Monday, August 26, 2024

Telegram Turmoil Threatens Dominant Chronicle of the War in Ukraine

The detention of Telegram’s founder has highlighted the messaging app’s outsize status in Europe’s deadliest war since World War II.

Pavel Durov, the founder and chief executive of Telegram, in San Francisco in 2014.
Credit...Jim Wilson/The New York Times

By Anatoly Kurmanaev
Reporting from Berlin
Aug. 26, 2024

The detention of Pavel Durov, the founder of the Telegram messaging app, in Paris on Saturday has raised questions about the future of a platform that has come to define the public perception of Russia’s war in Ukraine.

Russia’s invasion in 2022 helped transform Telegram from a niche communication tool for Russia’s educated classes into a global phenomenon. The app has allowed millions of people to follow battlefield developments in near real time, turned soldiers into the narrators of the conflict unfolding around them and gave both propagandists and dissidents a pulpit in the struggle for the hearts and minds of those monitoring the war.

Telegram was founded by Mr. Durov with his brother in 2013. Mr. Durov, a Russian-born French citizen, was arrested in connection with an investigation opened last month into criminal activity on the app and a lack of cooperation with law enforcement, French prosecutors said.

One in two Russian citizens use Telegram today, either to obtain information or to communicate with others, up from about 38 percent at the start of the war, according to the Levada Center, an independent Russian pollster.

Many Russians turned to the messaging app for news about the war after the Kremlin banned most other major Western social media platforms in the country, including Facebook and Instagram. The government has also shuttered the few independent newspapers, websites, and radio and television stations, and jailed hundreds of people for questioning the official narrative of the war.

About one in four Russians each day read Telegram’s public message boards, called channels, which provide a more unvarnished view of the war, according to a poll conducted by Levada in April. Five years ago, that figure was a mere 1 percent.

Others are drawn to the app’s strong encryption and privacy settings, which make it an attractive means of communicating sensitive information at a time of escalating censorship and repression in Russia.

The combination of Telegram’s large audience and the platform’s perceived security have made it a favorite communication tool in Russia for champions of the invasion and opponents alike.

Independent journalists now in exile have used the app to continue covering the war and informing the Russian audience about its toll. Previously obscure military buffs and satellite data analysts amassed millions of followers on Telegram after the invasion, becoming vital arbiters of opinion on the course of the war. Volunteers have used the app to raise donations for the troops and to help evacuate civilians caught in the fighting.
Telegram has also become a prominent source of war information in Ukraine. Many in the country, for example, turn to Telegram for air raid alerts, which are considered to be faster than the official government app.

A mother read news about the war on Telegram while her daughter played last year in Kyiv.Credit...Laetitia Vancon for The New York Times


But perhaps most tellingly, frontline soldiers have turned to Telegram to document their lives and deaths, changing the very nature of how information spreads in wartime. Telegram’s lack of restrictions on violent content means the app has become a portal for some of the most gruesome combat videos, exposing the reality of a 21st century war where drones and body cameras have created an unmatched amount of real-time footage.

Russian soldiers also regularly use Telegram to communicate military information with each other, highlighting how the war in Ukraine has been fought by a combination of military and commercial technologies, which also include hobby drones and Starlink routers.

“To date, Telegram has become perhaps the main means of units’ command and control” a pro-war collective of Russian military analysts, known as Rybar, wrote on Telegram after Mr. Durov’s detention.

Rybar added that Mr. Durov’s detention has exposed Russia’s need to develop more secure channels of military communications.

Telegram’s power to shape the narrative of the war became clear in the summer of 2023, when the Russian warlord Yevgeny V. Prigozhin used the messaging app to announce — and then narrate — his short-lived rebellion against the Russian military command. Millions in Russia and abroad watched on Telegram images and videos of Mr. Prigozhin’s armored columns move toward Moscow as the country’s television channels played their usual entertainment programs.

Yevgeny V. Prigozhin in an image taken from video posted on the Telegram account of his company, Concord, last year.
Credit...Concord Group/Telegram, via Agence France-Presse

Mr. Durov’s detention is now threatening Telegram’s status as the dominant medium chronicling the war.

Some analysts said his detention could complicate the company’s fund-raising, stirring doubts about its future financial viability. Others have expressed concerns about the sustainability of Telegram privacy protections after the French media reported that the country’s law enforcement agents are seeking access to the database of private chats on the app.

A Russian Telegram channel close to the country’s intelligence agencies, called Baza, reported on Monday that the country’s security officials have received a directive to delete the app from their phones.

“Everyone who got accustomed to using Telegram for sensitive conversations and chats must immediately delete them, and don’t do it in the future,” Margarita Simonyan, a Russian state media executive and prominent propagandist, wrote on Telegram on Sunday.

The Russian government has tried to get people off Telegram before, partly out of fear of providing the company run by Mr. Durov with sensitive national security information. But a 2018 effort to block access to the app proved largely futile, and the government abandoned those efforts two years later.

Since then, Telegram has become the main channel for Russian government announcements.

Andrew E. Kramer and Marc Santora contributed reporting.

Anatoly Kurmanaev covers Russia and its transformation following the invasion of Ukraine. More about Anatoly Kurmanaev\

\A version of this article appears in print on Aug. 27, 2024, Section A, Page 10 of the New York edition with the headline: App’s Turmoil Threatens Dominant Tool Used to Chronicle Fighting in Ukraine. Order Reprints | Today’s Paper | Subscribe
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‘Russians do everything via Telegram.’ Pavel Durov’s arrest upends Kremlin military comms

Although Durov publicly distances himself from Moscow, his platform has become vital for Russian army coordination in Ukraine.


Telegram is the primary vehicle for pro-war military bloggers and media — as well as millions of ordinary Russians.
 | Dan Kitwood/Getty Images

August 26, 2024 
By Veronika Melkozerova

KYIV — French authorities detained Pavel Durov on allegations that his Telegram social media platform was being used for child pornography, drug trafficking and organized crime — but the immediate freakout came from Russia.

That's because Telegram is widely used by the Russian military for battlefield communications thanks to problems with rolling out its own secure comms system. It's also the primary vehicle for pro-war military bloggers and media — as well as millions of ordinary Russians.

“They practically detained the head of communication of the Russian army,” Russian military blogger channel Povernutie na Z Voine said in a Telegram statement.

The blog site Dva Mayora said that Russian specialists are working on an alternative to Telegram, but that the Russian army's Main Communications Directorate has "not shown any real interest" in getting such a system to Russian troops. The site said Durov's arrest may actually speed up the development of an independent comms system.

Alarmed Russian policymakers are calling for Durov's release.

“[Durov’s] arrest may have political grounds and be a tool for gaining access to the personal information of Telegram users," the Deputy Speaker of the Russian Duma Vladislav Davankov said in a Telegram statement. "This cannot be allowed. If the French authorities refuse to release Pavel Durov from custody, I propose making every effort to move him to the UAE or the Russian Federation. With his consent, of course."

Their worry is that Durov may hand over encryption keys to the French authorities, allowing access to the platform and any communications that users thought was encrypted.

French President Emmanuel Macron said Monday that the arrest of Durov was "in no way a political decision."

The Russian embassy has demanded that it get access to Durov, but the Kremlin has so far not issued a statement on the arrest.

"Before saying anything, we should wait for the situation to become clearer," said Kremlin spokesperson Dmitry Peskov.

However, officials and law enforcement agencies were instructed to clear all their communication from Telegram, the pro-Kremlin channel Baza reported.

"Everyone who is used to using the platform for sensitive conversations/conversations should delete those conversations right now and not do it again," Kremlin propagandist Margarita Simonyan said in a Telegram post. "Durov has been shut down to get the keys. And he's going to give them."

Telegram's dark side

Telegram's lack of moderation has made it a haven for illicit gun and drug trafficking in the West, and a tool of communication, recruitment of saboteurs and propaganda in the East, Nazar Tokar, head of Kremlingram, an investigative group of activists studying Telegram’s security and its potential ties to the Kremlin, told POLITICO.

“Russians do everything via Telegram. They are recruiting agents and people for counter-activities. Today in Ukraine, a popular campaign is to recruit people who would burn Ukrainian military cars. And it is quite successful. They coordinate their military efforts using it,” Tokar said.

Telegram denied accusations that it was allowing dangerous content, saying it abides by EU laws, including the Digital Services Act. It insisted its moderation meets industry standards and is constantly improving.

“It is absurd to claim that a platform or its owner is responsible for abuse of that platform. Almost a billion users globally use Telegram as a means of communication and as a source of vital information,” Telegram said in a statement.

Tokar argues that Telegram has become so popular not just because it is convenient and fast, as well as having its own cryptocurrency and many free functions, but because it allows access to a seamy underworld of illicit activities.

“You just install the free app and get easy access to buying guns, drugs, explicit and violent content ... anything. It is all available simply by searching. And this is not so easily available anywhere in other messengers,” Tokar said.

Despite the platform being used by the Russian military, Telegram denies any ties to the Russian government, adding that it is “essential for freedom of speech.”

While the Kremlin has clamped down on most other social media platforms, Telegram has not been banned or limited, Tokar said. That's despite Durov saying he fled Russia in 2014 after the Kremlin demanded access to data on his previous social media company Vkontakte about Ukrainian pro-democracy protesters who took part in the country's 2014 revolution.

Ukraine's military largely uses the Signal platform for its communications, but most government agencies, including the president's office, have Telegram channels. It is also widely used for personal messages and blogs by Ukrainian soldiers and civilians.

Durov's arrest has revived a heated discussion in Ukraine about whether Kyiv should ban the platform, Tokar said.

But Telegram is much more important to Russia than to Ukraine.

“I think that the Russians are panicking because they are trying to predict possible outcomes for their essential communications tool and are trying to protect themselves and remove information from there. But everything will depend on the French government and the courts — whether they will imprison Durov, or come to an agreement and release him and he in return will provide them with some information — we do not know yet,” Tokar said.

Telegram founder Pavel Durov detained in judicial investigation involving 12 criminal counts, French prosecutors say

The Insider
26 August 2024



The investigation that led to the recent detention of Telegram founder and CEO Pavel Durov this past Saturday was originally opened on July 8, 2024 against an “unnamed person.” It involved suspicion on 12 counts, including refusal to cooperate with law enforcement, complicity in drug distribution, child pornography, cybercrime, and fraud, according to a statement from the French public prosecutor's office released earlier today.

“Pavel Durov, founder and director of the Telegram instant messaging platform, was arrested and placed in police custody at 8 p.m. on Saturday, August 24, 2024 at Le Bourget [airport]. This measure was taken as part of a judicial investigation opened on July 8, 2024, following a preliminary investigation initiated by the J3 section (JUNALCO — National Jurisdiction for Combating Organized Crime) of the Paris public prosecutor's office,” the statement read.

The charges against the “unnamed person” in the case include:Complicity in administering an online platform to facilitate illegal transactions within an organized group.
Refusal to provide information or documents necessary for lawful interceptions at the request of competent authorities.
Complicity in the possession of pornographic images of minors.
Complicity in distributing, offering, or providing pornographic images of minors within an organized group.
Complicity in the purchase, transportation, possession, offer, or sale of narcotic substances.
Complicity in offering, selling, or providing, without lawful justification, equipment, tools, programs, or data designed to gain unauthorized access to and impair the operation of automated data processing systems.
Complicity in organized group fraud.
Criminal conspiracy to commit a crime or offense punishable by five or more years of imprisonment.
Laundering proceeds from crimes or offenses committed by an organized group.
Providing cryptographic services for privacy without a certified statement.
Providing a cryptographic tool that does not exclusively offer authentication or integrity control without a prior declaration.
Importing a cryptographic tool that provides authentication or integrity control without a prior declaration.

Durov notably holds multiple passports. He is a citizen of France, the United Arab Emirates, and the Caribbean island nation of St. Kitts and Nevis. The independent Russian publication Agentstvo.Novosti, citing data from Russian government services portal Gosuslugi, reported on Sunday that Durov still holds a valid Russian passport.

In mid-April 2022 — several months after the start of Russia’s full-scale invasion of Ukraine — Durov asked Forbes not to call him a Russian billionaire, joining the likes of Revolut co-founder Nikolay Storonsky, tech investor Yuri Milner, and Yandex co-founder Arkady Volozh. “Pavel left Russia many years ago with no intention to return,” his spokesperson told the publication.

Vladimir Putin’s spokesman Dmitry Peskov earlier today told reporters that the Kremlin “does not know what exactly Durov is accused of,” which meant “it would be wrong to make any statements,” as per a report by the Russian news agency Interfax.

“We haven't heard any official statements to that effect yet. And before saying anything, we need to wait for the situation to be clarified: what exactly they are trying to charge Durov [with],” Peskov said.

He added that Vladimir Putin did not meet with Durov during his recent visit to Azerbaijan. Earlier, the Telegram channel Baza, which is reportedly affiliated with the Russian authorities, quoted a source as saying that the Russian president refused to meet with the Telegram founder while in Baku.

In a statement published on X on August 26, French President Emmanuel Macron took the position that Durov's detention was not politically motivated:
“The arrest of the president of Telegram on French soil took place as part of an ongoing judicial investigation. It is in no way a political decision. It is up to the judges to rule on the matter.”

Macron’s tweet also stressed that “France is deeply committed to freedom of expression and communication, to innovation, and to the spirit of entrepreneurship. It will remain so.”

However, Macron did not specify the exact nature of French law enforcement's concerns regarding the Telegram founder. Durov was detained at the Le Bourget airport outside Paris shortly after landing on a private jet late on Saturday. The arrest reportedly came in connection to the lack of moderation on Telegram and the platform's refusal to cooperate with French security services.

Pavel Durov, alongside his brother Nikolai, launched Telegram in August 2013, with Nikolai responsible for developing the technology behind the cloud-based messaging platform. Telegram, headquartered in Dubai, now boasts over 950 million active users worldwide, according to the company. Forbes estimates Pavel Durov's net worth at $15 billion.

The platform remains among the few avenues available to Russian citizens looking to bypass government censorship amid an increasingly stringent crackdown on the country’s information space.

Telegram is also extensively used by the Russian military for its internal communications, and the arrest of its founder led to a flurry of angered reactions among pro-war bloggers, including Alexander Sladkov.

“Pavel Durov was arrested. This attack on the owner of [Telegram], on which half of the communications in the [war] are held, was expected. Now we urgently need to create a Russian military messenger,” Sladkov wrote.

The Russian Telegram channel Rybar, founded by Mikhail Zvinchuk, a former employee of Russia's Defense Ministry, similarly noted that Telegram “has now become almost the main means of controlling units in the [special military operation] zone.”
“It will be very sad and funny at the same time if it is Pavel Durov's arrest that will be the catalyst for changes in the approaches to communication and control means in the Russian Armed Forces. And not the purely military problems that have piled up over the past two years, which for some reason [the Russian Defense Ministry] preferred to turn a blind eye to.”

Cover image: A screenshot from Durov’s April 2024 interview with former Fox News anchor Tucker Carlson. Source: YouTube / Tucker Carlson



French police have arrested the founder of Telegram. What happens next could change the course of big tech

PTI |
Aug 27, 2024 


Sydney, When Pavel Durov arrived in France on his private jet last Saturday, he was greeted by police who promptly arrested him. As the founder of the direct messaging platform Telegram, he was accused of facilitating the widespread crimes committed on it.

The following day, a French judge extended Durov’s initial period of detention, allowing police to detain him for up to 96 hours.

Telegram has rejected the allegations against Durov. In a statement, the company said:

It is absurd to claim that a platform or its owner are responsible for abuse of that platform.

The case may have far-reaching international implications, not just for Telegram but for other global technology giants as well.

Who is Pavel Durov?


Born in Russia in 1984, Pavel Durov also has French citizenship. This might explain why he felt free to travel despite his app’s role in the Russia-Ukraine War and its widespread use by extremist groups and criminals more generally.

Durov started an earlier social media site, VKontakte, in 2006, which remains very popular in Russia. However, a dispute with how the new owners of the site were operating it led to him leaving the company in 2014.

It was shortly before this that Durov created Telegram. This platform provides both the means for communication and exchange as well as the protection of encryption that makes crimes harder to track and tackle than ever before. But that same protection also enables people to resist authoritarian governments that seek to prevent dissent or protest.

Durov also has connections with famed tech figures Elon Musk and Mark Zuckerberg, and enjoys broad support in the vocally libertarian tech community. But his platform is no stranger to legal challenges – even in his birth country.


An odd target


Pavel Durov is in some ways an odd target for French authorities.

Meta’s WhatsApp messenger app is also encrypted and boasts three times as many users, while X’s provocations for hate speech and other problematic content are unrepentantly public and increasingly widespread.

There is also no suggestion that Durov himself was engaged with making any illegal content. Instead, he is accused of indirectly facilitating illegal content by maintaining the app in the first place.

However, Durov’s unique background might go some way to suggest why he was taken in.

Unlike other major tech players, he lacks US citizenship. He hails from a country with a chequered past of internet activity – and a diminished diplomatic standing globally thanks to its war against Ukraine.


His app is large enough to be a global presence. But simultaneously it is not large enough to have the limitless legal resources of major players such as Meta.

Combined, these factors make him a more accessible target to test the enforcement of expanding regulatory frameworks.

A question of moderation

Durov’s arrest marks another act in the often confusing and contradictory negotiation of how much responsibility platforms shoulder for the content on their sites.

These platforms, which include direct messaging platforms such as Telegram and WhatsApp but also broader services such as those offered by Meta’s Facebook and Musk’s X, operate across the globe.

As such, they contend with a wide variety of legal environments.

This means any restriction put on a platform ultimately affects its services everywhere in the world – complicating and frequently preventing regulation.


On one side, there is a push to either hold the platforms responsible for illegal content or to provide details on the users that post it.

In Russia, Telegram itself was under pressure to provide names of protesters organising through its app to protest the war against Ukraine.

Conversely, freedom of speech advocates have fought against users being banned from platforms. Meanwhile political commentators cry foul of being “censored” for their political views.

These contradictions make regulation difficult to craft, while the platforms’ global nature make enforcement a daunting challenge. This challenge tends to play in platforms’ favour, as they can exercise a relatively strong sense of platform sovereignty in how they decide to operate and develop.

But these complications can obscure the ways platforms can operate directly as deliberate influencers of public opinion and even publishers of their own content.


To take one example, both Google and Facebook took advantage of their central place in the information economy to advertise politically orientated content to resist the development and implementation of Australia’s News Media Bargaining Code.

The platforms’ construction also directly influences what content can appear and what content is recommended – and hate speech can mark an opportunity for clicks and screen time.

Now, pressure is increasing to hold platforms responsible for how they moderate their users and content. In Europe, recent regulation such as the Media Freedom Act aims to prevent platforms from arbitrarily deleting or banning news producers and their content, while the Digital Services Act requires that these platforms provide mechanisms for removing illegal material.

Australia has its own Online Safety Act to prevent harms through platforms, though the recent case involving X reveals that its capacity may be quite limited. Future implications


Durov is currently only being detained, and it remains to be seen what, if anything, will happen to him in coming days.

But if he is charged and successfully prosecuted, it could lay the groundwork for France to take wider actions against not only tech platforms, but also their owners. It could also embolden nations around the world – in the West and beyond – to undertake their own investigations.

In turn, it may also make tech platforms think far more seriously about the criminal content they host. AMS

The crazy life and times of Pavel Durov, Russia’s Elon Musk


Is the arrested Telegram CEO a free speech martyr or a shadowy criminal?



Pavel Durov likes to frame himself as the patron of the individual citizen against government snooping. | Michelle Rohn for POLITICO

August 26, 2024

Pavel Durov loves a good show.

The first glimpse many Russians caught of the current Telegram CEO — now languishing in Paris police custody — was in May 2012 when a small fleet of paper airplanes made out of cash descended on St. Petersburg’s Nevsky Prospekt, the city's main thoroughfare.

His face half hidden by a black cap, cameras captured a young Durov hanging out by an upstairs window, clearly enjoying himself as an agitated crowd scrabbled for more 5,000 ruble notes which the young tech prodigy was raining down from above.

At the time, Durov was the head of VKontakte, Russia’s equivalent of Facebook, which had skyrocketed to success aided by the near-total absence of online regulation.

A self-professed libertarian, Durov likes to frame himself as the patron of the individual citizen against government snooping. Authorities in France, however, are now probing him for his defense of a far less noble group of people, including pedophiles, drug dealers and gangsters.

Free speech martyr or shadowy criminal? Durov's reality is much more complex.
Durov's revenge

Authority and Durov have never been best friends.

As a student, Durov hacked his school’s computer network so it would show a photo of his least favorite teacher with the text "must die" as a screen saver.

Now in his late thirties, he still combines the nerdy reclusiveness of Facebook boss Mark Zuckerberg — taking after his brother Nikolai, who was a child math prodigy and is rumored to be the real brain behind the Durovs’ success — with the contrarian eccentricity and narcissism of Elon Musk.

Not long after the money-throwing episode, VKontakte began experiencing serious trouble. In the wake of large anti-Kremlin protests, Russia’s security service, the FSB, demanded greater control over the social media platform.

Under pressure, Durov sold his shares in the company and fled Russia in 2014, announcing his departure with a picture of dolphins and a line from The Hitchhiker's Guide to the Galaxy: “So long, and thanks for all the fish.”
Pavel Durov was the head of VKontakte, Russia’s equivalent of Facebook. | Nadine Rupp/Getty Images

For the Kremlin it was a case of good riddance. VKontakte was rebranded VK and co-opted, with the children of Russian President Vladimir Putin's acolytes appointed to key positions.

But like the heroes in his favorite films, Durov soon got his revenge. From Dubai, he doubled down on Telegram, an encrypted messaging service whose significance and success far outgrew that of his first company.
Who uses Telegram?

Today, Telegram is among the most popular messenger apps in Russia and in other post-Soviet countries, as well as in India and in a handful of autocracies such as Iran.

For people living in countries where they risk jail for an injudicious word or opinion, the app promises a safe means of communication.

What sets it apart from rival messengers, however, is that Telegram is also a media platform in its own right. Think: WhatsApp, Facebook and X, all in one.

That hybrid quality has made it a core platform for more uses than just texting, and more users than just government critics.

After Russia invaded Ukraine in 2022, Telegram became a primary mode of communication on both sides of the front lines. A new group of military bloggers, some with more than a million followers, have also made it their preferred platform.

Seeming to hold no grudge against Durov, top Russian Kremlin figures and propagandists also have channels on Telegram.

But Telegram, along with YouTube, has provided a refuge on the other side of the political divide for media outlets that were blocked by Russian authorities under wartime censorship laws.

“It’s become a replacement for independent media which have been squeezed out of the public space,” Lev Gershenzon, the Russian founder of news aggregator The True Story, told POLITICO. Gershenzon previously served as head of news at Russia's Yandex search engine, but resigned in protest of censorship at the company.


Telegram pushed back strongly against any suggestion of wrongdoing in an online statement. | Leon Neal/Getty Images

But in Europe, where citizens face fewer dangers from their democratically elected governments, Telegram’s function is “an altogether different story,” Gershenzon said.

Here it is used mostly by groups on the margins of society, such as anti-vaxxers, or by those with a vested interest in secure communications. More ominously, it has also become a mirror dark web for terrorists and those dealing in drugs, weapons and child pornography.

“In Russia, Telegram is a safe haven [from] the government’s fight against civil society,” Russian opposition politician Maxim Katz said in a livestream Monday. “In Europe, Telegram is a safe haven for criminals.”

Telegram pushed back strongly against any suggestion of wrongdoing in an online statement Sunday, saying it abides by all EU laws and that its founder “has nothing to hide.”

Meanwhile, Durov himself has remained elusive. He’s notoriously hard to reach for media, and reportedly also for governments; nor is much known about his personal life or the way his company is run. He is a citizen of the United Arab Emirates and, for reasons that remain murky, France.

When he has emerged from the shadows, it has usually been to cause a splash — to show off his six pack, to example, or to announce in a fit of TMI that he has fathered 100 children.

Is Telegram really safe?

In the months leading up to his arrest, Durov had been more visible. In a rare interview, with conservative media personality Tucker Carlson, he claimed he’d been pressured by the intelligence services of various countries to give them backdoor access to Telegram — singling the U.S. out for special mention — but that had always refused.

Many independent Russian internet experts, however, point to a number of cases when channels linked to the opposition were restricted for no clear reason. While Telegram also complied with European sanctions against propaganda network RT, Gershenzon said it seemed to suggest Durov was more open to negotiating with governments than he would have his followers believe.

In 2020, for example, Telegram’s Vice President Ilya Perekopsky met with Russian Prime Minister Dmitry Mishustin аt a tech panel in the Russian city of Kazan.

Before being arrested in Paris this weekend, Durov was in Azerbaijan where, according to speculation, he tried to secure a meeting with Putin, who happened to be visiting at the same time. (The Kremlin’s spokesperson said Monday that the two did not meet.)

Regardless of the nature of his ties to Russia, Durov’s arrest is a coup for the Kremlin’s propaganda machine.

In the months leading up to his arrest, Pavel Durov had been more visible.
 | Olga Maltseva/Getty Images

Initial reactions from Moscow suggest it will frame Durov’s arrest as an example of Western hypocrisy on free speech. At the same time, propagandists are also likely to argue Moscow was right to clamp down on Durov, first with VKontakte and more recently in 2018 when it tried unsuccessfully to block Telegram.

They're unlikely to mention, however, that in Russia, such moves have been motivated primarily by a desire to silence the voices of political critics, rather than those of criminals. That trend has recently spread to curbing YouTube, nudging Russia in the direction of a Chinese-style firewall.

Durov’s legal team will likely argue that he can't be held responsible for the actions of a few rotten apples, unsavory though they may be, or prioritize targeting them over the interests of some billion other users.

"Our right to privacy is more important than the fear of terrorism," Durov said in 2016, defending Apple’s right to resist FBI access to the encrypted iPhone of a man involved in a mass shooting.

Regardless of the facts, the detained Durov has two elements playing in his favor. The first is that his case is taking place in France, where it is still possible to get a fair trial, unlike in Russia (where the acquittal rate is 0.03 percent). The second is that his case will play out partly in the informational sphere and in the court of public opinion.

Judging by his past, that's an arena for which Durov, the showman, has been preparing his entire adult life.

Canada puts 100% tariff on China-made EVs, including Teslas 




Canada to hit China with tariffs on electric vehicles, steel

By Brian Platt
August 26, 2024 

(Bloomberg) -- Canada will impose new tariffs on Chinese-made electric vehicles, aluminum and steel, lining up behind western allies and taking steps to protect domestic manufacturers.

The government announced a 100 per cent levy on electric cars and 25 per cent on steel and aluminum, confirming an earlier report from Bloomberg News. Prime Minister Justin Trudeau unveiled the policy in Halifax, Nova Scotia, where he’s gathered with the rest of his cabinet for a series of meetings about the economy and foreign relations.

The surtax on electric vehicles will take effect Oct. 1 and will also include certain hybrid passenger automobiles, trucks, buses and delivery vans. It will be added to an existing 6.1 per cent tariff that applies to Chinese EVs, the government said in a news release.

The levies on aluminum and steel will come into place Oct. 15. The government released an initial list of goods on Monday and the public will have a chance to comment before it is finalized on Oct. 1.

Trudeau’s government is also launching a new 30-day consultation on other sectors, including batteries and battery parts, semiconductors, solar products and critical minerals.

“We are transforming Canada’s automotive sector to be a global leader in building the vehicles of tomorrow,” Trudeau told reporters in Halifax. “But actors like China have chosen to give themselves an unfair advantage in the global marketplace, compromising the security of our critical industries and displacing dedicated Canadian autos and metal workers.”

Canada, an export-driven economy that relies heavily on trade with the U.S., has been closely watching moves by the Biden administration to erect a much higher tariff wall against Chinese EVs, batteries, solar cells, steel and other products. Canada’s auto sector is heavily integrated with that of its closest neighbour: The vast majority of its light vehicle production — which was 1.5 million units last year — is exported to the U.S.

Finance Minister Chrystia Freeland, the most powerful person in Trudeau’s cabinet, has been one of the most prominent voices in favour of a harder approach to Chinese vehicle exports, and becoming a closer trade ally with the U.S.

In June, she announced a public consultation on possible measures to make it more difficult for Chinese companies to sell electric vehicles in the Canadian market. During an interview with Bloomberg News in July, she said the tariffs consultation might go beyond electric cars.

The government also announced Monday that it will limit eligibility for electric vehicle incentives to products made in countries that have negotiated free-trade agreements with Canada.

It will review the new levies within a year of them coming into effect.
‘No illusion’

The European Union has also announced proposed new tariffs on electric vehicles important from China, though at lower levels than the U.S. and now Canada are proposing.

Products made by SAIC Motor Corp. face additional duties of 36.3 per cent, while Geely Automobile Holdings Ltd. and BYD Co. each face tariffs of 19.3 per cent and 17 per cent, respectively, according to a draft decision released last week. Tesla Inc. will see an extra nine per cent charge on Chinese-made vehicles.

Chinese leaders plan to raise the issue of tariffs when U.S. National Security Adviser Jake Sullivan visits this week, according to the official Xinhua News Agency. Sullivan is due to meet with Foreign Minister Wang Yi and may also meet with Chinese leader Xi Jinping.

China has retaliated against Canada before. It previously restricted imports of Canadian canola seed for three years — a move seen as retribution for a decision by Canada authorities to arrest Huawei executive Meng Wanzhou in Vancouver on a U.S. extradition warrant. Meng returned to China in 2021.

The value of Chinese electric vehicles imported by Canada surged to $2.2 billion (US$1.6 billion) last year, from less than $100 million in 2022, according to data from Statistics Canada. The number of cars arriving from China at the port of Vancouver jumped after Tesla Inc. started shipping Model Y vehicles there from its Shanghai factory.

However, the Canadian government’s main concern isn’t Tesla, but the prospect of cheap cars made by Chinese automakers eventually becoming available. BYD informed the Canadian government in July that it intends to lobby lawmakers and officials about its plans to enter the country.

Trudeau also faced political and industry pressure. The Canadian auto sector had been pushing him to hike tariffs to protect domestic jobs and wages, arguing that China’s EVs are cheaper due to much weaker labour standards. The government has also bet big on automakers and manufacturers from democratic allies: the government has agreed to multibillion-dollar subsidies for electric vehicle plants or battery factories for Stellantis NV, Volkswagen AG and Honda Motor Co., among others.

Steel and aluminum producers in Canada have also publicly and repeatedly urged the government to restrict China’s access, saying that Xi’s industrial policy allows the Asian powerhouse to unfairly flood foreign markets, putting local jobs at risk.

©2024 Bloomberg L.P.


China expresses strong dissatisfaction with Canada's EV tarrifs

Source: Xinhua
Editor: huaxia
2024-08-27

OTTAWA, Aug. 27 (Xinhua) -- The Chinese Embassy in Canada expressed on Monday its strong dissatisfaction and resolute opposition against the Canadian government's action to impose tariffs on Chinese electric vehicles (EVs).

A spokesperson of the embassy criticized the Canadian government's decision to increase import taxes on Chinese-made EVs as typical trade protectionism and politically motivated, adding that it violates WTO rules and undermines Canada's traditional image as a global champion for free trade and climate change mitigation.

It will damage trade and economic cooperation between China and Canada, hurt the interests of Canadian consumers and enterprises, slow down the green transition process of Canada and certainly won't help global efforts to address climate change, which benefits no one and will only backfire, the spokesperson said.

The spokesperson emphasized that the rapid development of China's EV industry is a result of persistent technological innovation, well-established industrial and supply chains, and full market competition.

Its competitiveness is gained through utilizing its comparative advantages and following market principles, rather than relying on government subsidies, the spokesperson added.

"China will take all necessary measures to safeguard the legitimate rights and interests of Chinese enterprises," said the spokesperson.

Canadian Prime Minister Justin Trudeau announced at the federal cabinet retreat in Halifax on Monday that the country will raise import taxes on Chinese-made EVs from 6.1 percent to 106.1 percent on Oct. 1.

Tariffs on Chinese-made steel and aluminum products will increase to 25 percent starting Oct. 15. ■
Justin Trudeau says Canada reducing number of temporary foreign workers

By Sumanti Sen
Aug 27, 2024


Justin Trudeau has announced that he is planning to reduce the number of low-wage, temporary foreign workers and permanent residents being allowed into Canada.


Justin Trudeau has announced that he is planning to reduce the number of low-wage, temporary foreign workers and permanent residents being allowed into Canada. This comes as Canada is struggling to deal with a rapidly growing population that, according to some economists, has been putting pressure on housing and public services like
 healthcare

.
Justin Trudeau says Canada reducing number of temporary foreign workers (Photographer: Dean Casavechia/Bloomberg)(Bloomberg)

Trudeau took to X to make the announcement. “We’re reducing the number of low-wage, temporary foreign workers in Canada,” he wrote. “The labour market has changed. Now is the time for our businesses to invest in Canadian workers and youth.”

‘Canada remains a place that is positive in its support for immigration’

The federal statistics revealed that the majority of Canada’s population growth last year, which was about 97%, was driven by immigration. Trudeau and his government have often been called out for increasing immigration without bolstering services or housing construction.

Trudeau said at a press conference that changes to the labour market have prompted him to eye an overhaul to the temporary foreign workers programme. “It’s not fair to Canadians struggling to find a good job, and it’s not fair to those temporary foreign workers, some of whom are being mistreated and exploited,” he said, according to BBC.

The Temporary Foreign Worker programme allows foreign nationals to be hired by employers in Canada to fill temporary jobs in the absence of qualified Canadians. Labour advocates have criticised the programme. Recently, the UN called it “a breeding ground for contemporary forms of slavery” in a report.

Meanwhile, Trudeau also said that his cabinet has been considering reductions to permanent resident streams. The Prime Minister has been behind in polls as Canadians say Canada is bringing in a huge number of immigrants.

"We're looking at the various streams to make sure that as we move forward, Canada remains a place that is positive in its support for immigration, but also responsible in the way we integrate and make sure there's pathways to success for everyone who comes to Canada," Trudeau told reporters, Reuters reported. He added that this fall, the government will come up with a broader plan on immigration levels.


Canada to restrict low-wage foreign workers, consider lower immigration targets

August 26, 2024 

Prime Minister Justin Trudeau arrives at the Sunday evening cabinet retreat dinner at the Halifax Convention Centre on Sunday Aug. 25, 2024. 
CANADIAN PRESS/Kelly Clark

OTTAWA — Prime Minister Justin Trudeau is urging businesses to hire Canadians as his government announces new restrictions to limit the number of low-wage temporary foreign workers in the country.

Ottawa is also considering whether to reduce its annual targets for permanent residency — a potentially major shift in immigration policy for the Liberals.

In response to mounting criticism of the recent influx in temporary foreign workers, the federal government is bringing back pre-pandemic rules that made it harder for businesses to hire low-wage workers from abroad.

Speaking to reporters at the Liberal cabinet retreat in Halifax on Monday, Trudeau said his government loosened the rules to help businesses that were facing labour shortages recover from the pandemic.

But the economic situation is different now, he said, and Canada “no longer needs as many temporary foreign workers.”


“We need Canadian businesses to invest in training and technology and not increasing their reliance on low-cost foreign labour,” Trudeau said.

“It’s not fair to Canadians struggling to find a good job, and it’s not fair to those temporary foreign workers, some of whom are being mistreated and exploited.”

Trudeau said Employment Minister Randy Boissonnault is also looking at making changes to the high-wage stream of the program.

When asked whether the federal government is also considering restricting the number of permanent residents, the prime minister said those were “ongoing conversations.”

Monday’s announcement is the latest effort by the Liberals to limit the number of people coming into the country in response to criticism of its immigration policies.

Effective Sept. 26, the government will refuse applications for low-wage temporary foreign workers in regions with an unemployment rate of six per cent or higher.

Employers will be allowed to hire a maximum of 10 per cent of their workforce from the temporary foreign worker program, down from 20 per cent.

Workers hired through the low-wage stream will be able to work a maximum of one year, down from two years.

There will be some exceptions to the rules for specific sectors such as health care and construction.

“To those who would complain about worker shortages, here’s my message: there is no better time to hire and invest in Canadian workers,” Trudeau said.

Strong population growth over the last couple of years, driven by high immigration, has increased demand for housing and economists say that has worsened affordability.


The temporary foreign worker program has also been criticized for allowing cheap labour into the country at a time when the economy is slowing down.

When the federal government eased restrictions for the program in 2022, Canada had about one million job vacancies across the country and the unemployment rate dipped to a record-low of 4.9 per cent.

Job vacancies have decreased significantly since then and the unemployment rate is climbing as high interest rates restrict economic growth.

In July, the unemployment rate was 6.4 per cent.

Economists have criticized the federal government for maintaining the relaxed rules, arguing that they discourage businesses from investing in innovation and suppress workers’ wages.

Mike Moffatt, an economist with the Smart Prosperity Institute who is set to speak to cabinet Tuesday morning about the state of Canada’s middle class, called the move a great first step — “But only a first step.”

“Today’s changes basically roll us back to where we were in April 2022. I think there’s a lot more to do,” he said.

Moffatt said there are more streams of foreign workers that could be restricted, adding there’s been a massive increase in high-wage administrative assistants hired from abroad.

“We’re moving in the right direction. We’re just not doing so far enough or fast enough to address this crisis.”

While the Liberal government has defended its decision to loosen the rules, it is now acknowledging that it’s time to tighten them again.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

Immigration Minister Marc Miller later echoed Trudeau’s comments about potentially lowering the country’s targets for permanent residents.

“All options are on the table,” Miller said.

“I’ve heard directly from Canadians about where they see the direction of immigration going, and I think they’re asking us to adjust.”

Miller said cabinet has not yet discussed lowering immigration targets, but that over the next few weeks it will consider a wide range of options.

Canada is currently set to welcome 500,000 permanent residents in both 2025 and 2026, up from 485,000 this year.

Speaking to reporters on Monday, Conservative deputy leader Melissa Lantsman said the Liberal government’s announcement amounted to a reversal of its own policies.

She also attacked Housing Minister Sean Fraser, who was previously responsible for the immigration file.

“Today, they’ve walked back the disastrous policies of Sean Fraser, who at the time was immigration minister, who broke our immigration system and is now responsible for fixing housing. Canadians don’t buy it anymore,” Lantsman said.

As immigration minister, Fraser increased permanent resident targets and argued that Canada needed more people to grow the economy and help build more homes.

Historically, there have been no targets for temporary residents and the temporary foreign worker program is overseen by the employment minister.

However, Miller announced in March the federal government will begin including targets for both temporary and permanent residents in its immigration levels plan this fall.

Miller also pledged to decrease the share of temporary residents in the country to five per cent of the population over the next three years.

According to Statistics Canada data, temporary residents represented 6.8 per cent of the population as of April 1.

This report by The Canadian Press was first published Aug. 26, 2024.

— With files from Mia Rabson and Lynsday Armstrong in Halifax

Nojoud Al Mallees, The Canadian Press

 

Lab-based alternative to foie gras launched

Supporters say lab-grown foods can be produced using fewer resources and can contribute to food security. Critics say they do not have the same nutritional value as traditional products, and production is expensive and energy-intensive.
Lab-based alternative to foie gras launched

Foie gras sells for up to €100/kg despite its production involving force-feeding ducks and geese to encourage the rapid growth of their livers.

The world's gourmets could soon face a difficult moral question.

They pay up to €100 for a kilogram of fresh foie gras, despite its production involving force-feeding ducks and geese to encourage rapid growth of their livers.

If a French company succeeds in getting EU authorisation of its laboratory-grown foie gras, will connoisseurs of French cuisine accept it, and spell the end for force-feeding?

Public and private investors have bet more than €65m on the answer being 'yes', as that is how much the French company, Gourmey, has raised to commercialise its sustainable gourmet products, grown directly from animal cells in laboratories. Foie gras is its flagship product.

According to the Good Food Institute non-profit think tank, there are 174 publicly announced lab-grown meat and seafood companies worldwide, which have attracted about €2.8bn of investment.

But only the US, Singapore, and Israel have approved and allowed the commercial sale of lab-grown meat (it was authorised earlier this year in the UK for use in pet food).

Also called 'cultivated' or 'cell-based', the lab-grown product comes from animal cells grown in a nutrient-rich environment to form muscle, fat, and connective tissue.

Now, Gourmey has made the first request ever to the European Commission to sell lab-grown meat.

EU farmers have reacted badly, they are unlikely to be buyers of the Gourmey foie gras, after the European Livestock Voice, representing the meat supply chain, said this first application will open the door to many others, for bigger players and bigger markets. Obviously, that would pose a threat to traditional livestock farmers.

The EU’s food safety authority (EFSA) has nine months to publish its opinion. It could be authorised only if the EFSA finds it does not pose a safety risk to human health. For this product to mimic foie gras, it is also required that it does not mislead consumers nor be significantly less nutritious than foie gras. Placing it on the market will also require a qualified majority (at least 55% of member states representing 65% of the EU population) support.Learn more

To block the decision, at least four member states must vote against. Already, Hungary and Italy have opposed new foods such as lab-grown products, and the agriculture ministers of France, Italy, and Austria were backed by nine other colleagues when they called last January for stricter assessment of lab-grown products.

It will take up to two years, but success would open the markets of the EU, Iceland, Lichtenstein, and Norway for Gourmey, which is also seeking market approval in Switzerland, the UK, Singapore, and the US.

The global foie gras market was estimated at about €1.3bn in 2020.

But Gourmey has many hurdles to overcome, and competitors: since 2022, IntegriCulture in Japan has been developing lab-grown foie gras. And plant-based and other versions of foie gras already offer consumers an alternative.

When Nicolas Morin-Forest founded Gourmey in 2019, the pitch was that its lab-grown foie gras eliminated animal welfare concerns and could sell in the many countries where the product is banned.

Supporters say lab-grown foods can be produced using fewer resources and can contribute to food security. Critics say they do not have the same nutritional value as traditional products, and production is expensive and energy-intensive.

Outbreaks of bird flu also threaten the traditional foie gras supply chain.

Morin-Forest's aim is to be better than conventional foie gras by partnering with top chefs to create a signature flavour.

CO2 utilisation potential as key global decarbonization tool limited by current economics

CO2 utilisation currently represents less than 5% of globally announced capture capacity; stronger incentives needed

26 August 2024

Carbon Capture Utilisation and Storage (CCUS) is a crucial element in global decarbonisation, but current economics limit CO2 utilisation deployment as high costs and insufficient subsidies hinder the market, according to a recent report from Wood Mackenzie.

In Wood Mackenzie’s 2050 net zero scenario, more than 7 Btpa of CCUS capacity is needed. Currently, 500 Mtpa of planned carbon capture capacity has been announced worldwide, of which more than 95% is dedicated to storage and less than 5% (22.4 Mtpa) to utilization, according to the report “To use or not to use? CO2 utilisation as a carbon capture enabler.”

“Expanded CO2 utilisation could bolster overall carbon capture economics, but current high costs, insufficient subsidies, and unsubstantial markets for green premiums are limiting appetite for utilisation growth,” said Rohan Dighe, research analyst, CCUS for Wood Mackenzie.



Most markets remain uncompetitive due to costs

According to the report, e-Hydrocarbons are uncompetitive and cost three times more than incumbent technology when using green H2, which comprises more than 80% of the cost of production.

However, CO2 mineralisation to high-purity limestone is competitive with traditional manufacturing, showing double digit returns if technology is scaled economically, but the market size is limited.

“Aggregates could be more than a 500 Mtpa market, but conversion to aggregates is too expensive today to be competitive,” said Dighe.



More policy support and tax incentives needed

According to Dighe, tax incentives like the US 45Q and Canadian Investment Tax Credit support utilization but are limited in scope and provide insufficient revenue to justify projects. Only the EU has a legislated CO2 utilisation mandate, which is confined to e-fuel use in aviation.

“Policy supporting demand for utilisation products is not strong enough,” said Dighe. “Without markets for these products, utilisation economics will continue to be disadvantaged. Declines in feedstock and technology costs and development of strong policy incentives are crucial for utilisation to become a legitimate, widespread enabler of carbon capture deployment.”
 GREENWASHING 

PALM OIL NEEDS ESG/SDG*
Riau’s Quest For Ecosystem Revival Amid Adversity

Rajeev Peshawaria
Contributor
CEO, Stewardship Asia Centre. 
President, Leadership Energy Consulting.
Aug 26, 2024

The Riau Ecosystem Restoration (RER) project stands as a beacon of hope amidst environmental adversities in Indonesia. Launched by the APRIL Group in 2013, it aims to restore and preserve natural habitats, emphasizing the balance between development and sustainability. This initiative is part of APRIL Group's broader commitment to sustainable practices, as highlighted in their recently published 2023 Sustainability Report. The report, themed ‘Striving for Excellence,’ marks two decades of progress in sustainable business practices, showcasing the company's dedication to environmental stewardship across the global forestry and manufacturing sectors.


Despite operating within a challenging palm oil industry, particularly in the Riau region, where deforestation and environmental degradation have sparked global concerns, the RER project and the broader sustainability efforts detailed in the report highlight a pathway to genuine environmental stewardship. Through collaborative efforts with stakeholders and an ambitious set of APRIL2030 goals, APRIL Group is increasingly recognized as a driving force for positive change, demonstrating that business and environmental sustainability coexist.


Addressing Common Objections and Criticisms

The palm oil industry has faced scrutiny for its environmental and labor practices, including deforestation, land disputes with indigenous communities, and the destruction of carbon-rich peatlands. These challenges have led to significant environmental degradation and social unrest. However, the APRIL Group has taken a bold step by publicly acknowledging the impact of its operations since 1993. By acknowledging potential environmental and social harms in Riau, Indonesia, they demonstrate a commitment to meaningful change.

The acknowledgment is a crucial step. By fully engaging in the process of remediation to end its disassociation with the Forest Stewardship Council (FSC), APRIL Group is working diligently to rebuild trust and improve its environmental practices. While it has been viewed by some as a strategic move, the acknowledgement should be recognized as a courageous leadership action. What truly matters is the commitment to genuine, long-term benefits for the planet. The transformation within the industry, driven by the RER project, exemplifies how businesses can pivot towards sustainable practices and set a new standard for environmental responsibility.

PROMOTED

The RER project aims to show that business and environmental stewardship can coexist. Located on the Kampar Peninsula in Sumatra, the RER project started with 20,265 hectares and has expanded to over 150,693 hectares. This area is home to critically endangered species like the Sumatran tiger, pangolins, and sun bears. The project's integrated production-protection model demonstrates how peat landscapes can be managed to provide forest products while protecting biodiversity. This model includes a "plantation ring" that buffers against human encroachment and illegal activities.

Opportunity in Adversity

The palm oil industry in Indonesia has long been notorious for its environmental impact. However, this adversity now presents a powerful opportunity for transformation. Industry players recognize the urgent need for improvement and take decisive steps to address these challenges head-on. The RER project stands as a testament to how the industry can pivot towards sustainable practices, setting a bold new standard for environmental responsibility.

One pivotal initiative within the RER project is carbon sequestration, which contributes to environmental restoration and opens up significant business opportunities, such as trading carbon credits. This dual benefit has a profound positive impact on both the environment and the bottom line. Improving environmental and social practices is not just a necessity but a strategic imperative for the long-term viability of businesses in the palm oil industry. Cleaning up their act is proving to be a game-changer, leading to sustained growth and profitability. This shift towards sustainability is possible and immensely beneficial, showcasing the power of committed action.

Community Engagement, Transparency, and Accountability

A crucial aspect of the RER project's success is its multi-stakeholder approach. Collaboration with local communities, NGOs, and government agencies is vital for developing sustainable land-use practices and protecting vital habitats. Partnerships with organizations like Fauna & Flora International and the local NGO Bidara integrate conservation efforts with community development, providing alternative livelihoods and education on sustainable practices.

Engaging local communities fosters a sense of ownership and responsibility towards the environment. The project reduces dependency on harmful activities like illegal logging and slash-and-burn agriculture by providing alternative livelihoods. Education on sustainable practices empowers communities to protect their natural resources effectively.

The journey towards sustainability has been marked by rigorous scrutiny, reflecting the company's commitment to transparency and continuous improvement. The RER project has implemented several measures to uphold these principles. For example, forming a Stakeholder Advisory Committee allows for regular feedback and guidance from various stakeholders, ensuring the project remains aligned with its sustainability goals.

Engaging independent auditors like KPMG to assess progress provides an unbiased evaluation of the project's impact and effectiveness. These audits identify areas for improvement and ensure credible data back the project's claims. By openly sharing successes and challenges, the RER project demonstrates a commitment to continuous improvement and accountability, essential for rebuilding stakeholder trust.

The Economic Upside of Sustainability

Efforts to improve practices within the palm oil industry benefit the environment and business. Consumers increasingly support initiatives demonstrating a genuine commitment to sustainability, enhancing reputations, and driving business growth. Sustainability initiatives can lead to cost savings and increased efficiency. Practices reducing waste and improving resource management can lower operating costs. Additionally, sustainable practices open new markets and attract investment from socially responsible investors prioritizing environmental and social governance (ESG) criteria.

While the palm oil industry is often under intense scrutiny, APRIL’s RER project now demonstrates how companies can evolve into stewards of environmental responsibility and social progress, setting a powerful example for others to follow. By embracing sustainability, the company sets a powerful example that positive change is possible, regardless of past practices. The journey towards sustainability in the palm oil industry is a testament to the power of steward leadership to drive long-term success and positive impact. Through committed efforts to ethical practices, the industry can thrive and contribute to the well-being of society and the environment.


Follow me on Twitter or LinkedIn. Check out some of my other work here.


Rajeev Peshawaria

Rajeev Peshawaria is CEO, Stewardship Asia Centre, Singapore, and president, Leadership Energy Consulting, Seattle, WA, USA. He’s also the author of Wall Street Journal and Amazon bestseller Open Source Leadership (McGraw Hill), Too Many Bosses, Too Few Leaders (Simon & Schuster), and Sustainable Sustainability (Penguin Random House). Rajeev combines 22 years of global Fortune 100 experience with research-based insights to provide unique and practical approaches to personal leadership, governance, sustainable business growth and steward leadership. He pioneered practical concepts such as leadership energy and emotional integrity for personal growth, the Brains-Bones-Nerves model for enterprise leadership, and steward leadership as a model for driving profitable growth in the 21st century. In 2014 and 2017, he was named one of the top 100 Global Thought Leaders for Trustworthy Business by ‘Trust Across America.’ Follow Rajeev for out-of-the-box leadership solutions for modern business. 


* ENVIRONMENTAL, SOCIAL & GOVERNANCE / SUSTAINABLE DEVELOPMENT GOALS

SPACE

New Boeing CEO Faces Hard Choices After NASA Snubs Starliner for SpaceX

Julie Johnsson
Mon, 26 Aug 2024

(Bloomberg) -- After a humiliating setback to its space ambitions, Boeing Co. faces a dilemma that pits its national duty against strained cash reserves.

The decision about the future of the struggling Starliner program now rests with Boeing’s newly installed chief executive officer, Kelly Ortberg, after NASA announced over the weekend that it wouldn’t send astronauts home from the space station on the faulty spacecraft. Following weeks of testing and heated debate, the space agency decided it was safer to use Elon Musk’s SpaceX.

The specter of NASA astronauts being stuck in space is just one embarrassing moment of many for Boeing during an epically bad year that’s included a near-catastrophic blowout of an airborne 737 Max jetliner, federal investigations and an executive suite shake-up.

That leaves Ortberg, who took over the top job earlier this month, and the senior leadership council known internally as “exco,” to face thorny questions about the company’s commitment to human spaceflight and Starliner.

Seth Seifman, an analyst at JPMorgan, said in a note Monday that the decision “could result in further Starliner losses for Boeing.”

Shares of Boeing fell less than 1% at 1:28 p.m. in New York. The stock has lost about a third of its value since the beginning of the year.

Before Ortberg joined Boeing, executives had vowed to honor the company’s contract to ferry astronauts to the International Space Station for NASA. Bill Nelson, the agency’s top leader, said Ortberg recently voiced support for continuing the Starliner program after the craft is sent back from the space station without people on board.

“He expressed to me an intention that they will continue to work the problems once Starliner is back safely and that we will have our redundancy and our crewed access to the space station,” the NASA administrator told reporters on Saturday.

But as a new leader brought in to get Boeing back on track after years of turmoil, Ortberg has free rein to make sweeping changes and unpopular calls, including potentially scuttling the human spaceflight initiative.

“Do they ultimately exit the program because it’s too complicated,” Boeing can’t recover its investment, “and because the other guy can do it better?” said Robert Spingarn, an analyst with Melius Research. “It can happen.”

Much will depend on how Starliner performs during its return flight to Earth without astronauts on board next month. NASA hasn’t ruled out certifying the Boeing craft, although it could require another test flight before the capsule is allowed to carry astronauts again. That could cost Boeing about $400 million, based on charges the company booked to redo an earlier test flight. The agency’s experts still aren’t certain why some thrusters, used to position the craft, suddenly stopped working during the June mission and previous flight.

Boeing’s strained balance sheet and an expected cash burn of at least $5 billion this year are considerations the company has to weigh against its legacy in space, which dates back to the Apollo moon-landing program. After recording some $1.6 billion in cost overruns, the struggling aerospace giant seems unlikely to ever make money on Starliner.

In a July filing, the company disclosed $125 million in new losses stemming from delays to the crewed flight test and testing of Starliner’s glitchy propulsion systems. “For Boeing, the losses are significant and would call into question the viability of a business like this if you look at it in a long-term way,” said Clayton Swope, deputy director of the Aerospace Security Project with the Center for Strategic and International Studies.

“The risk would be ongoing cost overruns and delays as Boeing works toward completing its six contracted missions,” Sheila Kahyaoglu of Jefferies said in a report to clients Monday. She estimates that additional delays could cost Boeing around $500 million a year.

Starliner is one of several fixed-price contracts dragging on the profits in Boeing’s defense and space division, which posted a $762 million operating loss during the first six months of 2024, slightly worse than a year earlier. The stumbles at a business that was once reliably profitable is a pressing concern for Boeing’s new CEO.

“I think it’s really important for him to go in and have an assessment of this,” said Douglas Harned, an aerospace analyst with Bernstein. “He’s coming in with a clean slate.”

Boeing declined to comment on its internal deliberations over Starliner’s fate. In an internal message shared by the company on Saturday, Mark Nappi, a Boeing vice president and program manager, said staff would gather on Monday to ponder their next steps.

“I know this is not the decision we had hoped for, but we stand ready to carry out the actions necessary to support NASA’s decision. The focus remains first and foremost on ensuring the safety of the crew and spacecraft,” Nappi said.

Even before this weekend’s setback, there were signs Boeing’s long-term commitment to Starliner was in question. Late last year, Chief Financial Officer Brian West told a small gathering of investors that the company had a decision to make about future investment in the program after it fulfills its obligations to NASA for a half-dozen flights to the ISS.

Boeing, which is NASA’s primary contractor for the International Space Station, is also developing a long-delayed moon rocket for the agency, operates the secretive X-37B spaceplane and co-owns United Launch Alliance with Lockheed Martin Corp.

Subscribe to Business of Space: The inside stories of investments beyond Earth, from satellite networks to moon landings. Delivered weekly.

NASA faces critical trade offs of its own as it maps out the future of the commercial crew program.

The agency designed the program from the outset to have more than one US spacecraft to take its astronauts and cargo to orbit. While Starliner has fallen seven years behind schedule, SpaceX has launched nine separate crews to the space station for NASA since 2020.

For all its setbacks, Boeing remains the agency’s best hope for pursuing a multiplayer strategy, Swope said. If Boeing were to back out of its contract, “That’s not a good outcome for NASA either. They’d have to start over with commercial crew,” Swope said.

The agency could work with Sierra Space Corp. to escalate plans for a crewed version of its Dream Chaser vehicle, which lost out to Boeing and SpaceX in the original bidding a decade ago. But that’s years away given delays to a cargo version of the craft.

Given the stakes, Swope thinks NASA will try to work out a way forward that keeps Boeing in the commercial crew program while addressing some of its financial pain. If the aerospace giant needs to send Starliner into space autonomously to test its glitch-prone thrusters, perhaps the agency could convert that into a cargo mission, he said.

Space is far from the only problem facing Ortberg, a veteran aerospace leader who came out of retirement to take the CEO role at Boeing. He’s expected to get his executive team in place and then tackle tougher issues like the quality lapses and poor execution across Boeing’s enterprise.

“If Boeing can fix its commercial airplanes business, what happens in space is a lot less relevant,” said Spingarn of Melius Research.

--With assistance from Bruce Einhorn, Loren Grush and Esha Dey.

(Updates with shares in sixth paragraph, analyst’s comments in fourteenth paragraph.)

Most Read from Bloomberg Businessweek
US Consumers Got a $600 Billion Boost From Locked-In Mortgages



Alex Tanzi
Mon, 26 Aug 2024,

(Bloomberg) -- Mortgages locked in at low costs provided US consumers with an extra $600 billion in spending cash since 2022, blunting the impact of the Federal Reserve’s interest-rate hikes, according to analysis by the Swiss Re Institute.

The boost received by homeowners with fixed-rate mortgages amounted to almost 2% of all personal consumption spending, wrote economists Mahir Rasheed and James Finucane at the insurance firm’s research arm.

The effect has been to mute the impact of monetary policy transmission, as consumer demand proved resilient to Fed hikes. The same mechanism will likely counteract the effectiveness of rate cuts that the Fed is now planning, and make it harder to stimulate consumer demand if the economy slows.

That limited boost from looser monetary policy could lead to “a sharper easing cycle over the next year than our baseline currently assumes,” the Swiss Re analysts wrote.

During the recent Fed tightening cycle, market rates for US mortgages exceeded the average rate that borrowers paid on existing mortgages by as much as 3.2 percentage points, according to Swiss Re.

Because the impact of monetary policy moves was dispersed, with a large chunk of household debt shielded from any impact, the Fed may have raised rates higher than it would have otherwise — in effect penalizing renters.

The coming year may see the same effect in reverse, pushing the Fed to cut rates more aggressively, according to Swiss Re. The median home price has risen some 60% since early 2020 and credit card delinquencies are above pre-pandemic levels, pointing to larger household debt burdens that will only see limited relief from lower borrowing costs.

Most Read from Bloomberg Businessweek
MONOPOLY CAPITALI$M
FTC's bid to block Kroger-Albertsons merger heads to trial 

Reuters

Aug 26, 2024 #News #kroger #retail
The US FTC initiated a trial to block Kroger's $25 billion merger with Albertsons, making it a high-profile case for the Biden administration, which aims to reduce prices for consumers. 
Read the story here: https://reut.rs/3yHNYWE