctions against Iran, the committee will study the competence of buyers and how to obtain proceeds from the sale of oil, safe sale alternatives which are consistent with international law and do not lead to corruption and profiteering,” Hassanvand said.

The United States has told allies to cut all imports of Iranian oil by November, a senior State Department official said Tuesday.

In the separate unrest, demonstrators protesting against shortages of drinking water in oil-rich southwestern Iran clashed with police late Saturday after officers ordered about 500 protesters to disperse, IRNA reported.

Shots could be heard on videos circulated on social media from protests in Khorramshahr, which has been the scene of demonstrations for the past three days, along with the nearby city of Abadan. The videos could not be authenticated by Reuters.

A number of protests have broken out in Iran since the beginning of the year over water, a growing political concern because of a drought that residents of parched areas and analysts say has been exacerbated by mismanagement.

Speaking before the IRNA report on the clash, Khamenei said the United States was acting with Sunni Muslim Gulf Arab states, which regard Shiite Muslim Iran as their main regional foe, to try to destabilize the government in Tehran.

“If America was able to act against Iran, it would not need to form coalitions with notorious and reactionary states in the region and ask their help in fomenting unrest and instability,” Khamenei told graduating Revolutionary Guards officers, in remarks carried by state TV.
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U.S. President Donald Trump said in a tweet on Saturday that Saudi Arabia’s King Salman had agreed to his request to increase oil production “maybe up to

2,000,000 barrels” to offset production from Iran and Venezuela.

There was no immediate comment from Saudi authorities.

The world’s top oil exporter plans to pump up to 11 million barrels of oil per day (bpd) in July, an oil industry source told Reuters this week, after OPEC agreed with Russia and other

oil-producing allies to raise output by about 1 million bpd.

 
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President Donald Trump said Saturday that he had received assurances from King Salman of Saudi Arabia that the kingdom will increase oil production, “maybe up to 2,000,000 barrels” in response to turmoil in Iran and Venezuela. Saudi Arabia acknowledged the call took place, but mentioned no production targets.

Trump wrote on Twitter that he had asked the king in a phone call to boost oil production “to make up the difference…Prices to (sic) high! He has agreed!”

A little over an hour later, the state-run Saudi Press Agency reported on the call, but offered few details.

“During the call, the two leaders stressed the need to make efforts to maintain the stability of oil markets and the growth of the global economy,” the statement said.

It added that there also was an understanding that oil-producing countries would need “to compensate for any potential shortage of supplies.” It did not elaborate.

Oil prices have edged higher as the Trump administration has pushed allies to end all purchases of oil from Iran following the U.S. pulling out of the nuclear deal between Tehran and world powers. Prices also have risen with ongoing unrest in Venezuela and fighting in Libya over control of that country’s oil infrastructure.

Last week, members of the Organization of the Petroleum Exporting Countries cartel led by Saudi Arabia and non-cartel members agreed to pump 1 million barrels more crude oil per day, a move that should help contain the recent rise in global energy prices. However, summer months in the U.S. usually lead to increased demand for oil, pushing up the price of gasoline in a midterm election year. A gallon of regular gasoline sold on average in the U.S. for $2.85, up from $2.23 a gallon last year, according to AAA.

If Trump’s comments are accurate, oil analyst Phil Flynn said it could immediately knock $2 or $3 off a barrel of oil. But he said it’s unlikely that decrease could sustain itself as demand spikes, leading prices to rise by wintertime.

“We’ll need more oil down the road and there’ll be nowhere to get it,” said Flynn, of the Price Futures Group. “This leaves the world in kind of a vulnerable state.”

Trump is trying to exert maximum pressure on Iran while at the same time not upsetting potential U.S. midterm voters with higher gas prices, said Antoine Halff, a Columbia University researcher and former chief oil analyst for the International Energy Agency.

“The Trump support base is probably the part of the U.S. electorate that will be the most sensitive to an increase in U.S. gasoline prices,” Halff said.

Trump’s comments came Saturday as global financial markets were closed. Brent crude stood at $79.42 a barrel, while U.S. benchmark crude was at $74.15.

Saudi Arabia currently produces some 10 million barrels of crude oil a day. Its record is 10.72 million barrels a day. Trump’s tweet offered no timeframe for the additional 2 million barrels — whether that meant per day or per month.

However, Saudi Aramco CEO Amin Nasser told journalists in India on Monday that the state oil company has spare capacity of 2 million barrels of oil a day. That was after Saudi Energy Minister Khalid al-Falih said the kingdom would honor the OPEC decision to stick to a 1-million-barrel increase.

“Saudi Arabia obviously can deliver as much as the market would need, but we’re going to be respectful of the 1-million-barrel cap — and at the same time be respectful of allocating some of that to countries that deliver it,” al-Falih said then.

The Trump administration has been counting on Saudi Arabia and other OPEC members to supply enough oil to offset the lost Iranian exports and prevent oil prices from rising sharply. But broadcasting its requests on Twitter with a number that stretches credibility opens a new chapter in U.S.-Saudi relations, Halff said.

“Saudis are used to U.S. requests for oil,” Halff said. “They’re not used to this kind of public messaging. I think the difficulty for them is to distinguish what is a real ask from what is public posturing.”

The administration has threatened close allies such as South Korea with sanctions if they don’t cut off Iranian imports by early November. South Korea accounted for 14 percent of Iran’s oil exports last year, according to the U.S. Energy Department.

China is the largest importer of Iranian oil with 24 percent, followed by India with 18 percent. Turkey stood at 9 percent and Italy at 7 percent.

The State Department has said it expects the “vast majority” of countries will comply with the U.S. request.
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Editor’s note: A look at the veracity of claims by political figures

President Donald Trump has elevated his tax cuts to an act of biblical proportions, misleadingly claiming at a White House speech Friday that they triggered an “economic miracle.”

Not quite.

Also Friday, the president’s top economics aide, Larry Kudlow, appeared on the Fox Business Network to address one of the major problems with the tax cuts — that they’ll heap more than $1 trillion onto the national debt. Kudlow falsely countered that the budget deficit was falling because of growth generated by the tax cuts. The deficit is actually rising.

A look at the statements and the fact:

TRUMP: “Six months ago, we unleashed an economic miracle by signing the biggest tax cuts and reforms … the biggest tax cuts in American history.”

THE FACTS: The president is exaggerating, if not being outright deceptive.

Rather than achieving a miracle, his tax cuts have helped stoke additional growth in an economic expansion that was already approaching its 10th year. The additional growth is largely fueled by government borrowing, as the federal deficit rises because of the tax cut. The pace of growth is expected to taper off after next year, according to the Congressional Budget Office, the Federal Reserve and outside analysts.

And while the $1.5 trillion worth of tax reductions over the next decade are substantial, they’re far from the largest in U.S. history as a share of the overall economy. The Trump tax cut ranks behind Ronald Reagan’s in the early 1980s, post-World War II tax cuts and at least several more, according to the Committee for a Responsible Federal Budget, which advocates for deficit reduction.

Trump proudly went through a list of economic achievements that build on the progress begun under former President Barack Obama. The 3.8 percent unemployment rate and the historically low level of requests for jobless aid are both the result of a steady and gradual recovery from the worst economic meltdown since 1929.

Several hundred companies responded to the tax cuts by paying workers bonuses or hiking hourly wages, but any significant income growth has yet to surface in the overall economy.

The tax cuts have added on average $17 a month to people’s incomes, according to an analysis by Ernie Tedeschi, head of fiscal policy analysis at the investment firm Evercore ISI and a former Treasury Department economist. The analysis is based off consumer spending, income and inflation data released Friday.

That $17 monthly gain is helpful, but it’s far from miraculous.

​KUDLOW: “As the economy gears up, more people working, better jobs and careers, those revenues come rolling in, and the deficit, which is one of the other criticisms, is coming down, and it’s coming down rapidly.”

THE FACTS: Nope.

Since the fiscal year started in October, Treasury Department reports show the federal government has recorded a $385.4 billion deficit, a 12 percent jump from the same period in the previous year.

The Congressional Budget Office was even more blunt in a long-term assessment released Tuesday.

It estimates that the national debt — the sum of yearly deficits — will be $2.2 trillion higher in 2027 than it had previously forecast, largely a consequence of Trump’s 10 year, $1.5 trillion tax cut. The size of the debt could be even higher if provisions of the tax cut that are set to expire are, instead, renewed.
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General Motors Co warned on Friday that higher tariffs on imported vehicles under consideration by the Trump administration could cost jobs and lead to a “a smaller GM” while isolating U.S. businesses from the global market.

The administration in May launched an investigation into whether imported vehicles pose a national security threat, and U.S. President Donald Trump has repeatedly threatened to impose a 20 percent vehicle import tariff.

The largest U.S. automaker said in comments filed with the U.S. Commerce Department that overly broad tariffs could “lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less — not more — U.S. jobs.”

Higher tariffs could also hike vehicle prices and reduce sales, GM said.

​Less investment, fewer workers

Its comments echoed those from two major U.S. auto trade groups Wednesday, when they warned that tariffs of up to 25 percent on imported vehicles would cost hundreds of thousands of auto jobs, dramatically raise prices on vehicles and threaten industry spending on self-driving cars.

Even if automakers opted not to pass on higher costs “this could still lead to less investment, fewer jobs, and lower wages for our employees. The carry-on effect of less investment and a smaller workforce could delay breakthrough technologies,” GM said.

GM operates 47 U.S. manufacturing facilities and employs about 110,000 people in the United States. It buys tens of billions of dollars worth of parts from U.S. suppliers every year, and has invested more than $22 billion in U.S. manufacturing operations since 2009.

Still, 30 percent of the vehicles GM sold on the U.S. market in 2017 were manufactured abroad, according to the Michigan-based Center for Automotive Research. Eighty-six percent of those vehicles came from Canada and Mexico, while others came from Europe and China.

Detroit automakers Ford Motor Co and Fiat-Chrysler Automobiles NV also import many of the vehicles they sell in the United States.

“The overbroad and steep application of import tariffs on our trading partners risks isolating U.S. businesses like GM from the global market that helps to preserve and grow our strength here at home,” GM said.

GM shares closed down about 2.8 percent on Friday at $39.40. 

National security probe

Some aides have said that Trump is pursuing the national security probe to put pressure on Canada and Mexico to agree to concessions in talks to renegotiate the North American Free Trade Agreement.

Toyota Motor Corp filed separate comments opposing the tariffs on Friday saying they would “threaten U.S. manufacturing, jobs, exports, and economic prosperity.”

The company noted that Trump has repeatedly praised the Japanese automaker for investing in the United States, including a new $1.3 billion joint venture assembly plant in Alabama with Mazda.

“These investments reflect our confidence in the U.S. economy and in the power of the administration’s tax cuts,” Toyota said.

Toyota noted that international automakers assembling vehicles in the United States are based in countries including Japan, German and South Korea “that are America’s closest allies.”

The Commerce Department plans two days of public hearings next month, and Commerce Secretary Wilbur Ross said last week he aimed to wrap up the probe into whether imported vehicles represent a national security threat by late July or August.

“We have received approximately 2,500 comments already,” Ross said in a statement Friday, adding that he expected more before a midnight deadline.

“The purpose of the comment period and of the public hearing scheduled for July 19th and 20th is to make sure that all stakeholders’ views are heard, both pro and con. That will enable us to make our best informed recommendation to the president,” the statement said.
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Just days before the Trump administration’s tariffs on Chinese steel and aluminum imports are set to go into effect, trade analysts are watching for ripple effects across the automotive, manufacturing and technology sectors. VOA’s Elizabeth Cherneff has more from Washington.
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U.S. President Donald Trump said he expects a second tax overhaul to be unveiled in October or a bit earlier, and he is considering cutting the corporate tax rate to 20 percent from 21 percent.

In an excerpt of a Fox Business Network interview to be broadcast Sunday, Trump said: “We’re doing a phase two. We’ll be doing it probably in October, maybe a little sooner than that.”

“One of the things we’re thinking about is bringing the 21 percent down to 20, and for the most part the rest of it would go right to the middle class,” he said.

In December, Trump signed the biggest overhaul of the U.S. tax code in 30 years, slashing the corporate tax rate to 21 percent from 35 percent and giving temporary tax relief to middle-class Americans.

The sweeping bill passed the Republican-controlled Congress over the opposition of Democrats, who decried it as a giveaway to the wealthy that would add $1.5 trillion to the $20 trillion national debt.

Republicans, hungry to revisit the tax issue ahead of a November midterm election showdown for control of Congress, are to unveil the outline of new tax legislation over the summer in the House of Representatives.

But more tax cuts are unlikely to succeed in the closely divided Senate, where Democrats and conservative fiscal hawks could block such a measure.

The nonpartisan Congressional Budget Office warned this week that more tax cuts would hasten the growth of an already rapidly rising federal debt.

The debt, which equals 78 percent of U.S. gross domestic product, is on track to eclipse the 106 percent record set just after World War II in 2034.

House Ways and Means Committee Chairman Kevin Brady, who presides over the chamber’s tax policy debate, said this week that new legislation would aim to make permanent tax cuts for individuals that are to expire in 2026. He expects a House vote in the autumn.

The Texas Republican made no mention of plans for an additional 1 percentage point cut in the U.S. corporate rate, which analysts say would reduce government revenues by an additional $100 billion over a decade.
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Canada struck back at U.S. steel and aluminum tariffs on Friday, vowing to impose punitive measures on C$16.6 billion ($12.63 billion) of American goods and unveiling a C$2 billion aid package for affected industries

and workers.

Foreign Minister Chrystia Freeland told a news conference the tariffs would come into effect on July 1.
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U.S consumers increased their spending just 0.2 percent in May, a disappointing result after two months of much stronger gains. The weaker reading could raise questions about the extent of economic growth overall in the current April-June quarter.

The Commerce Department says the tiny rise in spending last month followed much stronger increases of 0.6 percent in March and 0.5 percent in April. It was the poorest showing since spending had fallen 0.1 percent in February.

Consumer spending accounts for 70 percent of economic activity, and economists are counting on solid gains to propel economic growth after a slow start to the year.

In a more hopeful sign, incomes grew a solid 0.4 percent in May, supported by strong growth in wages and salaries.
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After a sharp sell-off, China’s yuan and stock markets attempted a modest recovery Friday, yet investors were grappling with some of their worst losses in years as a bitter Sino-U.S. trade row threatened to ruffle the world’s second-biggest economy.

The yuan was set for its biggest monthly fall on record. Chinese stocks, on a downward spiral since late January, were also poised for their largest monthly slide since January 2016.

The downturn highlighted the anxiety among investors as Washington and Beijing showed no signs of backing down from their tariff dispute.

The worry is that an extended selloff in stocks and the yuan could spark a bout of capital outflows, putting further strain on the economy and complicating policy making as authorities put up defenses against the trade battle with the United States.

Down 3 percent in month

The yuan has shed more than 3 percent of its value against the dollar in June, its biggest fall since the market exchange rate was unified in 1994. On Friday, it fell to its lowest since mid-November 2017, but pulled up to 6.6139 per dollar by 0600 GMT for a modest bounce of about 0.16 percent on the day.

Offshore, where the yuan trades more freely, the unit was up by about a quarter of a percent, at 6.6224 per dollar.

In equities, the benchmark CSI300 Index rebounded more than 2 percent, while the Shanghai Composite Index gained around 2 percent, though they were both down around 9 percent for the month. In Hong Kong, the benchmark Hang Seng Index was also up more than 1 percent.

Trump and trade

U.S. President Donald Trump has shaken the world trade order by seeking to renegotiate the terms of some of the United States’ trading relationships, in particular with China.

The U.S. is targeting $34 billion of Chinese goods for tariffs to take effect July 6, and has threatened tens of billions of dollars more for similar duties.

Chinese 10-year treasury futures for September delivery, the most traded contract, leapt 0.34 percent. A fixed income portfolio manager said the sharp rise was a result of central bank promises of “ample” liquidity.

“The central bank is expected to step up efforts to calm investors and slow the pace of the yuan depreciation that has sparked risk aversion across regional markets, including a possible reintroduction of the counter-cyclical factor,” Gao Qi, FX strategist at Scotiabank in Singapore, wrote in a note Friday.

He expected “strong resistance” at 6.70 yuan per dollar.

Hard-hit areas

Sectors and stocks that were exposed to the depreciating yuan have been hit hard this month.

Real estate was down 5.7 percent and poised for its fifth straight month of losses. The transport sector index, whose components include many leading airlines, tumbled 9.4 percent this month and was set for its steepest monthly drop since January 2016.

A trader at a regional bank in Shanghai who declined to be named said there had been some “filtering” of the midpoint fixing, which is set by the central bank each morning, in an apparent bid to keep the yuan from falling too sharply.

“It is too early to say whether the counter-cyclical factor has been revived. If market sentiment could recover by itself, there is no need to use the factor. Market still needs some time to digest,” the trader said.
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Minnesota regulators on Thursday approved Enbridge Energy’s proposal to replace its aging Line 3 oil pipeline across the northern part of the state.

All five members of the Public Utilities Commission backed the project, though some cited heavy trepidation, and a narrow majority later approved the company’s preferred route despite opposition from American Indian tribes and climate change activists.

In discussion before the vote, several commissioners cited the deteriorating condition of the existing line , which was built in the 1960s, as a major factor in their decision.

“It’s irrefutable that that pipeline is an accident waiting to happen,” Commissioner Dan Lipschultz said ahead of the vote. “It feels like a gun to our head … All I can say is the gun is real and it’s loaded.”

Some pipeline opponents reacted angrily when it became clear commissioners would approve the project. Tania Aubid, a member of the Mille Lacs Band of Ojibwe, stood and shouted, “You have just declared war on the Ojibwe!” Brent Murcia, of the group Youth Climate Intervenors, added: “We will not let this stand.”

Opponents argue that the pipeline risks spills in pristine areas in northern Minnesota, including where American Indians harvest wild rice. Ojibwe Indians, or Anishinaabe, consider wild rice sacred and central to their culture.

Winona LaDuke, founder of Honor the Earth, said opponents would use every regulatory means possible to stop the project — and threatened mass protests if necessary.

“They have gotten their Standing Rock,” she said, referring to protests that drew thousands of people to neighboring North Dakota to rally against the Dakota Access pipeline. 

Others welcomed Thursday’s vote, including Bob Schoneberger, founder of Minnesotans for Line 3. He said Minnesota needs the line now “and will need it even more into the future.”

After commissioners agreed the pipeline upgrade was needed, the commission voted 3-2 in favor of Enbridge’s preferred route, which departs from the existing pipeline to largely avoid two American Indian reservations currently crossed.

The approved route does clip a portion of the Fond du Lac Band of Chippewa’s land, and commissioners said they would adjust the route if the Fond du Lac don’t agree. Tribal leaders had reluctantly backed a route that went much farther south as the least objectionable option.

After the commission’s work is formalized in the next few weeks, opponents may file motions asking it to reconsider. After that, they can appeal the decision to the state Court of Appeals. 

Several commissioners said the overall issue posed a difficult decision. Chairwoman Nancy Lange choked up and took off her glasses to wipe her eyes as she described her reasoning for approving the project. Another commissioner, Katie Sieben, said it was “so tough because there is no good outcome.”

The pipeline currently runs from Alberta, Canada, across North Dakota and Minnesota to Enbridge’s terminal in Superior, Wisconsin. Enbridge has said it needs to replace the pipeline because it’s increasingly subject to corrosion and cracking, and that it would continue to run Line 3 if regulators rejected its proposal.

Much of the debate has focused on whether Minnesota and Midwest refineries need the extra oil. Enbridge currently runs Line 3 at about half its original capacity of 760,000 barrels per day for safety reasons, and currently uses it only to carry light crude. 

The project’s opponents, including the Minnesota Department of Commerce, have argued that the refineries don’t need it because demand for oil and petroleum products will fall in the coming years as people switch to electric cars and renewable energy sources. Opposition groups also argue that much of the additional oil would eventually flow to overseas buyers.

Enbridge and its customers strongly dispute the lack of need in the region. They said Line 3’s reduced capacity is already forcing the company to severely ration space on its pipeline network, and that failure to restore its capacity would force oil shippers to rely more on trains and trucks, which are more expensive and less safe. Business and labor groups support the proposal for the jobs and economic stimulus. 

The Public Utilities Commission’s decision likely won’t be the final word in a long, contentious process that has included numerous public hearings and the filings of thousands of pages of documents since 2015. Lange said earlier this year that the dispute was likely to end up in court, regardless of what the commission decides.

Opponents have threatened a repeat of the protests on the Standing Rock Reservation against the Dakota Access pipeline, in which Enbridge owns a stake. Those protests in 2016 and 2017 resulted in sometimes violent skirmishes with law enforcement and more than 700 arrests. 

Similar concerns over the role of tar sands oil in climate change, indigenous rights and the risk of spills has fueled opposition to other pipelines out of Alberta’s oil sands region. Opponents of TransCanada’s Keystone XL pipeline to Nebraska are still fighting that project in court. The Canadian government agreed last month to buy Kinder Morgan’s Trans Mountain pipeline across Canadian soil to the Pacific Coast for $4.5 billion Canadian (US$3.4 billion) to ensure completion of the company’s plan to triple the line’s capacity. 

Enbridge has already replaced the short segment of Line 3 in Wisconsin and put it into service. Construction is underway on the short segment that crosses northeastern North Dakota and on the longer section from Alberta to the U.S. border, and Enbridge plans to continue that work. Enbridge has estimated the overall cost of the project at $7.5 billion, including $2.6 billion for the U.S. segment.

 

 
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