Republican lawmakers on Wednesday criticized Federal Reserve Chair Janet Yellen’s stewardship of the U.S. economy and urged her to halt work on financial regulation until President Donald Trump names new policymakers to the central bank.

In a tense hearing before the House of Representatives’ Financial Services Committee, Republicans made clear they will keep pressing the Fed to trim its large holdings of bonds and set interest rates based on established mathematical rules.

“We must be vigilant to ensure that our central bankers do not one day become our central planners,” said Jeb Hensarling, a Texas Republican and the committee’s chairman. “There is zero evidence that zero interest rates and a bloated Fed balance sheet lead to a healthy economy.”

Critics say the Fed’s push to cut and then keep rates near zero and buy huge amounts of bonds and mortgage-backed securities in response to the 2007-2009 financial crisis led to the slowest U.S. economic recovery since World War II ended.

Yellen offering warning

Hensarling is planning regulatory reforms that include congressional audits of interest rate policy when the Fed disregards policy rules, a measure Yellen said she opposes as an intrusion on the central bank’s independence.

“It would result in poor economic performance,” Yellen said during the hearing.

Trump, a Republican who criticized the Fed during last year’s presidential campaign, will be able to name three new members to its seven-member Board of Governors. It currently has two empty seats, with a third due to become vacant when Fed Governor Daniel Tarullo steps down around early April.

Hensarling and other Republicans said the Fed’s banking regulations were too intrusive and its holdings of U.S. Treasuries and mortgage-backed securities — currently around $4.2 trillion — could be fueling asset bubbles.

“Maybe we shouldn’t be expecting so much from unconventional policies,” said Kentucky Republican Andy Barr.

No new rules

North Carolina Republican Patrick McHenry urged Yellen to avoid making new rules based on talks with international banking regulators until Trump names an official to serve as the Fed’s top financial supervisor.

Yellen said Trump’s future pick for the role, which is one of the vacant seats on the Fed’s board, would likely be able to review new regulations before they come into effect.

“Nothing going on in these international discussions binds us to carry out things in our rule making process,” she said.

Yellen’s four-year term as chair ends in January 2018.

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A top executive at the company building the controversial Dakota Access pipeline is comparing pipeline opponents to terrorists.

Joey Mahmoud, executive vice president of Texas-based Energy Transfer Partners, says protesters have “assaulted numerous pipeline personnel,” destroyed millions of dollars’ worth of construction equipment and even fired a pistol at law enforcement during months of demonstrations against the 1,200-mile pipeline, which will carry North Dakota oil to an Illinois terminal.

Mahmoud tells Congress that the protest movement “induced individuals to break into and shut down pump stations on four operational pipelines. Had these actions been undertaken by foreign nationals, they could only be described as acts of terrorism.”

The chairman of the Cheyenne River Sioux, one of two tribes suing to stop the project, called Mahmoud’s comments unfair to project opponents.

“The majority of them are there in prayer,” Chairman Harold Frazier told reporters Wednesday. “From what I’ve seen [law enforcement officers] are the terrorists.”

Law enforcement has used tactics such as rubber bullets, tear gas and water sprays against protesters during clashes in southern North Dakota near the pipeline route, Frazier said, adding that he personally has been hit by rubber bullets and tear gas.

‘Half-truths and misrepresentations’

In testimony Wednesday for a hearing before a House energy subcommittee, Mahmoud also blasted the Obama administration, which twice delayed the project last year.

Mahmoud called the delays “politically motivated actions” that were “accompanied by a host of half-truths and misrepresentations in both social and mainstream media.”

Mahmoud also targeted the Standing Rock Sioux Tribe, whose reservation lies near the pipeline’s route and who say the pipeline threatens their water supply and tribal artifacts.

The pipeline developer reached out to the tribe more than two years ago but has been continually rebuffed, Mahmoud said.

“It was clear from their response they had no interest in discussing the project with us,” he said.

Mahmoud challenged the tribe’s objections and said the pipeline poses little threat to drinking water. The Dakota pipeline will be at least the 15th pipeline to cross the Missouri River, will employ state-of-the-art technology and will be buried more than 90 feet below the lowest part of the river, Mahmoud said.

“To cast this as a dispute about protection of water resources is, quite simply, at variance with the facts, and it ignores universally accepted scientific and engineering practices,” he said.

Tribe’s concerns ‘ignored’

Chad Harrison, a councilman at-large for the Standing Rock Sioux, said the federal government and the pipeline company “ignored the concerns of the tribe” for almost three years before the Obama administration paused the project last September. On Dec. 4, then-assistant Army secretary for civil works, Jo-Ellen Darcy, declined to issue an easement, saying a broader environmental study was warranted.

“To be clear, the tribe does not oppose economic development, energy independence or protecting our national security,” Harrison said. “What we oppose is development that is undertaken without our consent and in such a way that it is our community, our people, our cultural sites and our natural resources that are put at the most risk, and when we are the ones who will pay the cost when something goes wrong.”

A federal judge on Monday refused to stop construction on the last stretch of the pipeline, which is progressing much faster than expected and could be operational as soon as next month.

U.S. District Judge James Boasberg ruled that as long as oil isn’t flowing through the pipeline, there is no imminent harm to the Standing Rock Sioux and Cheyenne River tribes, which are suing to stop the project. Another hearing is scheduled on Feb. 27.

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Iran’s deputy minister for petroleum says the hawkish stance taken by U.S. President Donald Trump on the Iranian nuclear deal is a “passing hiccup” that should not affect foreign investment in the country’s energy sector.

Amir Hossein Zamaninia made the remarks Wednesday at the CWC Iran LNG and Gas Partnerships Summit  in Frankfurt, Germany.

Iran has among the largest proven natural gas reserves in the world, yet it supplies just 1 percent of the global market. Some sanctions on Iran were lifted a year ago in return for controls on the country’s atomic program, under the Joint Comprehensive Plan of Action (JCPOA). Tehran is now looking for foreign investment to rebuild the sector.

“As far as the oil and gas industry and the credibility of JCPOA is concerned, this may be a passing issue and we can overcome the uncertainties created by this dynamic in Washington,” Zamaninia told reporters. He said that $70 billion worth of contracts were available.

“Before the end of March 21st, a number of these tenders will be issued and conducted,” he said.

Trump’s election, however, has cast a shadow over Iran’s plans. On the campaign trail, he pledged to dismantle the nuclear agreement negotiated by the Obama administration and force Tehran back to the negotiating table. On Wednesday, Trump repeated his criticism of the accord, calling it  “the worst deal I have ever seen.”

This month, French energy giant Total said it would hold off on finalizing its investments in Iran until the United States renewed its waiver on Iranian sanctions in April or May.

Moving ahead

Yet other European and Asian oil companies are leading the charge into Iran. British-Dutch oil giant Shell inked an initial deal with Tehran in December. The company’s vice president in Iran, Hans Nijkamp, underlined that commitment Wednesday, telling the conference,”When Shell gets involved in a country, it wants to be there for the long term.”

Such investments have been strongly endorsed by European governments. Britain’s ambassador to Iran, Nicholas Hopton, described the Shell deal as an important step forward:

“We look forward to developing further cooperation in the oil and gas sector between Britain and Iran, which will be to the benefit of both countries,” he told reporters in December.

Craig Pirrong, an energy markets analyst at the University of Houston, told VOA that European countries see Iran as a potentially more reliable source of energy than Russia. “They are anxiously looking for alternative sources of gas because they’ve been historically dependent on Russia and they’re looking to get out of that,” he said.

The 28-nation European Union relies on Moscow for more than a third of its gas needs, but Russian supplies have been disrupted in recent years by pricing disputes between Russia and Ukraine, through which the gas is delivered to Europe.

Tehran’s Zamaninia said the recent visit to Washington by the European Union’s foreign policy chief, Federica Mogherini, would hearten investors.

“She came out and said that she’s been reassured that the United States government fully complies with JCPOA,” he said.

Analysts say that in any case, it will be difficult for Trump to dismantle the Iran nuclear deal, since it was signed and adopted by the U.N. Security Council.

Nevertheless, in the new geopolitical environment, the challenge for Iran is to convince foreign companies that its oil and gas sectors are a safe investment.

U.S. energy companies may be among the hardest to convince.

“They are more tentative than the European companies,” Pirrong said. “There haven’t been any deals (involving U.S. companies) – they are still in the talking stage, because some U.S. sanctions remain in place against Iran, not related to the nuclear deal. That makes it a more politically sensitive and risky issue for U.S. companies,” he said.


Hooman Bakhtiar of VOA’s Persian service contributed to this report.

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From buses and trucks to a $500 million golf resort, China is deepening its business footprint in Cuba, helping the fellow Communist-run state survive a crisis in oil-benefactor Venezuela and insulate against a possible rollback of U.S. detente.

Cuban imports from China reached a record $1.9 billion in 2015, nearly 60 percent above the annual average of the previous decade, and were at $1.8 billion in 2016 as the flow of oil and cash slowed from Venezuela because of economic and political turmoil in the South American country.

China’s growing presence gives its companies a head start over U.S. competitors in Cuba’s opening market. It could leave the island less exposed to the chance U.S. President Donald Trump will clamp down on travel to Cuba and tighten trade restrictions loosened by his predecessor, Barack Obama.

China may double down in Cuba

A deterioration in U.S.-China relations under Trump could also lead Beijing to dig in deeper in Cuba, some analysts say.

“If and when the Trump administration increases pressure on China … China may decide to double down on its expanding footprint in the United States’ neighborhood,” said Ted Piccone, a Latin America analyst at the Brookings Institution think tank.

China, the world’s second-largest economy, sells goods to Cuba on soft credit terms. It is Cuba’s largest creditor and debt is regularly restructured, though amounts and terms are considered state secrets.

While Cuba does not publish investment data, the state press has been abuzz with news of Chinese projects lately, covering infrastructure, telecoms, tourism and electronics.

Yutong buses, Sinotruk trucks, YTO  tractors, Geely cars, Haier domestic appliances and other products are prominent in Cuba, where the main U.S. products on display are cars dating back to the 1950s, thanks to the ongoing economic embargo.

Wi-Fi hot spots a big draw

Cubans flock every day to hundreds of Huawei-supplied Wi-Fi hot spots, and the firm is now helping to wire the first homes.

“Business is really booming, more than we could have ever imagined,” said the manager of a shipping company that  brings in Chinese machinery and transport equipment and who asked not to be identified.

The Foreign Ministry in Beijing described China and Cuba as “good comrades, brothers and partners,” and said the relations “were not influenced by any third party,” when asked whether U.S. policy was encouraging China to deepen its presence.

“We are happy to see that recently countries around the world are all expanding cooperation with Cuba. I think this shows that all countries have consistent expectations about Cuba’s vast potential for development,” Chinese Foreign Ministry spokesman Geng Shuang told reporters.

The U.S. State Department and White House did not immediately respond to requests for comment.

Increased investment

Over the past two decades, China has become a major player in Latin America and the Caribbean, second only to the United States in investment flows and diplomatic clout.

But the Asian giant was reluctant to invest in Cuba because of the poor business climate and fear of losing opportunities in the United States, according to Asian diplomats in Havana.

That began to change after Obama moved to normalize relations two years ago and Cuba sweetened investment rules, sparking new interest among U.S. businesses and competitors around the world.

China was well-placed because the local government preferred doing business with long-term friends offering ample credit to work with state-run firms.

In return, Cuba has shared contacts and knowledge about the region, and taught hundreds of Chinese translators Spanish.

A report on the government’s official Cubadebate media website last month said the two countries agreed to strengthen cooperation in renewable energy and industry, with 18 Chinese firms taking part in a three-day meeting in Havana.

Computer assembly plant opens

Plans for several projects were signed, including a joint venture with Haier to establish a renewable energy research and development facility, the report said.

A few weeks earlier, Cuba opened its first computer assembly plant with Haier with an annual capacity of 120,000 laptops and tablets, state media reported.

Other projects include pharmaceuticals, vehicle production, a container terminal in eastern Santiago de Cuba, backed by a $120 million Chinese development loan, and Beijing Enterprises Holdings Ltd. venture for a $460 million golf resort just east of Havana.

Shanghai Electric is providing funds and equipment for a series of bioelectricity plants attached to sugar mills.

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Venezuelan authorities raided the Caracas offices of Odebrecht on Tuesday, as prosecutors deepened a probe into the Brazilian construction firm that has admitted paying some $98 million in bribes to obtain government contracts in Venezuela.

“The investigation is aimed at clarifying the situation and determining if the projects for which this company was contracted were completed,” the prosecutor’s office said in a statement.

Odebrecht and affiliated petrochemical company Braskem in December pleaded guilty in a U.S. court to violating American foreign bribery laws by paying off officials to help secure lucrative construction contracts in 12 countries.


According to the plea bargain agreement, Odebrecht and representatives paid some $98 million in bribes to government officials and intermediaries in Venezuela between 2006 and 2015 – the highest amount outside Brazil.

President Nicolas Maduro has said that those responsible should be punished, but his critics say his government has been slow to respond to the scandal.

The country’s top prosecutor said in January that authorities were seeking the arrest of a person involved in the case, without disclosing the person’s identity.

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The mist-enshrouded cloud forest canopies dotting the mountains of Latin America have been degraded by encroaching cities and farms, but convincing hydropower operators to pay for their restoration could increase water flows and boost energy security, analysts say.

Research done for the Cloud Forest Blue Energy Mechanism, an early-stage project being incubated by the Global Innovation Lab for Climate Finance, indicates that restoring high-altitude cloud forests raises the quantity and quality of water flowing to hydropower plants, stabilizing supplies and cutting maintenance costs by reducing sediment.

“With climate change increasing, it’s all the more important to try to see how there might be a win-win situation here… to have [forest] restoration and improved energy security,” said Angela Falconer, senior analyst at the Climate Policy Initiative (CPI), which oversees the lab.

Given it could take several years for the benefits of protecting cloud forests to trickle down to hydropower operators, the project – proposed by green groups Conservation International and The Nature Conservancy – envisages finding first-stage funding from commercial lenders, donors or impact investors.

“In the long term, the hope is you could make the real financial case that there is a very good positive return on the investment in terms of the increase in energy security and availability, that will be able to pay back the initial investment,” said Falconer.

Later on, the project – which is looking at cloud forests in countries including Mexico, Panama, Colombia and Brazil – hopes to convince hydropower operators and large energy users such as mining companies to invest in the restoration and conservation of cloud forests.


While cloud forests can be found as low as 400 meters (1,300 ft) above sea level in wet, tropical mountainous areas, this project plans to assess areas found between 1,200 and 3,500 meters above sea level.

The International Energy Agency estimates that hydropower provides 16 percent of the world’s energy and 85 percent of global renewable electricity. But Latin America’s biggest country Brazil relies on hydro-electricity for 75 percent of its power, and Colombia for more than 70 percent.

Leonardo Sáenz, director of eco-hydrology at Conservation International, said his organization had identified around 200 dams that could potentially benefit from improving the state of cloud forests across Latin America.

“Conventionally we look at generation only in terms of transmission lines, dam walls – these engineering things – but we forget the source watershed, particularly when it comes to cloud forests which are very important,” he said.

Climate Resilience

Severe droughts have affected hydropower generation in some countries. But Sáenz explained that high-elevation cloud forests upstream of hydropower dams will likely be able to withstand rising temperatures as the planet warms because they will benefit from increased moisture in the atmosphere.

“Having cloud forest back in the system helps to increase resilience to the potential hydrological impact of climate change,” said Sáenz.

Around 65 percent of Latin America’s original cloud forest – equivalent to 105 million hectares (259.5 million acres) – has already been lost, he estimated. Urban sprawl around cities such as Bogota, Quito and San Jose is partly to blame, together with forest-clearing for activities like agriculture and mining.

Gauging the enthusiasm of hydropower users to pay for ecosystem services is a crucial part of the scheme, said CPI’s Falconer. A pilot could be launched by the end of the year bringing together interested investors and organizations working to restore cloud forest, she added.

“It’s about proving the case for potential commercial investors to come on board,” she said.

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Although U.S. President Donald Trump says he only wants to tweak trade ties with Canada, his pledge to renegotiate NAFTA to focus on Mexico is almost impossible and Canada will not emerge unscathed, Canadian officials and trade experts said Tuesday.

Trump had warm words for Canadian trade following a meeting with Prime Minister Justin Trudeau on Monday, but his call for major changes to the North American Free Trade Agreement to target Mexico stymied experts.

“I can’t see how it’s possible at all. It would be very complicated to do and I don’t think Mexico would … ever go along with it,” said Mark Warner, a trade lawyer and principal at MAAW Law in Toronto.

Canada and Mexico send the bulk of their exports to the United States under NAFTA.

One senior Canadian government official, asked how the agreement could be tweaked for one partner and changed in a major way for another, admitted frankly, “I don’t know.”

Trump spoke after his first meeting with Trudeau, who is trying to sell the merits of NAFTA while opposing a border tariff, an idea circulating in U.S. political circles that could badly hit Canadian industries.

Warner said that if the U.S. government decided to impose the tariff, “the consequences of that could be described as a tweak but the significance of it would be major.”

Matthew Kronby, an international trade lawyer at Bennett Jones in Toronto, said “it is very hard to tease apart the elements of the deal that I suppose Trump might think are a disaster with Mexico while leaving it intact with Canada.”

Officials say that while Trump did not reveal any details about his intentions on NAFTA, Canada would suffer collateral damage, whatever the administration pushes for.

“We cannot be untouched or unscathed by this,” said one person familiar with the matter.

Separately, another official working on the bilateral trade file said that once talks started, the U.S. dairy industry was set to demand Canada dismantle its supply management system of tariffs and taxes that keep out most dairy imports, including those from the United States.

“That could be a very unpleasant conversation,” said the official, who asked to remain anonymous because of the sensitivity of the situation.

Trudeau’s ability to make concessions is limited since all of Canada’s major political parties have vowed to protect supply management. Holding out too firmly, though, could irritate the American side, which might demand concessions elsewhere.

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Mexico Economy Minister Ildefonso Guajardo said on Tuesday he doubted a proposed border tax on Mexican imports to the United States, which the White House has said could be used to finance President Donald Trump’s border wall, would ever materialize.

Speaking on the sidelines of an event in Mexico City, Guajardo said he had spoken with several Trump’s advisors and had not found any uniformity in their backing of the border tax.

“I wouldn’t be so certain that it will end up in the proposal,” he told reporters.

Billed as a way to boost U.S. manufacturing and pay for corporate tax cuts, the so-called border adjustment would essentially tax imports but not exports. It is expected to be part of House tax reform legislation that could emerge in March or April.

It is unclear whether the border adjustment proposal has Trump’s support.

The White House has floated the idea of imposing a 20 percent tax on goods from Mexico to pay for a wall at the southern U.S. border. However, aides later said the tax was simply one of various measures being considered.

Trump has threatened to scuttle the North American Free Trade Agreement, which also includes Canada, if he cannot recast it to benefit U.S. interests, raising the risk of a major economic shock for Mexico.

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A rising tide of automation, trade problems and lagging growth in productivity has slashed millions of jobs from the U.S. manufacturing sector. At the same time, a small factory in Northbridge, Massachusetts, has been hiring, expanding and exporting.

Riverdale Mills hopes to grow further by making unusual products and building a strong workforce.

Riverdale makes materials that have revolutionized lobster fishing with unique processes and materials. The company applied lessons from fishing to making security fences, including some that protect borders. 

After welding, the wire metal mesh is dunked in a vat filled with tons of molten zinc at a historic building about an hour west of Boston. It’s just one part of a complex process used to make many kinds of rust-resistant products. 

That process combines skilled people and high-tech innovation. It’s helping the company find new markets for updated products, and means while other factories are laying off workers, Riverdale’s Dennis Meola is training new employees.

“We have an experienced operator training a new individual,” Meola said. “We started a new person today, as a matter of fact.”

Riverdale CEO Jim Knott says the company is growing, in part because he sells nearly half of his products overseas. Knott says he needs more than just machines to keep customers happy here and abroad.

“The key to being successful, both globally and in a domestic market, you have to have skilled or trained employees who are capable of making a leadership product that is better than what other people are making throughout the world,” he said.

On a recent visit to Riverdale, technicians were upgrading computers and other equipment that helps to run a huge machine that makes hundreds of welds at once. More automation is the reason that U.S. manufacturers produce as much as ever, with ever fewer people.

Massachusetts Institute of Technology Professor Tom Kochan says automation and international trade has cut one-third of U.S. manufacturing jobs since 1980. He says American employers mistakenly think of labor only as a cost to be minimized, not an asset. 

“Anytime some new form of technology comes along that they think they can replace that worker with technology, they tend to move in that direction,” Kochan said. “Often what that does is it over-invests in technology and under-invests in worker skills, and they end up still being the high cost producer.”

MIT research scientist Andrew McAfee says the U.S. education system is turning out workers with the skills “we needed 50 years ago.” He says a more modern approach is needed to boost productivity and prosperity. 

“We need to be encouraging creativity,” he said. “I think we need to be encouraging not just the ability to solve problems, but the ability to figure out what problem we should go chase down next. Technology is still lousy at that.”

McAfee says people eventually will adapt to the changing work environment, much as their ancestors did when the U.S. economy shifted from farming to manufacturing. It was a wrenching transition that began around the time when the building that now houses Riverdale Mills produced bayonets for the Union Army in the U.S. Civil War.

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One-Man Chocolate Factory Flourishes

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Americans shower their loved ones with gifts on Valentine’s Day, with chocolate candy being the most popular gift-giving item, according to a recent National Retail Federation survey. The organization estimates consumers will spend $1.7 million on chocolates this year. That keeps Ben Rasmussen, who creates award-winning chocolates, especially busy. VOA’s June Soh visited his one-man chocolate factory in the Virginia suburbs. Carol Pearson narrates her report.

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In May 2015, China convened a meeting of representatives of 56 countries to establish the Asian Infrastructure Investment Bank, against stiff U.S. resistance. This May, Chinese President Xi Jinping is inviting heads of several countries in Asia, Europe and the American continent for a meeting in Beijing under the name of One Belt, One Road (OBOR) Forum.

Chinese officials and experts have made it clear the May meeting’s purpose goes beyond OBOR because they want it to discuss the rising specter of protectionism in different countries, including the United States. China is also trying to raise and consolidate international opinion against actions by U.S. President Donald Trump, who is expected to impose restrictions on Chinese goods and investments, independent analysts said.

“The upcoming forum will be a major event for China’s diplomacy in 2017. It is set to discuss plans for future cooperation of the involved countries and organizations, explore ways to address regional and global economic problems, and generate fresh energy for interconnected development,” Chinese Foreign Minister Wang Yi said.

Goal post

Analysts said China has sensed an opportunity to grab a leadership role after Trump’s comments and actions caused uncertainties in European markets, and voices of resentment emerged from some countries like Australia, after his talks with their leaders.

The forum is also part of China’s efforts to enhance international business and political ties out of fear of a debilitating trade war with the United States that might occur if Trump goes ahead with his election promises to impose a high duty on Chinese goods, and restrict investments from China, they said.

“Trade war with the United States will be very bad for the Chinese economy. This fear of trade war is behind the move to expand cooperation and seek mutual interest with countries other than the U.S.,” Jan Gaspers, head of research for the European China Policy unit at Berlin’s Mercator Institute for China Studies, told VOA.

Russian President Vladimir Putin is among the first to accept the forum invitation. British Prime Minister Teressa May’s office has said she will soon visit China, which is being read in Beijing as confirmation that she will attend the forum. China’s new friend, Philippine President Rodrigo Détente, who chairs the Association of South East Asian Nations (ASEAN), has also promised to attend. China expects heads of more than two dozen governments to attend.

Chinese authorities want to turn OBOR or the Silk Road program into a diplomatic tool. “The future of globalization and the world economy are extremely uncertain. And the forum in May will reinforce confidence in the world economy,” the official media quoted Chu Yin, associate professor at the University of International Relations, as saying.

Bai Gao, a sociology professor at the Duke University took a somewhat different view. “I don’t see the purpose of this gathering is to raise voices against Trump’s actions. Rather, I guess the purpose of this gathering is to build consensus on free trade and raise voices against protectionism,” he said. .

Road to everywhere

China’s Ministry of Commerce recently said Chinese companies have invested $24.19 billion in 77 “economic cooperation zones”, which are industrial areas, in 36 countries. These zones covered 1,522 foreign companies and played a positive role in “the development of bilateral trade and economic relationship”.

Analysts say industrial investments are are foreign policy tools for China.

Beijing launched a $10 billion fund for industrial development in Latin America in 2015, and followed it up last year with a $11 billion fund for China-led development in Europe. More such announcements could be expected at the forum.

“The conference would be genuinely meaningful only if it is accompanied by commitments to more fully liberalize China’s economy, instead of the usual promises of China handing out more money, much of which will go to Chinese state owned enterprises,” said Scott Kennedy, director of the project on Chinese business and political economy at the Washington-based Center for Strategic and International Studies.

Making the magic work


Analysts say several European countries are uneasy about China using state power to aggressively promote Chinese companies instead of living up to its rhetoric about globalization and free trade.

“I do not see Europe being in a role that would allow China to take the lead in the global economic order without first complying to international standards on fair trade, environment and other issues,” Gaspers said. “Chinese are not terribly keen about promoting international standards. European countries are trying to find out how they can work constructively with China without giving up its standards”.

Some analysts said China is complaining too much without taking account of its own behavior on trade and investment.

“Whatever the difference between Xi and Trump in terms of rhetoric, China still has far more barriers in place to foreign goods, services and investment than the United States,” Kennedy of CSIS said, adding, “The U.S. also lacks the kind of industrial policy that China wields to give an added advantage to domestic companies”.

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Peugeot Buys Iconic Indian Car Brand

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French car manufacturer Peugeot has bought India’s most iconic car brand from its maker Hindustan Motors in a deal that signifies the passing of an era in India’s motoring history.


Over the weekend, the C.K. Birla Group that owns Hindustan Motors said it had signed an agreement with Peugeot SA to sell the Ambassador for 800 million rupees ($12 million).


The hulking Ambassador sedan remained largely unchanged for more than five decades, ferrying India’s elite, including prime ministers, visiting heads of states and celebrities. It was a throwback to an era when India’s policy of economic self-sufficiency meant domestically produced cars were the norm.


First manufactured in 1948, the Ambassador was the only luxury car available in India till the mid-1980s. By the early 1990s, economic reforms had opened India’s doors to many small car manufacturers.


Hindustan Motors stopped making Ambassadors in 2014 after about 2,200 cars were sold in 2013.


Fondly referred to as the “Amby,” the Ambassador was modeled after the British Morris Oxford III. Its lumbering shape, often compared to a bowler hat on wheels, was suited for India’s pot-holed roads and rugged terrain. But poor gas mileage and a lack of luxury features led a rising Indian middle class to aspire to own cheaper, newer models that were easier to maneuver in crowded cities.


Displaced by Japanese and Korean cars, the sturdy Ambassadors were relegated to use by taxi services and government departments. But even that has changed with the Indian government switching to smaller, swifter cars than the bulbous Ambassador.


It is unclear what exactly the French car maker plans to do with the Ambassador brand.


Peugeot pulled out of India after a joint-venture effort in the 1990s collapsed. Last month it signed an agreement with Birla to return to the fast-growing market, saying it will invest $107 million in a Hindustan Motors manufacturing facility in the southern Indian state of Tamil Nadu.


That deal includes hiking manufacturing capacity to 100,000 vehicles a year, to take advantage of the rapid growth in India, where car sales expanded 7 percent to 2.96 million cars last year.


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International Monetary Fund chief Christine Lagarde voiced optimism Sunday that U.S. President Donald Trump’s planned tax cuts and construction spending would boost the American economy, but said they could cause trouble for the economies around the globe.

Lagarde, speaking at the World Government Summit in Dubai, said, “From the little we know, and I will insist on the little we know, because this is really work in progress… but from the little we hear, we have reasons to be optimistic about economic growth in the United States.”

Major U.S. stock indexes are near record highs, with the new U.S. leader promising to unveil a “phenomenal” tax cut plan in the next two to three weeks, while also pledging to launch $1 trillion in major infrastructure spending to fix the country’s deteriorating roads and bridges and expand airports. But both measures would need approval by Congress, where the controlling Republican lawmakers have voiced skepticism about any changes that would add to the country’s nearly $20 trillion in long-term debt.

But Lagarde warned that advances by the U.S. economy, the world’s largest, could hurt economies elsewhere because of the strength of the dollar against other currencies and expected action by the U.S. central bank, the Federal Reserve, to gradually boost its benchmark interest rate to keep the American economy from overheating.

She said U.S. gains are good, but that “the more worrying news, if you will, is that it will have consequences on the rest of the world, and we are seeing it.” She said the Fed’s tightening of monetary policy “will be difficult on the global economy and for which economies will have to prepare.”

The IMF last month boosted its U.S. growth estimate a tenth of a point this year to 2.3 percent, and four-tenths of a point to 2.5 percent for 2018. The IMF predicted an increase in global growth to 3.4 percent in 2017 and and 3.6 percent in 2018, up from the 2016 figure of 3.1 percent.

Trump has already revoked U.S. participation in the planned 12-nation Trans-Pacific Partnership trade in favor of American deals with individual countries.

Lagarde, however, continued to promote globalization of the world economy, while acknowledging its negative aspects, which Trump says has cost U.S. manufacturing workers their jobs as their employers moved operations overseas in search of cheaper labor.

“We have been saying globalization is great, international trade is great — and it is,” Lagarde said. “But we have not looked at those who were badly, negatively impacted.”

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Somalia intends to resume printing banknotes this year for the first time since the government collapsed in 1991.

The governor of Somalia’s central bank, Bashir Issa Ali, told VOA in an exclusive interview Saturday that all technical preparations are complete, and his government is confident it can assemble a financial aid package within three months to fund the printing program. Further work would take another four months.

Asked if Somalia will print and distribute banknotes during 2017, Ali answered: “Absolutely. Absolutely. Absolutely!” He pledged the new currency would include “good, reliable security features.”

Pre-1991 banknotes have disappeared from Somali markets, replaced by either Western currencies, including dollars, or privately printed notes, most of which are worthless fakes.

Financial reforms to take hold soon

Ali said international institutions, such as the World Bank and the International Monetary Fund, as well as the U.S. Treasury, have been helping Somalia reform its financial sector and train central bank staff. 

“We have prepared all the issues and all the basic groundwork, and put in place the technical requirements,” he told VOA.

Outgoing Somali President Hassan Sheikh Mohamud met a key demand of the international community last year by signing into law parliament-approved legislation to outlaw money laundering and “financial terrorism.”

The Somali government needs $60 million to be able to begin printing banknotes. Ali said he expects to obtain pledges for that sum at an international donors’ conference for Somalia in London in May.

“We expect the international community to assist us with that issue,” the bank governor said.

Private banks, ‘mobile money’

Hardship and the scarcity of trustworthy currency has created opportunities for some innovative strategies in the private sector, Ali said, and Somalia has made some progress in establishing private banks and mobile money systems.

Many transactions in Somalia now take place using “electronic mobile money,” Ali added.

Somali shillings account for a small portion of the payments system, he said.

“Most of it is done through dollars and electronic money, which is a great thing for … saving costs and effort and very convenient, also.”

Remittance companies that relay payments from Somalis working abroad operate in many parts of the country, Ali noted, but a large part of the nation does not have access to electronic funds or dollars, so there is an urgent need for a reliable national currency.

Once Somalia-printed banknotes begin to circulate, the central bank governor said, his staff will be able to regulate and control operations by private banks and remittance services.

The bank now has trained staff members to work on the financial and exchange systems, and training efforts are continuing. On February 12, he said, “more than 10 staffers are departing for training about counterfeiting and financial controls. They include staff from the bank, police and the national security agency.”

Monetary policy comes next

Since Somalia does not yet have its own currency, it also lacks a monetary policy, Ali said, but once the banknotes begin circulating, he looks forward to “the beginning of a new era” in the East African nation.

“Monetary policy always must come together in close collaboration with the fiscal policy of the government — taxation and revenue, the public budget and these kind of things,” Ali told VOA. “We don’t apply any monetary policy at the moment.”

Economists have recently predicted a slowdown for Somalia’s domestic economy, which largely relies on livestock exports. Ali said a “very disastrous” drought has killed thousands of farm animals.

“When you don’t have enough crops, it will contribute to food shortages,” he said. “When you have drought problems, you will not be able to export livestock.

“That will affect our foreign market and our exports,” he added, so Somalia’s foreign-exchange earnings will decline.

“When you get less foreign exchange, you will not be able to import what is required,” the bank governor said, “and when you import less, there will be less tax revenue for the government.”

In the short term, the peaceful election of a new Somali president appears to have helped the nation’s economy. The Somali shilling rose in value compared with the U.S. dollar over a two-day period; $1 brought 22,000 shillings before the election in Mogadishu, and by Saturday it was trading at 16,000 shillings.

“It’s a matter of expectations. There is a new government, new environment and new atmosphere,” Ali said, and that will have an effect on people’s opinions about security, the economy and the stability of the government.

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Bolivian farmers and government officials are fighting a locust plague threatening corn and sorghum harvests, just as agricultural areas were starting to recover from the South American country’s worst drought in a quarter century.

The locusts, first reported in late January in Bolivia’s eastern grains belt, have affected around 1,000 hectares (2,470 acres) of crops and 500 producers, said Vicente Gutierrez, president of a corn and sorghum producers group.

Government authorities and farmers were preparing on Friday to fumigate 300 hectares of crops, with the ultimate goal of spraying some 17,000 hectares and preventing the plague from spreading and endangering the food supply.

“This fight will not be short,” said Reinaldo Diaz, president of Bolivia’s oilseed and wheat producers’ association. “We’re trying to identify where the eggs are, where the nymphs are – those are the initial stages of the plague and where we can control it most efficiently.”

The plague follows a severe drought in Bolivia that prompted controversial water rationing, conflicts between miners and farmers over aquifer use, and slashed agricultural harvests, requiring a sharp increase in imports.

Recent rains have relieved Santa Cruz and inspired optimism for this year’s crops although drought continues to afflict the main city of La Paz.

For the moment, the 1,000 hectares affected by locusts represent only a small fraction of the 100,000 hectares planted with grains in Santa Cruz department.

Bolivia, normally self-sufficient in grain production, had to import more than 100,000 tonnes of corn worth $21 million in 2016, largely from Argentina, according to the private Bolivian Institute of Foreign Trade. The country also imported 2,000 tons of sorghum worth $5 million.

Argentina, the world’s No. 3 corn exporter whose output has been rising since corn export taxes were slashed in late 2015, had sent experts to assist the fumigation effort, Bolivian producers said.

“They have lived with this since 1920; we are learning how to combat this problem,” Bolivia’s President Evo Morales said after flying over affected areas.

Producers in Santa Cruz, one of Bolivia’s wealthiest areas, have for years lobbied the government to lift export restrictions and liberalize regulations on the use of genetically-modified seeds, which they say will help produce crops that are resistant to plagues and adverse climate events.

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