Little-known U.S. firm secures deal for Syrian oil

Former diplomat and special forces soldier got green light to work with Kurds to develop crude in northeastern Syria.

A pond of oil at an oil field controlled by a U.S-backed Kurdish group, in Rmeilan, Hassakeh province, Syria. | AP Photo/Hussein Malla


By LARA SELIGMAN and BEN LEFEBVRE

08/03/2020

An American company has inked a contract with Kurdish authorities in northeastern Syria to develop and export the region’s crude oil under a secretive deal approved by the U.S. government months after President Donald Trump announced he was leaving U.S. troops to “secure the oil,” multiple people familiar with the project told POLITICO.

The agreement reached by a little-known firm helmed by politically connected former military and diplomatic officials has already angered the government of Syrian President Bashar Assad, which does not recognize the Kurdish authorities as autonomous. The Syrian Foreign Minister called the deal illegal and said it is aimed at “stealing” Syria’s crude.

The deal advances a longtime U.S. goal to help the Syrian Kurds, which have been staunch U.S. allies in the fight against the Islamic terrorist group, to strengthen their position in the region, where they face not just Assad's brutal regime but also the Turkish government -- and provide new means to help address the desperate needs of civilians that have been caught in the Syrian civil war.

The company, Delta Crescent Energy LLC, was incorporated in Delaware in February 2019, according to its business license. Its partners include former U.S. ambassador to Denmark James Cain; James Reese, a former officer in the Army’s elite Delta Force; and John P. Dorrier Jr., a former executive at GulfSands Petroleum, a U.K.-based oil company with offices and drilling experience in Syria.

It has been in talks with the Kurds for more than a year but only received a license from the Treasury Department's Office of Foreign Assets Control for the work in April, according to a State Department official and a Syrian source familiar with the discussions. The arrangement is to refine and use some of the oil locally but also export some through northern Iraq and Turkey, they said.

The Treasury Department has multiple sanctions against Syria’s oil market. In a March 2019 the Trump administration issued the orders targeting companies that deliver or finance petroleum shipments of Syrian oil on behalf of the country’s government. The effort is designed to punish the Assad regime for atrocities committed amid the country’s civil war.

However, the Pentagon and State Department have long been working to enable the Syrian Kurds to harness the crude oil in the region, a former Trump administration official told POLITICO. The idea is that revenue from the oil could help the Kurds deal with the dire humanitarian situation in the war-torn country, including overflowing refugee camps from years of civil war, the person said.

“The goal is to get the production back up to where it was before the civil war and sanctions,” said Ambassador Cain. “It was very much our effort to keep the State Department advised — not seeking approval — but wanting to know if this was contrary to American policy interest. Nobody told us no.”

A spokesperson for the Syrian Democratic Forces, which controls the region and is allied with the United States, declined to comment. A Treasury Department spokesperson also declined to discuss the deal on Monday.

"Treasury does not generally comment on or provide details on license applications or specific licenses that have been issued as the information contained within these licensing applications and determinations may be protected by the Privacy Act, the Trade Secrets Act, or other regulations governing OFAC’s licensing authorities," the spokesperson said in an email.



Secretary of State Mike Pompeo appears during a Senate Foreign Relations committee hearing in Washington. | Greg Nash/Pool via AP

The deal first came to light during a Senate Foreign Relations Committee hearing on Thursday, when Secretary of State Mike Pompeo was questioned about it by Republican Sen. Lindsey Graham of South Carolina.

Pompeo said the administration supports the deal and said it is intended to “modernize” the oil fields. “The deal took a little longer ... than we had hoped, and now we’re in implementation,” he said.

Graham told POLITICO on Monday that the company will brief him this week on its plans.

"I think this company’s going to improve the viability of the northern oil fields to make them more productive,” Graham said. “Conceptually it makes sense that we should, instead of just writing checks, help people help themselves.”

The State Department is leading the effort under James Jeffrey, United States Special Representative for Syria Engagement and the Special Envoy for the Global Coalition to Defeat ISIL, and his deputy, Joel Rayburn, the former Trump administration official said.

However, they have sought to keep the deal quiet for fear that Russia, which backs Assad’s regime and deploys military and paramilitary forces across the region, might retaliate, both the State Department official and Syrian source said.

A State Department spokesperson declined to comment on the contract but noted that the U.S. government considers requests “on a case-by-case basis to authorize U.S. persons’ involvement in activities that would normally be prohibited.”

“We are not involved in the commercial decisions of our local partners. However, as a general matter, we work to ensure that our sanctions are in line with our foreign policy interests and target the Assad’s regime continued violence against the Syrian people,” the spokesperson said.

“Syrian oil is for the Syrian people and we remain committed to the unity and territorial integrity of Syria," the spokesperson added. "The United States government does not own, control, or manage the oil resources in Syria. The populations in areas liberated from ISIS make their own decisions on local governance.”

Delta Crescent has so far been the only company to receive a license to work in Syria since U.S. military forces all but abandoned the country in October.

Trump at the time ordered only enough troops to stay in the war-ravaged country to allow for “keeping the oil." The U.S. used residual forces to secure the oil fields in the eastern part of the country and to continue fighting Islamic State militants. The country’s oil field were seized by ISIS during the civil war. Years of fighting that forced ISIS to retreat left the production infrastructure devastated, however.

Delta Crescent operates under the protection of the SDF and the U.S. military in northeast Syria, the sources said. The company’s plan is to sell the Syrian oil to various customers in the region, potentially including Assad, Turkish-backed rebels and Iraqi Kurdistan, all of whom could then sell it on the international market, the Syrian source said.

Cain said the company would sell its products “directly into the international market at market prices so that they can use the proceeds to rebuild their economy and help their people,“ he said.

Reese, the former Delta Force soldier was also a founder at North Carolina-based consulting and private security firm TigerSwan.

The company gained notoriety several years ago when North Dakota regulators sued it for providing private security in the state without a license after it sent agents to crack down on protests against the Dakota Access pipeline, operated by a company owned by Trump donor Kelcy Warren.

TigerSwan denied all wrongdoing and the state dropped the case after the company left North Dakota.

Attempts to reach Dorrier were unsuccessful. He left GulfSands in the late 2000s, according to news reports at the time. A GulfSands spokesperson did not reply to emails seeking comment.

Betsy Swan Woodruff contributed to this report.

Migrant workers on farms across Canada are being told they can’t leave, raising human rights concerns

TAVIA GRANT AND KATHRYN BLAZE BAUM
PUBLISHED AUGUST 3, 2020
Open this photo in gallery

Workers do maintenance at the Scotlynn Group near Vittoria, Ont., in Norfolk County on Wednesday, June 3, 2020. Agriculture employers in several provinces are restricting the movement of migrant farm workers during the pandemic.

NATHAN DENETTE/THE CANADIAN PRESS

Agriculture employers in several provinces are restricting the movement of migrant farm workers during the pandemic, raising questions about the human rights of temporary foreign workers who in some cases aren’t allowed to leave the premises, even to get groceries.

In an attempt to contain the spread of COVID-19 at agri-food operations, some employers are asking workers to sign agreements or conform to rules confining them to the property. Under the federal temporary foreign worker (TFW) program, employers often provide seasonal farm staff with on-site accommodations, which can include bunkhouses, trailers and sheds.

Some employees said they have not ventured off the grounds for several months, forgoing grocery runs, church services, medical appointments and visits with spouses and children who live in Canada year-round.

Workers told The Globe that they feel pressure to abide by the employer-imposed restrictions because their status in the country is tied to their status on the farm. The Globe is not identifying them because they fear workplace reprisal and deportation. Where possible, The Globe reviewed the contracts and letters pertaining to restrictions and terminations during the pandemic period.

Ottawa offers cash, more promises of reform for migrant workers in the agriculture industry

A Jamaican man who works on an Ontario vegetable farm said he felt he had no choice but to sign a form saying that he voluntarily wouldn’t leave the premises to buy groceries. The form, which the Migrant Workers Alliance for Change advocacy group said is being widely used by employers, states that the worker agrees that the employer or a service will arrange food delivery to the farm.


It says that although the worker has the choice to buy their own groceries, they have made the decision not to do so “in the best interest of my own health and those that I may interact with in a public setting.” Grocery costs, the form says, will be deducted from paycheques.

For the past two months, the man hasn’t gone grocery shopping, attended church or visited family in Toronto. He said he is confined to the crops by day and a bunkhouse without air conditioning by night. “We don’t deserve this,” he said, adding that he believes he is being overcharged for food.

“We can’t speak out. It’s like shackles around our feet. We cannot say nothing, because we want to come back.” He said access to permanent-resident status would help level the playing field by empowering workers to defend their rights.

The structure of the TFW program has long drawn criticism for enabling power imbalances between farm operators and their workers. The pandemic has exacerbated the problem and exposed the poor working and living conditions that some migrant workers face as they support the Canadian food system. In Ontario alone, more than 1,300 migrant farm workers have been infected with COVID-19, according to a Globe and Mail survey of local public-health units.

Medical officials stress that the workers contracted the virus locally. The situation is especially grave in Windsor-Essex, which is not moving to the next phase of reopening as the virus continues to spread in the Kingsville and Leamington growing regions

Fay Faraday, a Toronto-based labour and human-rights lawyer, said the restrictions of movement on workers this year are unprecedented and “feed into systemic racism that positions them as a threat,” she said. “What we’re seeing now is a really broad imposition of control. This goes so far beyond what is required in terms of social distancing.”

There’s nothing in the law, she said, that gives farm employers the ability to impose stricter conditions of public-safety measures on their employees during their off-work hours.

The pandemic-related restrictions, which were described to The Globe by workers, advocates and farmers in Ontario, B.C. and Nova Scotia, are a symptom of the pressure on employers to both ensure the success of their harvest and the well-being of their workers. Mid-season disruptions caused by labour shortages due to COVID-19 could lead to rotten crops and significant economic losses.

In addition, employers are getting advice from local public-health units, which in some regions say that workers should avoid going into town as much as possible.

Approximately 37,000 temporary foreign workers have already arrived in Canada to work on farms; an additional 14,000 are expected to come before the end of the year, with around half heading for Ontario. Harvests are looming for many key crops destined for Canadian tables, from field tomatoes to apples and squash.

None of the provincial health ministries in B.C., Ontario or Nova Scotia have issued restrictions on the ability of temporary foreign workers to leave the farm premises if there is no outbreak or specific isolation order in place.

In Nova Scotia, a single mother supporting two daughters back home in Jamaica – said she has been restricted, through a verbal order, from leaving the strawberry farm where she works. “If we have a day off, then we want to go to town to get something to bring back for our children back home,” the woman said.

She said her employer is “more aggressive” this year, using racial slurs and threatening to send workers back home if they speak up about conditions on the farm or pandemic-related rules.

A worker in B.C. told The Globe that he’s not allowed to leave the farm, and has been paying his employer for groceries at what he believes to be double the cost. “This year, they’re not letting us out from the farm to go shop for ourselves and they also don’t let any visitors come see us, including officials who used to come and check on us,” said the worker, who is from Mexico.

“Those restrictions are supposedly due to COVID-19, and yet we live very cramped in these very small trailers.”

Javier Robles, a migrant-support outreach worker at Kelowna Community Resources in B.C., said he takes Walmart orders for employees, and then drops off boxes in the middle of the road just outside the premises; when supervisors aren’t looking, he said, the migrant workers run to get the deliveries and leave cash on the road.

Mr. Robles said he has spoken with many workers this year, particularly those at larger operations, who say they’re required to stay on the premises and cannot have visitors. “They feel frustrated because they see the news that everybody is going to the beach, everybody is trying to have a normal life, but they’re not allowed,” Mr. Robles said.

In West Kelowna, two seasonal agriculture workers from Mexico were fired for breaching restrictions on their movement and having visitors after a community volunteer dropped off some work clothes and culturally appropriate food for them.

The Globe reached out to three large farms in the Kelowna area to ask about their policies; one declined to comment, and one did not respond. Bylands Nurseries, which employed the two workers who were fired for breaking COVID-19-related rules, said that due to the pandemic it is taking “additional precautions” for its staff living in company accommodations.

The company, which experienced an outbreak in late March, said it provides grocery services to workers and transportation to any medical appointments. Regarding the workers who were terminated, Bylands says it dismissed them after “multiple infractions, following orientation on the workplace policies and warnings about leaving the premises.”

In accordance with the terms of the seasonal agriculture worker program, the company alerted the Mexican consulate of the terminations. Amy Cohen, the volunteer and advocate who dropped off the clothes and food to the workers, said the pair have since been deported.

Jenn Pfenning, co-owner of Pfenning Organic Vegetables Inc. in New Hamburg, Ont., said that while the farm’s 35 Jamaican workers are not prohibited from leaving the premises, she can understand, to some degree, the logic for imposing restrictions aimed at mitigating pandemic-related risk.

“This is what happens when you have a program that sets employers up to be responsible for every aspect of the workers’ lives in a parental fashion,” said Ms. Pfenning, the chair of the National Farmers Union migrant worker subcommittee.


“Farmers are worried about protecting their workers’ health and well-being from a personal and business perspective. Sick workers can’t work. Unfortunately, that creates a human-rights issue.”

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UPDATED
HSBC warns loan losses could hit $13 billion as profit plunges 65%

Lawrence White, Alun John

LONDON/HONG KONG (Reuters) - HSBC Holdings PLC warned its bad debt charges could blow past a previous estimate to $13 billion this year and said its profits more than halved, as the coronavirus pandemic hammered the bank’s retail and corporate customers worldwide.


The lender warned its capital reserves could deteriorate, its revenues would come under pressure and it faced heightened geopolitical risk as Europe’s biggest bank set out a gloomier than expected outlook for the second half of the year.

HSBC increased its estimate of the total bad debt charges it could take this year to between $8 billion and $13 billion from $7 billion-$11 billion, reflecting worse-than-expected actual losses in the second quarter and expectations of a steeper decline in the economy.


“What we have seen this quarter is quite a sharp shift in economic outlook for the global economy, the famous ‘V’ has got a lot sharper and as a result we have materially increased our provisions,” Chief Financial Officer Ewen Stevenson told Reuters.

HSBC’s shares fell 4.6% to a nerly twelve-year low as investors digested the scale of the challenge facing HSBC, as it grapples with a global pandemic, political unrest in its core Hong Kong market, and low interest rates on its lending worldwide.

The bank reported a pre-tax profit of $4.32 billion for the first six months this year, lower than the $5.67 billion average of analysts’ forecasts.
FILE PHOTO: HSBC logo is seen in the financial district in New York, U.S., August 7, 2019. REUTERS/Brendan McDermid/File Photo

HSBC’s business in Britain has been hit particularly hard, Stevenson said, as it took a $1.5 billion charge against expected credit losses.

HSBC’s results reinforced the trend of lenders across the world increasing their buffers to absorb souring loans at a time when companies - from aviation to retail and hospitality sectors - are reeling from the impact of COVID-19.

TROUBLE AHEAD

The bank’s credit impairment provisions in the first-half soared to $6.9 billion, compared to $1 billion in the same period a year earlier.

Impairment charges included a $1.2 billion writedown on the value of software it owns, mainly in Europe, it said.

While HSBC’s core capital ratio, a key measure of financial strength, rose to 15% at the end of June, the bank warned the metric would likely decline later this year as falling credit ratings hit its risk-weighted asset ratio.

Its revenues fell 9% in the six-month period, as global interest rate cuts and declining market values on assets in investment banking and insurance outweighed higher trading income.

HSBC is continuing to review its long-term dividend policy, CEO Noel Quinn said in a statement.

FILE PHOTO: A Chinese national flag flies in front of HSBC headquarters in Hong Kong, China, July 28, 2020. REUTERS/Tyrone Siu/File Photo GLOBAL BUSINESS WEEK AHEAD

The bank earlier this year halted payouts in response to a regulatory request in Britain, infuriating many of its retail investors who rely on it for income, particularly in Hong Kong.

Quinn told Reuters the bank’s staff headcount has fallen by some 4,000 this year after it restarted a redundancy programme that was put on ice after the coronavirus outbreak.

The bank is aiming to cut costs by 3% this year from that restructuring as well as lower employee spending on travel and other items during the pandemic, he said.

Only a fifth of the around 9,000 staff in its headquarters in London’s Canary Wharf district would be able to return to work in the near term for safety reasons, Quinn told Reuters.


Reporting by Alun John in Hong Kong and Lawrence White in London; Additional reporting by Noah Sin in Hong Kong; Editing by Muralikumar Anantharaman and Louise Heavens


HSBC profits sink by 82% as loans sour: Shares plunge to lowest levels since 2009 crisis

By LUCY WHITE FOR THE DAILY MAIL

PUBLISHED: 3 August 2020 

HSBC profits plunged more than 82 per cent as the bank warned £10billion worth of loans could turn sour this year due to the coronavirus pandemic. 

The London-headquartered lender, which makes most of its money in Asia, said pre-tax profits slid to just £824m in the three months to June 30, down from £4.7billion over the same period last year. 

This was much worse than the £1.9billion expected by analysts, and caused shares to slump 2.9 per cent, or 9.95p, to 332.25p – their lowest level since March 2009 during the depths of the last financial crisis. 

+1

Slump: The lender said pre-tax profits slid to just £824m in the three months to June 30

HSBC boss Noel Quinn said he was planning to 'accelerate' his shake-up of the bank in a cost-cutting drive which was already set to see 35,000 jobs axed globally by 2022. 


The brutal restructuring was initially put on hold during the pandemic, but chief financial officer Ewen Stevenson confirmed yesterday that 3,800 jobs had been cut since the beginning of the year. 

And in a worrying sign for office landlords and business districts around the world, Quinn added that the bank may need less office space in future as the pandemic pushed more staff to work from home. 

He said: 'I do think there's potential over the medium term to reflect on different ways of working, allowing people greater flexibility to work from home or in the office.' 

Prime Minister Boris Johnson has urged workers to return to their offices where possible as lockdown eases, to bring life to deserted business hotspots. 

But the majority of staff at HSBC and other major financial institutions have been working at home throughout the pandemic, and many firms are now wondering whether they need all of their towering skyscrapers in costly locations such as Canary Wharf and London's Square Mile. 

The pandemic has also been weighing on HSBC's loan book, as it thinks more borrowers will become unable to repay their loans due to job losses and the resulting economic downturn. 

It had already set aside £2.3billion to cover bad loans in the first three months of 2020, and ramped this up to £5.3billion in June as the extent of the damage began to emerge. 

HSBC warned the cost over the full year could be as high as £10billion. Its outlook for the UK was gloomy, as around £1billion of the expected losses were linked to the country. On top of the coronavirus troubles, HSBC has been dealing with a flare-up in tensions between the US and China. 


The bank angered MPs, customers and investors when it supported the controversial law imposed by China on Hong Kong in June. 

The national security law drastically reduces Hong Kong citizens' rights, and makes it a crime for anyone to criticise Beijing's Communist regime. 

Quinn yesterday denied the bank would be forced to choose between its operations in the West and its more profitable business in Asia. He said: 'Current tensions between China and the US inevitably create challenging situations for an organisation with HSBC's footprint.' 

And despite prominent pro-democracy protester Joshua Wong claiming he had faced increased questions from HSBC over his finances since the law was introduced, HSBC denied it was screening customers specifically to check whether they had pro-democracy links. 

Quinn insisted that the bank was simply complying with all laws in the jurisdictions it operates in, and refused to speculate on the possible impact which US sanctions on Chinese officials could have. 
Metro Bank has bought Ratesetter as it ramps up its efforts to expand into more profitable lending. Metro, which is trying to recover from a bleak 2019 when it swung to a £11.7m loss, will buy the online lender for up to £12m. Ratesetter matches investors who want to lend with borrowers who are in need of cash, and offers personal loans, financing for car dealers, and loans for property developers, and has handed out more than £4billion since it launched.

UNDERDOGS
Start considering the Raptors real NBA title contenders

Kirk Goldsberry ESPN Staff Writer

The Toronto Raptors are the defending NBA champions, yet they remain horribly under the radar in this year's title race. That needs to change. Dating back to before the league's stoppage in March, this team has won 23 of its past 27 games. They've been awesome in their first two restart matchups, beating the Los Angeles Lakers by 15 points on Saturday night and outlasting Jimmy Butler and the Miami Heat on Monday.

Still, a recent poll of my esteemed ESPN colleagues revealed that only three of 16 NBA experts expect Toronto to come out of the Eastern Conference. That's harsh, but Nate Silver's robots are even harsher. The FiveThirtyEight prediction model, which is even called RAPTOR, is currently insulting its namesake -- giving the dysfunctional Philadelphia 76ers a 29% chance of making the Finals while the Boston Celtics have a 19% chance. The Raptors are down at 10%, but some folks have noticed how good they are.

"It's a great team," LeBron James said after Saturday's game. "No ifs, ands or buts. Exceptionally well coached. Championship DNA, you can never take that away from a ball club. ... The media may not talk about them much or give them as much credit because Kawhi [Leonard] is gone, but players know what type of team they are."


LeBron James discusses the "championship DNA" that the Raptors possess and explains why they are more of a threat than they get credit for.

James is absolutely right. Toronto has a 71.6% win percentage over the past three seasons, the best in the NBA. In that same time period, the Raptors have also recorded a plus-6.8 point differential -- again, No. 1 overall. This team is legitimate with or without last year's NBA Finals MVP.

While they're grabbing hold of the East's No. 2 seed with the league's No. 4 net rating, the Raptors' first two games in the bubble have revealed one key driver for their success: This is an emerging defensive juggernaut.

In a league increasingly dominated by perimeter production, head coach Nick Nurse and the Raps have found a way to frustrate the dominant tactics. The basketball world took notice when Nurse dusted off a highly unusual box-and-one defense that frustrated Stephen Curry and the Warriors in the Finals last year, but that was just the beginning. Nurse's staff has earned a reputation for innovative, unpredictable and unconventional approaches.


"The whole fourth quarter they were playing some janky defense ... Over the course of the game, it's kinda disrespectful to leave Andre Iguodala open like that. ... He's made big shots like that before."

-Steph Curry on the finish to Game 2 pic.twitter.com/eQ9Bymczv2— NBA on ESPN (@ESPNNBA) June 3, 2019

Nurse's weird bag of defensive tricks includes full-court presses, 2-3 zones, surprise traps and double-teams. The real trick, though, is having a roster full of guys ready and willing to implement these strategies. Masai Ujiri and the front office have loaded the roster with a bunch of guys who love to fight on the unglamourous end of the floor.

It all starts with Marc Gasol and Serge Ibaka shoring up the frontcourt with elite rim protection and communication. Toronto allows 41.9 points per game in the paint, trailing only the Milwaukee Bucks in that department.

The wings are led by Pascal Siakam and his stunning versatility. At 6-foot-9, Siakam can do it all. He has become one of the NBA's best 3-point deterrents, leading the NBA in contested 3s this season, per Second Spectrum tracking data. And shooters have only made 31.2% of the 337 3s that Siakam has challenged, the third-best mark among the 33 players with at least 250 contests.

The backcourt includes both Fred VanVleet's remarkable perimeter activity -- he leads the league in deflected passes, and was great on Curry last year -- and Kyle Lowry's never-ending love of drawing charges.

Bottom line: These dudes love the dark arts of defense. They each thrive in their own unique ways, but the collective strength is undeniable. It allows the Raptors to implement diverse, unorthodox defensive strategies tailored to each opponent. Game to game, you never know what you're going to get, and the results are solid.

https://www.instagram.com/p/CDcPmKIl1J_/?utm_source=ig_embed

Raptors opponents are making just 33.6% of their triples this season, the lowest such figure in the NBA. But the numbers behind that stat are interesting. Toronto actually allows the easiest 3s in the league, according to Second Spectrum's shot quality data. The negative difference between opponent's expected field goal percentage on 3s -- when accounting for things such as defender distance and shooter location -- and their actual shooting performance is greater than that for any other team by a considerable margin.

There's certainly some luck involved here, but there's a case that the Raptors' No. 2 overall defense should be credited more to strategy and execution. The Heat came into Monday's matchup as the league's most efficient 3-point shooting team, but Toronto held Miami to just 31% from deep in large part by limiting Duncan Robinson -- who trails only James Harden in total 3s this season -- to just one made 3 on four attempts. The way Robinson was swarmed and hounded was not luck.

The Raptors also like to shut down unassisted 3s, which are surging in popularity. Back in 2013-14, NBA shooters attempted just 4.5 such shots per 100 possessions. This season that number has surged to 7.8 -- but not against the Raptors, who give up 5.7 such tries per 100 possessions, the fewest in the NBA, per Second Spectrum. And opponents are converting just 29% of those looks, which ranks second in the league.

All told, Raptors opponents are managing to convert just 1.6 unassisted 3s per game, meaning they have to try to find offense elsewhere. Good luck.

Following the departure of Leonard, many NBA observers expected Toronto to crater. But the leftover Raptors have very different expectations. This team is playing like it can win it all again, and its case is strong. As Curry and Giannis Antetokounmpo both found out last year: Defense wins championships.

GDP crash

U.S. gross domestic product plunged at a 32.9% annualized rate in the second quarter of 2020, showing the depth of the coronavirus pandemic’s effect on the health of the American economy.

Graphics by Travis Hartman

PUBLISHED JULY 30, 2020

Gross domestic product is the broadest measure of everything produced by U.S. workers, private capital and the government. In 2019 that came to about $19.2 trillion adjusted for inflation. In 2020, that number has fallen enormously because of the COVID-19 pandemic, with the largest drop in history during the second quarter.

Three large aspects of the economy are particularly reflective of the pandemic’s impact. Overall consumer spending has suffered with millions of people out of work, government spending has soared because of the CARES act and business investment has languished with companies so unsure of the future.

Consumer spending

Consumer spending has historically been the driving force behind GDP, accounting for roughly two thirds of the total. The pandemic has had a big effect on how consumers spend their money. Spending on goods has remained relatively buoyant as people stocked up on food and other essentials, while stay-at-home orders and restaurant and bar shutdowns hit the service sector quite hard.

Consumer spending since 2002

Total consumer spending

Services

Goods

Note: Grey bars denote recession

Government spending

The U.S. government has spent money at an unprecedented pace to cushion the blow to households and businesses from the pandemic. That is most reflected in a nearly 40% increase in non-defense government spending during the second quarter. This massive bump in spending fueled a range of crisis relief programs, including a $1200 check to all qualifying Americans, enhanced unemployment benefits of $600/week on top of normal state programs, and a range of programs targeted at supporting businesses from airlines to pizza shops.

Non-defense government spending since 2002

Q2 2011

$471.6 billion

Note: Grey bars denote recession

Business investment

Business spending also retreated sharply as many companies are canceling capital spending projects due to overall insecurity.

Business investment since 2002

Note: Grey bars denote recession

Note

Headline chart is real GDP, percent change from preceding period, quarterly, seasonally adjusted annualized rate

Editing by Dan Burns

Source

U.S. Commerce Departme

Nippon Steel to appeal South Korea ruling allowing seizure of assets

FILE PHOTO: The logos of Nippon Steel Corp. are didplayed at the company headquarters in Tokyo, Japan March 18, 2019. REUTERS/Yuka Obayashi

TOKYO (Reuters) - Japan’s Nippon Steel Corp (5401.T) said on Tuesday it will appeal a South Korean court ruling that allows for the company’s assets in that country to be seized and sold as compensation for forced wartime labour.

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Japan will respond if South Korea seizes Japanese assets: deputy PM Aso

The ruling followed a South Korean Supreme Court decision in 2018 that Nippon Steel should pay 100 million won ($83,836.35) to each of four South Koreans as compensation for forced labor during World War II.


A lower court there approved in 2019 the seizure of part of the domestic assets of Nippon Steel, and Yonhap News Agency said the Daegu District Court in June set a Tuesday deadline for the process to begin.

“We will continue to take appropriate measures based on the diplomatic negotiations between the two nations and other situations,” a Nippon Steel spokeswoman said on Tuesday. “We will immediately make an appeal against procedures for seizure of assets which took effect at midnight on Aug. 4.”


At stake are 81,075 shares Nippon Steel holds in PNR, a Korea-based joint venture with steelmaker POSCO, worth about 400 million won by face value, according to Yonhap.

Nippon Steel has until the end of Sunday to file the appeal before, Yonhap said.

Japan has held that all matters concerning wartime reparations must be settled under a 1965 treaty that normalised relations between the countries.

Fed policymakers call for fiscal support to save U.S. economy

Evans, in an uncharacteristically passionate outburst during his call with reporters, said that the virus’ unequal toll was an “indictment” of unequal access to U.S. healthcare. “The state of equal healthcare in this country is abysmal,” he said.

Ann Saphir, Lindsay Dunsmuir


(Reuters) - The U.S. economy, battered by a resurgence in the spread of COVID-19, needs increased government spending to tide over households and businesses and broader use of masks to better control the virus, U.S. central bankers said on Monday.


FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. REUTERS/Leah Millis/File Photo

The calls for increased government intervention came as U.S. lawmakers and the White House resumed talks on a new government relief package, including a possible extension of unemployment benefits that expired on Friday.

“The ball is in Congress’ court,” Chicago Fed President Charles Evans told reporters on a call. “Fiscal policy is fundamental to a better baseline outlook, to a stronger recovery and getting the unemployment rate down, people back to work safely, and ultimately reopening the schools safely.”

Without more government aid, Evans said, “aggregate demand trouble is brewing.” Translated for non-economists: people could stop spending and the bottom could really fall out of the economy.

Or, as Richmond Fed President Thomas Barkin put it, “quickly pulling away the support that consumers and businesses are receiving would be a pretty traumatic move for what’s happening in the economy.”

The full court Fed press for more government spending came as Republicans appeared reluctant to spend much more than the $3 trillion Congress had already committed to bolstering the economy in the face of the virus. But things have gotten worse since then, Barkin said.

“Four months ago, when we did the first stimulus, we thought the economy faced a pothole and the stimulus put a plate over it so we could navigate,” he told the Northern Virginia Chamber of Commerce. “Now escalation of the virus may be making that pothole into a sinkhole and creating a need for a longer plate.”

Echoing those sentiments in slightly different terms were Dallas Federal Reserve Bank President Robert Kaplan and St. Louis Fed President James Bullard. Kaplan pushed back on the notion that the extra $600 weekly benefits to the unemployed had made it harder for businesses to hire, while Bullard said earlier efforts to keep businesses and households whole through the crisis have paid off so far.

“We’ve looked at a number of studies, we’ve done our own work: we don’t see it as much in the data but I can tell you I’m hearing it from business people,” Kaplan told Bloomberg TV earlier Monday when asked about whether the enhanced jobless aid was deterring people from returning to work.


“While it may have made it hard for certain individual businesses to hire, it has helped create jobs, because it has helped bolster consumer spending, so the net effect still has probably been positive for the economy for employment.”

Kaplan also said he did not agree with his colleague, Minneapolis Fed President Neel Kashkari, who at the weekend said he thought the U.S. economy should shut back down again for four to six weeks to suppress spread of COVID-19.

Instead, Kaplan said, universal mask-wearing could substantially mute transmission of the virus without a widespread lockdown. “I think we are going to have to learn to live with this virus. We are going to have to learn to re-engage in our daily activities but still control the virus,” he said. “Widespread mask-wearing is essential to that.”

Bullard, too, emphasized mask-wearing as a significant risk-management tool, especially as he does not expect health officials to be able to reduce disease transmissions to zero because it is so contagious. He also warned against placing too much emphasis on the development of a successful vaccine.

“If you put too much emphasis on the idea that a vaccine is going to come and save us, and someone’s going to crack a very difficult scientific problem ... then you get people not doing anything and sitting around waiting for the vaccine,” Bullard said in a presentation during an online event hosted by the bank’s Memphis, Tennessee, branch. “So if you do that, you do risk a depression because you could get a lot of business failures while you’re waiting, potentially a very long time for a vaccine to come and save the day.”

The regional bank presidents’ comments came just days after the Fed’s latest two-day policy meeting, at which officials repeated their pledge to do all in their power to help the economy weather the recession that began in February as the outbreak began ricocheting around the globe. The U.S. central bank has slashed interest rates to near zero - where they are expected to remain for years - and has rolled out roughly a dozen emergency programs to backstop financial markets and support businesses.

Bullard also said he expects that economic growth has resumed in the current third quarter, but that after a better-than-expected start to the rebound in May and June, the rebound slowed in July with the resurgence in infections in many areas of the country.

“We shouldn’t expect a completely smooth transition as you go forward because this is a crisis and there’s going to be ups and downs,” Bullard said.

Those swings were on display Monday, as U.S. manufacturing activity rose even as factory job losses persisted. California - the most populous U.S. state - reported a decline in hospitalizations and cases, but the state’s farmbelt has a severe outbreak, concentrated among Latinos.

Evans, in an uncharacteristically passionate outburst during his call with reporters, said that the virus’ unequal toll was an “indictment” of unequal access to U.S. healthcare.
“The state of equal healthcare in this country is abysmal,” he said.

(Open tmsnrt.rs/2WTOZDR in an external browser for a Reuters interactive)


Reporting by Ann Saphir and Lindsay Dunsmuir; Additional reporting by Jonnelle Marte; Editing by Dan Burns and Lisa Shumaker

L.A. teachers reach deal with school district on remote education
Steve Gorman

LOS ANGELES (Reuters) - The Los Angeles teachers union and local education officials on Monday agreed to a plan for resuming online-only classes later this month in the nation’s second-largest school district amid the coronavirus pandemic.


Protesters participate in a caravan protest during a national day of resistance to demand a safe, scientific, racially just and fully funded approach to reopening schools during the outbreak of the coronavirus disease (COVID-19) in Los Angeles, California, U.S., August 3, 2020. REUTERS/Mike Blake - RC2K6I952GYL

The deal encompasses new standards and work rules governing how the 30,000 teachers of the Los Angeles Unified School District (LAUSD) will provide instruction to 700,000 students remaining at home when the new academic year begins on Aug. 18.

The plan, hammered out during two weeks of negotiations between the district and United Teachers Los Angeles union, is designed to avoid the chaos that ensued when the worsening COVID-19 outbreak forced schools to abruptly switch to remote learning in March.

“We have all learned from our experiences with distance learning since March, and we’ve applied what we learned to this agreement,” LAUSD Superintendent Austin Beutner said in a statement.

Under the plan, age-appropriate class schedules have been created for all grade levels, from kindergarten to high school, including daily “synchronous” instruction by teachers — real-time lectures through video conferencing.


Teachers will also use “asynchronous” instructional materials and assignments posted online for students to complete independently, a joint statement from LAUSD and the union said.

While the plan gives teachers the option to work from their regular classrooms, students will remain at home, with daily attendance taken for each class session.

The plan also calls for:

- small-group instruction, teacher-guided “peer-to-peer” learning, and individual tutoring as necessary.

- guidance counselors and other non-teaching staff to follow a weekly schedule of services and office hours.


- special staff training and professional development.

Announcing its decision last month to proceed with online-only instruction, LAUSD cited “skyrocketing” coronavirus infection rates and a lack of adequate safeguards to ensure student and staff safety in classrooms.

Monday’s online-learning pact came as teachers at more than 35 other U.S. school districts staged protests over plans to resume in-class instruction while COVID-19 is surging in much of the country.


Reporting by Steve Gorman in Los Angeles; Editing by Aurora Ellis