Illinois gets a foot of rain, the U.S.'s 3rd 1,000-year rain in 1 week

Ben Adler

·Senior Editor

Wed, August 3, 2022 

The United States saw its third 1-in-1,000-year rain in a week on Monday night and Tuesday morning, as southern Illinois was drenched by 8 to 12 inches of rain in 12 hours. An area just south of Newton, Ill., recorded 14 inches of rainfall in just 12 hours, according to the National Weather Service. Thunderstorms brought damaging winds and heavy rainfall through midafternoon on Tuesday.

Heavy rain events such as this are becoming more common due to climate change.

The NWS office in Lincoln, Ill., received about 20 reports of flooding on Tuesday as roads turned into rivers. Several flash flood warnings were issued in the region.

Roughly 30,000 customers of CenterPoint Energy in the Evansville, Ill., area lost power on Tuesday, and more than 2,000 were still without power as of noon Central time on Wednesday.

The extraordinarily heavy rain in Illinois comes on the heels of similar events in Kentucky and Missouri. Record-breaking rainfall caused flash flooding in the St. Louis area last Tuesday, trapping cars, closing roads and causing at least one death. Last Thursday, rural areas of eastern Kentucky were flooded after receiving up to 14 inches of rainfall. The death toll, at the most recent count, stood at 37.

Although more rain actually fell in Illinois on Tuesday morning — a foot in the area southeast of Springfield, Ill., for example — the flooding was worse in St. Louis because urbanized areas are more heavily paved and less able to absorb water.

One-day observed precipitation on Tuesday. (National Weather Service)

All three inundations are considered 1,000-year rain events because the amount of rain that fell during such a short window has only a 0.1% chance of happening in any given year.

But that was before climate change. Due to rising concentrations of heat-trapping gases, mainly from the combustion of fossil fuels, the global average temperature has increased by 1.1 degrees Celsius (2 degrees Fahrenheit) since the dawn of the Industrial Revolution. With each degree Celsius of increased temperature, the air can hold 7% more moisture. Therefore, unusually heavy rains are becoming more frequent and severe.

This is especially true in the already-wet Northeast and Midwest. Last year, the Detroit area got 6 inches of rain in June and 8 inches in August, flooding basements and cars, and Hurricane Ida dumped more than 3 inches of rain on New York City in just one hour, resulting in flooding that killed 11 people and shut down the subway system.

Academic studies have shown that extreme rainfall and flooding will get worse in the future, especially if climate change continues unabated.

Wet'suwet'en chiefs arrive in Six Nations for 'landmark discussions,' starting 18-day tour

Wed, August 3, 2022 

Haudenosaunee Confederacy Chiefs Council secretary Hohahes Leroy Hill speaks to reporters, standing in front of the Wet'suwet'en Hereditary Chiefs who were visiting Tuesday. (Bobby Hristova/CBC - image credit)

Wet'suwet'en Hereditary Chiefs weren't surrounded by the towering pine trees and snow-capped mountains found in northern B.C., but they still found a feeling of familiarity while standing outside a traditional longhouse on Six Nations of the Grand River in Ontario on Tuesday.

The traditional chiefs met with Haudenosaunee Hereditary Chiefs to discuss common ground and spread awareness about their battle for land sovereignty back in B.C.

"We view these landmark discussions as not just discussions but real action-oriented, real logical starting points … toward something that's going to be working for all of us," said Hereditary Chief Woos of the Grizzly House with the Gidimt'en Clan in B.C. (who is also known as Frank Alec).

"We need to spread a message of peace and unity."

The visit to Six Nations of the Grand River is Day One of an 18-day trip that will stop in Indigenous communities near Sarnia (Aamjiwnaang First Nation), Montreal (Kahnawà:ke and Kanehsatà:ke) and Winnipeg, among others.

It was the first time in an estimated 35 years or so the Wet'suwet'en Hereditary Chiefs have come to Six Nations.

The trip's purpose is to build solidarity between Indigenous communities and raise awareness about shared concerns over land and the consent process.

The pipeline conflict

In northern B.C., some members of Wet'suwet'en Nation are occupying a Coastal GasLink construction site.

The proposed $6.6-billion, 670-kilometre pipeline will deliver natural gas from the Dawson Creek area in northern B.C., heading west near Vanderhoof to a liquefaction facility in Kitimat. It's part of a $40-billion LNG Canada project.

The province and all 20 elected First Nations councils along the route, including Wet'suwet'en elected council, approved the construction — but Wet'suwet'en hereditary chiefs said the project needed their consent too.

They said elected councils are responsible for only the territory within their individual reserves, which were created through the Indian Act.

But the hereditary chiefs say they are following Wet'suwet'en law that predates colonization and the Indian Act, meaning they assert authority over the broader 22,000 square kilometres of traditional territory that the pipeline would cross.

Protests and rail blockades across Canada, including one in Hamilton, took place in early 2020 in support of the hereditary chiefs.

In late June of this year, members of the Wet'suwet'en Nation sued the RCMP and Coastal GasLink for alleged harassment by police and private security.

In July, the Crown announced criminal contempt charges against 19 people including prominent Haudenosaunee activist Skyler Williams, who has made several trips from Six Nations to the western territory as an allied land defender.

'We're reconnecting' say Indigenous groups

Cayuga Snipe Chief Deyohowe:to (also known as Roger Silversmith) with the Haudenosaunee Confederacy Chiefs Council said despite Chief Woos and others being half a country away, both nations are fighting different kinds of development that affect land sovereignty.

Six Nations saw 1492 Land Back Lane — the occupation of a housing development in nearby Caledonia, Ont., that resulted in the cancellation of the project in July.

"When the chiefs told me here back in their own territory they can still drink the water out of their streams...here we can't do that," Chief Deyohowe:to said.

"The people who can make this change, they're not doing it."

They all called on the federal government to listen to their concerns and act accordingly.

Haudenosaunee Confederacy Chiefs Council secretary Hohahes Leroy Hill said he hopes the tour will lead to change.

"We're reconnecting and we're trying to find ways to support one another and speak with a united voice," he said.

The next stop on the Wet'suwet'en Hereditary Chiefs's tour is Aamjiwnaang First Nation, near Sarnia, Ont.

Alberta NDP to march in this year's Calgary Pride parade, UCP 'excluded,' caucus says

Wed, August 3, 2022 

The Alberta NDP in the 2015 Calgary Pride parade. (Rachel Maclean/CBC - image credit)

The Alberta NDP will be marching in this year's Calgary Pride parade on Sept. 4 — the first to be held since 2019 — but the caucus of the governing UCP say they've been excluded from this year's event.

Political parties were banned from participating in the parade in 2019 after a blind jury found only the Alberta NDP would pass their requirements to take part.

Rather than just allow the one party to join, the organization issued a blanket ban.

"The organization underwent some pretty extensive community engagement both with community stakeholders and with representatives of political parties," said Calgary Pride manager of communications Brit Nickerson in an interview on the Calgary Eyeopener.

"Their recommendations were that political parties should be allowed to participate but go through a slightly more rigorous process."

This year, the organization is requiring anyone who wishes to participate in the parade to submit an application, Nickerson said, as they don't have enough room to allow everyone to take part.

"They're asked … to state their party's formal and public position on the 2SLGBTQ community, to describe any initiatives for the gender and sexually diverse community, any initiatives for other marginalized folks," Nickerson said.

"And we've asked them to outline any actionable steps towards reconciliation with Indigenous communities."

The identity of the each respondent was redacted before their answers were handed to an 11 member jury, representing different intersections of the community, for approval.

Kate Adach/CBC

In a statement, Alberta NDP Leader Rachel Notley said their application was approved, adding the party is proud to be considered an ally.

"The fight for human rights is never truly over and with new threats emerging south of the border it is even more important that we take a stand and show our pride," she said.

"At the end of the day, love wins."

UCP caucus 'excluded'

In the case of the UCP caucus, the application did not get approved, according to director of communications for the United Conservative Caucus of Alberta, Tim Gerwing.

"We're disappointed that Calgary Pride organizers have chosen to exclude Alberta's largest political party, and the countless Albertans who identify as members and supporters of it, from an event that highlights representation, inclusion and diversity," he said.

"As disappointing as it is to see so many Albertans excluded from this event for political reasons, Alberta's United Conservative Caucus will continue to ensure that Alberta is the best place in the world to live, work and start a family, regardless of who a person loves or how they express their gender identity."

This isn't the first time the UCP's application has been rejected. In 2017, Calgary Pride asked the organization to take a workshop before being allowed to participate.

Nickerson emphasized the organization's jury is blind and members did not know which party's application they were assessing. Each submission requires a 50 per cent vote to move forward — the UCP application did not meet that criteria.

Rachel Maclean/CBC

Each applicant has 48 hours to appeal the decision, but Nickerson said the UCP caucus did not contest it. The organization has also tried to reach out to the party to provide feedback on their submission, which Nickerson said they won't discuss publicly at this time.

When asked whether the organization's application process might be exclusionary, Nickerson said they don't want anyone to feel left out.

"This process was put together after a lot of public stakeholder and community engagement, and the roundtable actually included quite a few active politicians," Nickerson said.

"We do have limited space … folks who are maybe not permitted to march in the parade are absolutely welcome in Pride in other ways. They're welcome to attend the parade and the festival. They're more than welcome to volunteer."

Calgary Pride received four applications from political parties but would not say more on which ones applied or received approval.

Alberta NDP slams UCP, ex-finance minister for big COVID-19 bonus to health chief


Wed, August 3, 2022 



EDMONTON — Alberta Opposition Leader Rachel Notley says the United Conservative Party government, particularly former finance minister Travis Toews, must bear the responsibility and fallout for the record-setting six-figure bonus payment to the chief medical officer of health.

Notley said Wednesday she isn’t passing judgment on whether the payout to Dr. Deena Hinshaw is merited.

But she said the payout has to be set against a government that, at the same time, was trying to cut the pay of front-line health workers in collective bargaining during the COVID-19 pandemic.

“It is jaw dropping to me that they would then turn around and offer up a 60 per cent bonus to someone who had — by her own admission — chosen not to completely exercise her authority and (instead) hand over decision-making power to an incredibly ill-informed cabinet,” Notley told reporters in Calgary.

The CBC, gleaning information from the government’s sunshine salary list, reported Monday that Hinshaw received a bonus of almost $228,000 for COVID-19 work in 2021 — the highest such cash benefit payout to any provincial civil servant since the list went public six years ago.

That figure, on top of her regular salary, put Hinshaw’s pay at more than $591,000.

Unions, including the Alberta Union of Provincial Employees have, like Notley, lambasted the payout as a travesty given the concurrent government steps to reduce pay and jobs in front-line health care.

Notley also said Toews’ claim he didn’t know about the payment cannot be believed.

“If it is true, then it is demonstrative of someone who has no business being finance minister in any government, and certainly not leading in government,” she said.

“There’s just no way that this should have happened under his watch.”

Toews is one of seven contenders seeking to replace Premier Jason Kenney, who announced he will soon be resigning the leadership after gaining a lacklustre 51 per cent support in a party leadership vote.

He and two other candidates left cabinet to avoid a conflict of interest during the race.

Christine Myatt, Toews’ spokesperson, responded to Notley in a statement.

"Mr. Toews did not authorize or approve this payment. In fact, he was not aware it was made. It appears this bonus was paid out by the public service without ministerial sign off,” said Myatt.

“Mr. Toews believes that Albertans expect their tax dollars to be spent wisely and with the greatest oversight.

“That is why he has promised to change the rules to ensure this does not happen again."

Toews’ campaign team tweeted out Wednesday a graphic stating that no new bonuses would be authorized without a cabinet minister’s explicit authorization.

The payout has reopened public divisions and debate over Hinshaw and the government’s handling of the pandemic and the health restrictions it imposed to combat the spread of the illness.

Kenney and Hinshaw have been criticized for acting too late in multiple waves of the pandemic. Hinshaw has also been criticized for not exercising more authority under emergency legislation, but instead subordinating her role to one of cabinet adviser rather than independent decision maker.

The issue threatens to become a wedge topic in the leadership race, with candidates such as former Wildrose party leaders Danielle Smith and Brian Jean wooing the section of the party base that bitterly resented vaccine mandates and other government-mandated restrictions.

“(The slogan) ‘we’re all in this together’ didn’t mean what we thought it did," Smith wrote on Twitter Monday. "Albertans are rightly stunned and outraged they gave Dr. Hinshaw a $228K COVID bonus."

Smith has promised that if she wins the Oct. 6 vote to replace Kenney, she will not impose any such restrictions again.

Jean wrote on Twitter on Monday: “While Albertans were losing businesses, while our health system was collapsing under mismanagement, the people on the Sky Palace balcony signed off on an all-time record bonus.”

Sky Palace referred to Kenney, Toews and others, being caught on camera having drinks and ignoring gathering rules while on the balcony of the Federal Building, near the legislature, during COVID-19.

It has come to symbolize the one-rule-for-us, another-for-them criticism of Kenney’s administration during COVID-19.

Alberta Health has said Hinshaw was paid as per a long-standing policy and financial calculation tied to emergencies.

The payout was one of the COVID-19 bonuses paid to 107 employees in management totalling $2.4 million.

This report by The Canadian Press was first published Aug. 3, 2022.

Dean Bennett, The Canadian Press

UCP leadership candidates at odds over Alberta public health official pay bonuses

Tue, August 2, 2022 

Some UCP leadership candidates who served in cabinet said they had no knowledge of cash bonuses awarded to Alberta's chief medical officer of health and other managers for their work during the pandemic. (Jeff McIntosh/The Canadian Press - image credit)

Several UCP leadership candidates who served in cabinet posts say they didn't know about the pandemic cash bonuses awarded to Alberta's chief medical officer of health and 106 other managers.

Leadership hopeful Travis Toews' spokesperson, Christine Myatt, said the former finance minister didn't authorize or have knowledge of a nearly $228,000 cash bonus paid to Chief Medical Officer of Health Dr. Deena Hinshaw in 2021.

Myatt referred further questions to the government.

Fellow leadership contender and former Community and Social Services Minister Rajan Sawhney also said via email she was not part of the decision and is "unfamiliar with the specific circumstances involved."

She, like many candidates, has pledged to hold a public inquiry into the Alberta government's response to COVID-19. Sawhney said this would include the roles played by health officials.

Leadership hopeful Leela Aheer, who was shuffled out of cabinet in July 2021, said the Alberta government owes the public an explanation of how the additional $2.4 million in pandemic pay given to 107 managers was calculated.

She worries those civil servants are being unfairly targeted for a decision beyond their control.

"We need to make sure that people understand what we're doing and why," Aheer said. "The reason the public is outraged right now is they don't understand."

Government spokespeople have not answered questions about who approved the additional pay.

The government has said the bonus pay was determined using a formula the public service commission uses to compensate managers for excessive overtime during public emergencies.

CBC News reached out to Rebecca Schulz for a response but, at the time of publishing, hadn't received a response.

Leadership hopefuls who weren't in cabinet scoffed at the idea the former ministers were unaware of the expense.

"Cabinet has made two years of bad decisions," MLA and leadership candidate Brian Jean said. "And this is one more of the latest insults. Cabinet needs to explain how this happened. All the money comes from the same place."

Independent MLA Todd Loewen, who is also seeking party leadership, is also pledging to hold an investigation into pandemic management if party members chose him as leader. He said in a video posted on Facebook on Tuesday that managers receiving bonus pay doesn't make him feel any better about the government's choices.

Danielle Smith called the bonuses "tone deaf."

"It is now clear we weren't all in this together, as many were making big bucks off the crisis. Our frontline health-care workers, including our doctors and nurses, pushed themselves to the brink. It's a slap in the face to each of them," she told CBC News via text.

Party members are slated to choose a new leader Oct. 6.

Unions say bonuses insulting to front-line workers

Meanwhile, the leaders of unions representing Alberta healthcare workers reacted with frustration and anger to news of the manager bonus pay.

The Health Sciences Association of Alberta (HSAA), which represents nearly 30,000 health-care workers, has just inked a contract that gives around 20,000 Alberta Health Services workers a one per cent pay increase in 2020-21. It's part of a total 4.25 per cent raise over four years.

HSAA website

To see Hinshaw receive 63 per cent more pay in the same year is "insulting," HSAA president Mike Parker said Tuesday.

Parker contrasted the expense with government arriving at the bargaining table seeking wage rollbacks as high as 11 per cent for some workers.

"The only reason the system was still operating was that our folks kept coming to work and staying extra. Doing more," he said.

The ranks of the Alberta Union of Provincial Employees include 55,000 health-care workers, such as laundry, housekeeping, and food services workers and maintenance staff.

Union vice-president Bonnie Gostola says those workers are in the midst of voting on a new contract that includes no new pay for 2020-21 and modest increases for the following two years.

She said it was a struggle to get "pennies" from the government in negotiations, even after all their efforts during the pandemic.

"I was very insulted for our members, and many others in health care," Gostola said.

Worried by prescription drug prices? Idaho’s ‘Hero of Main Street’ has big pharma’s back

The Editorial Board

idahostatesman.com
Wed, August 3, 2022 

John Sowell/jsowell@idahostatesman.com


U.S. Sen. Mike Crapo recently touted his receipt of a “Hero of Main Street” award from the National Retail Federation. Representing such small, local businesses as Walmart, the NFR’s decision to give the award to Crapo should assure everyday Idahoans that he has their back.

But look at Crapo’s legislative activities in the last few months, and they are dominated by the concerns of Wall Street — specifically the pharmaceutical industry, a lucrative campaign donor.

Part of the Inflation Reduction Act — a deal between Sen. Joe Manchin, D-West Virginia, and Majority Leader Chuck Schumer, D-New York, that can become law with only 50 votes — would direct the federal government to begin negotiating prices on certain drugs that constitute a huge chunk of federal entitlement spending. Currently, the federal government — the largest bulk purchaser in the world — simply pays whatever price pharmaceutical companies set.

Crapo has been working hard to undermine these efforts for months, as Salon noted in a piece published last week.

He has been bragging about these efforts. Crapo told Burgess Everett, Politico’s congressional bureau chief: “There are many Byrd objections. And we’re going through line by line, literally, making objections.”

“Byrd objections” are procedural efforts to prevent a bill from being able to pass by a simple majority vote. That is, Crapo is breaking his back to make sure that a drug prices bill needs 60 votes to pass, rather than being able to move forward with a simple majority.

This action seems to be at odds with Crapo’s longstanding political messaging.

Crapo has been grousing about the growing federal deficit (but only at times when a Democrat is in the White House; he grows silent when his party is in leadership) for decades now. But the very provision he is working to undermine would not only harm consumers but harm deficit reduction. The Kaiser Family Foundation notes that negotiating prescription drug prices is estimated to reduce the annual deficit by $288 billion — without raising taxes or cutting programs.

So what gives?

There could be ideological reasons Crapo could oppose negotiation on prescription drug prices. Maybe he actually believes, as he says, that it is “socialism” for companies to have to negotiate with the federal government on prices. It seems that to Crapo, capitalism means companies dictate prices, and taxpayers pay whatever they ask.

But there may be simpler reasons for Crapo’s stance.

For example, Crapo’s passionate efforts to kill an incredibly modest prescription drug price bill might have something to do with the tens of thousands in campaign contributions he’s raked in from pharmaceutical companies in the last few months. A recent report by Accountable.us noted that Crapo got about $20,000 from the industry between October and December 2021.

The tale of Crapo’s senatorial career seems to follow campaign donations pretty closely.

Look into the history of Idaho’s senators, and you find a long list of people who made their way into positions where they could appropriate federal funds. Such a position offers a lot of ways to do good for Idahoans on Main Street, where so many are employed in positions that rely on federal appropriations or that are tied to federal lands.

Instead of that career path, Crapo decided early on to head up the banking committee. Idaho has a very small banking sector, so he can’t do much for his home state with this position, but it is essentially a guarantee that the deepest pockets in Washington want him on their side. So year after year, banks and Wall Street firms of all sizes rewarded him handsomely.

He next set his eyes on the Finance Committee, where he is now the ranking member and which promises more of the same. He is expected to become chair the next time Republicans control the Senate.

Crapo never has to worry about coming home to raise money on Main Street. His Wall Street war chest is big enough to bury any challenger. Whose hero is he really?

Statesman editorials are the unsigned opinion of the Idaho Statesman’s editorial board. Board members are opinion editor Scott McIntosh, opinion writer Bryan Clark, editor Chadd Cripe, newsroom editors Dana Oland and Jim Keyser and community members Johanna Jones, Maryanne Jordan and Ben Ysursa.

Taiwan crisis to wreak havoc at ports and disrupt one of world’s busiest shipping lanes


Matt Oliver
Wed, August 3, 2022 

taiwan coast china military drills

Rising tensions over Taiwan threaten to make global supply chain issues even worse as China carries out live-fire military exercises off the island’s coast.

As Beijing prepares a major show of force, ships headed for the Taiwan Strait have been warned to expect port delays, traffic jams and on-the-spot searches, as well as a higher risk of accidental collisions. It threatens days of disruption in one of the world’s busiest maritime crossroads.

“We are telling our clients that there is a substantial threat to the safety of the vessel and crew,” said Casper Goldman, an analyst at maritime intelligence company Dryad Global.

“That is not necessarily because of a compromise of security coming from the live-fire exercises but rather from the issues associated with rerouting and ship traffic density.”

Some shipping companies have already begun diverting tankers around the bustling trade route, according to reports, while others are assessing their options.

The strait, through which half the global container fleet has passed this year, is expected to remain open but ships have been ordered to avoid areas where China’s military is operating.

Nancy Pelosi, speaker of the US House of Representatives - 

TAIWAN MINISTRY OF FOREIGN AFFAIRS/REUTERS

Beijing’s four-day display of air and naval firepower will run from Thursday to Sunday, in six different locations surrounding Taiwan.

The demonstration is in response to a visit to the self-governing island by Nancy Pelosi, speaker of the US House of Representatives. China’s communist government lays claim to Taiwan and has reacted angrily to Ms Pelosi’s pledge of support for the Taiwanese.

Mr Goldman said ships seeking to pass through the strait should expect long waits at ports and traffic jams at sea.

“There’s a likelihood that ships will be delayed and it will put a bigger strain on an already-strained global supply chain,” he said.

“It's four days, it's a long period of time to have those areas shut off, so it is quite significant.”

He also warned that the number of ships forced to sail around the military exercises would increase the risk of unintentional collisions, as well as on-the-spot searches of vessels by jittery Chinese naval forces.

“The Taiwan Strait is one of the most dense straits in the world, so we are advising people to ensure that they maintain a close watch and prevent collision with other vessels,” he said.

Mr Goldman added that he did not expect China’s military to go beyond the exercises, because any further escalation of tensions could harm the country’s own economy, which is already suffering from draconian “zero-covid” policies.

A UK shipping source said most tankers would face delays of a few days at most, which was not uncommon for an industry that regularly has to plan around extreme weather such as typhoons.

However, they added that it would still cause delays at ports and add to the costs of shipping companies if they were forced to divert cargo around the strait.

There were 308 containerships, tankers and bulkers headed for Taiwan on Wednesday, according to ship tracking firm VesselsValue, with 60 scheduled to arrive when military drills are taking place.

Soren Skou, chief executive of Danish shipping giant Maersk, said disruption would cause major problems in the freight market.

“The Taiwan Strait is one of the most busy straits in the world,” he told analysts on Thursday. “So obviously, if it were to close, it would have a dramatic impact on shipping capacity in the sense that everybody would have to divert around Taiwan and add to the length of voyages, and that would absorb a significant capacity.”

The threat of disruption comes as a report found delivery times on shipped goods had improved year-on-year for the first time since the pandemic began.

Consultancy Sea Intelligence said schedule reliability – the percentage of ships making arrivals and departures on time – improved by 3.6 percentage points to 40pc in June, breaking a trend since the start of the year. Vessels are still arriving more than six days late on average.

War is stopping Ukraine from paying its debts -- here's how international powers can continue to support its recovery

Matt Qvortrup, Chair of Applied Political Science, Coventry University
Tue, August 2, 2022 

THE CONVERSATION

Ukraine is burning through money fast. The invasion by Russia has been costly for the country. According to the International Monetary Fund, Ukraine’s GDP could shrink by 35% as a result of the war. The country’s international grain exports have been severely hampered, with a recent deal to restart exports likely to move only some of its current stocks. The country shipped US$27.8 billion (£22.6 billion) in agricultural products to other countries last year, or 41% of its total exports.

Bar chart showing monthly grain exports by Ukraine in tonnes

It is not surprising then that the country’s public finances are in distress. Ukraine’s ministry of finance has estimated its public sector deficit increased from US$2 billion in March 2022 to as much as US$7 billion by May.

If Ukraine runs out of money it would not only affect the war effort, but could also leave the country unable to pay nurses, teachers and police officers, among other important workers. The negative implications of this for the people of Ukraine would be varied, ranging from the breakdown of important services to an inability for households to pay bills and buy food. This a significant concern of course, but the outlook is not as catastrophic as some might think.

Ukraine has already received funding from allies, with more promised. The US, for example, has committed approximately US$5.3 billion in security assistance to Ukraine since the beginning of the Biden Administration, including around US$4.6 billion during “Russia’s unprovoked invasion”, the US Department of Defense says.

And this is not the only help received by Ukraine. The G7 and EU have announced official financing commitments to Ukraine worth US$29.6 billion. EU leaders have also pledged additional support of up to €9 billion (£7.6 billion), on top of a previous €1.2 billion emergency loan. This money from international partners will tide Ukraine over in the short term. So paying the interest on this debt and managing its upcoming bills will be not an immediate problem for Ukraine, although it remains a concern.

A more pressing challenge will be repaying its outstanding loans and bonds. With little money coming in, it will be hard for Ukraine to fulfil these obligations. Indeed, the country already asked for permission to freeze around US$20 billion in debt earlier this month. This request was immediately approved by western governments, most notably Germany.

Another challenge for the Ukrainian economy right now is the continuation of the war – of course because of the ongoing negative impact on its people, but also due to the financial consequences. A prolonged war will only bring more uncertainty for the country’s economy. Major cities across Ukraine are being hit by Russian missiles and there have been continued attacks on important infrastructure, including railways and ports. In addition to the short-term concerns around this, it also leaves little incentive to invest in the country at the moment, adding another long-term challenge to Ukraine’s economic outlook.

Avoiding a debt default

There is always the danger of a default, which is economist-speak for running out of money. And, in fact, Ukraine already defaulted on loans in 2020. This was not a catastrophic event, but it raised interest rates on any new loans the country sought. Lenders are typically not keen to loan money if there is a risk they won’t get it back, but the political situation and the pronouncements of support by western powers discussed above means Ukraine is more likely to receive money to prevent another default. This kind of very public commitment means these governments are likely to be willing to continue to pay a considerable price to keep Ukraine afloat, both militarily and economically.

It is also worth bearing in mind that, as bad as the economic situation is for Ukraine, the Russian economy is suffering too, which could affect the length and outcome of the war. Reports that Russia has withstood the sanctions – that they “sting but do not cripple” its economy – are inaccurate. This is the story the Kremlin would like us to believe, and is perhaps why Russia decided to no longer release data on key economic indicators.

A recent report published by Jeffrey Sonnenfeld and colleagues from the Yale School of Management, points out that, due to business retreats: “Russia has lost companies representing 40% of its GDP, reversing nearly all of three decades’ worth of foreign investment and buttressing unprecedented simultaneous capital and population flight in a mass exodus of Russia’s economic base.” Add to this that the country’s foreign exchange reserves are diminishing at a startling rate – an estimated US$75 billion has been lost since the start of the war – and we get a more nuanced perspective of the true state of affairs.

The destruction, death and devastation experienced by Ukraine is only one part of this war, loss of livelihood is another. Governments opposing such invasions need to help economically as well as militarily. So far, western countries have done so for Ukraine, but this support must continue if its economy is to survive.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Russian sanctions have been working in an unexpected way, and history says the West will come out on top in the economic struggle, economist Paul Krugman says

Jennifer Sor
Wed, August 3, 2022 

Nobel-winning economist Paul KrugmanJeff Zelevansky/Getty Images

Russian sanctions have been working in an unexpected way: by limited the nation's imports, not its exports.

Paul Krugman said Russia was having trouble buying goods, which has been tanking its production and GDP.

He said attempts at economic war have historically been unsuccessful unless they involved combat, bringing some hope to the West.

With Russia showing signs of benefitting from a volatile and chaotic energy trade since its invasion of Ukraine, some have wondered if Western sanctions on the country have backfired — but measures to choke Russia's economy have been working in an unexpected way, top economist Paul Krugman says, and history suggests the West that will come out on top in the economic struggle.

"Russia is having no problem selling stuff, [but] it's having a lot of trouble buying stuff," Krugman wrote in an op-ed for the New York Times on Tuesday, noting that although Western nations have fixated on capping Russian exports, limitations on Russian imports have been wreaking havoc on Moscow's economy.

It's a departure from the intent of the original plan, which aimed to curb Russia's war revenue through energy bans and a possible a price cap on Russia energy, which Western leaders are looking to propose by year-end.

But that hasn't gone according to plan, and data shows Russia pulled in $24 billion in energy exports the first three months of war alone, and has been limiting supply to Western nations to drive up energy prices, tipping economies in Europe close to a recession. Since the start of Ukraine's invasion, Brent crude is up 8% to $101.96 as of 8:40 am ET and natural gas is up 70% to $7.81.

But import side of the equation tells a different story. Bans on selling to Russia have lowered Russia's trade volume with sanctioning countries by 60% and non-sanctioning countries by 40%, Krugman pointed.

That's led to a dramatic decrease in Russia's industrial production and relatedly, its GDP. According to the Peterson Economic Institute, production in the country has fallen as much as 50% for goods ranging from plastic to coal to household appliances.

"So economic sanctions against Russia appear to have been surprisingly effective, just not in the way everyone expected," Krugman said.

He added that historically, previous attempts at economic warfare have been unsuccessful, unless they involved a military effort, such as the US sinking Japanese merchant shipments in World War II, causing the Japanese economy to tank.

That provides some optimism as Russia continues to slash energy supplies from Europe — suggesting that despite the attempts at retaliation, the country will struggle to come out on top against the West.

But Krugman acknowledged the fight would be affected by factors like inflation and high recession risks, which currently have the West in a difficult position. The Federal Reserve issued a 75-point rate hike last week to combat inflation running at 41-year highs, and the European Central Bank issued an aggressive half-point hike a few weeks ago to combat sky high prices and weakening economic sentiment.

However, Europe in particular still faces even greater difficulties ahead as the continent braces for winter without the normal flow of Russian gas supplies.

Russia is Europe's biggest energy supplier - but the US is sending more gas by boat than Russia is by pipeline

Phil Rosen
Wed, August 3, 2022

Aapsky/Getty Images

The US is now sending more gas to Europe by ship than Russia is sending by pipeline, per the Wall Street Journal.

In July, US liquefied natural gas accounted for 13% of total supply to Europe, compared to 10% from Russian pipelines.

Conflict in Ukraine shows no signs of easing, and the US has stepped in to help the EU amid a historic energy crisis.

Russia's invasion of Ukraine has redirected energy deliveries around the world, and one result has been that the US is now sending more gas to Europe by boat than Russia is by pipeline, ICIS data shows, according to the Wall Street Journal.

Since 1967, Gazprom's pipelines in West Siberia and the Yamal peninsula have delivered huge amounts of gas to Europe but that precedent has been turned on its head in recent months.

In July, US liquefied natural gas accounted for 13% of total supply to Europe, compared to 10% from Russian pipelines. Pipelines from Norway were the top source of gas to the continent, while other sources include North African pipelines and Qatar liquefied natural gas supplies, as well as domestic production.

Over the last six months, European wholesale gas prices have tripled as Moscow continues to tighten natural gas flows. State-run Gazprom, citing technical issues, cut Nord Stream 1 natural gas deliveries to Germany to 20% down from 40%.

The European Commission said that 12 member states are enduring severely reduced flows and a handful of nations have been entirely cut off. Just this week, Gazprom halted natural gas deliveries to Latvia.

Now, the continent has turned to importing more Russian diesel amid its struggle to wean off other energy supplies from the country. Imports of Russian diesel are up 23% from a year ago, Vortexa data shows.

With conflict in Ukraine showing no signs of easing and the EU facing a historical energy crisis, the US has stepped in as an emergency energy supplier.

Natural Gas Surges With US LNG Export Terminal Set for Fast Restart

Gerson Freitas Jr., Sergio Chapa and Diana Li
Wed, August 3, 2022



(Bloomberg) -- US natural gas prices surged after a key export terminal in Texas reached an agreement with regulators to restart as soon as October after an explosion.

Freeport LNG, which was shut down in June after a blast, has entered into an agreement with the Pipeline and Hazardous Materials Safety Administration to resume operations in early October at almost full capacity, the operator said in a emailed statement Wednesday. That would boost demand for natural gas by nearly 2 billion cubic feet a day, equivalent to roughly 2% of domestic output.

While Freeport had already indicated that it planned to resume operations in October, the news surprised traders who expected a more gradual restart after PHMSA, as the regulator is known, demanded a series of corrective actions from Freeport. The Texas plant must provide weekly updates to the agency and file a root cause analysis report within 90 days, according to order.

“The partial restart is bigger than previously expected,” said Brayton Tom, a senior risk manager for energy at StoneX Group Inc.

The restart of Freeport LNG is poised to increase the strain on US inventories of the heating and power-generation fuel ahead of winter. Concern about tightly supply has triggered stomach-churning volatility and led prices to more than double this year. Gas held in salt caverns and depleted aquifers is about 12% below levels typically seen for this time of the year, and booming domestic demand this summer has limited suppliers’ ability to add gas to storage.

“We previously had Freeport only returning to partial service in November, and the extra feedgas demand that is likely puts longer odds on the bearish side of the market,” said David Seduski, an analyst at Energy Aspects Ltd.

The restart of Freeport LNG should come as a relief for Europe, which desperately needs extra US gas. Reduced imports from Russia amid the war in Ukraine have sparked fears of a supply crunch this winter, sending prices in the region skyrocketing.

Gas for August delivery on the New York Mercantile Exchange settled up 7.3% at $8.266 per million British thermal units after earlier rising as much as 10%.

Brokerages Warned by SEC Over Conflicts of Interest Tied to Pay

Lydia Beyoud
Wed, August 3, 2022 


(Bloomberg) -- Brokerages and money managers are being warned that they need to do more than just disclose conflicts of interest associated with employee pay programs to avoid trouble with the US Securities and Exchange Commission.

SEC staff issued a new bulletin on Wednesday telling firms not to take a “check-the-box” approach to complying with conduct rules. The agency said that brokers must identify, disclose and in some cases eliminate conflicts of interest.

Money-managers and brokerages should pay particular attention to conflicts of interest that can arise from compensation and pay incentives for employees, the SEC said. They should consider if they could cause brokers or advisers to put their interests over those of their clients.

“Firms may adopt a range of measures to mitigate conflicts of interest for compensation arrangements for financial professionals, depending on the nature and magnitude of the conflicts they seek to address,” the SEC said. “The greater the reward to the financial professional for meeting particular thresholds,” the greater the concern, the agency added.

Some initiatives in particular may pose risks, the regulator indicated, such as programs based on meeting benchmarks, quotas or other performance metrics established by the firm.

The securities industry and investor advocates have been fighting for more than a decade over conduct rules that financial professionals must follow when offering investment advice or recommending products. In March, SEC staff said that brokers and financial advisers must abide by similar codes of conduct when helping retail clients choose which type of account to open.