Tonga Prime Minister Akalisi Pohiva has called for China to write-off debts owed by Pacific island countries, warning that repayments impose a huge burden on the impoverished nations.

Chinese aid in the Pacific has ballooned in recent years with much of the funds coming in the form of loans from Beijing’s state-run Exim Bank.

Tonga has run-up enormous debts to China, estimated at more than US$100 million by Australia’s Lowy Institute think tank, and Pohiva said his country would struggle to repay them.

He said the situation was common in the Oceania region and needed to be addressed at next month’s Pacific Island Forum summit in Nauru.

“We need to discuss the issue,” he told the Samoa Observer in an interview published on Tuesday.

“All the Pacific Island countries should sign this submission asking the Chinese government to forgive their debts.”

“To me, that is the only way we can all move forward, if we just can’t pay off our debts.”

Tonga took out the Chinese loans to rebuild in the wake of deadly 2006 riots that razed the center of the capital Nuku’alofa.

Beijing has previously refused to write-off the loans by turning them into aid grants but did give Tonga an amnesty on repayments.

Pohiva said China now wanted the debts repaid.

“By September 2018, we anticipate to pay $14 million, which cuts away a huge part of our budget,” he said.

Tonga’s ability to pay has been further dented this year by another massive rebuilding effort in Nuku’alofa, this time after a category five cyclone slammed into the capital in February.

“If we fail to pay, the Chinese may come and take our assets, which are our buildings,” Pohiva said.

“That is why the only option is to sign a submission asking the Chinese government to forgive our debts.”

His comments come as Australia and New Zealand ramp up aid efforts in the Pacific to counter China’s growing presence in the region.

Australia has raised fears in recent months Pacific nations’ debts to China leaves them susceptible to Beijing’s influence.

It has resulted in a race to win hearts and minds in the region.

Canberra recently announced plans to negotiate a security treaty with Vanuatu, while also funding and building an underseas communications cable to the Solomon Islands and Papua New Guinea.

Meanwhile, Chinese company Huawei has agreed to build PNG’s domestic internet network with funds supplied by Exim Bank.
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Nicaragua’s National Assembly on Tuesday approved a drastic cut to the national budget because of the economic impact of months of anti-government unrest.

The lawmakers adopted a 9.2 percent reduction of the 2018 budget, projecting $180 million less in spending to partly make up for a drop of $220 million in government income.

It was the steepest cut seen in the past 11 years that President Daniel Ortega has been in power. 

The minister for finance and public credit, Ivan Acosta, blamed the reduction on protesters accused of trying to stage a “coup” against Ortega’s government.

The demonstrations against Ortega began in April in anger at moves to cut back social security. But when security forces cracked down, they quickly spread to become marches demanding Ortega’s ouster. 

More than 300 people have died and thousands of Nicaraguans have fled what they say is harsh repression and persecution.

After operations against protest hubs in July, the president claimed the unrest was over and the country was getting back to normal. But demonstrations are continuing.

Contraction possible

Acosta said that before the protests, the economy had been expected to grow 4.3 percent this year. The government has now lowered that target to 1 percent, although some independent analysts say a contraction of 3.5 percent could be in the cards.

The minister told the National Assembly that the fallout from the unrest had forced 8,700 small businesses to close, leaving 71,000 people without work. The important tourism sector has lost $235 million, he said.

The private sector estimates that 200,000 people were left unemployed by the continuing crisis.

Acosta said the budget cuts would not affect social spending, public investment or the level of government employment.

“This reform is tough,” he said. “Right now we are working on the premise that the country is returning in the direction of normality and stability.”

Fiscal and tax reform was needed to make up for the diminished growth, he added, warning that “those who must pay will be made to pay.”

That warning appeared to be aimed at Nicaragua’s business owners who have abandoned Ortega because of the deadly violence ordered against the protesters.
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Last year, Brazilian farmer Gustavo Lopes sized up his sugar cane plantation against his soybean fields.

He looked at global trends, including rising U.S.-China trade tensions and a stubborn sugar-market glut. Then he tore up the last of his cane fields and ditched a decades-old supply contract with a local sugar mill.

Lopes planted soybeans across his 1,600-hectare (4,000-acre) farm in Sao Paulo state – a bet that paid off earlier this month when Chinese buyers loaded up on South American soy after Beijing imposed tariffs on U.S. beans. The farmer got his highest price ever for soybeans.

“It was unusual for this time of year,” Lopes said in an interview at his farm, where he’s prepping to plant another soy crop in September. “It’s got to be a result of Chinese demand.”

Shifting trade flows are redefining the Brazilian landscape, spurring more farmers to align their crops with Chinese appetites. The nation’s soy plantings have expanded by 2 million hectares in two years – an area the size of New Jersey – while land used for cane shrank by nearly 400,000 hectares, according to government data.

China’s growing demand for meat has supercharged soy imports for animal feed. The Asian nation paid $20.3 billion last year for 53.8 million tons of soybeans from Brazil, nearly half its output — and up from 22.8 million tons in 2012.

A new 25 percent Chinese tariff on U.S. soybeans — a retaliation for U.S. levies by President Donald Trump — is expected to boost Brazil’s soy exports to an all-time record this year.

Brazilian soybean exports to China rose to nearly 36 million tons in the first half of 2018, up 6 percent from a year ago.

In July, they surged 46 percent from the same month a year earlier to 10.2 million tons.

Brazil’s grains boom has it rivaling United States as the world’s top soy producer this year, after outpacing U.S. exports over the past five years.

All that soy is eating into Brazil’s sugarcane belt, which is reeling from sugar prices near multi-year lows. Chinese sugar tariffs have weighed on the global market for the sweetener as developed nations continue to cut back consumption.

“We lost 3,000 hectares of cane area to grains in the last two years,” said Roberto de Rezende Barbosa, chief executive of Nova América, one of the largest cane growers in Brazil, managing 110,000 hectares.

Rezende said he had seen farmers migrating from sugarcane into grains in nearly every state where both crops are viable.

Shuttered Sugar Mills

The crop swap is catching on quickly with farmers, threatening the survival of cane mills they once supplied.

About 60 cane mills have closed in the past five years in Brazil’s center-south cane region. About 270 that remain open must fight harder than ever to secure cane supplies.

Agroconsult, an agribusiness consultancy, said it has received requests from mills to calculate the premium they will have to pay producers to keep them from switching to grains.

Douglas Duarte, a director at the Londra mill in Itaí — which used to lease part of the Lopes farm — said he has plans to add 500,000 tons of capacity at the mill but has yet to line up enough cane supplies.

With so many farmers focused on grain, Duarte has worked to sign leases with families who are not interested in actively managing their land.

“In places where the owners have expertise with grains — the equipment and everything — then you can’t compete,” he said.

In some places, the closing of cane mills has also discouraged planting.

Farmer Antonio de Morais Ribeiro Neto gave up planting cane last year after the closure of the sugar mill that he supplied, called Usina Maracaju. Biosev SA, the Brazilian sugar arm of global commodities trader Louis Dreyfus, shut it down in a cost-cutting move.

So Riberio replaced 400 hectares of cane with soybeans, adding to the 2,000 hectares of soy he already had planted. As he watched the U.S.-China trade war escalate, he bought two new grain silos, more soybean-planting machinery and a new harvester.

‘Betting Big’

Plenty of sugar mills, which often grow part of the cane they process, have realized they cannot fight the soy boom and decided to plant their own soybeans as part of a crop rotation strategy.

Cane fields typically need to be replanted after five or six years, and mills are using the renovation window to produce soybeans.

“In the past, those areas subject to renovation would be left fallow until the following year,” said Victor Campanelli, who has exploited the niche.

His firm, Agro Pastoril Paschoal Campanelli, manages the planning, inputs and equipment for sugar mills’ one-off soy crops, sharing in the profits.

While the grains bonanza has many farmers flush with cash, some are wary about relying so much on one crop and one massive importer.

“This Chinese demand has attracted all the farmers,” said Marcos Cesar Brunozzi, who switched part of his land from sugar to grains in the state of Minas Gerais. “I hope the whole situation doesn’t change suddenly, because we are betting big.”

Lopes has no regrets about tearing up his cane fields.

Last year, his sugar cane yielded a net profit of 480 reais per hectare — compared to 2,600 reais per hectare for his soy fields.

“I know it won’t always be that way,” he said. “But still, it’s a huge difference.”
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Vienna has dislodged Melbourne for the first time at the top of the Economist Intelligence Unit’s Global Liveability Index, strengthening the Austrian capital’s claim to being the world’s most pleasant city to live in.

The two metropolises have been neck and neck in the annual survey of 140 urban centers for years, with Melbourne clinching the title for the past seven editions. This year, a downgraded threat of militant attacks in western Europe as well as the city’s low crime rate helped nudge Vienna into first place.

Vienna regularly tops a larger ranking of cities by quality of life compiled by consulting firm Mercer. It is the first time it has topped the EIU survey, which began in its current form in 2004.

At the other end of the table, Damascus retained last place, followed by the Bangladeshi capital Dhaka, and Lagos in Nigeria.

The survey does not include several of the world’s most dangerous capitals, such as Baghdad and Kabul.

“While in the past couple of years cities in Europe were affected by the spreading perceived threat of terrorism in the region, which caused heightened security measures, the past year has seen a return to normalcy,” the EIU said in a statement about the report published on Tuesday.

“A long-running contender to the title, Vienna has succeeded in displacing Melbourne from the top spot due to increases in the Austrian capital’s stability category ratings,” it said, referring to one of the index’s five headline components.

Vienna and Melbourne scored maximum points in the healthcare, education and infrastructure categories. But while Melbourne extended its lead in the culture and environment component, that was outweighed by Vienna’s improved stability ranking.

Osaka, Calgary and Sydney completed the top five in the survey, which the EIU says tends to favor medium-sized cities in wealthy countries, often with relatively low population densities. Much larger and more crowded cities tend to have higher crime rates and more strained infrastructure, it said.

London for instance ranks 48th.

Vienna, once the capital of a large empire rather than today’s small Alpine republic, has yet to match its pre-World War I population of 2.1 million. Its many green spaces include lakes with popular beaches and vineyards with sweeping views of the capital. Public transport is cheap and efficient.

In addition to the generally improved security outlook for western Europe, Vienna benefited from its low crime rate, the survey’s editor Roxana Slavcheva said.

“One of the sub-categories that Vienna does really well in is the prevalence of petty crime … It’s proven to be one of the safest cities in Europe,” she said.
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Venezuela’s heavily subsidized domestic gasoline prices should rise to international levels to avoid billions of dollars in annual losses due to fuel smuggling, President Nicolas Maduro said in a televised address on Monday.

“Gasoline must be sold at an international price to stop smuggling to Colombia and the Caribbean,” Maduro said in a televised address.

Venezuela, like most oil-producing countries, has for decades subsidized fuel as a benefit to consumers. But its fuel prices have remained nearly flat for years despite hyperinflation that the International Monetary Fund has projected would reach 1,000,000 percent this year.

That means that for the price of a cup of coffee, a driver can now fill the tank of a small SUV nearly 9,000 times.

Recently, the average price of a coffee with milk was 2.2 million bolivars, or about 50 cents, local media has reported.

Smugglers do brisk business reselling fuel in neighboring countries.

Maduro said the government would still provide “direct subsidies” to citizens holding the “fatherland card,” a state-issued identification card that the government uses to provide bonuses and track use of social services.

He said the subsidy was only available to those who registered their cars in a vehicle census being conducted by the state.
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Mexican President-elect Andres Manuel Lopez Obrador said on Monday his administration will invest more than $11 billion to boost refining capacity in order to curb growing fuel imports.

Lopez Obrador, who will take office on Dec. 1, told reporters his government plans to invest $2.6 billion to modernize existing domestic refineries owned and operated by national oil company Pemex, and spend another $8.4 billion to build a new one within three years.

The $8.4-billion figure is higher than a $6 billion estimate provided by a key energy advisor during the campaign.

Lopez Obrador, set to become Mexico’s first leftist president in decades, did not detail how the projects would be financed or whether private capital would be involved, but he has often said he will not raise taxes or grow government debt.

Mexico is among Latin America’s largest crude exporters, but is also the biggest importer of U.S. refined products. The country’s next president has pledged to lift refining capacity, which he says has declined due to corruption and neglect.

Pemex, formally known as Petroleos Mexicanos, has six domestic refineries with a total processing capacity of some 1.6 million barrels per day (bpd), but the facilities are only operating at about 40 percent of capacity so far this year.

Meanwhile, gasoline and diesel imports have sky-rocketed in recent months amid planned and unplanned refinery stoppages.

Pemex has posted losses in its refining division for years but Lopez Obrador aims to boost crude processing enough to halt imports within three years.

Lopez Obrador also said he plans to invest another $4 billion to drill new onshore and shallow-water oil wells in the states of Veracruz, Tabasco and Chiapas.

Pemex production has consistently declined in recent years to fall below 2 million bpd after hitting peak output of 3.4 million bpd in 2004.

President Enrique Pena Nieto passed a reform to open up Mexico’s state-run energy industry to private producers, which has led to a series of competitive auctions that have awarded more than 100 oil exploration and production contracts.

Lopez Obrador has said he will respect those contracts as long as an ongoing review does not find signs of corruption. He is widely expected to slow down the process of offering more contracts to private players.

($1 = 19.1100 Mexican pesos)
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Turkey’s currency, the lira, continues to slide as the country’s central bank failed to halt the decline Monday. Turkish President Recep Tayyip Erdogan has accused the United States of purposely trying to damage his country’s economy. More from VOA’s Bill Gallo.
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Tariffs imposed on goods imported from China, Europe and other parts of the world could hurt American consumers and small businesses more than help them. Analysts point out that in today’s global economy, most manufacturers produce parts and import others to make a final product. Tariffs imposed on Chinese electronic parts have already forced a U.S. TV factory to close down, and there are concerns that U.S. farmers could lose big markets overseas. VOA’s Zlatica Hoke has more.
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The Turkish lira has fallen more than 40 percent since the start of the year, 20 percent just last week, amid rising tensions between the U.S. and Turkey, and international investors’ concerns over the economy.  For Turkey, the dramatic collapse of the currency signal fears for the future, as Dorian Jones reports from Istanbul.

Fruit and vegetable sellers, along with fishmongers, try to drum up business in Istanbul’s old Kadikoy market.  But trade is slow. Most people just look and walk on.

Organic shopkeeper Meltem worries for the future.

She says she is pessimistic about the future because prices will rise and the ability of people to purchase will decrease. She adds that as money in their pockets decreases, people in hardship will buy much less than before.

The fear of plummeting currency values, which continued on markets Monday, will stoke Turkey’s already double-digit inflation, which appears to be the top concern among shoppers.  Turkey relies heavily on imports, especially for energy.

Thirty-year-old Tariq, a teacher doing his weekly shopping, says he is cutting back on spending as he prepares for difficult times ahead.

He says the lira has fallen heavily and predicts unbelievable inflation because Turkey imports so much.  He says everybody in Turkey is afraid the coming inflation, especially for heating bills, will make this winter hard.

Across the street, fishmonger Huseyin proudly displays what he claims is the finest turbot in Istanbul and tries to be more positive. He acknowledges there will be problems. 

He says he does not have much to do with dollars, because if more fish are caught, they are cheaper, if less they are more expensive. But he says buyers may be affected if they are having economic difficulties.  He says if there is a good quantity of fish, then he will keep selling.

Shopkeeper Meltem warns of economic uncertainty ahead.

She says the future does not look good, because when people are hungry, they will be tempted to steal and may choose illegal means to survive.  She said things will not be any good. Many stores are closing because there is no trade anymore.

Turkish President Recep Tayyip Erdogan said Monday an international conspiracy is responsible for undermining the currency, but says the financial fundamentals of the economy remain strong, and order will soon return to the markets.  

Such claims have been met with skepticism by international investors, while many economists warn the damage may have already been done to the economy, and difficult times lie ahead. 
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Turkey’s central bank failed to halt the slide of the country’s lira currency on Monday as Turkish President Recep Tayyip Erdogan accused the United States of purposely trying to damage his country’s economy.

“We are together in NATO and then you seek to stab your strategic partner in the back. Can such a thing be accepted?” Erdogan said in the capital, Ankara.

The Turkish lira has plunged 40 percent this year, dropping 16 percent Friday and tumbling another seven percent Monday, trading at 6.9 to the dollar, up slightly from its low point.

The Turkish central bank said it would take “all necessary measures” to stabilize the country’s economy to make sure the banks have all the money they need. But world stock traders were dismayed the bank did not raise interest rates, which is what many economists believe is necessary to ease the crisis.

U.S. President Donald Trump doubled tariffs on Turkish steel and aluminum exports last Friday, in part a response to Turkey refusing to release American pastor Andrew Brunson, whom Turkey accuses of espionage.

Brunson has been detained under house arrest pending his trial. Trump has called the preacher’s detention a “total disgrace.”

Erdogan said Turkey is facing an “economic siege,” calling the decline of the lira an “attack against our country.” Yet he remained optimistic, saying “it is not at all like we sank and we are finished .The dynamics of the Turkish economy are solid, strong and sound and will continue to be so.”

On Sunday, speaking to political supporters Erdogan said “the aim of the operation is to make Turkey surrender in all areas, from finance to politics. We are once again facing a political, underhand[ed] plot. With God’s permission we will overcome this.”

“What is the reason for all this storm in a tea cup?” he said.”There is no economic reason for this … This is called carrying out an operation against Turkey.”

Erdogan renewed his call for Turks to sell dollars and buy lira to boost the currency, while telling business owners to not stockpile the American currency.

“I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars,” he said. “Do not take a stance saying, ‘We are bankrupt, we are done, we should guarantee ourselves.’ If you do that, that would be wrong. You should know that to keep this nation standing is … also the manufacturers’ duty.”

Erdogan signaled he was not looking to offer concessions to the United States or financial markets.

“We will give our answer, by shifting to new markets, new partnerships and new alliances,” he said.

Erdogan has in recent years built closer ties with countries in Latin America, Africa, and Asia. “Some close the doors and some others open new ones,” he said.

He indicated Turkey’s relationship with Washington was imperiled.

“We can only say ‘goodbye’ to anyone who sacrifices its strategic partnership and a half-century alliance with a country of 81 million for the sake of relations with terror groups,” he said.”You dare to sacrifice 81-million Turks for a priest who is linked to terror groups?”

If convicted, Brunson, the pastor, faces a prison term of 35 years.
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Tesla Chief Executive Elon Musk said on Monday he was still in talks with potential backers of a possible buyout of the company, including Saudi Arabia’s sovereign wealth fund, but had not completed securing the funding.

In a blog post, Musk said the Saudi fund had been pushing to take the electric carmaker private in talks dating back nearly two years and also backed the deal last week.

The post fleshed out the Silicon Valley billionaire’s shock announcement on Aug. 7 that he was considering taking the company private and had “secured” funding. But Tesla shares were up only minimally in early trading, suggesting investors are yet to be convinced.

“I continue to have discussions with the Saudi fund, and I also am having discussions with a number of other investors, which is something that I always planned to do since I would like for Tesla to continue to have a broad investor base,” Musk wrote.

He said that since his Twitter posts on the possibility of a deal the managing director of the Saudi fund had expressed support for proceeding subject to financial and other due diligence.

Saudi Arabia’s Public Investment Fund (PIF) is known for its technology investments, including the $45 billion it has spent in SoftBank Group Corp’s Vision Fund.

The fund did not immediately respond to a request for comment. Tesla declined to comment further beyond Musk’s blog post.

“They first met with me at the beginning of 2017 to express this interest because of the important need to diversify away from oil,” Musk wrote.

“They then held several additional meetings with me over the next year to reiterate this interest and to try to move forward with a going private transaction. Obviously, the Saudi sovereign fund has more than enough capital needed to execute on such a transaction.”

Several analysts have said going-private would make sense for Tesla but expressed skepticism about the company’s ability to raise the required funds.

Musk’s failure to promptly file a formal disclosure has led to lawsuits from investors, accusing Tesla of fraudulently planning to squeeze short-sellers.

“I left the July 31st meeting [with the fund] with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving,” Musk said. “This is why I referred to ‘funding secured’ in the August 7th announcement.”

Musk said that after discussions on the deal last week with both outside directors and the full board it had been agreed that the next step was for him to consult with major shareholders.

He said he estimated about two-thirds of existing shareholders would roll over into the private Tesla and that as a result the capital required for a buyout deal would be less than the market value of company.

After opening sharply higher, Tesla shares were up just 0.5 percent at $357 in early trading on Monday, almost 8 percent below last week’s peak.
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A vessel carrying U.S. soybeans was unloading its cargo worth at least $23 million at the Chinese port of Dalian on Monday, becoming one of the first shipments to incur hefty new import duties as the trade row deepens between Beijing and Washington.

The docking of the vessel after five weeks anchored off China’s coast ended long-running speculation over the fate of the cargo, which had captured public attention.

China’s state grains stockpiler Sinograin confirmed in a fax to Reuters it will pay the additional 25 percent import tariff on its 70,000 ton cargo of the oilseed. That equates to about $6 million.

Comments on the country’s Twitter-like Weibo showed early public support for the cargo had started to wane amid concerns that the public is footing the bill for the prolonged trade war.

“Isn’t Sinograin state-owned? Who is this tariff hurting? Eventually it is us paying the tariffs and it’s us being sanctioned!” said one user.

Two posts about the ship’s arrival in dock and the extra costs generated more than 800 comments, mostly negative.

“Are we imposing sanction on ourselves? Common people will have to pay for that,” said another Weibo user.

Peak Pegasus started unloading its cargo on Saturday, a port official said on Monday, more than a month after it arrived off China’s coast just hours after Beijing imposed 25 percent import duties on $34 billion worth of U.S. goods, including soybeans.

Trade Dispute

The penalties were in retaliation for moves by Washington as part of a tit-for-tat trade dispute between the world’s two largest economies.

Last week, Washington said it would start collecting tariffs on another $16 billion worth of Chinese imports from Aug. 23, as it tries to pressure China to negotiate trade concessions.

Beijing has said it will retaliate in kind.

Soybeans, which are used to make cooking oil and animal feed, are the top U.S. agricultural export to China, with the trade worth $12.7 billion in 2017.

In the fax to Reuters, Sinograin said the cargo was delayed by port congestion, although two officials at Dalian port said they hadn’t seen major backlogs since June.

Two other ships carrying U.S. soybeans, Star Jennifer and Cemtex Pioneer, have been anchored off China’s coast for the past few weeks.

This is unlikely to be the start of a trend while China, the world’s top importer, can source alternative supplies from exporters such as Brazil, analysts said. Domestic stockpiles are 8.21 million tons, close to their highest on records.

“Peak Pegasus is just an extreme case since it failed to make the deadline. Sinograin had to pay for the lesson,” said Tian Hao, analyst from First Futures. “But for other buyers, they have turned to other sources such as Brazil.”
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Iranian Supreme Leader Ayatollah Ali Khamenei said Monday government mismanagement has hurt Iran’s economy more than U.S. sanctions.

U.S. President Donald Trump last week reimposed a set of sanctions that had been lifted as part of the 2015 nuclear deal Iran struck with world powers to limit the country’s nuclear program in exchange for relief from measures that had badly hurt its economy.

Those sanctions target Iran’s automotive sector, its trade in gold and other precious metals, along with its currency, the Iranian rial, and other financial transactions.

Trump has threatened another round of sanctions on November 5 against Iran’s energy-related transactions and business that foreign financial institutions conduct with the Central Bank of Iran.

Khamenei said Monday with better management Iran can resist the U.S. sanctions and overcome them.

Trump has been a frequent critic of the Iran nuclear deal and put the sanctions back in place after pulling the United States from the agreement. He says Iran must change the way it operates, including its activities in Syria and Yemen.

Iran and the other signatories of the nuclear deal have said they intend to continue to abide by the agreement.
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Turkish President Recep Tayyip Erdogan, embroiled in a bitter dispute with the U.S., a NATO ally, contended Sunday the plunging value of his country’s lira currency amounted to a “political plot” against Turkey.

Erdogan, speaking to political supporters in the Black Sea resort of Trabzon, said, “The aim of the operation is to make Turkey surrender in all areas, from finance to politics. We are once again facing a political, underhand plot. With God’s permission we will overcome this.”

U.S. President Donald Trump has feuded with Erdogan over several issues, including the detention of an American pastor in Turkey, whom Turkey has held since 2016 and accused of espionage. Turkey last month released the evangelical preacher from a prison, but is still detaining him under house arrest pending his trial, despite the demands of the U.S.

With the dispute intensifying, Trump on Friday doubled steel and aluminum tariffs on Turkey, sending the beleaguered lira plunging 16 percent, part of a 40 percent plummet for the currency this year. In early Asian trading Monday, the lira fell to a record low of 7.06 against the dollar.

“What is the reason for all this storm in a tea cup?” Erdogan said. “There is no economic reason for this … This is called carrying out an operation against Turkey.”

Erdogan renewed his call for Turks to sell dollars and buy lira to boost the currency, while telling business owners to not stockpile the American currency.

“I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars,” he said. “Do not take a stance saying, ‘We are bankrupt, we are done, we should guarantee ourselves.’ If you do that, that would be wrong. You should know that to keep this nation standing is … also the manufacturers’ duty.”

Erdogan signaled he was not looking to offer concessions to the United States, or financial markets.

“We will give our answer, by shifting to new markets, new partnerships and new alliances,” said Erdogan, who in recent years has built closer ties with countries in Latin America, Africa and Asia. “Some close the doors and some others open new ones.”

He indicated Turkey’s relationship with Washington was imperiled.

“We can only say ‘good-bye’ to anyone who sacrifices its strategic partnership and a half century alliance with a country of 81 million for the sake of relations with terror groups,” he said. “You dare to sacrifice 81-million Turkey for a priest who is linked to terror groups?”

American pastor Andrew Brunson, if convicted, faces a jail term of 35 years. Trump has described his detention as a “total disgrace” and urged Erdogan to free him immediately.
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Iran’s official IRNA news agency is reporting that China’s state-owned petroleum corporation has taken a majority share of the country’s South Pars gas project after French oil and gas company Total announced it would pull out because renewed U.S. economic sanctions against Iran.

The Saturday report quotes Mohammad Mostafavi, an official in Iran’s state oil company, as saying CNPC now owns 80 percent of the shares in the $5 billion project, having bought shares from Total.

CNPC originally had about 30 percent of shares in the project.

The renewal of U.S. sanctions took effect on Tuesday.
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France deems unacceptable a European Commission proposal to exclude French ports from a rerouting of a strategic trade corridor between Ireland and mainland Europe after Brexit, the government said.

At the moment much of Ireland’s trade with the continent goes via Britain in trucks. However, with less than eight months to go until Britain leaves the European Union, there is still little clarity on its future trade relations with the bloc and on the nature of the Irish Republic’s border with the British

province of Northern Ireland.

The new route put forward by the commission would connect Ireland by sea with Dutch and Belgian ports, including Zeebrugge and Rotterdam. French ports such as Calais and Dunkirk would be bypassed.

“France and Ireland maintain important trade channels, both overland via Britain and via direct maritime routes. The geographical proximity between Ireland and France creates an obvious connection to the single market,” French Transport Minister Elisabeth Borne wrote to the EU’s transport

commissioner in a letter dated August 10.

“Surprisingly, the commission proposal in no way takes this into account. This proposal therefore is not acceptable to France.”

At stake are jobs, millions of dollars’ worth of port revenues and possibly EU infrastructure funding.

Borne said that French ports had the necessary resources to ensure they could handle the likely increase in trade flows, hinting at concerns about congestion in ports such as Calais, France’s busiest passenger port.
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By most indicators, the U.S. economy is doing well. An achievement that President Donald Trump has boasted about on many occasions. But whether Americans see it that way, may depend on which side of the political aisle they’re on. This report by White House Correspondent Patsy Widakuswara explores partisanship and the American economy.
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The White House issued a proclamation Friday evening officially announcing the doubling of steel tariffs on Turkey, slated to go into effect Monday.

Earlier Friday, the Turkish lira suffered its worst one-day loss in a decade after President Donald Trump announced the United States would hike metals tariffs, prompting investor confidence to slump.

Trump announced the doubling of aluminum and steel tariffs in a tweet Friday morning, citing bilateral strains.

Ties between the countries have been strained, as Washington is urging Ankara to release Andrew Brunson. The American pastor is currently held under house arrest on terrorism charges. The White House dismisses the charges as baseless and accused Ankara of hostage taking. Turkey wants Brunson to stand trial.

The Brunson dispute triggered the collapse in the Turkish currency as investors feared U.S. financial sanctions. All week the lira has been under pressure, which accelerated with the failure of diplomatic talks in Washington this week.

‘Just the stick’​

U.S. patience with Turkey is seen to have ended, experts say.

“Most of the actors in the Washington scene think that carrots just don’t work with Turkey, just the stick,” said political analyst Atilla Yesilada of Global Source Partners.

Friday saw the lira falling more than 15 percent, bringing the decline to more than 40 percent since the beginning of the year. Turkish President Recep Tayyip Erdogan addressed supporters in the provincial city of Bayburt.

“We will not lose the economic war,” Erdogan said Friday. “Turkey will fight economic hitmen just as it fought the coup plotters.”

The Turkish president alleged Western powers are seeking to oust him from power through the creation of a financial crisis, after failing to so during a 2016 coup attempt.

“Some countries have engaged in behavior that protects coup plotters and knows no laws or justice,” he said. “Relations with countries who behave like this have reached a point beyond salvaging.”

Analysts suggest Erdogan could have Washington in mind, given Ankara is demanding the extradition of U.S.-based Turkish cleric Fethullah Gulen, who is blamed for masterminding the botched 2016 military take over.

Erdogan’s claim of a Western political plot against him sparked alarm in investors and prompted an acceleration in the currency sell-off.

Ankara is under pressure to adopt orthodox steps to protect the lira by aggressively increasing interest rates to rein in double-digit inflation, a move Erdogan has publicly opposed.

Adding to investors’ concerns, Erdogan pledged a continuation of his debt-fueled construction policy to boost the economy, which is blamed for Turkey’s rampant inflation and has added to currency weakness.

‘A national struggle’

The Turkish president Friday dismissed such concerns and called for people to defend the currency.

“Those who have dollars, euros or gold under their pillows should go and exchange them into (Turkish) lira. This is a national struggle. This will be my nation’s response to those who have declared an economic war,” Erdogan said during a rally of supporters.

The drop in the lira has put increasing pressure on Turkish banks, given that many companies have borrowed heavily in foreign currency. Corporate foreign currency loans are around $250 billion, much of which is due to be repaid in a year.

“I don’t think foreign banks will be willing to lend to Turkish banks. There are so many rumors percolating that large companies are going bankrupt,” said analyst Yesilada. “I am afraid there will be a bank run in Turkey, people rushing to withdraw their deposits.”

The Turkish president his indicated possible support from Beijing and Moscow, but analysts are skeptical given the scale of support the Turkish economy needs.

But the souring in U.S.-Turkey relations could give new strength to Russia-Turkey ties, already a source of concern among Turkey’s Western allies.

“There are historical and geopolitical reasons for limits with relations with Moscow, limits I think we’ve reached,” said international relations expert Soli Ozel of Istanbul’s Kadir Has University. “But if the United States can’t handle relations with Turkey … then a further deepening of relations with Moscow is an option. It may be not the best, but it is an option.”
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A threat of more U.S. sanctions has sent the ruble tumbling to its weakest since mid-2016 but authorities are not expected to leap to the currency’s defense after weathering a similar storm in April, analysts said.

The ruble crashed to 67.67 versus the dollar on Friday, losing more than 6 percent of its value in just one week, as the United States said it would impose fresh sanctions against Moscow.

The ruble’s slide was akin to its drop in April when, also battered by sanctions from Washington, it lost 12 percent in just a few days.

Lack of action

The lack of action by authorities back then is convincing market players now that they will not intervene this time either.

“When we think about what has happened in April, when sanctions were introduced and we saw a similar reaction in the ruble … this is not a move in the ruble that would make policy makers extremely worried,” said Tilmann Kolb, an emerging market analyst at UBS Global Wealth Management in Zurich.

Liza Ermolenko, an economist at Barclays in London, said that given the central bank refrained from intervening in the market in April, it is clear that a more sudden and deeper drop in the ruble would be required to make it step in now.

The authorities have made few public comments on the latest falls, which started on Wednesday, when the U.S. State Department announced a new round of sanctions that pushed the ruble to two-year lows and sparked a wider sell-off over fears Russia was locked in a spiral of never-ending sanctions.

Last intervention in 2014

On Friday the central bank said it had tools to prevent risks to financial stability, without specifying what they were.

The central bank, which last intervened in the market and raised rates to save the ruble from tanking in 2014, described the ruble’s drop on news about more U.S. sanctions as natural reaction.

As in April, the central bank has reduced its daily buying of foreign currency for state reserves this week to lift extra pressure from the ruble, which has fallen by around 15 percent versus the dollar so far this year.

“Authorities do not set a goal of avoiding a ruble drop at the moment. That’s why they won’t do anything,” said Pyotr Milovanov, currency trader at Metallinvestbank in Moscow.

Analysts say the other possible option to support the ruble would be a hike to the key interest rate, now at 7.25 percent, but this also seems to be off the table for now.

Rate hikes?

“At this stage we don’t expect policymakers to resort to rate hikes,” Ermolenko from Barclays said.

Kolb from UBS said he would “expect a bigger reaction if we got perhaps towards 70 (rubles per dollar) but this also depends on how we get there, if at all.”

“I wouldn’t expect Russian policymakers to use their available tools to support the ruble at current levels,” he said.
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Consumer prices in the U.S. rose a modest 2.9 percent in July from a year ago, as inflation rose gradually but slowly.

Friday’s Labor Department report showed the Consumer Price Index, a broad measure of Americans’ living expenses, increased two-tenths of a percentage point from the previous month. Core prices, which exclude volatile food and energy prices, rose at the same pace.

The main driver of inflation in July was higher housing costs. Food expenses increased slightly, while energy, medical care and clothing prices fell modestly.

The data showed that prices were rising a little faster than wages, leaving the buying power of paychecks one-tenth of a percentage point lower today than a year ago, despite an otherwise healthy economy.

Inflation increases and wage declines in the past 12 months can be blamed on higher oil, gasoline and transportation costs, which had remained at relatively low levels for the previous six years.

Keeping inflation in check is the job of the Federal Reserve, the central bank system of the U.S. It tries to do that by raising interest rates, which makes it more expensive to borrow money and tends to cool economic activity. Lower levels of commerce tend to reduce the pressure to raise prices and wages that fuel inflation.

The Fed already has raised interest rates twice this year, and many economists expect two more interest rate hikes this year. Higher borrowing costs, however, would make it more difficult for the economy to sustain the 3 percent growth rate President Donald Trump promised to voters.
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U.S. President Donald Trump further escalated tensions with Turkey Friday by announcing a sharp increase in tariffs on steel and aluminum imports in an early morning post on Twitter.

In announcing 20 percent tariffs on aluminum and 50 percent tariffs on steel, Trump said “the Turkish Lira, slides rapidly downward against our very strong Dollar!”

Trump’s announcement came two days after a Turkish diplomatic delegation visited Washington in a bid to to ease tensions between the two countries.

Analysts have warned that rising U.S.-Turkish tensions are threatening a financial crisis in Turkey.

On Monday, the Turkish lira suffered its most significant drop in a decade following reports the Trump administration was considering ending Turkey’s duty-free access to the U.S. market. Trump’s Friday tweet caused a further drop in the Turkish currency.

U.S.-Turkish tensions began to escalate last week, with Trump targeting two Turkish ministers with sanctions over the detention of U.S. pastor Andrew Brunson. Brunson is currently under house arrest in Turkey while standing trial on terrorism charges.

The White House dismisses the charges as baseless and accused Ankara of hostage taking.

Saying Friday Turkey faced “an economic war,” Turkish President Recep Tayyip Erdogan urged citizens to support the lira by exchanging foreign money for the local currency.

“If you have dollars, euros or gold under your pillow, go to banks to exchange them for Turkish lira,” he said on national television. “It is a national fight.”

Erdogan called on Turks to not be concerned about exchange rate movements, mockingly declaring “the dollar, the mollar will not cut our path.”

Erdogan added that Turkey was not afraid of “threats” and said it had many alternative sources of economic cooperation “from Iran, to Russia, to China, and some European countries.”
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Chinese state media on Thursday accused the United States of a “mobster mentality” in its move to implement additional tariffs on Chinese goods and warned that Beijing had all the necessary means to fight back.

The comments marked a ratcheting up in tensions between the world’s two largest economies over a trade dispute, which is already affecting industries including steel and autos and is causing unease about which products could be targeted next.

Beijing late on Wednesday said it would slap additional tariffs of 25 percent on $16 billion worth of U.S. imports, in retaliation against news the United States plans to begin collecting 25 percent extra in tariffs on $16 billion worth of Chinese goods beginning August 23.

“The two countries’ trade conflict, which is merely push and shove at the moment, is likely to escalate into more than just a scuffle if the U.S. administration cannot marshal its mobster mentality,” state newspaper China Daily said in an editorial.

“China continues to do its utmost to avoid a trade war, but in the face of the U.S.’s ever greater demand for protection money, China has no choice but to fight back,” it said.

So far, China has now either imposed or proposed tariffs on $110 billion of U.S. goods, representing the vast majority of its annual imports of American products. Big-ticket U.S. items that are still not on any list are crude oil and large aircraft.

“China has confidence in protecting its own interests [and] has many means,” state broadcaster CCTV said on its early-morning news show.

Another commentary, written by China Institute of International Studies research fellow Jia Xiudong and published in the overseas edition of the People’s Daily newspaper, said the United States was trying to “suppress China’s development.”

China should consider “unconventional methods” such as the stimulus plan used by Beijing during the global financial crisis if needed to sustain economic growth, the Global Times newspaper, a tabloid published by the ruling Communist Party’s People’s Daily, said in a commentary.
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