NATO NATION BUILDING
Libya’s security forces release ex-minister whose detention prompted oil closure, tribal elder says

Associated Press
Sat, July 15, 2023 

CAIRO (AP) — Security authorities in the Libyan capital of Tripoli released a former minister Saturday less than a week after his detention which had prompted his tribesmen to shut down crucial oil fields, a tribal elder said.

Former Finance Minister Faraj Bumatari, who hails from the al-Zawi tribe in southeastern Libya, walked free Saturday afternoon from detention in Tripoli, said al-Senussi al-Zawi, one of the tribe's elders.

“I spoke with him by phone, and he is awaiting a flight to the east” of Libya, al-Zawi told The Associated Press by phone.

Bumatari was detained earlier this week by the Tripoli-based Internal Security Agency which is allied with the government of Prime Minister Minister Abdul Hamid Dbeibah, according to local media.

His detention was prompted by his bid to replace Sadiq al-Kabir as governor of the Central Bank of Libya, according to al-Zawi. Al-Kabir, a divisive figure in Libya, is a close ally of Dbeibah.

Dbeibah’s government didn’t comment on Bumatari’s detention.

To force his release, Bumatari’s tribe shut down crucial oil fields, which produce hundreds of thousands of barrels per day.

Al-Zawi didn’t say when they would allow the resumption of oil production. Local media, however, said technical teams were working to restart production from the closed fields.

Libya’s prized oil output has been subjected to repeated closures for different political reasons and local protesters’ demands during the chaotic decade since the 2011 NATO-backed uprising against former leader Muammar Gaddafi.

The North African country has been divided between two rival governments, each backed by international patrons and numerous armed militias on the ground.

THE WAR IS OVER

Iraqi PM visits Syria in first trip since Syrian war



Sun, July 16, 2023 
By Timour Azhari

BAGHDAD (Reuters) - Iraqi Prime Minister Mohammed Shia Al-Sudani began an official visit to Syria on Sunday, the first by an Iraqi premier since the outbreak of the Syrian war in 2011, in a trip aimed at securing their shared border and bolstering economic ties.

Iraq and Syria, which have close economic, military and political ties to regional heavyweight Iran, maintained relations throughout Syria's civil war even as other Arab states withdrew their ambassadors and closed their embassies in Syria.

Baghdad and Damascus, along with Shi'ite armed groups backed by Iran, cooperated in the fight against militant group Islamic State, which spread from Iraq into Syria and at one point controlled more than a third of both countries.

Farhad Alaaldin, foreign affairs adviser to the prime minister, said Sudani was set to discuss combatting the flow of drugs, especially the amphetamine Captagon, and preventing the infiltration of Islamic State militants over their shared 600km border.

The prime minister would also discuss trade and economic cooperation and possibilities for reopening an oil export pipeline in the Mediterranean, which could help Iraq diversify its export routes, he said.

Sudani's visit comes as other countries, including Saudi Arabia, rebuild relations with Damascus after years of tensions.

Syria was suspended from the Arab League in 2011 over Assad's brutal crackdown on protests and several Gulf states supported the armed opposition to his rule.

But Assad has regained control of most of Syria with military and economic support from Russia and Iran, Syria was readmitted to the Arab League in May, and regional countries are seeking dialogue with him to end drug smuggling and return millions of refugees.

Syria has agreed to help end drug trafficking across its borders with Jordan and Iraq.

Top Syrian officials and relatives of Assad have been put on sanctions lists in recent months in the United States, United Kingdom and European Union over their alleged ties to the trade.

The Syrian government denies involvement in the drug trade.

(Reporting by Timour Azhari; Editing by Alexandra Hudson)

Iraqi premier in Syria for first visit in over a decade to discuss boosting cooperation

In this photo released by the Syrian official news agency SANA, Syrian President Bashar Assad, right, welcomes Iraq's Prime Minister Mohammed Shia al-Sudani during a welcome ceremony in Damascus, Syria, Sunday, July 16, 2023. Iraq's prime minister held talks Sunday with Syrian President Bashar Assad in Damascus during the first such trip by an Iraqi premier to the war-torn country since the 12-year conflict began. 

(SANA via AP)

SAMAR KASSABALI and ABDULRAHMAN ZEYAD
Updated Sun, July 16, 2023 

DAMASCUS, Syria (AP) — Iraq’s prime minister held talks Sunday with Syrian President Bashar Assad in Damascus during the first trip of its kind to the war-torn country since the 12-year conflict began.

The two leaders told reporters that they discussed fighting drugs, the return of Syrian refugees and the imperative of lifting Western sanctions imposed in Syria. They also talked about Israel's strikes on the war-torn country and water shortages in the Euphrates River that cuts through both countries because of projects in Turkey.

Iraq and Syria have had close relations for years even after many Arab countries withdrew their ambassadors from Damascus and Syria’s membership in the 22-member Arab League was suspended because of the crackdown on protesters in 2011.

Assad received Mohammed Shia al-Sudani, who was heading a high-ranking delegation, at the presidential palace in Damascus. They discussed mutual relations and cooperation between the two neighboring countries among other issues, according to the office of Syria’s president.

Al-Sudani’s office said in a statement that talks revolved around ways of expanding cooperation in the fields of trade, economy, transportation, tourism, how to combat climate change and collaboration to fight terrorism.

Security cooperation against extremist groups was likely to top the agenda for the two-day visit. The two countries, where Iran enjoys wide influence, have a joint 600 kilometer-long (373-mile) border. In June 2014, the Islamic State group declared the establishment of a self-styled “caliphate,” a traditional model of Islamic rule, in wide areas under its control in Iraq and Syria.

After a yearslong campaign that left tens of thousands dead in both countries, IS was defeated in Iraq in 2017 and in March 2019 in Syria. In recent years, Syrian government forces regained control of much of Syria with the help of Russia and Iran.

Earlier this year, Syria’s membership in the Arab League was reinstated and Assad attended the Arab summit that was held in Saudi Arabia in May.

Assad referred to Turkey without naming it as being behind the “theft” of Iraq and Syria's shares in the Eurphrates River in what is affecting agriculture in both countries. Assad also said that they discussed cooperating on fighting drugs, a scourge he said is "no different from terrorism as it can destroy the society the way terrorism does.”

Syria's conflict that started in March 2011 has killed half a million people and displaced half the country's pre-war population of 23 million, including more than 5 million who are refugees.

“We are interested in working through official and government channels to solve the issue of refugees and guarantee a safe return for them as soon as the situation becomes stable in places where they reside,” al-Sudani said. Iraq is hosting about 250,000 Syrian refugees.

Al-Sudani was invited to visit Damascus during a trip by Syria’s Foreign Minister Faisal Mekdad to Baghdad last month.

The Iraqi prime minister said countries around the world that have citizens in Syria's al-Hol camp, home to tens of thousands of mostly women and children linked to IS, should start working on repatriating them as Baghdad is doing.

Al-Hol camp in northeast Syria near the Iraqi border holds about 51,000 people, including the wives, widows and other family members of IS militants. Most are Syrians and Iraqis. But there are also around 8,000 women and children from 60 other nationalities who live in a part of the camp known as the Annex. They are generally considered the most die-hard IS supporters among the camp residents.

Many countries are refusing to repatriate their citizens out of concern that they might be a security threat. Iraq has repatriated hundreds of families over the past months where they undergo rehabilitation programs.

The U.S. has a presence in both Syria and Iraq and Syrian officials have been calling for the withdrawal of American troops from the country who first arrived in 2015.

On any given day there are at least 900 U.S. forces in Syria, along with an undisclosed number of contractors attempting to prevent the resurgence of the Islamic State group. U.S. special operations forces also move in and out of the country but are usually in small teams and are not included in the official count.

U.S.-led coalition forces have officially ended their combat mission in Iraq, but continue to play an advisory role to Iraqi forces in the fight against the Islamic State extremist group.

____

Zeyad reported from Baghdad. Associated Press writer Bassem Mroue contributed from Beirut.

Welcome to the Dollar War — the global battle that will decide the fate of America's economy

Phil Rosen
Sun, July 16, 2023 

While the US dollar won't be replaced as the world's favorite currency overnight, a concerted effort to eat into its dominance has the chance to erode the greenback's place in the world.

Chelsea Jia Feng/Insider

A global battle over cash will decide who rules the world economy

The US dollar isn't just for Americans — every country in the world relies on it.

The greenback has been facilitating the flow of money and goods around the world for over a century. Buying or selling oil? Usually done with dollars. Countries issuing government debt? Usually the price of those bonds is in US dollars. For generations, the greenback has been the safe haven for investors when markets crash and systems go haywire. The US even reminded everyone just how influential the buck is when it effectively froze Russia out of the global financial system with sanctions last year.

But if you listen to certain corners of the financial world and internet, the dollar's reign as the world's financial instrument of choice could be coming to an end. Motivated by a mix of politics and economics, countries from Israel and France to Russia and China have signaled they're looking to start doing more business in a currency other than the US dollar. Central banks have also started to tiptoe away from the dollar, with currencies like the Chinese yuan, Japanese yen, and euro taking up a growing portion of global reserves.

These doom-and-gloom scenarios are overblown, financial experts told me, but in classic conspiracy fashion there's a kernel of truth to the freak out if you look hard enough. The percentage of financial transactions done in US dollars has slipped over the past few decades, and the percentage of countries' cash reserves that are held in dollars has been sliding.

These shifts, while notable, don't mean the US dollar's dominance is going to end anytime soon. There may be changes around the edges, but as the Stanford finance professor Chenzi Xu told me, there's still no viable alternative to cold, hard American cash.

"What currency would those countries hold instead?" Xu said. "We need something that looks like money, that will act like money. If you don't hold dollars, there's no alternative because everything else is too small or subject to the same risks as the dollar but worse."

While the US dollar won't be replaced as the world's reserve currency overnight, a concerted effort to eat into its dominance has the chance to erode the greenback's place in the world and cause real shifts in the financial system. If America wants to stay on top, the US can't take the dollar's status for granted.

The long arm of the dollar

Over the past five centuries, only a handful of countries have issued the bills the world uses to conduct financial transactions — the globe's reserve currency. Becoming the issuer of the global reserve currency is about trust. Whether it was the Dutch guilder, the French franc, or the British pound sterling, people trusted that the value of that currency — backed by the country's government — would stay steady enough to be the benchmark for a transaction. Political instability or prolonged economic downturns can chip away at that trust, until one day the currency is supplanted by cash from a country that is more powerful, more economically stable, and therefore more trustworthy.

For the past 102 years, the US has sat atop of the currency heap. And the globalized nature of the world's economy means the US dollar has achieved a more powerful status than previous reserve currencies. This so-called "exorbitant privilege" places America on top of an asymmetric financial system, grants the US major trade benefits, and mutes the blowback of other nations' economic fluctuations. This dynamic also means that the Federal Reserve — which is responsible for printing and controlling the supply of US dollars — is closely watched around the globe. The rest of the world pays far more attention to its policy decisions than, say, the European Central Bank or the People's Bank of China. Ron Temple, the chief market strategist at Lazard, told me that the US dollar achieved this vaunted status thanks to more than a century's worth of rule of law and stable markets, which helped earn the confidence of investors.

"People in any country around the world can be found with $100 bills tucked away for safety," he said. "That especially became true after World War II, when the US dominated manufacturing and trade while other countries were still rebuilding after the war. The US was just an economic powerhouse, with robust institutions that could withstand partisanship and conflict."

The US has controlled the global reserve currency for 102 years — giving it a special status in the world economy.

CFOTO/Future Publishing via Getty Images

Today, nearly 60% of international reserves are held in dollar-denominated assets, according to the International Monetary Fund, and it's by far the most-used currency for trade. Data from the Bank of International Settlements shows the dollar is involved in about 88% of all international trade transactions. A good litmus test to see exactly how much sway a reserve currency has is to look at what happens during financial crises. And for the past century, investors always rush to assets they can convert to dollars.

Countries like China or Saudi Arabia are doing what they can to "thumb their nose in the direction of the US," Gregory Brew, an analyst at the consultancy firm Eurasia Group, told me, but until American assets are no longer viewed as the best option in times of catastrophe, the dollar won't lose its seat at the head of the table anytime soon. Still, given that the country controlling the global reserve currency holds that status of an average of 94 years, history seems to indicate it's high time for a successor. So while the timeline may be long, talks of de-dollarization are proof that there may be a new movement afoot.

Threats to hegemony

The global economic order as we know it will end with Operation Sandman.

When Operation Sandman is launched, the emerging theory goes, 100 countries from around the world will sell off trillions of dollars worth of US government debt in a coordinated effort to undermine the value of the dollar and break America's dominance over the world's economy. The move will be calamitous for America and the global order, but in time, the effort to break the US dollar's hold on the world will open the door to a new hierarchy of economic superpowers.

If that all sounds a little far-fetched, that's because discussion of Operation Sandman is mostly confined to chatter on economic and currency conspiracy accounts on Reddit and TikTok. This "mother of all dollar conspiracies," as one Reddit user called it, would certainly be a momentous start to a new chapter, but there's little real-world indication that it could come to fruition.

"I think we live in a conspiratorial time," Eurasia's Brew said. "There's an abiding interest in certain online communities in the idea that the global economy — and specifically the world of fiat currency — is teetering on the brink of some kind of systemic collapse."

Despite the crackpot inclinations of Operation Sandman's biggest fans, they do get one thing right: There's clear evidence the world is de-dollarizing.

Stephen Jen, the chief executive of Eurizon SLJ Capital and a former economist at the IMF, caused a stir in economic circles with an April note to clients that declared the "erosion of the dollar's reserve currency status has accelerated in recent years at an alarming pace." By Jen's calculations, the share of global reserves held in dollars saw a sharp decline in 2022, eroding at nearly 10 times the average annual pace of the past two decades. In 2003, the dollar accounted for roughly two-thirds of global reserves, but Jen said his data shows that's fallen to about 47% — a much lower mark than the IMF's 60% estimate. Other groups have failed to detect as steep a drop, he told me, because they don't account for fluctuations in the underlying value of the dollars in central banks' coffers.

Jen told me that while countries beyond the US are still frequently using dollars, the appetite for the currency has cooled recently. "We've seen a sharp decline in global interest in US dollars," he said. "After 15 years of very gradual declines, we've seen a plunge, an absolute plunge in the past year."

Most shifts away from the dollar can be chalked up to politics. The world is waking up to just how America-centric the financial world has become, Jen explained — a far cry from the multipolar nature of the cultural and political landscape. And the economies in developing countries have grown larger and more sophisticated over the past few decades, which means there are fewer reasons to stay embedded in a financial landscape that hinges on the dollar and the Fed.

"There is a legitimate argument to ask the question of whether other countries should cope with a unipolar currency world," Jen said. "There's a disconnect between the two — the financial world and the real world."

It's an interesting line of thinking. Why shouldn't the financial world resemble something closer to the mosaic of cultures, politics, and nations that exists today? Naturally, it's something other world powers, such as Russia and China, would want. When the US froze hundreds of billions of Moscow's dollar reserves, it reminded other countries that the buck can indeed be weaponized.

Stanford's Xu told me that other countries are thinking: "Well, if I end up in Russia's shoes, where all my dollar assets are unusable, then it makes sense to go back to our own domestic currency." While it would make every transaction more difficult, Xu added it could "shield you from bigger shocks of not being able to use your savings."

China, for one, has made a concerted effort to promote its currency — the yuan — for international trade as a way to shield itself during a time of heightened geopolitical tensions with the US. While China's yuan comprises less than 3% of global reserve currencies, it's seen its slice of the pie grow at the fastest rate of any currency since 2016. Meanwhile, Saudi Arabia, France, Brazil, India, Pakistan, Bolivia, Iraq, and others have either completed trades using yuan or expressed a willingness to participate in yuan-denominated trade in the future. These make up a tiny fraction of total dollar transactions, but the trend is emerging.

"There's a very strong political element to this, particularly with US-China relations worsening," Eurasia's Brew told me. "From China's point of view, de-dollarization reduces their exposure to US influence and potential future sanctions. It's becoming clear the two will compete economically and diplomatically, and the yuan is becoming a political driver for other countries interested in improving their relations with China."

Meanwhile, BRICS nations — Brazil, Russia, India, China, and South Africa — have indicated that they want to launch a shared currency to directly rival the dollar. "Every night I ask myself why all countries have to base their trade on the dollar," Brazil's leftist president Luiz Inácio Lula da Silva said in April. "Why can't we do trade based on our own currencies?"

There are plenty of other threats to the dollar too: digital currencies, unexpected backlash to US sanctions, even the Fed. Josh Lipsky, the senior director at the Atlantic Council, said that the Fed's aggressive interest-rate hikes over the past year and a half have widened the gap in exchange rates between many developing nations and the US. As a result, other countries' debt gets more expensive.

"Other economies have felt the pain from the dollar very acutely," Lipsky said. "Evidence of de-dollarization is small but growing."

Small shifts, long ripples

For most people whose financial lives consist of paying bills, buying gas, and getting a mortgage, the idea of de-dollarization may seem a world away. It's not as if the average American is going to settle a cross-border oil contract or that the grocery store is going to refuse dollars anytime soon. The experts I talked to agreed: Unless you regularly transact at an institutional- or country-level, Americans probably won't notice the direct effects in their everyday lives.

But for firms that do transact at the institutional level, a weaker buck — one possible consequence of de-dollarization — could gradually crimp demand for dollars and diminish its standing as the go-to currency for big deals.

JPMorgan strategists Alexander Wise and Jan Loeys told clients they only expect marginal de-dollarization over the next decade. If the dollar's status does wane beyond that, it's possible US assets could see a hit — lower stocks, higher bond yields, pricier imports. The biggest threat, Wise and Loeys said, is if the US's geopolitical standing takes a hit.

"De-dollarization per se probably has little impact on growth and inflation, but the adverse events which could catalyze de-dollarization would probably worsen both," Wise and Loeys wrote in June.

If being the reserve currency is about trust, then any shift away from the US dollar would indicate an erosion of trust in America — its government, its economy, its financial system. The events that would cause that decline in faith would clearly be a negative for both our economy and society. A politically fueled debt default or a sudden divestment from American assets (albeit in a less coordinated fashion than Operation Sandman), would erode that faith — though neither have historical precedent.

The most likely path forward, according to the JPMorgan team, is partial de-dollarization that takes place over several decades, with the Chinese yuan the most likely candidate to cut into the dollar's share of trade and reserves. But shifting to the yuan would come with a host of new issues, from China's rules around cash leaving the mainland to the country's own economic problems. It's not even clear Beijing wants its currency to take on the reserve role.

To Stanford's Xu, de-dollarization fears are largely moot given the sheer number of greenbacks sloshing around the global financial system. It's estimated that half of all international loans and trade invoices are denominated in dollars, and the more companies and governments that use dollars as their benchmark, the more that liquidity deepens. For de-dollarization to happen, a very large stockpile of safe, low-risk debt backed by another currency would have to materialize, and Xu said that would probably require a crisis-level scenario where everyone dumps their dollars all at once. And, again, the odds of either happening remain slim.

"Having the reserve currency is unambiguously a good thing for the US," Xu said. "Part of maintaining that does require having some amount of goodwill in the world, and if the US can do that, it's going to keep providing safe assets for the international economy."

The panic is overdone, but the trend is real

It's easy to scoff at conspiracies on Reddit, but there is truth behind the whispers of de-dollarization. It is real, and it is happening — but at a far slower clip than the recent headlines may suggest.

Rather than shrugging it off entirely, however, America's leaders — from Congress to the Fed — should take all of the talk as a reminder not to take the coveted status for granted. Fooling around with Fed policy, threatening to default on US debt, or hastily imposing financial sanctions, Lazard's Temple said, isn't doing America any favors. A century of having the top currency shouldn't lead anyone to believe we'll have a century longer.

"We should always recognize we get tremendous benefits from maintaining the dollar's status," Temple said. "I don't think anything is permanent, and other countries could be ready to use something other than the dollar at some point. The 'exorbitant privilege' that we've had for decades is not a birthright."

Phil Rosen is a senior reporter for Insider covering markets and the economy.

History Says It’s Time to Buy Long-Term Bonds as Peak Rates Near


Ye Xie and Liz Capo McCormick
Sat, July 15, 2023 at 2:00 PM MDT·5 min read





(Bloomberg) -- Investors loading up on long-term bonds have history at their back.

For decades, Treasuries maturing in 10 or more years have consistently outperformed shorter-dated sectors immediately following the last in a series of interest-rate increases by the Federal Reserve. On average, they returned 10% over six months after the fed funds rate peaked.

Of course, only in hindsight is it known whether a rate increase is the last one. But investors have embraced the view that an expected quarter-point hike in the target range for the federal funds rate on July 26 will conclude the epic series that began in March 2022. And surveys by Bank of America Corp. and JPMorgan Chase & Co. have found that investors digesting the price action have jacked up their exposure to long-dated bonds.

“We like the idea of extending and adding duration at this point in the cycle,” said Nisha Patel, a managing director of SMA portfolio management at Parametric Portfolio Associates LLC. “Historically, over previous tightening cycles, yields have tended to decline” during the period between the last hike and the first rate cut, she said.

Bonds this week logged their biggest gains since March — when the failure of several regional banks unleashed haven demand — after a report showed consumer prices increased at the slowest pace in two years. Swap contracts that as recently as last week assigned more than 50% odds to another Fed rate increase after this month repriced that to around 20%, and added to wagers on rate cuts next year.

The sentiment shift kneecapped the dollar, which suffered its biggest weekly loss since November. With the European Central Bank and other major monetary authorities expected to remain in tightening mode, there’s probably more downside in store for the greenback, according to strategists at ING Bank N.V.

In bonds, the biggest moves in yield were in short- and intermediate-maturity tenors where expectations for Fed policy are expressed. The five-year rate tumbled nearly 35 basis points, compared with just 13 basis points for the 30-year.

But long-dated bonds’ greater price sensitivity to a given change in yield means investors can reap bigger rewards. On average, Treasuries maturing in 10 or more years have gained 10% in the six months after a Fed policy-rate peak, compared with 6.5% for bonds maturing between five and seven years and 3.7% for those due within three years, according to data compiled by Bloomberg. In 12 months, the longest-dated bonds returned 13%, outpacing the other sectors.

“There is finally income to be earned in the fixed-income market,” BlackRock President Rob Kapito told analysts Friday, calling the higher yields a “remarkable shift” and a “once-in-a-generation opportunity.”

As an end-of-cycle theme, it’s proven more reliable than wagering on relative changes in yields such as the one that occurred this week as two- to five-year rates dropped more than longer-dated ones, producing a steeper yield curve.

The difference between two- and 10-year yields increased in the six months after the Fed concluded a tightening cycle in December 2018, but it narrowed following the end of one in 2006.

“Going long duration at the end of the hiking cycle is a more consistent trade than the steepener, which is more conditional on a harder landing outcome from the Fed,” Bank of America’s strategists including Mark Cabana and Meghan Swiber wrote in a note.

A Bank of America investor survey conducted monthly since 2004 found that respondents had amassed a record amount of interest-rate risk relative to their benchmarks in June before trimming a bit this month.

“I love duration here,” said Eddy Vataru, a fixed-income manager at Osterweis Capital Management. Inflation, which cooled to 3% last month, its 12th straight drop from a peak of 9.1% last year, has scope to fall below 2%, he said.

To be sure, Fed policymakers remain on guard. Their quarterly forecasts for the policy rate released in June had a median expectation for two additional increases this year. Fed Governor Christopher Waller Thursday said he agreed with that even after the latest inflation reading as the labor market remains very robust.

Even if employment strength induces the Fed to keep tightening beyond July, investors may pile into Treasuries because yields are high enough to be a compelling hedge against a possible recession, said Michael Franzese, head of fixed-income trading for New York-based market-maker MCAP LLC.

“You have a lot of investors looking now to make a bet and buy” if yields move back up, he said. “We may see a wave of new buying coming in, as Treasuries are an asset that could start to accrete really well for investors when the Fed does eventually start cutting.”

WAR ON THE G IN ESG
House Republicans want to change the way shareholder meetings work. Here's how.

The ideas range from making it easier for corporate leadership to summarily dispatch shareholder proposals, to limits on the role of the SEC.

ESG needs to focus on 'investing first and not marketing': Strategist

- Investors are continuing  to pull away from ESG funds


Ben Werschkul
·Washington Correspondent
Sun, July 16, 2023

House Republicans unveiled a push last week aimed at changing how shareholder meetings work as part of their larger campaign against socially-conscious investing.

The effort included a whopping 13 bills as well as two separate Congressional hearings devoted to the subject.

Some ideas would make it easier for corporate leadership to quickly dispatch shareholder proposals without a vote. Others would place limits on the role of the Securities and Exchange Commission (SEC). The proxy voting process — which conservatives say introduces too many "non-material" topics — is also an area of intense interest.

Republicans are looking to potentially pass some proposals by the end of the month but the ideas are unlikely to be embraced by Senate Democrats. Nonetheless, the keen focus on these often non-political gatherings could put further pressure on companies as they try to strike a balance between rising shareholder activism and the political backlash against so-called environmental, social, and corporate governance (ESG) principles.

"We must prevent shareholder activism from diverting attention and resources away from the core issues at hand," House Financial Services Committee chair Patrick McHenry (R-NC) said as he kicked off his party’s ‘ESG month’. He promises that these proposals are serious efforts to force change not simply so-called messaging bills designed to make a political point.

Warren Buffett's image welcomes Berkshire Hathaway shareholders to a picnic during the company's annual meeting in Omaha, Nebraska in 2011. (REUTERS/Rick Wilking)

Democrats, meanwhile, charge that Republicans are unduly influenced by fossil fuel companies, and these efforts are little more than an attempt to shut down the voices of women and minorities in the corporate governance process.

"The reason for this hearing is not because investors won’t vote for these resolutions, it’s because they will," said Rep. Brad Sherman (D-CA). Rep. Maxine Waters (D-CA) added sarcastically that the proposals are designed to "protect investors from their own ideas."

The shareholder proposal process is typically a non-binding affair — CEOs and boards are usually free to ignore them if they wish — but they can exert pressure on companies to change behaviors. Corporate directors often feel the pressure most acutely, as the same group of shareholders putting forward these proposals also vote on their appointment or removal from office.
A movement in response to a rising trend of shareholder activism

The campaign in Washington comes in response to a surge in shareholder activism in the pro- and anti- ESG directions.

An analysis by ISS Corporate Solutions found a record number of shareholder proposals through the first five months of 2023 with just 8.3% being approved so far.

A big factor in the surge is a rise of anti-ESG efforts. ISS found this type of proposal has grown by more than 400% since 2020 and a recent Harvard University analysis found that concerns there were decidedly focused on diversity matters with two-thirds of the proposals in 2023. Only about 10% concerned the environment.

The rising shareholder activism has come in part following a change in the rules after Joe Biden took office. During the Trump administration, then-SEC Chair Jay Clayton often discouraged proposals with an agency that was empowered to take actions like so-called "no action letters" to short-circuit some shareholder proposals.

Rep. Patrick McHenry (R-NC) is chair of the House Financial Services Committee. (Tom Williams/CQ-Roll Call, Inc via Getty Images)

Many of those rules were reversed in 2021 when Gary Gensler took office as chair of the SEC. In recent years, the agency has instead actively prodded corporate directors and shareholders to more forcefully consider issues like the climate.

Many of the latest bills introduced would re-implement some Trump-era rules but with the additional force of law.

One proposal would allow corporate boards to simply exclude a resolution "if the subject matter of the shareholder proposal is environmental, social, or political." Additional ideas take aim at proposals that are deemed repetitive with other GOP lawmakers focused on limiting the influence of asset management giants like BlackRock. Others would forbid the SEC from weighing in.
A focus on proxy advisory firms

Republicans have also unified around a key villain that they say is tipping the scales: Proxy advisory firms.

The two main companies in the space —Glass Lewis and Institutional Shareholder Services (ISS) — are far from household names but their purported influence came up again and again.

"I would love to see this duopoly broken up," said Rep. Bryan Steil (R-WI) in one of many heated moments in recent days.

These firms emerged over the past few years in concert with giant asset management giants like BlackRock and State Street who hold large stakes in companies across the economy due to the trillions that they manage for their clients.

Rep. Maxine Waters (D-CA) led Democrats lawmakers during a news conference to lambaste the GOP focus on corporate environmental and social policy investing. (Drew Angerer/Getty Images)

The proxy advisory firms' stated purpose is to provide information to the asset management companies about their investments but the charge from Republicans is that the companies have ESG-infused models that are essentially forcing the principles down companies’ throats.

The Business Roundtable has weighed in on what it says is an outsized influence for these firms. Kristen Silverberg, the group’s President and COO, wrote in a letter to lawmakers that "recommendations of proxy advisory firms often dictate the outcome of shareholder votes, and with them, some of the most important decisions facing public companies."

For their part, these firms deny any outsized influence, with both Glass Lewis and ISS appearing before lawmakers this week to defend themselves.

Steven Friedman, the general counsel at ISS promised lawmakers "we perform our work in a prudent, open, and honest manner, consistent with our fiduciary responsibilities."

Ben Werschkul is a Washington correspondent for Yahoo Finance.

Appeals court pauses order limiting Biden administration contact with social media companies


President Joe Biden gives a thumbs up as he walks with first lady Jill Biden to board Marine One on the South Lawn of the White House in Washington, Friday, July 14, 2023, as they head to Camp David for the weekend. 

(AP Photo/Stephanie Scarbrough)


KEVIN McGILL
Updated Fri, July 14, 2023 

NEW ORLEANS (AP) — A federal appeals court Friday temporarily paused a lower court’s order limiting executive branch officials’ communications with social media companies about controversial online posts.

Biden administration lawyers had asked the 5th U.S. Circuit Court of Appeals in New Orleans to stay the preliminary injunction issued on July 4 by U.S. District Judge Terry Doughty. Doughty himself had rejected a request to put his order on hold pending appeal.

Friday's brief 5th Circuit order put Doughty's injunction on hold “until further orders of the court.” It called for arguments in the case to be scheduled on an expedited basis.

Filed last year, the lawsuit claimed the administration, in effect, censored free speech by discussing possible regulatory action the government could take while pressuring companies to remove what it deemed misinformation. COVID-19 vaccines, legal issues involving President Joe Biden’s son Hunter and election fraud allegations were among the topics spotlighted in the lawsuit.

Doughty, nominated to the federal bench by former President Donald Trump, issued an Independence Day order and accompanying reasons that covered more than 160 pages. He said the plaintiffs were likely to win their ongoing lawsuit. His injunction blocked the Department of Health and Human Services, the FBI and multiple other government agencies and administration officials from “encouraging, pressuring, or inducing in any manner the removal, deletion, suppression, or reduction of content containing protected free speech."

Administration lawyers said the order was overly broad and vague, raising questions about what officials can say in conversations with social media companies or in public statements. They said Doughty's order posed a threat of “grave” public harm by chilling executive branch efforts to combat online misinformation.

Doughty rejected the administration's request for a stay on Monday, writing: “Defendants argue that the injunction should be stayed because it might interfere with the Government’s ability to continue working with social-media companies to censor Americans’ core political speech on the basis of viewpoint. In other words, the Government seeks a stay of the injunction so that it can continue violating the First Amendment.”

In its request that the 5th Circuit issue a stay, administration lawyers said there has been no evidence of threats by the administration. “The district court identified no evidence suggesting that a threat accompanied any request for the removal of content. Indeed, the order denying the stay — presumably highlighting the ostensibly strongest evidence — referred to ‘a series of public media statements,’” the administration said.

Friday's "administrative stay" was issued without comment by a panel of three 5th Circuit judges: Carl Stewart, nominated to the court by former President Bill Clinton; James Graves, nominated by former President Barack Obama; and Andrew Oldham, nominated by Trump. A different panel drawn from the court, which has 17 active members, will hear arguments on a longer stay.

THE POLITICAL ECONOMY OF WAR

Russia Ukraine War Grain Deal Explainer

Why allowing Ukraine to ship grain during Russia's war matters to the world
 

 A farmer collects harvest in a field ten kilometers from the front line, around a crater left by a Russian rocket in the foreground, in the Dnipropetrovsk region, Ukraine, July 4, 2022. 

(AP Photo/Efrem Lukatsky, File)

 

 Workers load grain at a grain port in Izmail, Ukraine, April 26, 2023. 

(AP Photo/Andrew Kravchenko, File)

 

Harvesters collect wheat in the village of Zghurivka, Ukraine, on Aug. 9, 2022. 

 (AP Photo/Efrem Lukatsky, File)

 Exterior view of the grain storage terminal during visit of United Nations Secretary General Antonio Guterres at the Odesa Sea Port, in Odesa, Ukraine, Aug. 19, 2022. Agreements that the U.N. and Turkey brokered with Ukraine and Russia to allow food and fertilizer to get from the warring nations to parts of the world where millions are going hungry have eased concerns over global food security. But they face increasing risks. Moscow has ramped up its rhetoric, saying it may not extend the deal that expires Monday July 17, 2023, unless its demands are met. 

(AP Photo/Kostiantyn Liberov, File)


COURTNEY BONNELL
Sat, July 15, 2023 

LONDON (AP) — Agreements that the United Nations and Turkey brokered with Ukraine and Russia to allow food and fertilizer to get from the warring nations to parts of the world where millions are going hungry have eased concerns over global food security. But they face increasing risks.

Moscow has ramped up its rhetoric, saying it may not extend the deal that expires Monday unless its demands are met, including ensuring its own agricultural shipments don't face hurdles.

The Black Sea Grain Initiative has allowed 32.8 million metric tons (36.2 million tons) of food to be exported from Ukraine since last August, more than half to developing countries, including those getting relief from the World Food Program.

If the deal isn’t renewed, “you will have a new spike for sure” in food prices, said Maximo Torero, U.N. Food and Agriculture Organization chief economist. “The duration of that spike will depend a lot on how markets will respond."

The good news is some analysts don't foresee a lasting rise in the cost of global food commodities like wheat because there’s enough grain in the world to go around. But many countries are already struggling with high local food prices, which are helping fuel hunger.

Here's a look at the crucial accord and what it means for the world:

WHAT IS THE GRAIN DEAL?

Ukraine and Russia signed separate agreements in August 2022 that reopened three of Ukraine's Black Sea ports, which were blocked for months following Moscow's invasion. They also facilitated the movement of Russian produce amid Western sanctions.

Both countries are major global suppliers of wheat, barley, sunflower oil and other affordable food products that Africa, the Middle East and parts of Asia rely on. Ukraine is also a huge exporter of corn, and Russia of fertilizer — other critical parts of the food chain.

Interrupted shipments from Ukraine, dubbed the “breadbasket of the world,” exacerbated a global food crisis and sent prices for grain soaring worldwide.

“One major agricultural producer is waging war on another major agricultural producer, which is affecting the price of food and fertilizers for millions of people around the world,” said Caitlin Welsh, director of the Global Food and Water Security Program at the Center for Strategic and International Studies.

The deal provides assurances that ships won't be attacked entering and leaving Ukrainian ports. Vessels are checked by Russian, Ukrainian, U.N. and Turkish officials to ensure they carry only food and not weapons that could help either side.

Meant to be extended every four months, the deal was hailed as a beacon of hope amid war and has been renewed three times — the last two for only two months as Russia insisted its exports were being held up.

WHAT HAS IT ACCOMPLISHED?

The deal helped bring down global prices of food commodities like wheat that hit record highs after Russia invaded Ukraine.

As the war caused food and energy costs to surge worldwide, millions of people were thrown into poverty and faced greater food insecurity in already vulnerable nations.

Once the grain deal was struck, the World Food Program got back its No. 2 supplier, allowing 725,000 metric tons (800,000 tons) of humanitarian food aid to leave Ukraine and reach countries on the precipice of famine, including Ethiopia, Afghanistan and Yemen.

“It is a pretty unique phenomenon to have two warring parties and two intermediaries agree to establish this sort of corridor to get humanitarian products — which is ostensibly what this is — out to markets that need it most,” said John Stawpert, senior manager of environment and trade for the International Chamber of Shipping, which represents 80% of the world’s commercial fleet.

WHAT THREATENS THE DEAL?

Russian President Vladimir Putin said Moscow wouldn’t extend the grain deal unless the West fulfills “the promises given to us.”

“We have repeatedly shown goodwill to extend this deal," Putin told reporters Thursday. "Enough is enough.”

He said he wants an end to sanctions on the Russian Agricultural Bank and to restrictions on shipping and insurance that he insists have hampered agricultural exports.

Some companies have been wary of doing business with Russia because of sanctions, but Western allies have made assurances that food and fertilizer are exempt.

“It’s not uncommon in situations like this for countries to use whatever levers they have to try and get sanctions regimes changed," said Simon Evenett, professor of international trade and economic development at the University of St. Gallen in Switzerland.

U.N. Secretary-General Antonio Guterres sent a letter to Putin this week proposing to ease transactions through the agricultural bank, a spokesperson said.

Russian “claims that its agriculture sector is suffering are countered by the reality" that production and exports are up since before the war, Welsh said.

Russia exported a record 45.5 million metric tons of wheat in the 2022-2023 trade year, with another all-time high of 47.5 million metric tons expected in 2023-2024, according to U.S. Department of Agriculture estimates.

WHO IS AFFECTED?

The International Rescue Committee calls the grain deal a “lifeline for the 79 countries and 349 million people on the frontlines of food insecurity."

East Africa, for instance, has seen both severe drought and flooding, destroying crops for 2.2 million people who depend on farming for their livelihoods, said Shashwat Saraf, the group’s regional emergency director for East Africa.

“It is critical that the deal is extended for a longer term to create some predictability and stability,” he said in a statement.

Countries that depend on imported food, from Lebanon to Egypt, would need to find suppliers outside the Black Sea region, which would raise costs because they are further away, analysts say.

That would compound costs for countries that also have seen their currencies weaken and debt levels grow because they pay for food shipments in dollars.

For low-income countries and people, food “will be less affordable” if the grain deal isn't renewed, World Food Program chief economist Arif Husain told reporters.

WHAT ABOUT UKRAINE?

Ukraine's economy depends on agriculture, and before the war, 75% of its grain exports went through the Black Sea.

It can send its food by land or river through Europe, so it wouldn’t be cut off from world markets if the grain deal ends, but those routes have a lower capacity than sea shipments and have stirred anger from farmers in neighboring countries.

Nonetheless, the Ukrainian Grain Association wants to send more grain through the Danube River to neighboring Romania's Black Sea ports, saying it's possible to double monthly exports along that route to 4 million metric tons.

Ukraine’s wheat shipments have fallen by more than 40% from its pre-war average, with the USDA expecting 10.5 million metric tons exported in the coming year.

Ukraine has accused Russia of slowing down inspections of ships and preventing new ones from joining the initiative, leading to a drop in its food exports from a high of 4.2 million metric tons in October to 2 million in June.

WHAT ELSE AFFECTS FOOD SUPPLY?

Fallout from the pandemic, economic crises, drought and other climate factors affect the ability of people to get enough to eat.

There are 45 countries that need food assistance, the Food and Agriculture Organization said in a July report. High domestic food prices are driving hunger in most of those countries, including Haiti, Ukraine, Venezuela and several in Africa and Asia.

While drought can also be a problem for major grain suppliers, analysts see other countries producing enough grain to counterbalance any losses from Ukraine.

Besides Russia's huge exports, Europe and Argentina are increasing wheat shipments, while Brazil saw a banner year for corn.

“These markets adapt and producers adapt — and boy, the wheat and corn markets have adapted very, very quickly,” said Peter Meyer, head of grain analytics at S&P Global Commodity Insights.

___

AP reporter Edith M. Lederer at the United Nations contributed

Xi calls for 'solid' security barrier around China's internet



Reuters
Sat, July 15, 2023 

BEIJING (Reuters) - Chinese President Xi Jinping said China must build a "solid" security barrier around its internet under the supervision of the ruling Communist Party, in his latest call to safeguard online data and information.

China must persist in managing, operating and ensuring access to the internet in accordance with the law, Xi said in instructions delivered to officials attending a two-day cybersecurity meeting in Beijing that ended on Saturday.

"We must adhere to the Party's management of the internet and adhere to (the principle of) making the internet work for the people," state-run Xinhua news agency cited Xi as saying.

In the past decade, Xi has made preserving security a priority, with his concept of security covering everything from politics and the economy to the environment and cyberspace.

In 2015, China passed a national security law with a broader scope to include its cyberspace. A year later, a law was passed that contained requirements for security reviews and for data to be stored on servers in China.

In 2021, China rolled out regulations around so-called critical information infrastructure.

This year, lawmakers updated anti-espionage legislation to ban the transfer of information related to national security and broaden the definition of spying.

Navigating China's dense network of rules and laws on online data and information is not without risk for companies.

In April, U.S. consultancy firm Bain & Co said police visited its office in Shanghai and questioned some staff. The Financial Times, citing people briefed on the surprise visit, reported that the police also took away computers and phones.

Last year, regulators told China's biggest financial data provider Wind Information Co to stop providing offshore users with certain data, sources told Reuters at the time.

In 2021, authorities launched a cybersecurity investigation into ride-hailing giant Didi Global two days after it went public in the United States.

(Reporting by Ryan Woo; additional reporting by Beijing Newsroom; editing by Christina Fincher)

Alibaba's Ele.me food delivery platform extends welfare coverage to 3 million couriers with collective contract


South China Morning Post
Sun, July 16, 2023


Alibaba Group Holding-backed Chinese food delivery service Ele.me has committed to bring more social security and welfare benefits to its roughly 3 million couriers, following a similar move by JD.com in March to include its flexibly employed logistics workers in the firm's social welfare program.

The company held a meeting in Shanghai on Thursday, with 175 delegates approving and signing a collective contract and three specific contracts covering issues including wages, female employees and occupational health and safety, according to a report by state media Workers' Daily.

The contracts state that the basic delivery fee should tie in with factors such as the local consumer price index, delivery distance, and weather, to ensure couriers receive adequate compensation. Ele.me will also increase the roll-out of its smart helmet designed to safeguard riders and "stipulate a reasonable delivery time" for the orders, according to the report.

The signing of the contracts, witnessed by officials from the All-China Federation of Trade Unions, is expected to provide the 3 million couriers for China's second-largest food service platform with a wide range of social welfare benefits usually beyond the reach of the country's growing flexible workforce.

China has over 200 million flexible workers, defined as those without fixed-term contracts, many of whom work for the digital platforms of the country's Big Tech firms, such as Alibaba's Taobao marketplace, Meituan's food delivery service, and Didi's driver platform.

These workers are not covered by social security benefits, a situation that has long raised the ire of local governments in China.

In January 2022, the National Development and Reform Commission (NRDC) published a document on facilitating the healthy growth of the Big Tech platforms, where it made a call to increase "the rights and interests" of the flexibly employed.

Ele.me's decision to offer social welfare to its large pool of workers is likely to put pressure on Meituan, its main rival and the country's largest food delivery platform, which as of last year had more than 6 million food couriers on its books.

"Providing benefits for flexible workers by way of collective contracts is a practical approach. It's an important and meaningful step [towards offering them more security]," said Leo Yu Xin, a Beijing-based legal counsel at Jingtiangong Cheng Law Firm.

The move by Ele.me came two day after the Chinese government, in a reversal of its years of hostility towards the country's internet platforms, lauded those same platforms for helping technology development and economic growth.

Alibaba owns the South China Morning Post.

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.

US Virgin Islands wants JPMorgan to pay $190 million and implement anti-human trafficking policies in Jeffrey Epstein lawsuit

Jordan Hart
Sat, July 15, 2023 

The financial giant and the US territory have been in a heated blame game for months.

Leonardo Munoz/Getty Images

The US Virgin Islands is suing JPMorgan Chase in connection with the Jeffrey Epstein case.


Court filings show it wants the bank to hire a compliance consultant to combat human trafficking.


JPMorgan said the claims were "not well founded" and would be challenged in court.

The US Virgin Islands is seeking at least $190 million from JPMorgan Chase for its alleged involvement with Jeffrey Epstein, as well as implement measures to prevent human trafficking.

In a brief filed in court on Friday, the US Virgin Islands' Department of Justice argued that the bank failed to properly scrutinize Epstein when he was a client and even benefited from his sex trafficking, according to the court documents.

The US Virgin Islands also requested that the bank brings in an independent consultant "to prevent human trafficking" and "overcome the economic incentives to underreport suspicious activity."

It also wanted JPMorgan to confirm customers' basic details before they could open a private account, and to prohibit "participation of any employee who has a personal relationship with a private banking client in the decision to retain or exit that client," per the filing.

In a statement, the bank said the US Virgin Islands' "misdirected damages theories" were "not well founded" and would be challenged in court.

Since the US Virgin Islands filed its lawsuit in December 2022, both parties have blamed the other for their roles in Epstein's sex trafficking operation.

In another lawsuit, JPMorgan alleged that Epstein paid the college tuition for the children of the former first lady of the US Virgin Islands.

In June The Wall Street Journal reported that Epstein also offered to help a former JPMorgan executive get his daughter into Columbia University. The bank did not comment on the claim to the newspaper other than repeating previous statements expressing regret about working with Epstein.

Epstein was arrested in 2019 on federal sex trafficking charges. He died later that year while being held at Manhattan's Metropolitan Correctional Center.

In June, JPMorgan agreed to pay $290 million to some of Epstein's victims, who alleged that the bank facilitated his sex trafficking and ignored his behavior.