News round-up, April, 10, 2023

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Quote of the day…

“Europeans cannot resolve the crisis in Ukraine; how can we credibly say on Taiwan, ‘watch out, if you do something wrong we will be there’? If you really want to increase tensions that’s the way to do it,” he said. 

ABOARD COTAM UNITÉ (FRANCE’S AIR FORCE ONE) — Europe must reduce its dependency on the United States and avoid getting dragged into a confrontation between China and the U.S. over Taiwan, French President Emmanuel Macron said in an interview on his plane back from a three-day state visit to China. / POLITICO.EU

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Most read…

Europe must resist pressure to become ‘America’s followers,’ says Macron

The ‘great risk’ Europe faces is getting ‘caught up in crises that are not ours,’ French president says in interview.

POLITICO.EU bY JAMIL ANDERLINI AND CLEA CAULCUTT, APRIL 9, 2023 

China’s new world order is taking shape

Macron gave Xi the optics he sought: A clear reminder to the United States — who Xi obliquely referred to as a domineering “third party” — of the gap between its hawkish stance on China and the more perhaps equivocating posture of many in Europe.

TWP, analysis by Ishaan Tharoor, Columnist, April 10, 2023

Analysis: Europe facing costly winter without enough long-term LNG deals

Europe made the majority of purchases on the spot market, where prices are far higher than those agreed upon in long-term contracts preferred by seasoned purchasers like China. The International Energy Agency estimates that the cost of its LNG imports will more than treble to almost $190 billion in 2022.

REUTERS by Marwa Rashad and *Ron Bousso, TODAY

How the Latest Leaked Documents Are Different From Past Breaches

The freshness of the documents — some appear to be barely 40 days old — and the hints they hold for operations to come make them particularly damaging, officials say.

NYT by *David E. Sanger, April 9, 2023

The Belgian Towns Producing Their Own Green Power

Energy prices in Europe have skyrocketed in the last year. But not in some towns in Belgium, where consumers have joined together to form co-ops and are generating their own sustainable electricity. It is a popular, and growing, model in Europe.

Spiegel, by Jan Petter in Eeklo, Belgium, 06.04.2023, 

Analysis: Western curbs on Russian oil products redraw global shipping map

As a result of the European Union ban on Russian fuel that started on Feb. 5, tankers carrying clean oil products such as gasoline, diesel, jet fuel and naphtha are travelling between 16 and 18 days to bring Russian supplies to Brazil or U.S. cargoes to Europe, according to two shipping sources.

REUTERS by Mohi Narayan and Jonathan Saul, TODAY

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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Today's events

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Today's events 〰️

"The great risk” Europe faces is getting "caught up in crises that are not ours," says Macron | Ludovic Marin/ AFP/ POLITICO.EU

Europe must resist pressure to become ‘America’s followers,’ says Macron

The ‘great risk’ Europe faces is getting ‘caught up in crises that are not ours,’ French president says in interview.

POLITICO.EU bY JAMIL ANDERLINI AND CLEA CAULCUTT, APRIL 9, 2023 

ABOARD COTAM UNITÉ (FRANCE’S AIR FORCE ONE) — Europe must reduce its dependency on the United States and avoid getting dragged into a confrontation between China and the U.S. over Taiwan, French President Emmanuel Macron said in an interview on his plane back from a three-day state visit to China.

Speaking with POLITICO and two French journalists after spending around six hours with Chinese President Xi Jinping during his trip, Macron emphasized his pet theory of “strategic autonomy” for Europe, presumably led by France, to become a “third superpower.”

He said “the great risk” Europe faces is that it “gets caught up in crises that are not ours, which prevents it from building its strategic autonomy,” while flying from Beijing to Guangzhou, in southern China, aboard COTAM Unité, France’s Air Force One.

Politico by Stuart Lau

Xi Jinping and the Chinese Communist Party have enthusiastically endorsed Macron’s concept of strategic autonomy and Chinese officials constantly refer to it in their dealings with European countries. Party leaders and theorists in Beijing are convinced the West is in decline and China is on the ascendant and that weakening the transatlantic relationship will help accelerate this trend.

“The paradox would be that, overcome with panic, we believe we are just America’s followers,” Macron said in the interview. “The question Europeans need to answer … is it in our interest to accelerate [a crisis] on Taiwan? No. The worse thing would be to think that we Europeans must become followers on this topic and take our cue from the U.S. agenda and a Chinese overreaction,” he said.

Just hours after his flight left Guangzhou headed back to Paris, China launched large military exercises around the self-ruled island of Taiwan, which China claims as its territory but the U.S. has promised to arm and defend. 

Those exercises were a response to Taiwanese President Tsai Ing-Wen’s 10-day diplomatic tour of Central American countries that included a meeting with Republican U.S. House Speaker Kevin McCarthy while she transited in California. People familiar with Macron’s thinking said he was happy Beijing had at least waited until he was out of Chinese airspace before launching the simulated “Taiwan encirclement” exercise. 

Beijing has repeatedly threatened to invade in recent years and has a policy of isolating the democratic island by forcing other countries to recognize it as part of “one China.”

Taiwan talks

Macron and Xi discussed Taiwan “intensely,” according to French officials accompanying the president, who appears to have taken a more conciliatory approach than the U.S. or even the European Union.

“Stability in the Taiwan Strait is of paramount importance,” European Commission President Ursula von der Leyen, who accompanied Macron for part of his visit, said she told Xi during their meeting in Beijing last Thursday. “The threat [of] the use of force to change the status quo is unacceptable.”

Xi responded by saying anyone who thought they could influence Beijing on Taiwan was deluded. 

Macron appears to agree with that assessment.

“Europeans cannot resolve the crisis in Ukraine; how can we credibly say on Taiwan, ‘watch out, if you do something wrong we will be there’? If you really want to increase tensions that’s the way to do it,” he said. 

“Europe is more willing to accept a world in which China becomes a regional hegemon,” said Yanmei Xie, a geopolitics analyst at Gavekal Dragonomics. “Some of its leaders even believe such a world order may be more advantageous to Europe.”

In his trilateral meeting with Macron and von der Leyen last Thursday in Beijing, Xi Jinping went off script on only two topics — Ukraine and Taiwan — according to someone who was present in the room.

“Xi was visibly annoyed for being held responsible for the Ukraine conflict and he downplayed his recent visit to Moscow,” this person said. “He was clearly enraged by the U.S. and very upset over Taiwan, by the Taiwanese president’s transit through the U.S. and [the fact that] foreign policy issues were being raised by Europeans.”

In this meeting, Macron and von der Leyen took similar lines on Taiwan, this person said. But Macron subsequently spent more than four hours with the Chinese leader, much of it with only translators present, and his tone was far more conciliatory than von der Leyen’s when speaking with journalists.

‘Vassals’ warning

Macron also argued that Europe had increased its dependency on the U.S. for weapons and energy and must now focus on boosting European defense industries. 

He also suggested Europe should reduce its dependence on the “extraterritoriality of the U.S. dollar,” a key policy objective of both Moscow and Beijing. 

Macron has long been a proponent of strategic autonomy for Europe | Ludovic Marin/AFP via Getty Images

“If the tensions between the two superpowers heat up … we won’t have the time nor the resources to finance our strategic autonomy and we will become vassals,” he said.

Russia, China, Iran and other countries have been hit by U.S. sanctions in recent years that are based on denying access to the dominant dollar-denominated global financial system. Some in Europe have complained about “weaponization” of the dollar by Washington, which forces European companies to give up business and cut ties with third countries or face crippling secondary sanctions.

While sitting in the stateroom of his A330 aircraft in a hoodie with the words “French Tech” emblazoned on the chest, Macron claimed to have already “won the ideological battle on strategic autonomy” for Europe.

He did not address the question of ongoing U.S. security guarantees for the Continent, which relies heavily on American defense assistance amid the first major land war in Europe since World War II.

As one of the five permanent members of the U.N. Security Council and the only nuclear power in the EU, France is in a unique position militarily. However, the country has contributed far less to the defense of Ukraine against Russia’s invasion than many other countries.

As is common in France and many other European countries, the French President’s office, known as the Elysée Palace, insisted on checking and “proofreading” all the president’s quotes to be published in this article as a condition of granting the interview. This violates POLITICO’s editorial standards and policy, but we agreed to the terms in order to speak directly with the French president. POLITICO insisted that it cannot deceive its readers and would not publish anything the president did not say. The quotes in this article were all actually said by the president, but some parts of the interview in which the president spoke even more frankly about Taiwan and Europe’s strategic autonomy were cut out by the Elysée.

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Iranian Foreign Minister Hossein Amirabdollahian holds hands with his Saudi Arabian counterpart, Prince Faisal bin Farhan al-Saud, and Chinese counterpart, Qin Gang, in Beijing on Thursday. (Ding Lin/Xinhua News Agency/AP)

China’s new world order is taking shape

Macron gave Xi the optics he sought: A clear reminder to the United States — who Xi obliquely referred to as a domineering “third party” — of the gap between its hawkish stance on China and the more perhaps equivocating posture of many in Europe.

TWP, analysis by Ishaan Tharoor, Columnist, April 10, 2023

It was a bumper week for diplomacy in Beijing. Chinese President Xi Jinping accompanied his French counterpart, President Emmanuel Macron, on a three-day visit to the Chinese capital and the southern metropolis of Guangzhou. Escaping, if briefly, from the fiery protests taking place in his own country, Macron was received by adoring, excited crowds of students at Guangzhou’s Sun Yat-sen University. In between grand receptions and formal tea ceremonies, the two leaders saw a slate of French companies and Chinese state-run firms clinch some major business deals.

Macron gave Xi the optics he sought: A clear reminder to the United States — who Xi obliquely referred to as a domineering “third party” — of the gap between its hawkish stance on China and the more perhaps equivocating posture of many in Europe. It was less clear what Xi gave Macron politically: The French president urged Xi to bring Russia “to reason” over its invasion of Ukraine, but that was met by boilerplate rhetoric and little indication of the needle of the conflict being moved in any significant direction.

In what was framed as a joint call with France, Xi urged for peace talks to resume soon and called “for the protection of civilians,” while also reiterating that “nuclear weapons must not be used, and nuclear war must not be fought” over Ukraine. That latter point marked perhaps the biggest distance between Xi and Russian President Vladimir Putin, who has periodically rattled the nuclear saber as the war he unleashed in Ukraine lurches on. Despite European entreaties, Xi made no definitive commitment to speak with Ukrainian President Volodymyr Zelensky.

Macron was joined in China by Ursula von der Leyen, president of the European Commission. The two leaders sent somewhat divergent messages; von der Leyen bemoaned China’s “unfair practices,” particularly in trade, and arrived in the country after delivering a tough speech on the authoritarian challenge posed by Beijing. Macron, on the other hand, warned against the West plunging itself into an “inescapable spiral” of tensions with China.

Chinese commentators suggested that’s because the tables of history have turned and Macron recognizes the sheer weight and importance of China’s economy, not least at a moment when he’s trying to carve out a vision of a more robust, capable and independent Europe. “Although there are still concerns in France about our country’s increasing [global] role, China’s support is essential if France wants to exercise its soft power in global governance,” Shanghai-based scholars Zhang Ji and Xue Sheng wrote in a recent essay.

Iranian Foreign Minister Hossein Amirabdollahian holds hands with his Saudi Arabian counterpart, Prince Faisal bin Farhan al-Saud, and Chinese counterpart, Qin Gang, in Beijing on Thursday. (Ding Lin/Xinhua News Agency/AP)

Macron and Europe hedge their bets on China

In the middle of Macron’s visit, another major summit took place in Beijing. The foreign ministers of Saudi Arabia and Iran — the Middle East’s feuding antagonists — conducted the highest-level meeting between their two countries in seven years in the Chinese capital. In Washington, a bemused clutch of regional experts looked on as China played the role of a stabilizing outside power in the Middle East.

The thaw between Riyadh and Tehran was long in the works and not exclusively because of Chinese efforts. “Analysts say the warming ties are due to a convergence of interests,” wrote my colleagues Kareem Fahim and Sarah Dadouch. “Iran, under Western sanctions and trying to suffocate a domestic protest movement, has looked to ease its global and regional isolation; Saudi Arabia, faced with security threats from Iran that threaten its plan to diversify the kingdom’s economy away from oil, is seeking to tamp down regional tensions — a strategy that has included pursuing partnerships with major world powers beyond the United States.”

But it does invariably show a waning of American influence, especially over the Saudis. “Many experts still assume that whoever is in the White House will guide Saudi policy on Iran, but that simply isn’t true today,” said Anna Jacobs, a senior Gulf analyst at the International Crisis Group, to the New York Times. “Saudi Arabia and Gulf Arab states are focusing on their economic, political and security interests and protecting themselves from regional threats.”

Enter Xi’s China, an economic juggernaut now flexing new geopolitical muscles. “China has in recent years declared that it needs to be a participant in the creation of the world order,” former U.S. secretary of state Henry Kissinger told Post columnist David Ignatius last month. “It has now made a significant move in that direction.”

China’s Xi promises to build ‘great wall of steel’ in rivalry with West

The contours of this imagined Chinese world order are still difficult to sketch. We know about its vast economic ambitions, including the Belt and Road Initiative that has seen China finance and invest in major infrastructure projects around the world. But in recent weeks, Xi has touted a number of other new initiatives over “security” and “civilization” — still vague policy positions essentially challenging the architecture of the U.S.-led order, as well as the concept of universal values.

“It appears to be a counterargument to [President] Biden’s autocracy versus democracy narrative,” Moritz Rudolf, a research scholar at Yale Law School’s Paul Tsai China Center, told the Financial Times. “It’s an ideological battle that’s more attractive to developing countries than people in Washington might believe.”

China’s foray into Middle East great power politics, in particular, show a new capacity and willingness to act. “In the past we would declare some principles, make our position known but not get involved operationally. That is going to change,” said Wu Xinbo, dean of the Institute of International Studies at Fudan University in Shanghai, said in the same Financial Times story.

For some analysts, Macron’s visit is a reminder of the tough questions facing Europe. While the war in Ukraine and antipathy toward Russia have galvanized the transatlantic alliance, the question of China is thornier, with Chinese investment and trade vital to Europe’s future prospects. What that means for the grim scenarios that obsess Washington policymakers — including a possible future Chinese invasion of Taiwan — is an open question, and one that may elicit unwelcome answers on both sides of the pond.

“The paradox would be that, overcome with panic, we believe we are just America’s followers,” Macron told reporters traveling with him, before gesturing to current tensions over Taiwan. “The question Europeans need to answer … is it in our interest to accelerate [a crisis] on Taiwan? No. The worse thing would be to think that we Europeans must become followers on this topic and take our cue from the U.S. agenda and a Chinese overreaction.”

“What happens in Europe now — not just in terms of the outcome of this war [in Ukraine], but how Europeans define their relations with China in the future — will shape transatlantic relations,” wrote Andrew Michta, a nonresident senior fellow at the Atlantic Council. “And Europe’s choices when it comes to its China policy will greatly influence the outcome of U.S. competition with China in other theaters too.”

A global order defined — or heavily sculpted — by Beijing’s one-party regime would not be an attractive prospect to most countries. China is, in the Economist’s gloomy analysis, a would-be “superpower that seeks influence without winning affection, power without trust and a global vision without universal human rights.”

But its greater clout on the world stage need not always ring alarm bells. “Not everything between the U.S. and China has to be a zero-sum game,” Sen. Chris Murphy (D-Conn.), who leads the Senate Foreign Relations Committee’s Middle East panel, told Politico in the context of Beijing’s Middle East diplomacy. “I don’t know why we would perceive there to be a downside to de-escalation between Saudi Arabia and Iran.”

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Image: A general view shows a special ship, "Neptune", the floating liquefied natural gas terminal, during the inauguration of the Liquefied Natural Gas (LNG) terminal 'Deutsche Ostsee' in the port of Lubmin, Germany January 14, 2023. REUTERS/Annegret Hilse

Analysis: Europe facing costly winter without enough long-term LNG deals

Europe made the majority of purchases on the spot market, where prices are far higher than those agreed upon in long-term contracts preferred by seasoned purchasers like China. The International Energy Agency estimates that the cost of its LNG imports will more than treble to almost $190 billion in 2022.

REUTERS by Marwa Rashad and *Ron Bousso

LONDON, April 6 (Reuters) - Europe has not made enough progress in locking in long-term contracts for liquefied natural gas (LNG) as an alternative to Russian pipeline supply, which may prove costly next winter as a rebound in Chinese demand could sharply tighten the market.

Buying LNG to replace curtailed Russian flows helped the bloc weather the first winter of the Ukraine conflict, with Europe importing 121 million tonnes of the fuel in 2022, a 60% increase from 2021.

But that came at a cost: Europe bought largely on the spot market, where prices are much higher than those negotiated under long-term deals favoured by seasoned buyers like China. According to the International Energy Agency, the cost of its LNG imports more than tripled in 2022 to some $190 billion.

Northweat Europe LNG imports Northwest Europe LNG imports

Analysts estimate that Europe accounted for more than a third of global spot market trades in 2022, from around 13% in 2021. Such exposure could reach more than 50% this year if no long-term contracts were signed.

But Europe's climate goals - the EU aims to cut net emissions at least 55% by 2030, and to reach net zero by 2050 - mean its LNG buyers struggle to commit to the timeframes necessary to lock in LNG more cheaply under contract.

Morten Frisch, senior partner at Morten Frisch Consulting, said Europe ideally needs about 70-75% of its LNG supply under firm long-term sale and purchase agreements (SPAs).

"But since the green lobby in Europe has managed to persuade politicians wrongly that hydrogen to a large extent can replace natural gas as an energy carrier by 2030, Europe has become far too reliant on spot and short term purchases of LNG," he added.

One senior supply-side source reported a "disconnection" during negotiations with European companies between their needs and the messages they get from their governments on climate.

"Some customers struggle internally... (wondering) is there is a hard stop in 2030? Is there a net-zero by 2040? This moving target... is it really a cliff?" he said.

"This makes it tough for them to commit to the medium and longer term deals, and that potentially leaves them exposed to the spot market in the future."

SECURITY OF SUPPLY

Asia has continued to pull ahead in the race for limited global LNG supply this year before new flows come into the market in 2025 and beyond.

"Their preference for security of supply has allowed them to continue to support new projects, whereas European buyers are concerned about committing to supply well into the start of their net-zero targets," said Felix Booth, head of LNG at energy intelligence firm Vortexa.

China's LNG imports China's LNG imports

While gas is a fossil fuel, it produces less carbon dioxide emissions than coal, so some EU states see it as a temporary alternative to replace dirtier fuels.

Eurasia Group's managing director for energy, climate and sustainability Raad Alkadiri said Europe will not be able to lock in LNG as a replacement for Russian gas as long as the EU views it as a transition fuel, as producers want a guaranteed market in Europe over the next few decades.

LNG imports and exports by region LNG imports and exports by region

Spot LNG prices have dropped more than 82% since they hit a record $70.50 per million British thermal units (mmBtu) in 2022 after Russia’s invasion of Ukraine.

LNG spot market prices LNG spot market prices

But they are expected to rise again, with a hot summer that could cut hydro levels, a cold 2023-2024 winter and a rebound in Chinese LNG demand all seen as among the risk factors for price.

"EU companies would need to act first by signing a series of large-scale, long-term SPAs based on the Chinese model, to hedge themselves against any ups and downs of the turbulent global LNG market," said Victor Tenev, LNG business consultant at advisory ROITI Ltd.

"Failing to hedge their unenviable natural short position would leave the EU exposed again to the damagingly expensive spot market."

TRANSITION

Major LNG producers and traders including QatarEnergy, Shell, Chevron and ConocoPhillips have in recent months all held talks in European capitals on securing LNG deals.

QatarEnergy's talks with the German government and top power companies such as RWE have hit a wall due to disagreements over deal length, company and industry sources said.

While Qatar typically seeks to sign contracts with at least 25-year terms, Germany has sought a term of 10 to 15 years due to its commitments to slash greenhouse gas emissions, the sources said.

"If you take gas with the delivery point Germany, you cannot go beyond 2043, because gas is not allowed in Germany after 2043," a senior German industry source said.

To resolve the issue, Qatar has offered Germany shorter term contracts of 15 years which would price the LNG at a hefty premium to the longer-term contract, the sources said.

"Nobody wants to lock in 20 years nowadays, and it's the worst possible idea when you're trying to work out what's going to happen next year," Shell Chief Financial Officer Sinead Goreman said at a conference in March.

Shell is offering supply contracts with "break clauses" to allow changes to contracts' term and destination throughout the life of the supply deal such as a three, five or 10 year mark, she said.

"That's what you are going to see more and more - the big integrated players... (being) willing to take that risk because ultimately, countries and smaller companies want to have the flexibility to say, well, let's see how fast renewables grow."

*Thomson Reuters

Ron has covered since 2014 the world’s top oil and gas companies, focusing on their efforts to shift into renewables and low carbon energy and the sector's turmoil during the COVID-19 pandemic and following Russia's invasion of Ukraine. He has been named Reporter of the Year in 2014 and 2021 by Reuters. Before Reuters, Ron reported on equity markets in New York in the aftermath of the 2008 financial crisis after covering conflict and diplomacy in the Middle East for AFP out of Israel.

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Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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Leaked documents leave no doubt about how heavily the United States in involved in the war in Ukraine.Credit...Stefani Reynolds for The New York Times

NEWS ANALYSIS

How the Latest Leaked Documents Are Different From Past Breaches

The freshness of the documents — some appear to be barely 40 days old — and the hints they hold for operations to come make them particularly damaging, officials say.

NYT by *David E. Sanger, April 9, 2023

When WikiLeaks spilled a huge trove of State Department cables 13 years ago, it gave the world a sense of what American diplomats do each day — the sharp elbows, the doubts about wavering allies and the glimpses at how Washington was preparing for North Korea’s eventual collapse and Iran’s nuclear breakout.

When Edward Snowden swept up the National Security Agency’s secrets three years later, Americans suddenly discovered the scope of how the digital age had ushered in a remarkable new era of surveillance by the agency — enabling it to pierce China’s telecommunications industry and to drill into Google’s servers overseas to pick up foreign communications.

The cache of 100 or so newly leaked briefing slides of operational data on the war in Ukraine is distinctly different. The data revealed so far is less comprehensive than those vast secret archives, but far more timely. And it is the immediate salience of the intelligence that most worries White House and Pentagon officials.

Some of the most sensitive material — maps of Ukrainian air defenses and a deep dive into South Korea’s secret plans to deliver 330,000 rounds of much-needed ammunition in time for Ukraine’s spring counteroffensive — is revealed in documents that appear to be barely 40 days old.

It is the freshness of the “secret” and “top secret” documents, and the hints they hold for operations to come, that make these disclosures particularly damaging, administration officials say. On Sunday, Sabrina Singh, a Pentagon spokeswoman, said U.S. officials had notified congressional committees of the leak and referred the matter to the Justice Department, which had opened an investigation.

The 100-plus pages of slides and briefing documents leave no doubt about how deeply enmeshed the United States is in the day-to-day conduct of the war, providing the precise intelligence and logistics that help explain Ukraine’s success thus far. While President Biden has barred American troops from firing directly on Russian targets, and blocked sending weapons that could reach deep into Russian territory, the documents make clear that a year into the invasion, the United States is heavily entangled in almost everything else.

It is providing detailed targeting data. It is coordinating the long, complex logistical train that delivers weapons to the Ukrainians. And as a Feb. 22 document makes clear, American officials are planning ahead for a year in which the battle for the Donbas is “likely heading toward a stalemate” that will frustrate Vladimir V. Putin’s goal of capturing the region — and Ukraine’s goal of expelling the invaders.

One senior Western intelligence official summed up the disclosures as “a nightmare.” Dmitri Alperovitch, the Russia-born chairman of Silverado Policy Accelerator, who is best known for pioneering work in cybersecurity, said on Sunday that he feared there were “a number of ways this can be damaging.” He said that included the possibility that Russian intelligence is able to use the pages, spread out over Twitter and Telegram, “to figure out how we are collecting” the plans of the G.R.U., Russia’s military intelligence service, and the movement of military units.

In fact, the documents released so far are a brief snapshot of how the United States viewed the war in Ukraine. Many pages seem to come right out of the briefing books circulating among the Joint Chiefs of Staff, and in a few cases updates from the C.I.A.’s operations center. They are a combination of the current order of battle and — perhaps most valuable to Russian military planners — American projections of where the air defenses being rushed into Ukraine could be located next month.

Mixed in are a series of early warnings about how Russia might retaliate, beyond Ukraine, if the war drags on. One particularly ominous C.I.A. document refers to a pro-Russian hacking group that had successfully broken into Canada’s gas distribution network and was “receiving instructions from a presumed Federal Security Service (F.S.B.) officer to maintain network access to Canadian gas infrastructure and wait for further instruction.” So far there is no evidence that Russian actors have begun a destructive attack, but that was the explicit fear expressed in the document.

Because such warnings are so sensitive, many of the “top secret” documents are limited to American officials or to the “Five Eyes” — the intelligence alliance of the United States, Britain, Australia, New Zealand and Canada. That group has an informal agreement not to spy on the other members. But it clearly does not apply to other American allies and partners. There is evidence that the United States has plugged itself into President Volodymyr Zelensky’s internal conversations and those of even the closest U.S. allies, like South Korea.

In a dispatch that is very reminiscent of the 2010 WikiLeaks disclosures, one document based on what is delicately referred to as “signals intelligence” describes the internal debate in Seoul over how to handle American pressure to send more lethal aid to Ukraine, which would violate the country’s practice of not directly sending weapons into a war zone. It reports that South Korea’s president, Yoon Suk Yeol, was concerned that Mr. Biden might call him to press for greater contributions to Ukraine’s military.

It is an enormously sensitive subject among South Korean officials. During a recent visit to Seoul, before the leaked documents appeared, government officials dodged a reporter’s questions about whether they were planning to send 155-millimeter artillery rounds, which they produce in large quantities, to aid in the war effort. One official said South Korea did not want to violate its own policies, or risk its delicate relationship with Moscow.

Now the world has seen the Pentagon’s “delivery timeline” for sea shipments of those shells, along with estimates of the cost of the shipments, $26 million.

With every disclosure of secret documents, of course, there are fears of lasting damage, sometimes overblown. That happened in 2010, when The New York Times started publishing a series called “State’s Secrets,” detailing and analyzing selected documents from the trove of cables taken by Chelsea Manning, then an Army private in Iraq, and published by Julian Assange, the WikiLeaks founder. Soon after the first articles were published, Secretary of State Hillary Clinton expressed fear that no one would ever talk to American diplomats again.

“In addition to endangering particular individuals, disclosures like these tear at the fabric of the proper function of responsible government,” she told reporters in the Treaty Room of the State Department. Of course, they did keep talking — though many foreign officials say that when they speak today, they edit themselves with the knowledge that they may be quoted in department cables that leak in the future.

When Mr. Snowden released vast amounts of data from the National Security Agency, collected with a $100 piece of software that just gathered up archives he had access to at a facility in Hawaii, there was similar fear of setbacks in intelligence collection. The agency spent years altering programs, at a cost of hundreds of millions of dollars, and officials say they are still monitoring the damage now, a decade later. In September, Mr. Putin granted Mr. Snowden, a low-level intelligence contractor, full Russian citizenship; the United States is still seeking to bring him back to face charges.

But both Ms. Manning and Mr. Snowden said they were motivated by a desire to reveal what they viewed as transgressions by the United States. “This time it doesn’t look ideological,” Mr. Alperovitch said. The first appearance of some of the documents seems to have taken place on gaming platforms, perhaps to settle an online argument over the status of the fight in Ukraine.

“Think about that,” Mr. Alperovitch said. “An internet fight that ends up in a massive intelligence disaster.”

*David E. Sanger is a White House and national security correspondent. In a 38-year reporting career for The Times, he has been on three teams that have won Pulitzer Prizes, most recently in 2017 for international reporting. His newest book is “The Perfect Weapon: War, Sabotage and Fear in the Cyber Age.”  

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Jan de Pauw: "Personally, I just didn’t want my money heading to a French company month after month." Foto: Mashid Mohadjerin / DER SPIEGEL

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The Belgian Towns Producing Their Own Green Power

Energy prices in Europe have skyrocketed in the last year. But not in some towns in Belgium, where consumers have joined together to form co-ops and are generating their own sustainable electricity. It is a popular, and growing, model in Europe.

Spiegel, by Jan Petter in Eeklo, Belgium, 06.04.2023, 

*Global Societies

For our Global Societies project, reporters around the world will be writing about societal problems, sustainability and development in Asia, Africa, Latin America and Europe. The series will include features, analyses, photo essays, videos and podcasts looking behind the curtain of globalization. The project is generously funded by the Bill & Melinda Gates Foundation.

All Articles

Along with 65,000 other households, the couple are members of Belgium’s largest energy co-operative. The co-op produces and delivers green energy to its members at cost. When compared to the large corporations in the industry, Ecopower is just a dwarf, but it is a popular one. Last year, three times more people wanted to join the co-operative than could be supplied with electricity. At the moment, Ecopower is no longer accepting members.

Bernadette Vandercammen in her home. "It is important to me that the profits stay here in Eeklo."

Foto: Mashid Mohadjerin / DER SPIEGEL

The co-operative has its roots in Eeklo, Vandercammen’s hometown in northern Flanders. The "Eco" in the name once stood for the ecological convictions of its founders. These days, though, the name can easily be understood as a reference to the sustainable energy it produces. In the current energy crisis, Ecopower and other co-operatives offer reliability. Whereas others engage in speculation, jack up prices out of fear or throw out customers, Ecopower continues to provide cheap energy from renewable sources.

"We make long-term contracts," says Jan de Pauw, who works for Ecopower as a project developer. "We only provide energy to our members at a dependable price, without earning much profit." It’s also a rather small operation, regionally focused instead of seeking to expand multi~nationally. Many of its customers live within sight of the wind turbines and solar farms from which they get their energy.

Excellent Wind Power Conditions

Belgium is a leader when it comes to the concept of energy co-ops. In part, as de Pauw says during a tour of a facility, because of the conditions. After Denmark, he notes, Belgium is home to the best conditions in Europe for harnessing wind energy. He gestures to the flat, expansive fields, across which the wind blows down from the North Sea. But there are also other reasons. "Personally, I just didn’t want my money going to a French company month after month," says de Pauw.

Belgium is divided into French-speaking Wallonia and Dutch-speaking Flanders. The differences between the two populations have produced a sense of regional pride, with many needs being met locally. Including, in this case, the production of sustainable energy. Despite the local focus, however, de Pauw is convinced that the model could provide a more universal solution that would work in large parts of Europe and beyond.

Jan De Pauw: "The one wind turbine only benefits the company to which it belongs. The other is ours, and we pay out 10,000 euros per year from it to the people who live here."

Foto: Mashid Mohadjerin / DER SPIEGEL

One reason he highlights is the extremely small number of protests against the wind turbines that the Ecopower co-operative has erected here. De Pauw has collected the data to prove it: "Ten times fewer" complaints were lodged against Ecopower’s plans when compared to conventional projects, he claims. "Even those who weren’t members of the co-op accepted the projects."

The "not-in-my-backyard" (NIMBY) problem is one that has dogged the expansion of windfarms in many parts of Europe in recent years. In Bavaria, for example, complaints from locals have led to a situation in which the installation of wind power facilities has come to a virtual standstill. In Eeklo, by contrast, new wind turbines go up all the time, with 14 of them recently being added. The city produces more green energy than it consumes.

Wind turbines on the outskirts of Eeklo. The town now produces more energy than it consumes.

Foto: Mashid Mohadjerin / DER SPIEGEL

Support from locals is far from being just some sort of Flemish tic, says de Pauw. Locals know that the expansion of wind power benefits everybody in town. "Our offer is simply better."

To demonstrate his approach, he points to two different wind turbines of the exact same model, both of which reach 120 meters into the sky, their rotors gently humming as they turn. "What is the difference between the two?" de Pauw asks, his arm outstretched. He immediately answers his own question: "The one wind turbine only benefits the company to which it belongs. The other is ours, and we pay out 10,000 euros per year from it to the people who live here."

Cheaper and Sustainable

To convince locals of the value of his co-op, he organized a number of town hall meetings over the course of several months to explain the concept and respond to concerns. Ultimately, Ecopower and Eeklo agreed to a joint concept: For each wind turbine, the operators pay 5,000 euros into a local fund for climate protection each year and the same amount into a community fund for other needs. In addition, Ecopower has agreed to finance an engineer for the city for 20 years, whose job it is to help the town shift to renewable energy sources and develop a district heating system. That engineer is de Pauw himself.

Overall, the co-op isn’t particularly expensive, and it benefits the community. In recent years, electricity from Ecopower was only slightly cheaper than that from conventional providers. It was a model for sustainability, not necessarily for saving significant amounts of money. But ever since electricity prices have skyrocketed as a result of the war in Ukraine and other factors, it has been both. Whereas the large providers have tripled their prices in some cases, the co-op has only made slight increases to cover infrastructure and management costs. The basic price of electricity from their wind turbines, by contrast, only has to cover construction and maintenance costs. It remains constant for 20 years.

Bob D'Haeseleer: "Ecopower was a godsend for our community."

Foto: Mashid Mohadjerin / DER SPIEGEL

Bob D’Haeseleer, who was deputy mayor of Eeklo when Ecopower was set up, closely followed the co-op’s development for nearly 10 years. "Ecopower was a godsend for our community," he says. "It saved us from a number of destructive debates and brought more revenues to the city than a conventional provider." He says the city council vote to participate in the deal with the co-op and expand wind power was unanimous.

More recently, though, the mood in Eeklo has soured somewhat. Farmers are fighting about who is allowed to sell property to wind turbine operators. The district heating network, which was to become part of the co-op and be built with the corporation Veolia, hasn’t come to fruition. And the electricity providers who won the concession for the wind park along with Ecopower aren’t paying into the local fund as promised, says D’Haeseleer. Still, even though Eeklo has run into some problems, the concept of energy co-ops is gaining in popularity elsewhere in Europe.

A plaque next to an Ecopower wind turbine explains the idea behind the co-op.

Foto: Mashid Mohadjerin / DER SPIEGEL

Since 2019, the European Commission has been seeking to expand energy co-ops into an additional pillar of the European electricity supply. And the arguments in Brussels are the same as those in Eeklo: greater local support and participation and a more responsible approach to energy.

Heading Offshore

Ecopower is now setting up a European association of comparable organizations, with their number having multiplied in recent years. In countries like Spain, Britain and Germany, people are joining forces in organizations to produce energy. In addition to pure co-ops, there is also an increasing number of FinCoops, energy companies that customers can invest in to earn dividends.

"Despite the successes, we need to stay realistic," says de Pauw. "We're an additional pillar. A very important one, but for now, we cannot and do not want to take over the entire energy market." Currently co-ops are supplying only 2 percent of households in Belgium. That share, though, is almost certain to rise in coming years, with the participation of co-ops in new projects now legally mandated.

In a model European Union project, 100 needy families are currently receiving co-op shares instead of cost subsidies. Ecopower customers, says de Pauw, are twice as thrifty as other power consumers, so involving needy families in co-ops could facilitate the exchange of tips and ideas for awareness when it comes to energy consumption.

But the biggest upcoming project is elsewhere. Together with 32 other Belgian co-ops, Ecopower is planning to build an offshore wind park off the coast of Belgium. The plan calls for 240 wind turbines producing 15 megawatts of electricity each, eight times more powerful than the facilities in Eeklo. The call for tender is currently underway. The co-ops are to pool 450 million euros in a consortium. Should the plan ever become reality, the park would produce enough electricity for 800,000 households.

For Bernadette Vandercammen, though, other elements of the energy co-op are more important. "It is important to me that the profits stay here in Eeklo," she says.

*This piece is part of the Global Societies series. The project runs for three years and is funded by the Bill & Melinda Gates Foundation.

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Oil is pumped into an oil tanker at the Ust-Luga oil products terminal in the settlement of Ust-luga, April 9, 2014. REUTERS/Alexander Demianchuk/File Photo

Analysis: Western curbs on Russian oil products redraw global shipping map

As a result of the European Union ban on Russian fuel that started on Feb. 5, tankers carrying clean oil products such as gasoline, diesel, jet fuel and naphtha are travelling between 16 and 18 days to bring Russian supplies to Brazil or U.S. cargoes to Europe, according to two shipping sources.

REUTERS by Mohi Narayan and Jonathan Saul, TODAY

NEW DELHI/LONDON, April 6 (Reuters) - Global fuel suppliers are turning to longer and costlier routes that produce more carbon emissions to move their diesel and other products as Western restrictions on Russian cargoes have reshuffled global energy shipping patterns.

As a result of the European Union ban on Russian fuel that started on Feb. 5, tankers carrying clean oil products such as gasoline, diesel, jet fuel and naphtha are travelling between 16 and 18 days to bring Russian supplies to Brazil or U.S. cargoes to Europe, according to two shipping sources.

That is up from the four to six days a ship used to travel from Russia to Europe, said the two sources, a broker at a major shipbroking firm and a charterer involved in the Russian trade of naphtha, which is used to make plastics and petrochemicals.

The ban comes on top of a halt late last year on Russian crude sales into the bloc as well as Western price caps.

Since the start of the ban, the Clean Tanker Index published by the Baltic Exchange, which measures average freight rates for shipping fuels like gasoline and diesel on some of the most common global routes, has more than doubled.

The redrawing of the shipping map underscores the knock-on effects of Western efforts to punish Russia over its invasion of Ukraine last year, adding to fuel supply insecurity and pushing up prices even as policymakers worry about inflation and the risk of a global economic downturn.

"Not only are voyages much longer, but vessel behaviour has also changed, keeping vessels from operating in other CPP (clean petroleum product) markets," Dylan Simpson, freight analyst at oil analytics firm Vortexa, wrote in a March 31 note.

Russian cargoes of fuel are heading to far-flung buyers in Brazil, Turkey, Nigeria, and Morocco as Moscow compensates for the lost European business, while Europe is importing more fuels such as diesel from Asia and the Middle East, according to shipping data from Refinitiv and Kpler.

Asian cargoes, in turn, are being displaced by Russian fuels in Africa and the eastern Mediterranean, and redirected to the blending hub of Singapore for temporary storage, two northeast Asian refinery sources said.

Naphtha trade route before Russia-Ukraine crisis

European importers whose naphtha cargoes travelled from Russian ports to Antwerp in four days before Russia's invasion of Ukraine now must wait 18 days for alternative supplies from the United States, the shipbroking source said.

Naphtha trade route before Russia-Ukraine crisis

The U.S. is also emerging as a top supplier of heavy naphtha to Europe amid the EU ban, while the Group of Seven Nations, EU and Australia have capped Russian naphtha prices at $45 a barrel and diesel and gasoline at $100 a barrel for trades that use Western ships and insurance. Meanwhile, Brazil, traditionally a U.S. naphtha importer, is boosting purchases from Russia at more attractive prices.

However, the journey from Russia to Brazil can take 18 days or longer and, at up to $7 million per voyage, the costs are nearly double that of a U.S. shipment, the ship charterer involved in the Russian market said.

Brazil received around 240,000 tonnes of Russian diesel and gasoil in the first three weeks of March, accounting for a quarter of Brazilian imports, up from Russia's 12% share in February and less than 1% last year, said Benedict George, head of diesel pricing with energy and commodity data provider Argus.

"Until February, Europe had remained Russia's primary market for refined product exports; however, in the space of a month, a major pivot has been observed," tanker broker E A Gibson said in a recent report.

Naphtha trade routes after Russia-Ukraine crisis unfolded

LONGER DISTANCES, MORE POLLUTION

Measured in terms of cargo miles, which multiplies the cargo quantity in metric tonnes by the distance travelled in nautical miles, the amount of Russian oil product shipments to Brazil in March rose to 3.07 billion metric tonne-nautical miles (MT-NM) from 941 million MT-NM in November, according to data from valuation company VesselsValue. Shipments from Russia to Nigeria rose to 1.88 billion MT-NM in March from zero in November, VesselsValue estimates showed.

Clean product cargoes to Saudi Arabia in March jumped to 1.75 billion MT-NM from 31 million MT-NM in November, while shipments to the United Arab Emirates were 4.43 billion MT-NM in March, up from 2.85 billion MT-NM in November, the data showed.

Also in March, Russian clean products shipped to Togo reached 973 million MT-NM, up from zero in November. In volume terms, Brazilian imports of oil products from Russia were about 284,000 metric tonnes in February, up from 73,300 tonnes in September, VesselsValue data showed. Conversely, Russian exports to the Netherlands dropped to 238,200 tonnes in February from 1.15 million tonnes in September.

Those longer distances are being done at higher costs for Russian products than for typical shipments from Europe.

According to market estimates, freight rates for the UK/European continent to West Africa are quoted at $55.77 per tonne for a product tanker with a standard 37,000-tonne load. This compares with an indicative rate of $174.24 per tonne for shipments from Russia's Baltic ports to Nigeria, $103.84 for Morocco and around $150 to Egypt.

With ships travelling further, that is also likely translating into greater emissions from smokestacks.

Based on pre-pandemic data, a 10% increase in mileage for all tankers travelling to and from the European economic area would increase their emissions by around 1.5 million tonnes of carbon dioxide, equal to the emissions of around 750,000 cars per year in Europe, said Valentin Simon, data analyst with the Transport & Environment think tank in Brussels.

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Image: Germán & Co

Cooperate with objective and ethical thinking…

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Putin’s Energy Offensive Has Failed (NYT)

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HAPPY EASTER…

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Source: NYT, editing by Germán & Co

It is well known that the Kremlin's original plan for the military invasion of Ukraine was a blitzkrieg designed to encircle Kyiv and other essential cities quickly. What took place?

Germán & Co

NYT by Paul Krugman, April 6, 2023

Opinion Columnist…

Vladimir Putin invaded Ukraine on Feb. 24, 2022. Since then, Russia has launched four great offensives. Three were military; the fourth was economic. And while you don’t hear much about that last offensive, its failure offers some very important lessons.

Everyone knows about the first military offensive: the attempted blitzkrieg that was supposed to seize Kyiv and other major Ukrainian cities in a matter of days. Many observers — especially, but not only, Western right-wingers who fetishized the perceived prowess of Russia’s un-woke military — expected this blitzkrieg to succeed. Instead, it turned into an epic defeat: Stalled by a dogged Ukrainian defense, the Russians eventually retreated after suffering huge losses.

The second offensive was more limited in scope: a spring attack on eastern Ukraine. Here again, many observers expected a decisive Russian victory, perhaps the encirclement of much of Ukraine’s army. And the Russians did make some advances thanks to overwhelming artillery superiority. But this offensive stalled once Ukraine acquired Western precision weapons, especially the now famous HIMARS, which wreaked havoc on Russian rear areas. And Ukraine was eventually able to launch counterattacks that regained significant ground, notably retaking Kherson.

The third Russian offensive, a winter attack in the Donbas region, is still underway, and it’s possible that Ukraine may choose to pull out of the embattled city of Bakhmut, a place of little strategic importance that has nonetheless become the scene of incredibly bloody fighting. But most observers I read view the enterprise as a whole as yet another strategic failure.

In some ways, though, Russia’s most important defeat has come not on the battlefield but on the economic front. I said that Russia has launched four great offensives; the fourth was the attempt to blackmail European democracies into dropping their support for Ukraine by cutting off their supplies of natural gas.

There were reasons to be concerned about this attempt to weaponize energy supplies. While the Russian invasion of Ukraine initially disrupted markets for several commodities — Russia is a major oil producer, and both Russia and Ukraine were major agricultural exporters before the war — natural gas seemed like an especially serious pressure point. Why? Because it isn’t really traded on a global market. The cheapest way to ship gas is via pipelines, and it wasn’t obvious how Europe would replace Russian gas if the supply were cut off.

So many people, myself included, worried about the effects of a de facto Russian gas embargo. Would it cause a European recession? Would hard times in Europe undermine willingness to keep aiding Ukraine?

Well, the big story — a story that hasn’t received much play in the news media, because it’s hard to report on things that didn’t happen — is that Europe has weathered the loss of Russian supplies remarkably well. Euro area unemployment hasn’t gone up at all; inflation did surge, but European governments have managed, through a combination of price controls and financial aid, to limit (but not eliminate) the amount of personal hardship created by high gas prices.

And Europe has managed to keep functioning despite the cutoff of most Russian gas. Partly this reflects a turn to other sources of gas, including liquefied natural gas shipped from the United States; partly it reflects conservation efforts that have reduced demand. Some of it reflects a temporary return to coal-fired electricity generation; much of it reflects the fact that Europe already gets a large share of its energy from renewables.

And yes, it was an unusually warm winter, which also helped. But the bottom line, as a report from the European Council on Foreign Relations puts it, is that “Moscow failed in its effort to blackmail E.U. member states through withholding gas.” Indeed, Europe has stepped up its military aid to Ukraine, notably by sending main battle tanks that may help the coming Ukrainian counteroffensive.

So what can we learn from the failure of Russia’s energy offensive?

First, Russia looks more than ever like a Potemkin superpower, with little behind its impressive facade. Its much vaunted military is far less effective than advertised; now its role as an energy supplier is proving much harder to weaponize than many imagined.

Second, democracies are showing, as they have many times in the past, that they are much tougher, much harder to intimidate, than they look.

Finally, modern economies are far more flexible, far more able to cope with change, than some vested interests would have us believe.

For as long as I can remember, fossil-fuel lobbyists and their political supporters have insisted that any attempt to reduce greenhouse gas emissions would be disastrous for jobs and economic growth. But what we’re seeing now is Europe making an energy transition under the worst possible circumstances — sudden, unexpected and drastic — and handling it pretty well. This suggests that a gradual, planned green energy transition would be far easier than pessimists imagine.

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Cooperate with objective and ethical thinking…

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News round-up, April, 6, 2023

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Most read…

America’s First Indicted Ex-President Is Very Sorry—for Himself

Notes on Donald Trump’s day in court.

THE NEW YORKER By Susan B. Glasser, April 5, 2023

India's power output grows at fastest pace in 33 years, fuelled by coal

Intense summer heatwaves, a colder-than-normal winter in northern India, and an economic rebound caused a rise in electricity consumption, India is forced to increase output from coal plants to prevent power outages.

REUTERS BY MATTHEW CHYE AND CARMAN CHEW

Analysis: A Surprise Accusation Bolsters a Risky Case Against Trump

The unsealed case against Donald J. Trump accuses him of falsifying records in part to lay the groundwork for planned lies to tax authorities.

NYT By Charlie Savage, Published April 4, 2023

Exclusive: German insurers renew cover for blast-damaged Nord Stream gas link

“All indicate the pipeline's potential to resume operations following an alleged sabotage attack…

According to five sources with knowledge of the situation, German insurers Allianz and Munich Re have extended their coverage for the damaged Nord Stream 1 gas pipeline, which is under the control of Russia.

REUTERS BY JONATHAN SAUL,  CAROLYN COHN,  CHRISTOPH STEITZ AND JOHN O'DONNELL, EDITING BY GERMÁN & CO

China sends carrier group off Taiwan coast ahead of US meeting

China staged war games around Taiwan last August following the visit to Taipei of then-House Speaker Nancy Pelosi.

Reuters, Today

China accuses U.S. of using Taiwan as ‘ATM for American arms sellers’

Taiwan is allegedly being utilized by the United States as a "chess piece" in a containment strategy and as a "ATM for American armaments vendors," according to China Central Television.

TWP By Christian Shepherd and Vic Chiang, TODAY

Energy firms bet big on German port as clean energy hub

The company stated in an email response that "feasibility studies are presently being developed for both projects, which will provide further insights into their practicability."

REUTERS By Vera Eckert, TODAY, EDITING BY GERMán & CO

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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Today's events

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Today's events 〰️

Donald Trump spoke to a crowd of fans at Mar-a-Lago shortly after his arraignment, in Manhattan, on numerous felony charges.Photograph by Todd Heisler / NYT / Redux

America’s First Indicted Ex-President Is Very Sorry—for Himself

Notes on Donald Trump’s day in court.

THE NEW YORKER By Susan B. Glasser, April 5, 2023

By the time Donald Trump marched out from behind a phalanx of American flags and emerged into the gilded Mar-a-Lago ballroom to speak to cheering supporters on Tuesday night, America’s first indicted ex-President hardly seemed chastened by his historic day as a defendant in a Manhattan courtroom. He told the crowd that prosecutors investigating him were “racist” or “lunatic.” He criticized the judge in his case. He criticized the judge’s daughter. He lied about matters large and small, and expounded at length on everything from “Russia, Russia, Russia” to “Hunter Biden’s laptop from Hell.” He even attacked the National Archives and Records Administration as a “radical-left troublemaking organization.”

Indicted and Arraigned Trump, in other words, turned out to be just like his most recent previous incarnation, Impeached and Defeated Trump: a rambling, unrepentant grievance machine so beloved by his superfans in the Republican Party that he remains the front-runner for the G.O.P. nomination in 2024, even after everything.

Since last Thursday, when the Manhattan District Attorney, Alvin Bragg, secured Trump’s historic indictment, an unrealistic sense of expectation had built up around Tuesday’s arraignment of the former President, as if it were going to be, in and of itself, Trump’s long-awaited day of reckoning. But of course it was not. The charges, when finally unveiled, on Tuesday afternoon, were thirty-four felony counts stemming from alleged efforts by Trump to suppress sordid stories before the 2016 election with hush-money payments. But no major new evidence or surprise witnesses were revealed, and the next court appearance in the case won’t take place until December. Many legal analysts, including even “hard-core Democrats,” as Trump gleefully put it during his nighttime Mar-a-Lago speech, were soon casting doubt on Bragg’s decision to pursue a case that other prosecutors had declined to bring. If this was a reckoning, it didn’t seem all that much like one for an ex-President who, little more than two years ago, was urging a violent mob of his supporters to march on the U.S. Capitol and stop Congress from certifying his 2020 election defeat.

What it seemed like, instead, was the kind of televised spectacle that Trump both craves and excels at creating. The television networks remain more than willing to oblige, broadcasting each step in Trump’s return to New York to surrender to the authorities with a tone of breathless incrementalism that made for hours of exhausting but largely uneventful coverage: Trump has entered the building! Trump has left the building! Trump, Trump, Trump! What a long day of minutiae. I watched his motorcade leave Trump Tower, just after 1 p.m. Minutes later, I watched live as his motorcade arrived at the Manhattan Criminal Courthouse. As far as I could tell, no breaking news occurred in the course of the short trip downtown from Trump Tower.

The endless vamping by cable-news anchors was tedious—think rain-delay-at-the-World-Series-level tiresome—but at least it wasn’t as hard to take as the obvious trolling of the public by Trump and his team. The former President, according to a “source familiar” with Trump’s state of mind who was quoted on Twitter by a CBS News reporter, was said to be “resolute, determined, and fighting for all Americans against injustice, persecution, and weaponization.” Yeah, right. It’s not yet clear whether crying persecution by the prosecution will be good for Trump’s legal fortunes, but it is already abundantly clear that the TV drama has been good for his political coffers: Trump’s campaign, after bragging that he’s already raised more than seven million dollars as a result of Bragg’s indictment, began sending out fund-raising e-mails using his “NOT GUILTY” plea even before he had entered it. Hours before Trump had retreated back to Florida, you could get a T-shirt emblazoned with a fake mug shot of the former President for a contribution of a mere forty-seven dollars to the campaign.

For a historic day, it was notably unrevelatory. The big surprise, in fact, was that there was no surprise. Before Bragg’s sealed indictment was revealed, it seemed that the case would be centered on the years-old allegations involving hush-money payments made to the former porn performer known as Stormy Daniels, with Trump’s disgruntled former fixer Michael Cohen and Daniels as key witnesses. And that is what it turned out to be. Reading the official “statement of facts” that Bragg’s prosecutors filed along with the indictment was like returning to an old book that you’d read with great interest many years ago, but whose particulars you’d long since forgotten. The tawdry, embarrassing story behind the “Catch and Kill Scheme to Suppress Negative Information” in the 2016 election, as the prosecutors’ memo described it, was not new. Much of this has been known since 2018, when the Wall Street Journal published the first scoop about the hundred-and-thirty-thousand-dollar payoff to Daniels; many other reports followed, including great work by my colleague Ronan Farrow, who extensively reported on how the National Enquirer tabloid worked its “catch and kill” tactics on Trump’s behalf. Cohen, who handled payoffs for Trump before renouncing him, eventually even testified about the ex-President’s “dirty deeds” in a public congressional hearing, in early 2019. The flashy evidence produced that day included a photocopy of a check from Donald J. Trump’s personal bank account that, Cohen said, had been used to reimburse him for buying Daniels’s silence about her assignations with Trump.

It felt odd to read about all of this once again, in 2023. The Stormy Daniels affair, after all, was so many Trump scandals ago. Before impeachment No. 1 and Trump’s refusal to concede the 2020 election. Before January 6th and impeachment No. 2. In contrast, the fact that Trump slept with a porn star and paid her off to keep quiet about it before an election seems like the kind of old-fashioned political contretemps that might be bad for a politician’s image—and marriage—and even quite possibly illegal, but which hardly threatens to shake the foundations of American democracy.

In a press conference on Tuesday, shown on CNN with a split screen as “Trump Force One” taxied for takeoff at LaGuardia Airport, Alvin Bragg piously spoke of his “solemn responsibility to insure that everyone stands equal before the law.” Bragg may yet mount a strong legal case for Trump’s culpability; it’s impossible to tell from the bare-bones listing of charges released yesterday. But one thing is already apparent from Tuesday’s proceedings: a courtroom resolution rendering judgment on the former President’s guilt or innocence will be many months, if not years, in the future.

In the meantime, Bragg’s filing of the charges has had an electrifying effect on Trump’s reëlection campaign, offering the ex-President a new grievance to fuel his comeback bid at just the moment when he needs something to galvanize his effort and distract the Republican Party from the growing concerns about his losing record. The short-term boon is real, if possibly quite temporary: since news of the case broke, polls have shown Trump with his biggest leads in the G.O.P. primary so far, and even Trump-skeptical Republicans, such as Mitt Romney, found themselves leaping to his defense against what they insist is a politically motivated prosecution.

None of this may matter several months from now. Trump faces far more serious potential prosecutions in cases involving his efforts to overturn the 2020 election and his possession at Mar-a-Lago of classified documents from his Presidency. If charges are forthcoming in any of those investigations, Manhattan indictment No. 71543-23 may end up as little more than a footnote to history, the first but not the last time that a prosecutor dared to call a former President a crook in a court of law. But what a footnote it will be. ♦

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Image: A view of an under-construction coal jetty of the planned 1,320-megawatt power plant on the coastline near India's southern tip, in Udangudi, Tamil Nadu, India, October 13, 2021. Picture taken October 13, 2021. REUTERS/Sudarshan Varadhan/Editing by Germán & Co

India's power output grows at fastest pace in 33 years, fuelled by coal

Intense summer heatwaves, a colder-than-normal winter in northern India, and an economic rebound caused a rise in electricity consumption, India is forced to increase output from coal plants to prevent power outages.

REUTERS By Matthew Chye and Carman Chew

SINGAPORE, April 5 (Reuters) - India's power generation grew at the fastest pace in over three decades in the just-ended fiscal year, a Reuters analysis of government data showed, fuelling a sharp surge in emissions as output from both coal-fired and renewable plants hit records.

Intense summer heatwaves, a colder-than-usual winter in northern India and an economic recovery led to a jump in electricity demand, forcing India to crank up output from coal plants and solar farms as it scrambled to avoid power cuts.

Power generation rose 11.5% to 1,591.11 billion kilowatt-hours (kWh), or units, in the fiscal year ended March 2023, an analysis of daily load data from regulator Grid-India showed, the sharpest increase since year ended March 1990.

Output from plants running on fossil fuels rose 11.2%, the quickest growth in over three decades, thanks to a 12.4% surge in electricity production from coal, the analysis showed, offsetting a 28.7% decline in generation from cleaner gas-fired plants as a global spike in LNG prices deterred usage.

In the new fiscal year that began April 1, Indian power plants are expected to burn about 8% more coal.

India fossil and non-fossil power output India fossil and non-fossil power output

The rapid acceleration in India's coal-fired output to address a spike in power demand underscores challenges faced by the world's third largest greenhouse gas-emitter in weaning its economy off carbon, as it attempts to ensure energy security to around 1.4 billion Indians.

Total power supplied during the last fiscal year was 1509.15 billion kWh, 8.4% higher than a year earlier but still 6.69 billion units short of demand, the widest deficit in six years.

Electricity generated from coal rose to 1,162.91 billion kWh, the data showed, with its share in overall output rising to 73.1% - the highest level since the year ending March 2019.

India's Central Electricity authority estimates that 1 million kWh of power produced from coal generates 975 tonnes of carbon dioxide, while the same amount of power generated from gas produces 475 tonnes. A plant fired by lignite, known as brown coal, emits 1,280 tonnes to produce equivalent power.

RENEWABLES PUSH

Increased fossil fuel burning for power in the world's fifth largest economy drove up CO2 emissions during the year by nearly a sixth, to 1.15 billion tonnes, Reuters calculations based on government data and emissions estimates show.

That is 3.4% of the International Energy Agency's estimate of annual global emissions of 33.8 billion tonnes in 2022.

Reuters Graphics

Many major countries boosted coal use in the twelve months due to Russia's invasion of Ukraine, but the rise was steepest in India, data from energy think-tank Ember shows.

The government has defended India's high coal use citing lower per capita emissions compared with richer nations and rising renewable energy output.

Reuters Graphics

After missing a target to install 175 GW in renewable energy capacity by 2022, India is trying to boost non-fossil capacity - solar and wind energy, nuclear and hydro power, and bio-power - to 500 GW by 2030.

India's solar capacity additions have risen by about a fifth during the just-ended fiscal year, boosting its renewable energy output by a record 33.3 billion units, or 21.7%, to 187.1 billion units.

The green energy output helped prevent as much as 32.5 million tonnes of CO2 emissions from power that would otherwise likely have been produced with coal, calculations show.

The share of renewables in power generation, excluding big hydro and nuclear power, rose to 11.8% in 2022/23, compared with 10.8% the previous year, the data showed, driven mainly by a 35% increase in solar output.

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Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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Image: By Germán & Co

Analysis: A Surprise Accusation Bolsters a Risky Case Against Trump

The unsealed case against Donald J. Trump accuses him of falsifying records in part to lay the groundwork for planned lies to tax authorities.

NYT By Charlie Savage, Published April 4, 2023

WASHINGTON — The unsealed indictment against former President Donald J. Trump on Tuesday laid out an unexpected accusation that bolstered what many legal experts have described as an otherwise risky and novel case: Prosecutors claim he falsified business records in part for a plan to deceive state tax authorities.

For weeks, observers have wondered about the exact charges the Manhattan district attorney, Alvin L. Bragg, would bring. Accusing Mr. Trump of bookkeeping fraud to conceal campaign finance violations, many believed, could raise significant legal challenges. That accusation turned out to be a major part of Mr. Bragg’s theory — but not all of it.

“Pundits have been speculating that Trump would be charged with lying about the hush money payments to illegally affect an election, and that theory rests on controversial legal issues and could be hard to prove,” said Rebecca Roiphe, a New York Law School professor and former state prosecutor.

“It turns out the indictment also includes a claim that Trump falsified records to commit a state tax crime,” she continued. “That’s a much simpler charge that avoids the potential pitfalls.”

The indictment listed 34 counts of bookkeeping fraud related to Mr. Trump’s reimbursement in 2017 to Michael D. Cohen, his former lawyer and fixer. Just before the 2016 election, Mr. Cohen had made a $130,000 hush money payment to the pornographic film actress Stormy Daniels, who has said she and Mr. Trump had an extramarital affair.

Various business records concerning those payments to Mr. Cohen, an accompanying statement of facts said, falsely characterized them as being for legal services performed in 2017. For each such record, the grand jury charged Mr. Trump with a felony bookkeeping fraud under Article 175 of the New York Penal Law. A conviction on that charge carries a sentence of up to four years.

But bookkeeping fraud is normally a misdemeanor. For it to rise to a felony, prosecutors must show that a defendant intended to commit, aid or conceal a second crime — raising the question of what other crime Mr. Bragg would contend is involved.

Bragg Details Charges Against Trump

Alvin L. Bragg, the Manhattan district attorney, accused Donald J. Trump of falsifying business records connected to a hush money payment to a porn star. Mr. Trump pleaded not guilty to all 34 felony counts.CreditCredit...Andrew Seng for The New York Times

On Tuesday, Mr. Bragg suggested that prosecutors are putting forward multiple theories for the second crime, potentially giving judges and jurors alternative routes to finding that bookkeeping fraud was a felony.

As was widely predicted, he is pointing toward alleged violations of both federal and state elections laws. By doing so, he is in part plunging forward with a premise that has given pause to even some of Mr. Trump’s toughest critics.

As a matter of substance, it can be ambiguous whether paying off a mistress was a campaign expenditure or a personal one.

As a matter of legal process, to cite federal law raises the untested question of whether a state prosecutor can invoke a federal crime even though he lacks jurisdiction to charge that crime himself. Still, Article 175 does not say that the second intended crime must be a state-law offense.

To cite state law raises the question of why New York election rules would apply to a federal presidential election, which is governed by federal laws that generally supersede state laws.

At a news conference, Mr. Bragg pointed to both state and federal election law. He cited a New York state election law that makes it a misdemeanor to conspire to promote a candidacy by unlawful means, but did not explain why that law would apply to a presidential election. He also described a federal cap on campaign contributions without indicating why he had the authority to invoke a crime he could not himself charge.

But Mr. Bragg also introduced yet another theory, accusing Mr. Trump of falsifying business records as a way to back up planned false claims to tax authorities.

“The participants also took steps that mischaracterized, for tax purposes, the true nature of the payments made in furtherance of the scheme,” Mr. Bragg wrote in the statement of facts that accompanied the indictment.

How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.

The statement of facts also described how Mr. Trump paid Mr. Cohen more than Mr. Cohen had paid Ms. Daniels to cover income taxes Mr. Cohen would incur. Mr. Bragg further emphasized that point in his news conference.

His wording was ambiguous in places. At one point, he seemed to suggest that a planned false statement to New York tax authorities was just an example of the ways by which Mr. Trump and Mr. Cohen purportedly violated the state law against conspiring to promote a candidate through unlawful means.

But it is also a crime to submit false information to the state government. At another point Mr. Bragg seemed to put forward an alleged plan to lie to tax authorities — an intention to say Mr. Cohen had earned income for “legal services performed in 2017” to launder what was in reality a repayment — as a stand-alone offense.

In addition to covering up campaign-finance crimes committed in 2016, Mr. Bragg said: “To get Michael Cohen his money back, they planned one last false statement. In order to complete the scheme, they planned to mischaracterize the repayments to Mr. Cohen as income to the New York state tax authorities.”

In the courtroom, the prosecutor Christopher Conroy accused Mr. Trump of causing the Trump Organization to create a series of false business records, adding that he “even mischaracterized for tax purposes the true nature of the payment.”

That prosecutors cited the possibility of planned false statements on tax filings struck some legal specialists as particularly significant, given the speculation over how bookkeeping fraud charges would rise to felonies.

“The reference to false tax filings may save the case from legal challenges that may arise if the felony charges are predicated only on federal and state election laws,” said Ryan Goodman, a law professor at New York University.

Indeed, a range of election-law specialists on Tuesday expressed fresh doubt about whether Mr. Bragg could successfully use campaign finance laws alone to elevate the bookkeeping fraud charges to felonies. Among those skeptics were Richard L. Hasen, a University of California at Los Angeles legal scholar, and Benjamin L. Ginsberg, a longtime election lawyer for the Republican Party and a critic of Mr. Trump.

Even with the addition of the claim about intended false statements to tax authorities, Robert Kelner, the chairman of the election and political law practice group at the firm Covington & Burling, remained uncertain that it would show an intent to commit another crime.

“The local prosecutors seem to be relying in part on a bank shot exploiting Michael Cohen’s guilty plea in a federal campaign finance case,” he said. “But there were serious questions about the legal basis for the case against Cohen, making that a dubious foundation for a case against a former president. Prosecutors also allude vaguely to ‘steps’ taken to violate tax laws, but they say little to establish what that might mean.”

Mr. Trump arriving at the Manhattan courthouse on Tuesday afternoon for his arraignment.Credit...Dave Sanders for The New York Times

Still, Mr. Bragg emphasized that at this stage, prosecutors did not need to go into detail about what other crimes they believe Mr. Trump intended to commit.

But he will eventually have to show his hand. Barry Kamins, a retired New York Supreme Court judge who is now in private practice, said the next phase of the case would require prosecutors to divulge more.

“What is going to happen now is that the prosecutors are obligated to disclose things in discovery,” he said. “Defense counsel will learn in discovery the nature of the elections laws violations and the tax issues that were raised by Mr. Bragg in his statement of facts.”

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Image: The landfall facilities of the 'Nord Stream 1' gas pipeline are pictured in Lubmin, Germany, March 8, 2022. Picture taken with a drone. REUTERS/Hannibal Hanschke/File Photo/ Editing by Germán & co

Exclusive: German insurers renew cover for blast-damaged Nord Stream gas link

“All indicate the pipeline's potential to resume operations following an alleged sabotage attack…

According to five sources with knowledge of the situation, German insurers Allianz and Munich Re have extended their coverage for the damaged Nord Stream 1 gas pipeline, which is under the control of Russia.

Reuters by Jonathan Saul,  Carolyn Cohn,  Christoph Steitz and John O'Donnell, Editing by Germán & Co

LONDON/FRANKFURT, April 4 (Reuters) - German insurers Allianz and Munich Re have renewed cover for the damaged Russia-controlled Nord Stream 1 gas pipeline, five sources with knowledge of the matter said, indicating that its revival has not been ruled out after an alleged sabotage attack.

Insurance by two of Germany's biggest companies is critical for any long-term future of the pipeline, which was the main route for Russian gas to Europe for a decade before the blast last September.

The insurance stands in contrast to Germany's public stance of severing ties with Moscow, but one of the five sources said the German government had not opposed the cover. Most Western investors have written off their stakes in the pipeline.

Munich Re (MUVGn.DE), Allianz (ALVG.DE) and Germany's chancellery declined to comment, while the economy ministry said insurance was not part of the support the government had in the past provided for the pipeline.

Russia has a 51% stake in Nord Stream 1 through a subsidiary of state-owned energy group Gazprom (GAZP.MM).

Some of Nord Stream's German shareholders favour at least preserving the damaged pipeline in case relations with Moscow improve, two people familiar with the matter said separately.

One of the people said that Berlin tolerated such an approach to the infrastructure, even though it has said that energy ties with Russia are severed.

All of the insurance industry and trade sources declined to be named because of the sensitivity of the issue.

The insurance policy covers damage to the pipeline and business interruption issues, one of the sources said.

Having insurance would also facilitate any repair work needed to resume gas supplies under the Baltic Sea to Europe.

While the import of Russian crude oil and oil products is banned under European Union (EU) sanctions, Russian gas imports are allowed. The West, however, is trying to find alternatives.

'OLD LOGIC'

Europe's imports of Russian gas have fallen from around 40% of EU gas supply to less than 10% since Russia's invasion of Ukraine began in February last year.

The economy ministry spokesperson said the aim was to stop using gas from Russia and elsewhere.

"Russia showed everyone last year that it is not a reliable partner," said the spokesperson. "We need more renewable energies and must become independent of fossil imports."

The stance represents a major shift from Germany's previous whole-hearted support for Russian gas, in defiance of warnings from other EU countries and the United States.

Some German officials, politicians and others familiar with German government thinking told Reuters a minority still hoped Nord Stream 1 can be revived, even if few saw any prospect of that happening in the near future.

Michael Kretschmer, conservative leader of the eastern Saxony region, told the Berliner Zeitung newspaper in January the pipeline should be repaired and Germany should retain the option of importing through it again.

Veronika Grimm, one of the government's chief economic experts who advises the chancellery, said Germany's previous policy of relying on cheap Russian gas to support its economy and build political ties was no longer viable.

"There are still some who follow an old logic with regards to rebuilding energy ties to Russia after the (Ukraine) war," Grimm told Reuters.

The economy ministry spokesperson said the Federal government in 2010 supported the construction of Nord Stream 1 with export credit guarantees and a separate financial credit guarantee, adding that there was no further federal support.

In September 2022, several unexplained underwater explosions ruptured the Nord Stream 1 and newly-built Nord Stream 2 pipelines, each more than 1,200-km-long, that link Russia and Germany across the Baltic Sea.

Last month, sources told Reuters Nord Stream's undersea gas pipelines were to be sealed and there were no immediate plans to repair or reactivate them.

Other sources described this process as keeping the pipeline dormant.

OTHER INSURERS

Prior to Russia's invasion of Ukraine last February, Nord Stream 1 was insured by multiple European underwriters including some from the Lloyd's of London market, sources told Reuters.

Industry sources with knowledge of the situation said some Lloyd's underwriters were believed to have cut insurance arrangements that came up for renewal in late 2022 in part because of UK sanctions imposed on an entity connected to Gazprom.

Three of the Lloyd’s syndicates previously involved in insurance cover were unlikely to have renewed their exposure, three of the insurance industry sources said.

However, a fourth source said its underwriting syndicate from the Lloyd's market continued to provide insurance for the project. They all declined to provide further details.

Lloyd's of London declined to comment.

Customers often renew insurance contracts when their property is damaged and this is taken into account when agreeing the contract terms, industry sources said.

Nord Stream 1's policy was a two-year contract which renewed after the first year, two of the sources said. However, policy-holders and insurers can often break such a contract after the first year, depending on the terms, two insurance industry sources said.

It was unclear if insurer Zurich was part of the new arrangemen

Zurich (ZURN.S), which one of the five sources said was among the pipeline's insurers when the damage occurred, declined to comment.

Gazprom is subject to sanctions by Britain, Canada and the United States, as well as some EU restrictions.

Gazprom and Swiss-based Nord Stream AG did not immediately respond to requests for comment.

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Image: Editing by Germán & Co

China sends carrier group off Taiwan coast ahead of US meeting

China staged war games around Taiwan last August following the visit to Taipei of then-House Speaker Nancy Pelosi.

Reuters, Today

Chinese and Taiwanese flags are seen in this illustration, August 6, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

TAIPEI, April 5 (Reuters) - Taiwan's defence ministry said on Wednesday a Chinese aircraft carrier group was in the waters off the island's southeast coast, the same day President Tsai Ing-wen was due to meet U.S. House Speaker Kevin McCarthy in Los Angeles.

China, which claims democratically-governed Taiwan as its own territory, has warned of unspecified retaliation if the meeting goes ahead.

China staged war games around Taiwan last August following the visit to Taipei of then-House Speaker Nancy Pelosi.

Taiwan's defence ministry said the Chinese ships, which were led by the carrier the Shandong, passed through the Bashi Channel which separates Taiwan from the Philippines and then into waters to Taiwan's southeast.

It said the ships were going for training in the Western Pacific, and that Taiwanese naval and air forces and land-based radar systems closely monitored them.

"The Chinese communists continue to send aircraft and ships to encroach in the seas and airspace around Taiwan," the ministry said.

"In addition to posing a substantial threat to our national security, it also destroys the status quo of regional security and stability. Such actions are by no means the acts of a responsible modern country."

The ministry provided two pictures - one a grainy black and white image of the carrier taken from the air, and the other of a Taiwanese sailor looking at the Shandong and another unidentified ship in the distance.

China has yet to comment on the carrier group, whose appearance also coincided with the arrival in Beijing of French President Emmanuel Macron.

China has sailed its aircraft carriers near to Taiwan before and at similarly sensitive times.

In March of last year, the Shandong sailed through the Taiwan Strait, just hours before the Chinese and U.S. presidents were due to talk.

Taiwan's defence ministry, in its statement about the Shandong's latest mission near the island, said that "external pressure will not hinder our determination to go into the world".

Taiwan's military will continue to closely monitor the situation in the Taiwan Strait, and uphold the principles of "not escalating conflicts, not causing disputes" to deal with any challenges.

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China accuses U.S. of using Taiwan as ‘ATM for American arms sellers’

Taiwan is allegedly being utilized by the United States as a "chess piece" in a containment strategy and as a "ATM for American armaments vendors," according to China Central Television.

TWP By Christian Shepherd and Vic Chiang, TODAY

Beijing accused the United States and Taiwan of “serious wrongdoing” after Taiwanese President Tsai Ing-wen met with Speaker Kevin McCarthy (R-Calif.) and a bipartisan group of House lawmakers Wednesday, a historic gathering at which both sides reaffirmed their commitment to preserving freedom amid escalating tensions with China.

Various Chinese ministries released coordinated statements condemning the meeting on Thursday morning local time. The Ministry of Foreign Affairs said that the United States had ignored “repeated warnings” against allowing Tsai to visit and promised “resolute and forceful measures to defend national sovereignty and territorial integrity in response to the serious wrongdoing of U.S.-Taiwan colluding together.”

State broadcaster China Central Television accused the United States of using Taiwan as a “chess piece” in a strategy of containment and as an “ATM for American arms sellers.”

The Chinese Communist Party claims the self-governing island democracy of 23 million as part of its territory and regularly threatens to annex Taiwan by force if it formally declares independence.

As of Thursday morning, China had yet to announce large-scale military exercises similar to the display of force it put on after then-House Speaker Nancy Pelosi visited Taipei in August. That earlier meeting on Taiwanese soil was the first time such a senior American politician had come to Taiwan in almost 30 years. China responded by sending warships, jets and missiles to surround Taiwan’s main island in drills that mimicked a partial blockade.

Taiwan’s president meets with McCarthy after warnings from China

Taiwan’s Defense Ministry said that it monitored the passage of China’s Shandong aircraft carrier as it sailed through the Bashi Channel between Taiwan and the Philippines on Wednesday. It came within 200 nautical miles of Taiwan en route to a training exercise in the West Pacific.

“For China, there is no need for a large response,” said Lin Ying-yu, a professor of international relations at Tamkang University in Taiwan, noting that April is peak time for the Chinese military to conduct training exercises. “They are reopening now [after covid], the Japanese foreign minister just visited and now so has the French president. What would other countries see if they launched large-scale military drills at this point?”

A three-day special operation from the Chinese coast guard this week also prompted Taiwan’s Ocean Affairs Council to warn China against infringing on its legal authority, asking Taiwanese vessels to report any attempts by China to board or carry out inspections.

In recent months, China has increased efforts to assert its claimed sovereignty over the Taiwan Strait. Taiwanese scholars worry that beefed-up coast guard patrols are part of this “gray zone” tactic as Beijing gradually alters the delicate balance in the critical waterway.

Taiwanese President Tsai Ing-wen and House Speaker Kevin McCarthy (R-Calif.) deliver remarks to the press after attending a bipartisan leadership meeting at the Ronald Reagan Presidential Library in Simi Valley, Calif., on Wednesday. (Jabin Botsford/The Washington Post)

Tsai’s visit marked the culmination of an eight-year effort to raise Taiwan’s international profile and strengthen relationships with countries that share democratic values with Taipei, even if they do not have formal diplomatic ties. Central to that strategy has been normalizing high-level exchanges with the United States.

Tsai’s meeting with McCarthy at the Ronald Reagan Presidential Library in Simi Valley, Calif., was the first time that Taiwan’s president met with a political leader in the line of presidential succession on U.S. soil since the United States opened diplomatic relations with China in 1979. At the time, the United States agreed that it would break off formal ties with Taiwan, but it has in the decades since maintained highly choreographed unofficial relations with the island.

“It is no secret that today the peace that we have maintained and the democracy which [we] have worked hard to build are facing unprecedented challenges,” Tsai said in brief remarks with McCarthy after their meeting. “We once again find ourselves in a world where democracy is under threat, and the urgency of keeping the beacon of freedom shining cannot be understated.”

Taiwan, like Ukraine, is fighting for democracy, Tsai says in New York

McCarthy repeatedly signaled that lawmakers in both parties are unified in their desire to continue fostering a relationship with Taiwan. “The one thing I hope all countries see is that we’re united in the same approach together, on both sides. And we’re going to speak with one voice when it comes to China or any others when we look at foreign policy,” he said at a news conference following the meeting.

Tsai’s stop in California marks the end of her unofficial meetings with top political leaders throughout the United States that came ahead of a trip to Central American countries that maintain formal diplomatic ties with Taiwan.

Several Democratic and Republican lawmakers said Wednesday that they met with Tsai last week during her stopover in New York. House Minority Leader Hakeem Jeffries (D-N.Y.) said he and Tsai met while she was in New York on Friday, noting in a statement that their encounter resulted in “a very productive conversation about the mutual security and economic interests between America and Taiwan.”

Tsai also met with a bipartisan group of senators — including Sens. Joni Ernst (R-Iowa), Mark Kelly (D-Ariz.) and Dan Sullivan (R-Alaska) — in New York on Friday, Ernst’s office confirmed Wednesday.

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Image: Germán & Co

Cooperate with objective and ethical thinking…

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The 'Hoegh Esperanza' Floating Storage and Regasification Unit (FSRU) is anchored during the opening of the LNG (Liquefied Natural Gas) terminal in Wilhelmshaven, Germany, December 17, 2022. Michael Sohn/Pool via REUTERS/File Photo/ Editing by Germán & Co

Energy firms bet big on German port as clean energy hub

The company stated in an email response that "feasibility studies are presently being developed for both projects, which will provide further insights into their practicability."

REUTERS By Vera Eckert, TODAY, EDITING BY GERMán & CO

WILHELMSHAVEN, Germany, April 6 (Reuters) - Germany's only deep water port, home to its largest naval base, is where energy firms now plan to spend more than $5.5 billion to help construct the clean energy infrastructure the country needs to help end its reliance on Russian gas.

Europe's leading industrial exporter has only just managed to get through an energy crunch by rushing to build makeshift floating infrastructure for importing liquefied natural gas (LNG), aiming to partially plug the gap left by Moscow's cuts.

But with energy firms already looking beyond LNG in efforts to reduce fossil fuel use, the port of Wilhelmshaven on Germany's northern coast is emerging as a hub for the infrastructure which is needed for hydrogen and ammonia imports, hydrogen production and offshore carbon emissions storage.

"We will become the pumping heart of Germany by 2030," said Alexander Leonhardt, who heads the business development agency for Wilhelmshaven, which has a population of 80,000. Challenges to its development include concerns about disturbing wildlife in the sensitive Wadden Sea and the risks of LNG overcapacity.

Uwe Oppitz of Rhenus Ports, who speaks for Energy Hub Port Wilhelmshaven, said that Wintershall Dea (WINT.UL) (BASFn.DE), Uniper (UN01.DE) and Tree Energy Solutions (TES) plan to spend a total of more than 5 billion euros at Wilhelmshaven.

Energy Hub Port Wilhelmshaven comprises 30 companies, which include E.ON (EONGn.DE), RWE (RWEG.DE) and Orsted (ORSTED.CO), as well as Wilhelmshaven's home state of Lower Saxony.

Oppitz said the investment, the magnitude of which has not previously been reported, will be made between 2026 and 2030, adding that the overall figure was disclosed on condition that no breakdown would be published.

TES, which is backed by Belgium private investment firm AtlasInvest, said the total sum was plausible.

Wintershall Dea said it is planning two projects, called BlueHyNow and CO2nnectNow.

"Feasibility studies are currently being prepared for both projects, which will provide further insights into their practicability," the company said in an emailed comment.

"Wintershall Dea plans to invest around 1 billion euros in the Wilhelmshaven site together with its partners," it said.

Uniper was not immediately available for comment.

The investment commitment is raising hopes that money and jobs can be funnelled into what is a relatively weak region economically and that it may even attract some companies to relocate from Germany's industrial heartland in the south.

Planned investments include electrolysis plants that could be scaled up to more than 1 gigawatts (GW) size, Oppitz said.

Wilhelmshaven is not only the landing point for pipelines and vessels, it has a flourishing offshore wind presence and gas storage caverns, while rail links from legacy activities are also a potential draw for new investment.

Reuters Graphics Reuters Graphics

GREEN HYDROGEN RUSH

Already home to Germany's first floating LNG terminal (FSRU), which is operated by state-controlled Uniper, Wilhelmshaven is also where TES is due to bring another FSRU into service by the end of this year.

Both companies are planning for clean gas production to begin in the second half of this decade.

And while Wintershall Dea will not get involved in LNG, it wants to repurpose some Norwegian pipeline gas imports for hydrogen production, capturing carbon dioxide from the process and exporting it in liquefied form for permanent subsea storage.

Wilhelmshaven's mayor Carsten Feist said he expects to create 1,000-2,000 jobs over the next five years and double corporate tax revenue, if such plans proceed.

To lessen their bills, the companies will tap funds under the European Union's Projects of Common Interest funding (PCI) scheme, hoping for grants to the tune of 30-50%, said Oppitz.

TES said it is confident no subsidies will be needed for its projects.

Paper maker PKV, a big employer 13 kilometres south of Wilhelmshaven, plans a new factory that working with the port projects could perhaps use waste heat from planned electrolysis plants that produce green hydrogen from renewable electricity.

And steelmaker Salzgitter (SZGG.DE) has already struck a deal with Uniper to receive green hydrogen for its steel mill processes, replacing essential fossil-fuel produced hydrogen.

Oppitz said that other firms are assessing the opportunities Wilhelmshaven offers, with clean hydrogen primarily needed by refineries, chemicals, fertilisers and metals makers while industry might welcome carbon storage options.

The Wilhelmshaven business promotion agency estimates that the region could produce more than 30 terawatt hours (TWh) of hydrogen a year from 2030. This alone would represent a quarter of Germany's demand for green hydrogen at that date, namely 95-130 TWh, according to its national hydrogen strategy.

Wintershall Dea wants to grow with that market, said project leader Andreas Moeller.

He rejected suggestions that carbon capture and storage (CCS) strategies are simply a way for fossil fuels to survive.

"We don't want to push green hydrogen to the side. On the contrary, we want to support its ramp-up," he said.

Gundolf Schweppe, chief executive of Uniper Energy Sales said it plans to bring up to 2.6 million tonnes of green ammonia into Wilhelmshaven a year in the second half of this decade.

That is not far off Germany's current production of ammonia, a fertiliser raw material, of 3 million tonnes a year.

Meanwhile, TES wants to bring renewable methane under the name electric natural gas (e-NG) from solar power made overseas into Wilhelmshaven from 2027.

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News round-up, April 4, 2023

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Most read…

White House announces clean energy initiatives on coal

On Tuesday, the White House said that it was directing hundreds of millions of dollars toward supporting coal communities, including $450 million for sustainable energy initiatives in both active and past mining regions.

REUTERS

Stormy Daniels: Woman at center of Trump indictment is porn star turned ghostbuster

The alleged 2006 sexual encounter between adult movie star Stormy Daniels and former president Donald Trump has helped her create a sizable economic empire.

Reuters By Julia Harte, editing by Germán & Co

New York Already Knows a Lot About Donald Trump…

...a "SOROS BACKED ANIMAL." Mr. Trumph said.

While awaiting the indictment, the former president referred to Mr. Bragg in an anti-Black and anti-Semitic manner on Truth Social, calling him a "SOROS BACKED ANIMAL." Law enforcement authorities had to prepare for potential street unrest on Tuesday because Mr. Trump threatened "death and destruction" and called for large-scale protests before being indicted.

NYT, By Mara Gay, April 4, 2023, editing by Germán & Co

OPEC+ oil cut delivers blow to ECB

The action consists of putting additional pressure on European governments when voters from London to Berlin are unsatisfied with the rising expenses of energy, food, and transportation. Support for politicians has declined as individuals have struggled to pay their costs, leading to protests and industrial unrest. The West's reaction to Russia's invasion of Ukraine and other factors contributing to inflation is not getting any less important.

Analysts expect the supply crunch to negatively impact inflation in Europe.

POLITICO EY BY PAOLA TAMMA, EDITING BY GERMÄN & CO, APRIL 3, 2023

There ought to be no hiding place for Putin

Successful charges before an international tribunal would fully recognize the crime allegedly being committed by its full and proper name — the crime of aggression.

POLITICO EU BY AARIF ABRAHAM, TODAY

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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Image: A general view of the White House in Washington, U.S., July 21, 2022. REUTERS/Kevin Lamarque/File Photo, Editing by Germán & Co

White House announces clean energy initiatives on coal

On Tuesday, the White House said that it was directing hundreds of millions of dollars toward supporting coal communities, including $450 million for sustainable energy initiatives in both active and past mining regions.

Reuters

WASHINGTON, April 4 (Reuters) - The White House said on Tuesday it was funneling hundreds of millions of dollars to help coal communities, including $450 million for clean energy projects on current and former mining areas.

The Department of Energy will also provide $16 million to the University of North Dakota and West Virginia University to complete design studies for a domestic refinery that will extract rare earth and other critical minerals from coal ash, acid mine drainage and other mine waste, the White House said.

"This project will help strengthen American supply chains, revitalize energy communities, and reduce reliance on competitors like China," the White House said in a statement.

The government action also includes putting 11 federal agencies to work in tandem on getting new resources into energy communities like former coal mining towns, it said.

The Treasury Department and Internal Revenue Service will release guidance on Tuesday that will allow developers of clean energy projects and facilities to tap into billions of dollars in boneses, in addition to existing tax credits, it said.

The funding for this initiative comes from the Inflation Reduction Act and the Bipartisan Infrastructure Law, the White House said.

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Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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Image: By Germán & Co

Stormy Daniels: Woman at center of Trump indictment is porn star turned ghostbuster

The alleged 2006 sexual encounter between adult movie star Stormy Daniels and former president Donald Trump has helped her create a sizable economic empire.

Reuters By Julia Harte, editing by Germán & Co

 Who's who in Trump hush money case

April 4 (Reuters) - Adult film star Stormy Daniels has built a lucrative business empire around her alleged 2006 sexual encounter with former President Donald Trump and earned legions of fans for her breezy retorts to those who cast her as an immoral woman.

Her popularity and profits appeared to get a boost with the news of Trump's indictment on Thursday in a case involving a $130,000 hush payment she received in the waning days of his 2016 election campaign.

"Thank you to everyone for your support and love!" she posted on Twitter after news of the criminal charges broke. "#Teamstormy merch/autograph orders are pouring in."

Daniels, 44, is an author, director and media personality. She launched her own reality TV show, "Spooky Babes", in which she searches haunted houses as a "paranormal investigator", and she once flirted with a U.S. Senate bid as a Democrat-turned-Republican.

When a Twitter user asked what "the whore" was doing one day this week, Daniels responded, "Not sure why you're curious but... Just fed my horse and mucked stalls, signing photos and #teamstormy shirts and mailing them, booking crew/location for a music video I'm directing, floating in my pool and then my live show."

"Basically the usual," she added.

She is not shy about capitalizing on the attention around her connection to Trump. She points out he has done the same - but, in her view, has faced far less criticism.

"You take the opportunity," Daniels said on a Wednesday livestream on OnlyFans, an online subscription platform known for adult content, according to a report by British newspaper The Independent. "Isn't that what America is all about?"

Trump has raised more than $2 million for his legal defense since predicting on March 18 that he would soon be arrested, according to his campaign. A Trump fundraising group sent an email asking supporters for more contributions after his indictment.

After he announced his impending arrest, searches for Daniels on the website Pornhub jumped 21,655%, according to the site's research and analysis branch.

A spokesperson for Daniels could not be reached for comment.

'VINDICATION'

Daniels, whose real name is Stephanie Clifford, is married to a fellow adult film star and has a young daughter and a horse farm, according to her social media profiles.

Her childhood was marred by sexual assault and poverty. Growing up in Louisiana with a single mother, "we were just trash. And my mom was a trainwreck, and my clothes didn't fit, and I was poor and I smelled," Daniels told Vice News in 2021.

Daniels said she had been a straight-A student and editor of her high school newspaper when she left home and started stripping to support herself.

She continued working in adult entertainment after graduating high school and began her career in adult films in 2002, according to the Vice News interview. Daniels soon began winning industry awards and landed roles in TV shows and films such as "The 40-Year-Old Virgin" and "Knocked Up".

Daniels has said she received the hush money in exchange for keeping silent about a sexual encounter she had with Trump in 2006. Trump has denied having the affair and initially disputed knowing anything about the payment.

It is unclear what charges he will face, and he has signaled he will continue his 2024 bid for the presidency as he fights the case.

In an interview with Britain's Times newspaper on Friday, Daniels called the indictment "vindication" and referred to a vulgar comment Trump made in a 2005 recording in which he boasted about forcing himself on women.

"But it's bittersweet," she said. "He's done so much worse that he should have been taken down before. I am fully aware of the insanity of it being a porn star. But it's also poetic; this pussy grabbed back."

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Image: NYT, editing by Germán & co

New York Already Knows a Lot About Donald Trump…

...a "SOROS BACKED ANIMAL." Mr. Trumph said.

While awaiting the indictment, the former president referred to Mr. Bragg in an anti-Black and anti-Semitic manner on Truth Social, calling him a "SOROS BACKED ANIMAL." Law enforcement authorities had to prepare for potential street unrest on Tuesday because Mr. Trump threatened "death and destruction" and called for large-scale protests before being indicted.

NYT, By Mara Gay, April 4, 2023, editing by Germán & Co

Ms. Gay is a member of the editorial board.

If Donald J. Trump seems a little on edge lately, so does the city where he made his name.

The former president, after largely eluding legal accountability of any kind for decades, has now been indicted by a grand jury in a case brought by the Manhattan district attorney, Alvin Bragg.

So far Mr. Trump has handled the investigation, which has looked into whether he broke laws while paying hush money to a porn star ahead of the 2016 election, exactly as one might imagine: with the minimum amount of class and the maximum use of racist slurs. Not only has he made sure everyone knows Mr. Bragg is Black, he has also suggested he is subhuman.

“HE IS A SOROS BACKED ANIMAL,” the former president told his followers on Truth Social while waiting for the indictment, using anti-Black racism as well as antisemitism to describe Mr. Bragg. Mr. Trump also called for widespread protests before he was indicted and predicted “death and destruction,” forcing law enforcement agencies to prepare for possible violence in the streets on Tuesday, when he is expected to be arraigned.

All of this has made New York City, his former hometown, a bit anxious, too. The wait for Mr. Trump’s arraignment and any backlash that may come from it has the city unnerved.

Few Americans have seen Mr. Trump shimmy his way out of a jam more often than New Yorkers. We’ve seen him bounce back from bankruptcy six times, and he has never been truly held to account for his long history of excluding Black people from the rental properties that helped make him rich. We’ve seen his political fortunes soar despite credible claims of sexual assault and tax fraud. We’ve watched up close his gravity-defying, horrifying metamorphosis from a tacky real estate developer and tabloid fixture into a C-list celebrity and, finally, a one-term president with authoritarian aspirations.

Given that history, the idea that Mr. Trump will soon be fingerprinted and booked in a New York courthouse has left many in disbelief. A kind of collective angst over the Trump prosecution has settled over New York City, where many deeply disdain him but seem unconvinced he will ever truly be held to account.

During a recent stage performance of “Titanique,” the hit musical comedy and glitter-filled parody of the 1997 film about the doomed ship, Russell Daniels, the actor playing Rose’s mother, let out a kind of guttural scream. “It’s not fair that Trump hasn’t been arrested yet!” Mr. Daniels cried. Inside the Manhattan theater, the audience roared.

In Harlem recently, the Rev. Al Sharpton held a prayer vigil for Mr. Bragg, who received threats after Mr. Trump used his social media platform to share a menacing photograph of himself with a baseball bat juxtaposed with a photo of the district attorney, in a clear hint of his violent mind-set.

“We want God to cover him and protect him,” Mr. Sharpton said, referring to Mr. Bragg. “Whatever the decision may be, whether we like it or not, but he should not have to face this kind of threat, implied or explicit. Let us pray.”

New Yorkers, weary and still recovering from the pandemic Mr. Trump badly mismanaged, are also now bracing themselves for the possibility of demonstrations by the former president’s supporters. In the hours after the indictment on March 29, N.Y.P.D. helicopters hovered over the courthouses of Lower Manhattan and officers set up barricades along largely empty streets. The Police Department ordered all roughly 36,000 uniformed members to report for duty amid bomb threats and the arrest of one Trump supporter with a knife.

The inevitable spectacle began on Monday, when television helicopters tracked every inch of Mr. Trump’s motorcade from LaGuardia Airport to Manhattan, as if he were visiting royalty. The courthouse area downtown is expected be largely closed to traffic on Tuesday. All Supreme Court trials in the Manhattan Criminal Courts Building will be adjourned early. There are also police lines and TV trucks around Trump Tower, where the former president stayed on Monday night. Meanwhile, Republican groups and Trump supporters are planning or sponsoring rallies nearby, one of which will be addressed by Representative Marjorie Taylor Greene, who will bring her destructive rhetoric up from Georgia.

Of the four known criminal investigations Mr. Trump faces, the Manhattan case is seen by some legal experts as the least serious, in part because it may involve allegations of campaign finance violations before his presidency rather than attempts to abuse his office by overturning the results of an election or inciting supporters to effectively overthrow the United States government. Fair enough.

Still, it’s a poetic irony that the former president will face his first criminal indictment in New York City, the town where he sought to burnish his “law and order” credentials. In 1989, Mr. Trump took out a notorious ad in several newspapers, including The New York Times, calling for the reinstatement of the death penalty when a group of Black and Latino teenagers were accused of the sexual assault of a jogger in Central Park. After serving prison sentences that varied from six to 13 years, the teens were exonerated.

“What has happened to the respect for authority, the fear of retribution by the courts, society and the police for those who break the law, who wantonly trespass on the rights of others?” Mr. Trump wrote in the 1989 ad. “How can our great society tolerate the continued brutalization of its citizens by crazed misfits?”

Over many years, New York has learned a painful lesson. Mr. Trump and his many misdeeds are best taken seriously.

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Image: Editing by Germán & Co

OPEC+ oil cut delivers blow to ECB

The action consists of putting additional pressure on European governments when voters from London to Berlin are unsatisfied with the rising expenses of energy, food, and transportation. Support for politicians has declined as individuals have struggled to pay their costs, leading to protests and industrial unrest. The West's reaction to Russia's invasion of Ukraine and other factors contributing to inflation is not getting any less important.

Analysts expect the supply crunch to negatively impact inflation in Europe.

The move is seen by analysts as a deliberate attempt by the group's largest countries to push the price of oil higher | Patrick T. Fallon/AFP via Getty Images

POLITICO EY BY PAOLA TAMMA, EDITING BY GERMÄN & CO, APRIL 3, 2023 

A shock cut in oil output by the OPEC+ group has thrown a spanner into central banks' efforts to tame inflation just as pressure on Europe's cost of living was starting to ease.

The announcement on Sunday by the oil-producing cartel of a reduction of over 1 million barrels per day ― forcing the price up by as much as 8 percent by Monday morning ― has stoked fears of a knock-on effect on the economy as a whole. It comes at a time when inflation is only just starting to slow after reaching record rates in the eurozone since the summer.

It will take about two months for the OPEC+ decision to trickle down to the real economy, as current crude prices make their way to oil products, said Jorge León, senior vice president of Rystad Energy, a market intelligence firm. This will "most likely" increase inflation.

"That's a problem for Europe, because oil prices are very relevant for headline inflation in Europe" as a net importer of oil, he said. Future gasoline contracts are already trading at higher prices.

The move heaps more pressure on European governments at a time when rising costs of energy, food and transport have sown discontent among voters from London to Berlin. As people have struggled to pay bills, support for leaders has slipped and has triggered a wave of protests and industrial unrest. One of the many drivers of inflation ― Russia's invasion of Ukraine and the West's response to it ― shows little sign of becoming any less critical.

Money supply

Closer to home, higher inflation also may encourage the European Central Bank to continue tightening the money supply by putting up interest rates, and this in turn could have consequences for growth in the eurozone.

"What I'm worried about is the impact that this could have, first of all, on inflation, and therefore, on the attitudes of central banks, and therefore, on economic growth perspectives for this year and for next year," said León.

Annual inflation in the eurozone dropped to 6.9 percent in March from 8.5 percent in February having hit a record 10.6 percent in October. In an effort to bring it back to its 2 percent target, the ECB has continued to increase interest rates from -0.5 percent last summer to 3 percent in March — its fastest-ever tightening cycle.

The Opec+ decision was led by Saudi Arabia, it's most powerful member. This move, together with Saudi's continuing cooperation with Russia, adds to tension with the US and European governments as they struggle to present a united front on Moscow's aggression.

"The dramatic cut [in oil production] will only add to pressing global inflationary squeezes," said Nigel Green, CEO of deVere Group, an independent financial adviser. "There's real concern that the surprise decision announced by Saudi Arabia for OPEC+ will prompt central banks to maintain interest rates higher for longer due to the inflationary impact, which will hinder economic growth."

The move sent prices jumping from just under $80 per barrel of crude at market close on Friday to over $85 at one point on Monday, before falling back slightly. Analysts immediately raised their expectations for future oil prices, with Goldman Sachs projecting crude to reach $95 a barrel by the end of the year.

Concerns linger

It was the second slash in output announced by OPEC+ in under a year, after last fall it cut production by 2 million barrels per day — a decision that was sharply criticized by the U.S.

Non-OPEC countries can do little to counter the effort to push the price of oil higher at a global level | Vladimir Simicek/AFP via Getty Images

The move is seen by analysts as a deliberate attempt by the group's largest countries to push the price of oil higher. It hovered around the $100 a barrel mark last year.

Non-OPEC countries, including the U.S. and those of the EU, can do little to counter the effect, given historically low levels of crude oil reserves. U.S. reserves, which Washington can decide to release to counter some of the supply crunch, are at their lowest since 1984.

"It will take some time to see exactly how much this impacts global prices as demand concerns linger, but this is another potential factor exerting upward pressure on inflation," analysts at Deutsche Bank wrote in a note.

Opec, the Organization of the Petroleum Exporting Countries, was expanded to become Opec+ in 2016 to bring in countries including Russia as crude oil prices fell.

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Image: Germán & Co

Cooperate with objective and ethical thinking…

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Image: NYT EDITING BY GERMÁM & CO

There ought to be no hiding place for Putin

Successful charges before an international tribunal would fully recognize the crime allegedly being committed by its full and proper name — the crime of aggression.

POLITICO EU BY AARIF ABRAHAM, TODAY

Aarif Abraham is a British barrister and a member of Garden Court North Chambers and Accountability Unit in London.

The International Criminal Court’s (ICC) arrest warrant for Russian President Vladimir Putin on the war crime of unlawfully deporting children to Russia is a historic moment for intentional criminal justice. It is only the third time the ICC has issued indicative charges against a serving head of state, and the first time against that of a U.N. Security Council member.

The warrant starts a process that runs in parallel with another first — the initiative to create a Special Tribunal for the crime of aggression as allegedly being committed in Ukraine. It would be the first aggression-focused tribunal since Nuremberg and Tokyo, which prosecuted axis-power leaders after World War II. 

If created, such a tribunal could prosecute senior military and political leaders for what the 1946 Nuremberg judgment called the “supreme international crime.” Why? Because had the manifestly illegal acts of aggression — such as invasion, attack or occupation — not occurred, the egregious harm inflicted on civilians, including tens of thousands of war crimes, would never have happened. 

But the ICC cannot prosecute the crime of aggression in relation to Ukraine, only other international crimes like war crimes, crimes against humanity or genocide. The only way for the ICC to prosecute the crime of aggression would be either with Russia’s consent, or through a U.N. Security Council referral. And it is for this reason the initiative for a tribunal led by Ukraine has received the active backing and strong engagement of over 30 countries — and the list is growing.

So, where does the ICC arrest warrant for Putin leave both processes, and which is more likely to succeed? The truth is, the ICC route and the tribunal route are highly complementary.

First, Ukraine rightly wishes to see all responsible military and political leaders in Russia and Belarus held to account for the totality of the harm resulting from aggression. And there would be far more senior leaders caught by the aggression net than the ICC net, which requires a strong evidential link between international crimes being committed by soldiers on the ground and senior leaders in Russia and Belarus. This usually makes such crimes difficult to decisively prove — particularly when Russia claims its actions, such as the deportation of children, are motivated by humanitarian concerns.

By contrast, the crime of aggression is easier to prosecute, as it goes straight to the top and does not require extensive testimonial evidence, given its focus on the high-level acts of the armed forces. It may, however, likely require significant material from intelligence and military sources.

Second, Russia heavily contests the ICC’s jurisdiction to try nationals of countries that are not its members — countries that include Russia, the United States and China. So, while the ICC’s 123 members are under a legal duty to apprehend Putin, executing the arrest warrant will be a source of immense political, and possibly legal, contention, as there is a view that serving heads of state enjoy personal immunity from arrest or prosecution — especially before courts to which they do not belong.

Thus, the consequences for a country apprehending the Russian head of state are not likely to be insignificant, but a special tribunal would face a similar challenge —although a different pool of states may back it. And in such a case, the support of powerful countries like the U.S., which has now been confirmed, could decisively strengthen the possibility of apprehending Putin, and provide some degree of immunity from Russian retaliation in enforcing any arrest warrants.

Third, the ICC route is clear, and its jurisdiction derives from a treaty that its 123 members agreed to adhere to.

The tribunal would likely be created by a similar treaty, ideally agreed with the U.N. General Assembly and/or the European Union and/or multilaterally. Its jurisdiction could be inherent from the extant prohibition on aggression under international law, which binds states through custom, combined with the prohibition on aggression under Ukrainian law. Incidentally, there is a prohibition on aggression under Belarusian and Russian law too —  a concept that was ironically pioneered, and strongly advocated for, by the Soviet Union in response to the horrors it suffered during World War II.

A man looks at his vehicle parked outside a destroyed building after a deadly strike in the city of Sloviansk in Eastern Ukraine, on March 27, 2023 | Aris Messinis/AFP via Getty Images

Considering the continuing aggression, and the risk of further contagion to other countries, both the ICC and special tribunal routes ought to run on a parallel track, for continued backing for a tribunal means there would be no hiding place for senior Russian and Belarusian leaders.

And successful charges before such a tribunal would not only encapsulate the horrors of the harm suffered, but it would finally recognize the crime allegedly being committed by Putin and those around him by its full and proper name.

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News round-up, April, 3, 2023

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Most read…

In Surprise, OPEC Plus Announces Cut in Oil Production

Oil prices soared 7 percent on Sunday night after the group’s move to cut 1.2 million barrels a day.

NYT BY CLIFFORD KRAUSS, NOW 

World Bank Warns of Lost Decade for Global Economy

Lender sees demographics, war and pandemic aftereffects holding back growth

WSJ BY HARRIET TORRY, APRIL 2, 2023 

Janet Yellen Says Bank Rules Might Have Become Too Loose

Treasury secretary argues that efforts to protect financial stability are incomplete

WSJ BY ANDREW DUEHREN

Exclusive: Russia shifts to Dubai benchmark in Indian oil deal - sources

The two state-controlled firms' move to leave the Brent standard, which is favored by Europe, is a part of a shift in Russia's oil sales toward Asia after Europe boycotted Russian oil after its invasion of Ukraine more than a year ago.

REUTERS BY NIDHI VERMA

Dollar ahead as inflation worries resurface after OPEC+ surprise

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, also known as OPEC+, announced data on Friday that revealed that U.S. consumer spending increased moderately in February after surging the previous month, with inflation showing some signs of cooling even though it remained high.

REUTERS BY ANKUR BANERJEE. EDITING BY GERMÁN & CO

Justice Department has more evidence of possible Trump obstruction in documents probe, Washington Post reports

According to the Post, which cited people familiar with the investigation, Trump looked through some of the boxes of government records in his home after his advisers were served with a subpoena in May demanding the return of the classified records out of an apparent desire to keep certain things in his possession.

REUTERS, EDITING BY GERMÁN & CO

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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Image: Germán & Co

In Surprise, OPEC Plus Announces Cut in Oil Production

Oil prices soared 7 percent on Sunday night after the group’s move to cut 1.2 million barrels a day.

NYT By Clifford Krauss, now

Saudi Arabia, Russia and their oil-producing allies announced on Sunday that they would cut production by more than 1.2 million barrels of crude a day, or more than 1 percent of world supplies, in an apparent effort to increase prices.

Oil prices soared as markets opened Sunday evening, with both the American and global oil benchmark prices rising by 7 percent.

The production cut was unexpected because leaders of the group, known collectively as OPEC Plus, said in recent days that they did not intend to make changes in their policies. While the announcement was a surprise, its significance may ultimately be slight, especially if the global economy slows.

The alliance produced nearly two million barrels below its supply target in February, the last month for which official output figures are available. “We expect shortfalls to continue,” said Ha Nguyen, a global oil analyst for S&P Global Commodity Insights.

There have been persistent reports that Russia is struggling to keep up production without the benefit of Western service companies that have wound down their operations since the Russian invasion of Ukraine more than a year ago. Saudi production has also been below its production quota set by Organization of the Petroleum Exporting Countries in recent months.

Taking up the slack in supplying the 100-million-barrel-a-day global market are Brazil, Canada, Guyana, Norway and the United States. All are increasing their oil production.

Still, the OPEC Plus action has symbolic importance at a time when oil prices are a third below where they were immediately after Russia’s invasion of Ukraine last February. OPEC Plus members may be responding to growing fears of a recession later this year in the wake of the failure of several American and European banks as well as central bankers’ continued efforts to tame inflation. Oil demand has also been undercut by strikes in France, including at refineries.

“We don’t think cuts are advisable at this moment given market uncertainty,” said Adrienne Watson, a spokeswoman with the U.S. National Security Council, adding, “We’re focused on prices for American consumers, not barrels, and prices have come down significantly since last year.”

Saudi Arabia and Russia will lead in making the announced cuts, with declines of 500,000 barrels each, followed by Iraq, United Arab Emirates and Kuwait. Some analysts said the move could spur more investor speculative interest in oil futures and help drive oil prices higher in coming weeks.

“I really am surprised,” said Tom Kloza, the global head of energy analysis at the Oil Price Information Service. Mr. Kloza said he expected that the Brent global oil price benchmark, which has been hovering at $75 to $80 a barrel in recent weeks, would climb above $80. On Sunday evening, the price of Brent crude surged to $85.48 a barrel. West Texas Intermediate, the American benchmark, rose to $81.04.

Various energy experts estimated the eventual cut differently. Helima Croft, head of global commodity strategy at RBC Capital Markets, said that the voluntary cuts on paper amounted to more than 1.6 million barrels a day but, she added, the “real effect could be around 700,000 barrels a day.”

The global oil market is roughly 102 million barrels a day.

In recent years, Saudi Arabia, the leader of the group, has appeared determined to lift prices to around $90 a barrel. Ms. Croft said she saw the latest OPEC Plus cut as “just one more indication that the Saudi leadership is moving its oil production decisions with a clear eye to their own economic self-interests.” Other experts saw it as another sign of growing Saudi independence from the United States, with its relationship to China increasing in importance. It is already a vital partner of Russia’s in directing oil supply levels.

The cuts, which are voluntary and start in May, could be temporary depending on economic conditions.

Just last week, Saudi Aramco, the Saudi state oil company, announced two deals with China to supply refineries there with 690,000 barrels a day. Demand for oil continues to rebound from the global slowdown amid the Covid-19 pandemic. World diesel demand has nearly recovered to its levels before the pandemic, and jet fuel demand continues to surge as China emerges from its Covid shutdown.

The cuts come as gasoline prices, still well below where they were a year ago, are rising again. The average price for regular gasoline in the United States on Sunday was $3.51 a gallon, 13 cents above a month ago. The price a year ago was $4.20 a gallon, and was a major factor in the rise of inflation.

The cartel agreed in October to output cuts of two million barrels a day, but the ultimate reduction was well below that as producing countries like Libya and Nigeria agreed to cut to levels that they could not reach anyway.

The group had last slashed production in 2020, when demand collapsed because of the pandemic. It then gradually increased production until October.

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Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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Image: The World Bank’’s forecast comes in the wake of the Inflation Reduction Act.
PHOTO: SAMUEL CORUM/BLOOMBERG NEWS. Editing by Germán & Co

World Bank Warns of Lost Decade for Global Economy

Lender sees demographics, war and pandemic aftereffects holding back growth

WSJ by Harriet Torry, April 2, 2023 

“Over the past year, governments around the world have announced tax breaks, subsidies and new laws in a bid to accelerate investment, combat climate change and expand their workforces.

That might not be enough. 

The World Bank is warning of a “lost decade” ahead for global growth, as the war in Ukraine, the Covid-19 pandemic and high inflation compound existing structural challenges. 

The Washington, D.C.-based international lender says that “it will take a herculean collective policy effort to restore growth in the next decade to the average of the previous one.” Three main factors are behind the reversal in economic progress: an aging workforce, weakening investment and slowing productivity.

“Across the world, a structural growth slowdown is under way: At current trends, the global potential growth rate—the maximum rate at which an economy can grow without igniting inflation—is expected to fall to a three-decade low over the remainder of the 2020s,” the World Bank said.

Potential growth was 3.5% in the decade from 2000 to 2010. It dropped to 2.6% a year on average from 2011 to 2021, and will shrink further to 2.2% a year from 2022 to 2030, the bank said. About half of the slowdown is attributable to demographic factors.

The latest alarm bells from the World Bank about the global economy come in the wake of the U.S.’s passing the Inflation Reduction Act, which includes hundreds of billions in incentives and funding for clean energy, as well as a law to ratchet up investments in semiconductors. In response, the European Union is relaxing its rules on government tax breaks and other benefits for clean-tech companies.  

Meantime, major economies are trying to boost their workforce numbers, often in the face of steep resistance. In France, protesters responded violently to President Emmanuel Macron’s overhaul of the country’s pension system, while China’s shrinking population has prompted local governments there to offer cash rewards and longer maternity leaves to boost births.

These efforts so far might be too little, too late. Weakness in growth could be even more pronounced if financial crises erupt in major economies and trigger a global recession, the World Bank report cautions. The warning comes just weeks after the collapse of Silicon Valley Bank sparked turmoil in the U.S. and European banking sectors. 

Questions surrounding global growth prospects will be in the air in Washington, D.C., alongside the blooming cherry blossoms at the spring meetings of the International Monetary Fund and World Bank from April 10 to 16.

Policy makers and central-bank officials will join economists from around the world to discuss topics including inflation, supply chains, global trade fragmentation, artificial intelligence and human capital.

Earlier this year, the World Bank sharply lowered its short-term growth forecast for the global economy, citing persistently high inflation that has elevated the risk for a worldwide recession. It expects global growth to slow to 1.7% in 2023. Other organizations, such as the International Monetary Fund and the Peterson Institute for International Economics, a Washington-based think tank, expect global GDP growth to expand a more robust 2.9% in 2023. 

This isn’t the first time the World Bank has warned of a lost decade. In 2021, the lender said the Covid-19 pandemic raised the prospect owing to lower trade and investment caused by uncertainty over the pandemic. It issued similar warnings after the 2008 financial crisis. Global growth from 2009 to 2018 averaged 2.8% a year, compared with 3.5% in the prior decade. 

The World Bank identifies a number of challenges conspiring to push down global growth: weak investment, slow productivity growth, restrictive trade measures such as tariffs and the continuing negative effects—such as learning losses from school closures—because of the pandemic.

It said pro-growth policies would help. Measures to boost labor-force participation among discouraged workers and women can help reverse the negative trend in labor force growth from an older population and lower birthrates, according to the World Bank. 

Some view the World Bank’s projection for a lost decade as too pessimistic. Harvard University economist Karen Dynan said that aging populations in nearly every part of the world will be a drag on global growth, but she was more optimistic on raising productivity—output per worker.

“I expect, outside the demographic effects, output per person to look a lot like it did before the pandemic,” she said.

“The World Bank is right to draw concern to the possibility of a lost decade in sub-Saharan Africa, in Central America, in South Asia—an awful lot of human beings are at risk or are facing very grim situations,” said Adam Posen, president of the Peterson Institute for International Economics. 

“But from a global GDP outlook, or even a global population outlook, most of the major emerging markets along with most of the Group of 20 essentially are doing pretty well,” Mr. Posen said. He pointed to economic resilience in Europe and emerging markets in recent years, even as the Federal Reserve has sharply raised interest rates.

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Image: WSJ, editing by Germán & co

Janet Yellen Says Bank Rules Might Have Become Too Loose

Treasury secretary argues that efforts to protect financial stability are incomplete

WSJ by Andrew Duehren

WASHINGTON—Treasury Secretary Janet Yellen said that regulators might need to tighten banking rules after the collapse of Silicon Valley Bank and Signature Bank, arguing that the recent turmoil is a sign that efforts to bolster the financial system are incomplete.  

Speaking at an economics conference Thursday, Ms. Yellen questioned whether the regulatory system she helped build after the 2008 financial crisis was adequate to protect financial stability. Regulators this month extended emergency assistance to banks and stepped in to protect all depositors at SVB and Signature.

“These events remind us of the urgent need to complete unfinished business: to finalize post-crisis reforms, consider whether deregulation may have gone too far, and repair the cracks in the regulatory perimeter that the recent shocks have revealed,” Ms. Yellen said.

She spoke at the National Association for Business Economics, which was presenting her with an award in memory of former Federal Reserve Chair Paul Volcker. Before becoming Treasury secretary, Ms. Yellen held top jobs at the Fed, including serving as its chair.

Since SVB and Signature failed, some former regulators have said Washington might have focused too much on the biggest banks after the 2008 financial crisis. In 2018, lawmakers from both parties voted to raise to $250 billion from $50 billion the asset threshold at which banks automatically face strict stress tests and other rules. 

The Federal Reserve is now reconsidering a number of its rules for banks with assets between $100 billion and $250 billion. The White House on Thursday also called for tougher rules for midsize banks.

“Regulatory requirements have been loosened in recent years. I believe it is appropriate to assess the impact of these deregulatory decisions and take any necessary actions in response,” Ms. Yellen said.

More broadly, Ms. Yellen said the fallout from the recent banking turmoil—as well as from the market volatility in the spring of 2020, when the Covid-19 pandemic struck the U.S.—had been successfully mitigated.

“In large part, this was due to the post-crisis reforms we put in place,” she said. “But in both cases, the government had to deliver substantial interventions to ease the pressure on certain parts of the financial system. This means that more work must be done.”

Ms. Yellen also laid out the work she and federal regulators are doing to address risks they see outside of banks. Under Ms. Yellen, the Financial Stability Oversight Council—an interagency forum created after the financial crisis—is preparing to change its rules so it can more easily subject institutions such as money-market funds to enhanced federal supervision.

Ms. Yellen said that money-market funds, hedge funds and stablecoins, a type of digital asset typically pegged to the dollar, each present the risk of creating fire sales of assets that could fuel instability. For instance, she said, if investors try to pull out of money-market funds en masse, that can force sales of underlying assets, potentially destabilizing those markets.

“The financial stability risks posed by money market and open-end funds have not been sufficiently addressed,” she said.

FSOC has restarted a group studying hedge funds, Ms. Yellen said, adding that the group could make policy recommendations. The Treasury has also asked Congress to pass legislation that would regulate stablecoin issuers more like banks. And Ms. Yellen said she would continue to accelerate hiring efforts at the FSOC, which she said had been decimated because of staff turnover before she took office.

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Image: A model of oil barrels is seen in front of Russian and Indian flags in this illustration taken, December 9, 2022. REUTERS/Dado Ruvic/Illustration./Editing by Germán & Co

Exclusive: Russia shifts to Dubai benchmark in Indian oil deal - sources

The two state-controlled firms' move to leave the Brent standard, which is favored by Europe, is a part of a shift in Russia's oil sales toward Asia after Europe boycotted Russian oil after its invasion of Ukraine more than a year ago.

Reuters by Nidhi Verma

NEW DELHI, April 3 (Reuters) - Russia's largest oil producer Rosneft (ROSN.MM) and India's top refiner Indian Oil Corp (IOC.NS) agreed to use the Asia-focused Dubai oil price benchmark in their latest deal to deliver Russian oil to India, three sources familiar with the deal said.

The decision by the two state-controlled companies to abandon the Europe-dominated Brent benchmark is part of a shift of Russia's oil sales towards Asia after Europe shunned Russian oil following Russia's invasion of Ukraine more than a year ago.

Both benchmarks are denominated in dollars and set by S&P Platts, a unit of U.S.-based S&P Global Inc (SPGI.N), but Brent is mostly used by European oil majors and traders, whereas Dubai is heavily influenced by Asian and Middle Eastern oil trading.

Rosneft's chief executive Igor Sechin said in February that the price of Russian oil would be determined outside of Europe as Asia has emerged as largest buyer of Russian oil since the West imposed progressively tighter sanctions on the export.

Under the new deal, announced on March 29, Rosneft will nearly double oil sales to Indian Oil Corp (IOC.NS), two of the sources told Reuters.

IOC and Rosneft did not immediately respond to Reuters emails seeking comment on the details of the agreement, which have not been previously reported.

Russian Deputy Prime Minister Alexander Novak said on Tuesday that Russian oil sales to India jumped 22-fold last year, but he did not specify the volume sold.

Rosneft would sell up to 1.5 million tonnes (11 million barrels) each month, including some optional quantities, to IOC in the new fiscal year from April 1, the two sources said.

They said that in 2022/23, IOC had a deal to buy 3 million barrels of Urals grade with an option to double the quantity every month priced at differentials to dated Brent on a delivered basis.

The new contract includes Urals crude, shipped from Russia's European ports of Primorsk, Ust-Luga and Novorossiysk, and Sokol oil exported from Sakhalin which will be sold at a discount of $8-$10 per barrel to Dubai quotes on a delivered basis, three sources said.

The larger volumes and change in Russian oil pricing highlight closer ties between Moscow and India, which has now become the largest buyer of seaborne crude from Russia.

Indian refiners rarely bought Russian oil in the past due to higher freight costs compared with Europe, but after Urals prices fell to historical lows Russia has now replaced Iraq as top oil supplier to India in the last few months, data from trade sources showed.

Russia has been rerouting its energy supplies from traditional markets in Europe to Asia, mainly India and China, since the West imposed wide-ranging sanctions, including an embargo on seaborne Russian oil imports.

The European Union nations stopped buying Russian oil from Dec. 5 and the Group of Seven (G7) countries joined the EU in imposing a price cap on Russian crude of $60 per barrel. The move was aimed at cutting Russia's oil revenue while maintaining stability on the global oil market.

India was the biggest buyer of Russia's benchmark Urals grade crude in March. Deliveries to India are set to account for more than 50% of all seaborne Urals exports last month, with China in second place.

China, which buys Russian Urals at prices pegged against either dated Brent or ICE Brent, doubled its purchases of Urals oil in the first half of February compared to the same period of January, according to traders and Refinitiv Eikon data.

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Image: Germán & Co

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Image: Woman holds U.S. dollar banknotes in front of Euro banknotes in this illustration taken May 30, 2022. REUTERS/Dado Ruvic/Illustration/File Photo. Editing by Germán & Co

Dollar ahead as inflation worries resurface after OPEC+ surprise

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, also known as OPEC+, announced data on Friday that revealed that U.S. consumer spending increased moderately in February after surging the previous month, with inflation showing some signs of cooling even though it remained high.

Reuters by Ankur Banerjee. Editing by germán & Co

SINGAPORE, April 3 (Reuters) - The U.S. dollar was broadly higher as fears over inflation resurfaced after a surprise announcement by major oil producers to cut production further, with traders wagering the Federal Reserve may need to increase interest rates at its next meeting.

The announcement from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, comes after data on Friday showed U.S. consumer spending rose moderately in February after surging the prior month, with inflation showing some signs of cooling even as it remained elevated.

"While receding broader contagion risks, positive developments in China and expectations that the Fed is nearing the end of the tightening cycle should keep sentiments broadly supported, the oil price gain due to the surprise production cut is a fresh risk to inflation," said Christopher Wong, a currency strategist at OCBC in Singapore.

"Fresh inflation risks do imply the inflation fight is not over."

The euro was down 0.44% to $1.0791, after touching a one-week low of $1.0788, while the Japanese yen weakened 0.46% to 133.41 per dollar. Sterling was $1.2277, down 0.45% on the day. The dollar rose 0.32% against the Swiss franc.

The dollar index , which measures the U.S. currency against six peers, was 0.078% higher at 103.01, breaking past 103 for the first time in a week.

The OPEC+ cuts caused oil price increases of more than 6% on Monday.

The cuts were announced even before a virtual meeting of the OPEC+ ministerial panel, which includes representatives from Saudi Arabia and Russia, that was expected to stick to cuts of 2 million barrels per day (bpd) already in place until the end of 2023.

Instead, the oil producers on Sunday announced further output cuts of around 1.16 million bpd.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 4.6 basis points at 4.108%. The yield on 10-year Treasury notes was up 2.9 basis points to 3.519%.

Markets are now pricing in the probability of the Fed hiking rates by a quarter point in May to 61%, from 48% on Friday. But, by the end of the year, expectations are priced in for cuts of 40 basis points.

Friday's report from the U.S. Commerce Department showed that personal consumption expenditures price index rose 5.0% in February from a year earlier, down from the 5.3% increase in January. A measure of core inflation - seen as a better gauge of future price increases - came in a shade lower than expected at 4.6%.

Additional data also showed U.S. consumer sentiment fell for the first time in four months in February on concerns of an impending recession, although the impact of the banking crisis was muted.

Citi strategists said concerns over financial stability are fading and any drag from tighter credit is likely to be both lagged and limited.

"Still, the recent experience likely will keep the Fed more cautious in raising rates and markets more cautious in pricing hawkish policy," Citi strategists said in a note, adding they expect 25 basis point hikes at the next three Fed meetings.

The risk-sensitive Australian dollar fell 0.30% to $0.667 ahead of a high-stakes policy meeting from the Reserve Bank of Australia this week, with markets betting the central bank will stand pat on interest rates after 10 interest rate hikes.

The kiwi slid 0.62% to $0.622, its biggest one-day percentage drop since March 24.

In cryptocurrencies, bitcoin last fell 2.43% to $27,703.00. Ethereum , last fell 2.27% to $1,776.40.

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Image: U.S. President Donald Trump delivers an update on the so-called Operation Warp Speed program in an address from the Rose Garden at the White House in Washington, U.S., November 13, 2020. REUTERS/Carlos Barria/File Photo/Editing by Germán & Co

Justice Department has more evidence of possible Trump obstruction in documents probe, Washington Post reports

According to the Post, which cited people familiar with the investigation, Trump looked through some of the boxes of government records in his home after his advisers were served with a subpoena in May demanding the return of the classified records out of an apparent desire to keep certain things in his possession.

Reuters, editing by Germán & Co

April 2 (Reuters) - U.S. Justice Department and FBI investigators have amassed new evidence indicating possible obstruction by former President Donald Trump in the probe into classified documents found at his Florida estate, the Washington Post reported on Sunday, citing sources.

FBI agents seized thousands of government records, some marked as highly classified, from Trump's Mar-a-Lago estate in August. The investigation is one of two criminal inquiries into the former president being led by Special Counsel Jack Smith.

Trump, who was indicted on Thursday in a separate inquiry in New York, has denied any wrongdoing in the cases and describes them as politically motivated.

After his advisers received a subpoena in May demanding the return of the classified records, Trump looked through some of the boxes of government documents in his home out of an apparent desire to keep certain things in his possession, the Post reported, citing people familiar with the investigation.

Investigators also have evidence indicating Trump told others to mislead government officials in early 2022, before the subpoena, when the U.S. National Archives and Records Administration was working to recover documents from Trump's time as president, the Post reported.

The FBI referred questions to the Justice Department, which did not immediately respond to a request for comment.

In a statement to the Post, Trump spokesman Steven Cheung said that the "witch-hunts against President Trump have no basis in facts or law," and accused Special Counsel Smith and the Justice Department of leaking information to manipulate public opinion.

Smith's investigations are among a growing number of legal worries for Trump, who in November launched a campaign seeking the 2024 Republican presidential nomination.

In addition to the New York probe, Trump faces a Georgia inquiry over whether he tried to overturn his 2020 election defeat in the state.

What is the Iraq-Turkey oil pipeline dispute and who's on the hook?

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According to the federal government of Iraq, only SOMO, a state-owned marketing company, is authorized to oversee crude exports through Ceyhan.

REUTER by Rowena Edwards and Ahmed Rasheed, editing by Germán & Co

March 31 (Reuters) - An international arbitration ruling on March 23 prompted the shutdown of Iraq's northern crude oil exports through Turkey and sent oil prices back towards $80 a barrel.

Iraq, OPEC's second-largest oil producer, exports about 85% of its crude via ports in the south. But the northern route via Turkey still accounts for about 0.5% of global oil supply.

WHAT IS THE ORIGIN OF THE DISPUTE?

Iraq's Kurdistan Regional Government (KRG) began exporting crude from the semi-autonomous northern region independently from the federal government in 2013, a move Baghdad deemed illegal.

KRG exports flow through a KRG pipeline to Fish-Khabur on the northern Iraqi border, where the oil enters Turkey and is pumped to the Turkish port of Ceyhan on the Mediterranean coast.

Iraq's federal government says its state-owned marketed SOMO is the only party authorised to manage crude exports through Ceyhan.

Iraq filed for arbitration in 2014 with the Paris-based International Chamber of Commerce (ICC) over Turkey's role in facilitating oil exports from Kurdistan without the consent of the federal government in Baghdad.

Iraq said that by transporting and storing oil from Kurdistan and loading it on tankers in Ceyhan without Baghdad's approval, Ankara and Turkish state energy company BOTAS violated provisions of an Iraq-Turkey pipeline agreement signed in 1973.

HOW DID THE CASE DEVELOP?

After the final hearing in Paris in July, the ICC ruled on March 23 in Iraq's favour for the right to control loading at Ceyhan and to have access to see what was being loaded, a source familiar with the case has told Reuters.

Turkey was also asked to pay 50% of the discount at which KRG oil was sold, three sources said.

However, Turkey claimed the ICC overruled four out of Iraq's five demands and had ordered Iraq to pay compensation to Turkey, without stating the amount. Turkey also won a counter claim for Iraq to pay a pipeline throughput fee, one source said.

Based on all the rulings, the net amount Turkey owes Iraq was about $1.5 billion before interest, the source familiar with the case said. According to a Turkish source, Iraq's initial demand was for about $33 billion.

The arbitration case covers the period 2014-2018.

A second arbitration case, which could take about two years, would cover the period from 2018 onwards.

The Turkish government and the governments in Baghdad and Kurdistan have released statements since the court ruling but none of them included full details about the decision.

The KRG declined to comment when asked for further details. The Turkish energy ministry did not immediately respond to requests for further comment. The Iraqi oil ministry could not immediately be reached on Friday, the Iraqi weekend.

WHY DID TURKEY HALT OIL EXPORTS?

On March 25, Turkey stopped pumping around 450,000 barrels per day (bpd) of Iraqi oil via the pipeline to Ceyhan.

This comprised 370,000 bpd of KRG crude and 75,000 bpd of federal crude, a source familiar with pipeline operations said.

Turkey shutdown the pipeline because Iraq's federal government won the right to control loading at Ceyhan. Iraq's SOMO would have to instruct Turkey on ship-loading or the crude would have built up in storage with nowhere to go.

Turkey, Iraq's federal government and the KRG are in talks on how to reach a mutual agreement over northern Iraqi exports. A KRG source said Turkey had no choice but to halt flows through the pipeline until an agreement could be found.

HOW HAVE KRG OIL SALES DEVELOPED SINCE 2014?

Sales of KRG crude through the pipeline have grown rapidly over the past decade, with the total value reaching $12.3 billion in 2022, according to a Deloitte report, up 62% from 2017 when Deloitte first published data.

The KRG's ministry of natural resources said its oil revenues reached $5.9 billion in 2015.

From June 2015, the KRG restarted independent oil sales and signed several pre-payment deals with oil trading houses.

With its oil exports at a standstill, Kurdistan has halted repayments to energy traders including Vitol and Petraco on crude cargo deals worth $6 billion, trading sources said.

Vitol and Petraco have declined to comment on the issue.

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PDVSA's supervising board to appeal new creditors' move to go after Citgo

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To settle a $970 million claim by Canadian miner Crystallex resulting from the seizure of its Venezuelan properties, a U.S. court is preparing to auction shares in Delaware-registered PDV Holding. This week, attorneys have had a dispute regarding priority due to other businesses trying to attach their judgments to the case.

Reuters, Edeting by Germán & Co

The corporate logos of the state oil company PDVSA and Citgo Petroleum Corp are seen in Caracas, Venezuela April 30, 2018. REUTERS/Marco Bello/File Photo

HOUSTON, March 31 (Reuters) - A board that supervises Venezuela's overseas assets said it plans to file an appeal to a U.S. court's decision granting four firms the right to seize shares in one of the parent companies of Venezuela-owned U.S. refiner Citgo Petroleum.

A U.S. court is preparing for an auction of shares in Delaware-registered PDV Holding to satisfy a $970 million claim by Canadian miner Crystallex stemming from a expropriation of its Venezuelan assets. Other companies have sought to attach their own judgments to the case, leading to a feud this week among attorneys over priority.

The decision by a U.S. judge in Delaware to approve the attachments is contingent on green light by the U.S. Treasury Department.

O-I Glass Inc (OI.N), Huntington Ingalls Industries Inc (HII.N), ACL1 Investments Ltd, and Rusoro Mining Ltd (RML.V) received the court's blessing after showing state-oil firm PDVSA was the "alter ego" of Venezuela's government in asset battles.

An ad-hoc board created by Venezuela's National Assembly in 2019 to supervise PDVSA's foreign subsidiaries, especially Houston-based Citgo Petroleum, will oppose any conditioned auction, board's president Horacio Medina told Reuters.

Lawyers representing Crystallex and U.S. oil producer ConocoPhillips (COP.N), which have been fighting for years to recoup billions of dollars in expropriated assets, complained on Thursday that rights granted to additional creditors could complicate any sale.

"We might need to think about how the court is going to rank what is now becoming a very significant number of very substantial claims," said Amy Wolf, an attorney representing ConocoPhillips.

Even without green light from the U.S. Treasury, which has protected Citgo from creditors in recent years, U.S. Judge Leonard Stark has set a calendar for an eventual auction and asked investment banker Evercore Group to begin working on a tender.

Stark this week rejected a motion by lawyers representing Venezuela to disqualify the person appointed to manage the potential auction, and said he expects to hear by April 7 on whether the U.S. Treasury would allow a transfer of shares.

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Cooperate with objective and ethical thinking…

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News round-up, March 31, 2023

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Most read…

‘O.J. Simpson on steroids’: Team Trump preps for a post-indictment frenzy

Plans have been in place to react to an indictment from the Manhattan D.A. On Thursday night, they were triggered.

POLITICO.COM by ALEX ISENSTADT and MERIDITH MCGRAW, 03/30/2023 

EU extends gas price cap system to all EU hubs

Following protracted discussions over taming gas prices that reached record highs after Russia curtailed gas exports to Europe in response to its invasion of Ukraine, EU member states agreed to the cap in December.

Reuters editing by Germán & co

China's demand comeback to help oil weather banking crisis: Reuters poll

Brent is presently trading at $80 after falling earlier this month to 15-month lows around $70 due to growing concerns over the banking sector's health. Since then, institutional rescue programs for troubled banks have mostly alleviated those concerns.

Reuter By Bharat Gautam, editing by Germán & Co

The "Vulkan Files" A Look Inside Putin's Secret Plans for Cyber-Warfare

Elite hackers from Russia have their sights set on airports and power plants around the world, along with the internet. Confidential data from Moscow, obtained by DER SPIEGEL and its partners, now provide a look inside their arsenal of cyber-weapons and reveal their strategy.

Spiegel by Nikolai Antoniadis, Sophia Baumann, Christo Buschek, Maria Christoph, Jörg Diehl, Alexander Epp, Christo Grozev, Roman Höfner, Max Hoppenstedt, Carina Huppertz, Dajana Kollig, Anna-Lena Kornfeld, Roman Lehberger, Hannes Munzinger, Frederik Obermaier, Bastian Obermayer, Fedir Petrov, Alexandra Rojkov, Marcel Rosenbach, Thomas Schulz, Hakan Tanriverdi und Wolf Wiedmann-Schmidt, 30.03.2023

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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Image: Germán & Co

‘O.J. Simpson on steroids’: Team Trump preps for a post-indictment frenzy

Plans have been in place to react to an indictment from the Manhattan D.A. On Thursday night, they were triggered.

POLITICO.COM by ALEX ISENSTADT and MERIDITH MCGRAW, 03/30/2023 

For most people, getting indicted is a setback. From Donald Trump’s team, it’s viewed as an opportunity.

Aides to the former president moved aggressively on Thursday to capitalize politically on news that a Manhattan grand jury had charged Trump — using it to fill their fundraising coffers, mobilize loyalists and further solidify his hold on his base of supporters in the GOP presidential primary.

A man with no shortage of love for made-for-TV drama, Trump himself anticipates that the media attention around the grand jury’s decision may help him win sympathy and support. His team is preparing for a circus. One Trump adviser compared the expected press frenzy of Trump going to Manhattan for the arraignment to “O.J. Simpson on steroids,” with television networks potentially launching helicopter coverage to dramatically follow Trump from his Florida estate to his plane at Palm Beach International Airport, and then from LaGuardia Airport to lower Manhattan.

Trump’s campaign had spent weeks laying the groundwork for this moment. And those plans kicked into gear when news finally emerged that he was facing charges related to allegations that he made a hush-money payment to a porn actress during the waning days of the 2016 election.

The Trump campaign’s pushback was swift. Just minutes after news broke that he was being indicted, the campaign sent out a statement from Trump calling the charges “Political Persecution and Election Interference at the highest level in history.”

It was followed by a fundraising appeal and then a deluge of statements from supporters rushing to Trump’s defense. There will be more, advisers say: Trump’s team has convened a small army of lawyers and surrogates, who are set to pepper the airwaves in the coming days with campaign-approved talking points. The campaign is also expected to appeal for small-dollar contributions on Facebook.

Operatives close to the campaign noted that it came just ahead of Friday’s end–of-first-quarter fundraising deadline, allowing Trump to increase his totals that would be revealed in a report to be filed next month.

The effort underscores how Trump’s team believes it can turn the indictment into a campaign positive, at least in the short term. The president has found himself in legal jeopardy before — though an indictment against a former president is unprecedented — and there is a conviction based on that history that it will bolster him politically.

Key figures in the Trump indictment

Here are some of the people involved as the case against former President Donald Trump moves forward.

Michael Cohen

Trump’s former attorney testified in 2018 that he made a hush-money payment on behalf of Trump.

Stormy Daniels

The porn actress is said to have received $130,000 for her silence about an affair with Trump.

Alvin Bragg

The Manhattan DA took office in January 2022 and inherited the investigation.

Allen Weisselberg

Prosecutors gave the ex-Trump Organization CFO immunity in their hush-money probe in 2018.

Joe Tacopina

A vocal member of Trump’s legal team, he began representing Trump earlier this year.

Susan Necheles

She is one of Trump’s lawyers who was on the defense team in the Trump Organization trial.

Robert Costello

Cohen’s former legal adviser cast aspersions on Cohen’s credibility before the grand jury.

Karen McDougal

The model is another woman who received “hush money” for her involvement with Trump.

David Pecker

The former National Enquirer CEO has been linked to Cohen’s efforts to pay off Daniels and McDougal.

Trump was in Florida at his Mar-a-lago resort when the news of the indictment came down. Both he and his advisers were blindsided by it, people close to the former president say.

But while the news was sudden, their preparations for it weren’t. Over the past two weeks, Trump and his campaign have been keeping tabs on which Republicans were dismissing the case and boosting the ex-president. After Florida Gov. Ron DeSantis appeared to mock Trump during a press conference last week for finding himself in a scandal with a porn actress, Trump lashed out, insinuating DeSantis would soon experience false accusations of his own. Unsatisfied with that Truth Social post, Trump deleted it and replaced it with another that went even further, not only suggesting without evidence DeSantis could be faced with allegations from not only a woman but a man, too, and that it could also come from someone “underage.”

The message was deliberate and unambiguous: Defend me or else. When the time came on Thursday, Trump’s fellow Republicans did just that. DeSantis, seen as the leading 2024 primary opponent to Trump, called the indictment “un-American,” and said he would not assist with any extradition request (Trump’s lawyers have said he will turn himself in). RNC Chair Ronna McDaniel called the news “a blatant abuse of power from a DA focused on political vengeance instead of keeping people safe.” And in a pre-recorded video message, GOP presidential candidate Vivek Ramaswamy called the indictment “wrong” and said the country was “skating on thin ice.”

While many Republicans believe the indictment could boost Trump’s prospects by further solidifying his already-loyal base of supporters, they are also sanguine about the long-term damage it might cause. The case being brought against Trump is historic (no ex-president has ever been indicted). And future charges stemming from his actions on Jan. 6, 2021, and his possession of classified documents loom and could harm him even more in a general election, should he end up the nominee.

Former Vice President Mike Pence — who is debating his own 2024 challenge of Trump — called the indictment an “outrage” during a pre-scheduled interview with CNN. But he would not say whether he thinks Trump should drop out of the race if he is convicted.

“It’s a long way to that decision,” Pence said. “So I don’t want to talk about hypotheticals in all of this.”

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Image: Media

EU extends gas price cap system to all EU hubs

Following protracted discussions over taming gas prices that reached record highs after Russia curtailed gas exports to Europe in response to its invasion of Ukraine, EU member states agreed to the cap in December.

Reuters editing by Germán & co

BRUSSELS, March 31 (Reuters) - The European Commission will extend its gas price cap system to all trading hubs in the European Union from May to prevent potential distortions to Europe's energy markets, it said on Friday.

EU countries agreed the cap in December after drawn-out talks over taming gas prices that hit record levels after Russia cut gas deliveries to Europe following its invasion of Ukraine.

For now, the cap is triggered if prices exceed 180 euros ($196) per megawatt hour for three days on the Dutch Title Transfer Facility (TTF) gas hub's front-month contract.

The TTF price must also be 35 euros/MWh higher than a reference price based on existing liquefied natural gas (LNG) price assessments for three days.

TTF derivatives account for more than 90% of the natural gas derivatives traded on regulated markets in the European Union.

The Commission said its "market correction mechanism" would extend to derivatives linked to trading in all other EU hubs from May 1.

Report an The EU executive said the move would provide an even broader shield against high and volatile gas prices and help avoid potential distortions from applying it solely to TTF derivatives.

If triggered, trades would not be permitted on the front-month, three-month and front-year TTF contracts at a price more than 35 euros/MWh above the reference LNG price, which is currently set at 39.09 euros/MWh.

This caps the price at which gas can be traded, but the cap can fluctuate alongside global LNG prices - a system designed to ensure EU countries can still bid for gas in global markets.

The front-month TTF gas price contract hit a record high of 343 euros in August, but was trading on Friday at 45.70 euros/MWh, Refinitiv Eikon data showed.

The cap mechanism is designed to be temporary, applying until January 2024

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Image: An aerial view shows a crude oil tanker at an oil terminal off Waidiao island in Zhoushan, Zhejiang province, China January 4, 2023. China Daily via REUTERS

China's demand comeback to help oil weather banking crisis: Reuters poll

Brent is presently trading at $80 after falling earlier this month to 15-month lows around $70 due to growing concerns over the banking sector's health. Since then, institutional rescue programs for troubled banks have mostly alleviated those concerns.

Reuter By Bharat Gautam, editing by Germán & Co

March 31 (Reuters) - Oil will rebound after recent banking turmoil as demand from top consumer China is set to soar, but worries around economic growth will keep both benchmarks hovering below $90 this year, a Reuters poll showed on Friday.

A survey of 45 economists and analysts forecast benchmark Brent crude would average $86.49 a barrel this year, down from February's estimate of $89.23.

Brent is currently trading around $80, having been dragged to 15-month lows near $70 earlier this month on mounting worries over the stability of the banking sector. Those fears have since largely been allayed by institutional rescue measures for struggling banks.

"Fundamentals for the oil market do not seem to have changed meaningfully in light of bank runs in the U.S. and the forced takeover of a Swiss bank," said Suvro Sarkar, energy sector team lead at DBS Bank.

"The dip in oil prices is more of a blip at the moment, rather than a sustained move below $80 per barrel".

Analysts forecast U.S. crude to average $80.88 a barrel in 2023, down from the $83.94 consensus last month, but still above current trades of around $74.

Most analysts polled by Reuters expect oil prices to stay below $90 on fears of a recession in developed economies stemming from interest rate increases to bring down inflation.

Global oil demand is seen rising by about 1 million-2 million barrels per day (bpd) in 2023, with dips related to economic jitters or slowdowns in the West likely to be countered by increases from China, the world's biggest oil importer.

"Oil demand in China should pick up a bit further over the year. And while U.S. demand should slow, it won't fall, even as the economy weakens under the weight of higher interest rates," Capital Economics' Bill Weatherburn said.

Along with China, prices will also hinge on potentially declining Russian oil production due to Western sanctions, with a combination of the two likely tightening global supplies, analysts said.

OPEC+, which comprises the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, is likely to stick to its deal on output cuts of 2 million bpd until the end of the year, which could add to upward price momentum, the poll showed.

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Image: [M] Lea Rossa / DER SPIEGEL; Fotos: Vulkan Files (4); Gavriil Grigorov / dpa; Bobylev Sergei / Itar-Tass / action press; Wikimedia Commons; Sebastien Bozon / AFP; Denis Charlet / AFP

The "Vulkan Files" A Look Inside Putin's Secret Plans for Cyber-Warfare

Elite hackers from Russia have their sights set on airports and power plants around the world, along with the internet. Confidential data from Moscow, obtained by DER SPIEGEL and its partners, now provide a look inside their arsenal of cyber-weapons and reveal their strategy.

Spiegel by Nikolai Antoniadis, Sophia Baumann, Christo Buschek, Maria Christoph, Jörg Diehl, Alexander Epp, Christo Grozev, Roman Höfner, Max Hoppenstedt, Carina Huppertz, Dajana Kollig, Anna-Lena Kornfeld, Roman Lehberger, Hannes Munzinger, Frederik Obermaier, Bastian Obermayer, Fedir Petrov, Alexandra Rojkov, Marcel Rosenbach, Thomas Schulz, Hakan Tanriverdi und Wolf Wiedmann-Schmidt, 30.03.2023

A fine, late-winter drizzle is falling on a Moscow that has yet to completely free itself from its winter bleakness. Heaps of dirty snow are still piled up in front of the gray office building in the Sokolinaya Gora district in the eastern part of the city. It is an unremarkable structure in an unremarkable neighborhood, not far from the Preobrazhenskoye Cemetery, where an eternal flame burns in honor of the Soviet Union’s World War II dead. Outside the building, there is no barbed-wire and no threatening guards.

It's all quite normal. And it’s all a ruse.

The company headquartered here at Ulica Ibragimova 31 is called NTC Vulkan, and it presents itself as a completely normal, IT consulting firm, a small company with software expertise. Its website claims the company has a close relationship with IBM and lists Toyota Bank as a customer. One of its specialties: "Information security management.” It is a carefully constructed façade that holds up at first glance. And at second glance. But it’s not the whole truth.

Those wishing to go inside for a closer look at the frequently darkened offices full of computers, servers and other high-tech electronic equipment, must pass through security doors and a phalanx of cameras. After all, the building is home to programmers and hackers with a sinister mission: sowing chaos and causing destruction.

Vulkan headquarters in northeastern Moscow. Foto: DER SPIEGEL

For example: Paralyzing the computer systems of an airport so that the tower can no longer communicate with planes. Or triggering train derailments using a software program that deactivates all safety controls. Or interrupting power supplies.

All those things are elements of cyberwarfare, a specialty of Russian secret service agencies. And Vulkan works for those agencies: for the military intelligence agency GRU, the domestic intelligence agency FSB and for the foreign and economic intelligence agency SVR. "To begin with, it wasn’t clear what my work would be used for,” says one former employee, who has since left the country. "Later, I understood that we weren’t just collecting data. But that it was being used by the Russian secret service.”

The systems developed by Vulkan bear anodyne codenames like "Scan-V,” "Crystal-2V,” and "Amezit,” but their purposes are anything but normal. They have been programmed to assist the Russian military in finding the digital vulnerabilities of adversaries, thus making cyberattacks far easier to carry out. They can ambush enemy communications systems and take them over. And they can spread disinformation.

This is all chronicled in 1,000 secret documents that include 5,299 pages full of project plans, instructions and internal emails from Vulkan from the years 2016 to 2021. Despite being all in Russian and extremely technical in nature, they provide unique insight into the depths of Russian cyberwarfare plans. In a militarized country that doesn’t just fight with warplanes, tanks and artillery, but with hackers and software.

This strategy is especially apparent in Ukraine, which has been so unrelentingly attacked by Russian hackers since the invasion in February 2022 that experts have begun referring to it as the "first comprehensive cyberwar” ever seen. The Russians attack important companies and government agencies and interrupt internet service, and even managed to paralyze a communications satellite.

But cyberattacks in other parts of the world have also become increasingly brazen and dangerous.

USA 2016

During the U.S. presidential campaign, the servers of the Democratic Party were hacked, with data later being published on the WikiLeaks platform. In addition, fake news favoring the Republican candidate and later victor Donald Trump was disseminated. In an additional cyberattack, 60,000 emails belonging to Hillary Clinton’s campaign manager were stolen. A number of Russian hacker groups are thought to have been behind the attack, including “Fancy Bear.”

France 2017

Shortly before the run-off election for the presidency, thousands of emails and other documents from the campaign team of Emmanuel Macron were leaked. The trail leads back to the Russian hackers from “Sandworm.”

USA 2017

It becomes known that the nuclear power plant Wolf Creek in Kansas was hacked. Employees had received spear phishing emails ahead of the hack. In 2021, the U.S. Justice Department indicted three Russians in the case. They are thought to be part of the FSB hacking group “Berserk Bear.” They are also thought to have tried to spy on more than 3,300 people in more than 500 American and international energy companies.

Ukraine 2017

Russian hackers from “Sandworm” infiltrate a popular Ukrainian tax software and use it to successfully spread the trojan NotPetya. The program encrypts computers and makes them unusable. The virus spreads around the world and numerous international companies are affected.

South Korea 2018

“Sandworm” is thought to have interrupted the Olympic Winter Games. During the opening ceremony, the internet was intermittently interrupted. Later, the U.S. Justice Department indicted six GRU employees, who are thought to have been behind the attack.

Germany 2021

Numerous politicians received phishing emails in 2021 sent to their private email addresses. It is thought that the group “Ghostwriter” is behind the attacks. They are considered to be linked to GRU, Russia’s military secret service, and are known for their disinformation campaigns. In 2015, the GRU attacked 5,600 computers in the German parliament, including those in Angela Merkel’s parliamentary office.

Unit 74455 from the Russian GRU, codename "Sandworm," was responsible for the attacks in France and South Korea at the very least. It is considered the most dangerous group of hackers in the world, and Vulkan, according to the documents, may provide them with some of the tools they need for their attacks.

Until now, investigators have only been able to retroactively analyze the tracks left behind by such cyberattacks. But now, the Vulkan Files enable a detailed understanding of how such attacks are prepared and organized, and how aggressively Vladimir Putin, with the help of private companies, plans and implements hacking operations around the world. The documents allow a step-by-step look at how such attacks are intended to proceed.

Most of the documents are from an anonymous source. A few days after the Russian invasion of Ukraine, that source made the information available to the German daily Süddeutsche Zeitung, later sharing it with DER SPIEGEL as well. "Because of the events in Ukraine, I decided to make this information public,” said the source, who never identified themself and has since receded. "The GRU and FSB are hiding behind this company. People should know about the dangers.”

DER SPIEGEL verified and analyzed the documents with 10 media partners from eight different countries. German public broadcaster ZDF was part of the group, along with the Guardian, the Washington Post, the Austrian daily Der Standard, Le Monde in France, Danish public broadcaster DR, the Tamedia Group in Switzerland and the Russian investigative portal IStories. Months of reporting turned up more internal documents from the company in addition to information about money transfers. Both Vulkan and the Kremlin were given several opportunities to comment, but they declined to respond. There are no obvious reasons to doubt the conclusions reached by the investigative team.

The "Vulkan Files"

For years, Russia has been pursuing cyberwarfare. A team of journalists coordinated by DER SPIEGEL and including reporters from the Guardian, German broadcaster ZDF, Austrian daily Der Standard, the Danish broadcaster DR, the Tamedia Group in Switzerland, the Washington Post, the Süddeutsche Zeitung and Le Monde has analyzed internal documents from the Moscow-based IT company NTC Vulkan. The company works for the Russian military and secret service agencies, providing tools for their virtual attacks.

For the first time, the Vulkan Files provide insight into Vladimir Putin's plans for cyber-warfare.

Five Western intelligence agencies also confirmed the authenticity of the documents. Most of those agencies have been keeping an eye on Vulkan for some time because of the work the company does for intelligence agencies. Vulkan appears to be part of the opaque military-industrial complex in which Russian intelligence agencies work closely with more than 40 private IT companies. One of their goals is to develop highly effective cyberweapons that can be used against all those that the Kremlin has identified as Russia’s enemies. Especially, of course, in the West.

"Russia is in our networks,” warns Wolfgang Wien, deputy head of the Bundesnachrichtendienst (BND), Germany’s foreign intelligence agency. Countries ensure that their hackers are well-prepared, he says, so that they can deploy quickly when ordered to do so.

It’s a frightening thought, one of many that arises when one dives into the dark world of hackers, agents and saboteurs. Another: Russian cyberwarriors don’t just hunker down in their secret bunkers and hidden headquarters somewhere in Moscow. Some have obtained jobs at multinational companies, including some in Germany. DER SPIEGEL has been able to track down former Vulkan employees at SIEMENS and at a BASF service provider, in addition to Trivago and Booking.com. The most concerning trail, however, leads to Dublin, into one of the centers of the European tech industry.

Ranelagh is a prosperous suburb in southern Dublin full of pleasant pubs and trendy restaurants with names like Butcher Grill and Firebyrd. Victorian villas contain foreign embassies, while the smaller brick houses with white window frames are frequently occupied by employees of Google, IBM and Meta – whose headquarters are only a few minutes away.

Sergey N. lives in one of these homes, a 35-year-old who seems younger than his age when he opens the door. Sergey N.’s commute is manageable, with less than a 30-minute drive to Amazon Web Services (AWS), an Amazon subsidiary with $80 billion in annual revenues that is the world’s largest provider of cloud computing. Many of the largest companies in the world store their information, and even much of their IT needs, with AWS, including Netflix, Vodafone, NASA, the U.S. Navy and most of the companies listed on Germany’s blue-chip stock index DAX, from Allianz to Volkswagen. A huge portion of the global internet runs though AWS servers – as does Ukrainian government information.

Sergey N. is a "senior software development engineer.” To get the job, he no doubt had to go through numerous selection rounds. Amazon can take its pick of the best programmers in the world, and Sergey N. has plenty of experience: He held a leadership position at Vulkan as chief developer.

AWS apparently hired him in 2018, long before the invasion – at a time when it seemed completely unproblematic to hire experts from Russian IT companies. Particularly from those like Vulkan that seemed inconspicuous. A company PR film notes that employees of Vulkan can "change the world for the better.” It currently employs 135 people.

For the seven years Sergey N. worked there, though, changing the world for the better wasn’t apparently a priority. The projects he worked on included a system called "Scan-V,” a software program that IT security experts and several Western intelligence agencies believe is "offensive” in nature. In other words, it can be used to attack other countries through the internet.

That is one of the things we hope to discuss with Sergey N. when he opens the door. "We are journalists from DER SPIEGEL and we are working on a story about a company named Vulkan. You worked for that company. Could we ask you a few questions?”

Sergey N. seems taken aback, and the expression on his face is a mixture of fear and confusion. He doesn’t want to answer any questions.

"Do you know about the system 'Scan-V?’” His eyes widen in apparent shock. "No, sorry.” He then shuts the door.

Reporters around Europe knocking on the doors of dozens of former Vulkan employees had similar experiences. Most of them didn’t want to talk about their former employer. It remains unclear whether that reticence is due to fear of reprisals or out of concern that their cover could be blown.

The example of Sergey N. raises a number of disturbing questions. What is a Russian cyberwar specialist doing in a company that takes care of the IT needs of hundreds of leading companies, the infrastructure of which is one of the pillars of the global internet? Did AWS not know what Sergey N. had worked on in Russia? Or did it not want to know? One leaked document from June 2019 includes comments signed in his name – at a time when he says he was already working for AWS. When approached for comment, the U.S. based company said only that the security of its customers’ data is its highest priority.

Siemens, where DER SPIEGEL also located a former Vulkan employee, provided a similar response, saying merely that the company takes the issue seriously, but was unable to provide information about specific employees for reasons of data protection. The integrity of job applicants, the company added, is investigated to the degree permitted by law. IBM commented that its business ties with Vulkan came to an end in 2020.

Companies seem improvident in the face of the extremely competitive marketplace for well-trained programmers. Numerous Vulkan employees are graduates of Bauman University in Moscow. The university has close ties to the Russian security apparatus and carries out "special studies” for the Russian Defense Ministry and the intelligence agency FSB.

Bauman University in Moscow has close ties to the Russian security apparatus. Foto: Grigory Dukor / REUTERS

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At least one of the founders of Vulkan, Alexander Alexandrovich Irzhavsky, also has such connections and is a regular guest at conferences held by the Defense Ministry. When he was once stopped for a traffic violation, the address he provided belonged to an institute that is closely linked to GRU, the military intelligence agency. In 2010, Irzhavsky founded Vulkan together with Anton Vladimirovich Markov. Both of them are middle-aged and inconspicuous.

Company founder Alexander Irzhavsky:

"I was always a bit afraid of them."

Foto: NTC Vulkan

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Company founder Anton Markov

Foto: NTC Vulkan

It is nevertheless possible to discover what they and their company have been working on over the past decade, including a system that bears the codename "Amezit.” The goal of the system is to gain control of flows of information in specific regions, according to one description in a document bearing the heading: "Software Purpose.” In numerous other documents, including hundreds of pages of blueprints, diagrams and tables, a platform is described that would cover virtually all aspects of modern-day cyberwarfare, ranging from censorship and the manipulation of social media content to attacks on critical infrastructure. Trails in the material lead to server farms in the U.S. and to a nuclear power plant in Switzerland.

"These documents suggest that Russia sees attacks on civilian critical infrastructure and social media manipulation as one-and-the-same mission, which is essentially an attack on the enemy’s will to fight,” says John Hultquist, a leading expert on Russian cyberwarfare and vice president of intelligence analysis at Mandiant, an IT security company.

Numerous elements of the program indicate that Amezit could be deployed during the takeover of occupied areas in order to quickly gain control over communication – areas such as the Crimean Peninsula or the Donbas region of Ukraine. The timing of its development is likewise concurrent with efforts by the Kremlin to build up a national internet sealed off from the rest of the world.

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It isn’t possible to definitively say for whom or what such a system was developed, but there are clues. These include an email written by project director Maxim Andreyevich D. to several Vulkan employees bearing the date June 22, 2018, and the subject line: "Business trip to Rostov.” He was heading to the Research Institute of Radio Communication run by the FSB, which is perhaps the most powerful secret service in Russia and employees an estimated 350,000 people.

Putin himself was head of the FSB at the end of the 1990s. Today, the agency is his most important tool for suppressing the opposition in Russia. As DER SPIEGEL and the investigative platform Bellingcat discovered, it was an FSB commando that apparently attempted to murder opposition leader Alexey Navalny in Siberia in summer 2020. FSB agents covertly smeared the nerve agent Novichok on his underwear.

The cyber-capabilities of the FSB are also prodigious. Several years ago, hackers from the agency forced their way into the computer system of the German Foreign Ministry in Berlin. They slowly progressed through the system until they ended up at the department responsible for Russia and Eastern Europe, which was apparently the primary target. Western security experts dubbed the group behind the attack "Snake.”

Another FSB hacker unit, known as "Berserk Bear” by experts, spent years covertly inserting malware into the computer systems of nuclear power plants, oil and natural gas companies and other energy corporations in 135 countries around the world, including the U.S. and Germany.

Despite having special cyberwar departments of their own, it isn’t unusual for secret services to work together with private companies. The whistleblower Edward Snowden, for example, didn’t work directly for the National Security Agency (NSA). He was an employee of a private partner company called Booz Allen Hamilton. There are several similar examples from India and China. Just like in the business world, it is sometimes quicker and more efficient to outsource jobs to specialized service providers. Such as Vulkan.

As such, it would seem that the Vulkan team’s business trip to the FSB site in Rostov-on-Don was part of a typical business relationship. In his email, Vulkan executive Maxim Andreyevich D. asked his team to quickly prepare a presentation "of our software platform for the military representative in Rostov.” The demonstration of "Amezit” and several of its sub-systems was to take place over the course of several days. According to the emails, the present-day Amazon employee Sergey N. was also to join the trip to present four "Amezit” sub-systems. For that purpose, it was made clear in the email traffic, the necessary equipment ("three servers, five mounts, switchboard”) was to be sent ahead to the FSB institute as quickly as possible.

The leaked documents provide no indication as to whether the trip to Rostov-on-Don was successful or whether the FSB is currently using "Amezit.” But there were plenty of other opportunities for the Vulkan engineers to present their cyberweapons. Teams of developers regularly made the trip to FSB headquarters on Lubyanka Square in Moscow, just four stops away from Vulkan on the subway. The square is flanked by the gigantic, ominous building which today houses the FSB – and where Stalin’s KGB used to torture and murder those designated as enemies of communism. It is just a few hundred meters from here to the Kremlin.

FSB headquarters on Lubyanka Square in Moscow. Foto: Mikhail Svetlov / Getty Images

The Vulkan employees generally entered the FSB through an inconspicuous building next door, according to a meeting participant. That building is home to the offices of the FSB’s Information Security Center, one of the secret service’s most important hacker departments. The Vulkan staffers would carry their laptops through a long entryway, passing through several sets of security doors, before their papers were controlled. They would then be received by FSB agents. Together, they would head to the upper floors, where Vulkan's people would spend hours presenting their products and answering questions, interrupted only by a lunch break with their hosts in the cafeteria of the Lubyanka complex.

Not all of the Vulkan staffers enjoyed making such visits, because the secret service agents of the FSB would often send them on their way with technically unrealistic requests.

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The Kremlin’s cyber-plans envision not just the rapid development of all manner of offensive cyberweapons, but also the training of Russian IT experts in their use. And Vulkan is apparently deeply involved in that effort as well: The company has developed its own training program for the state-sponsored hackers of tomorrow. One leaked document about the secret program, which bears the codename "Crystal-2V,” states that its goal is the "comprehensive training of specialists” in "information confrontation” – the term that Russian secret service agencies use to describe cyberwarfare.

According to the document, up to 30 IT experts were to be trained on using "Crystal-2V” to execute attacks on critical infrastructure. This includes "knocking out the control systems of rail, air and shipping transport” and other "vital” areas such as electricity and water supply. The program is also designed to train them in blocking access to the global public information system – an apparent reference to the internet. Such attacks on vital supply and transportation arteries and industrial control systems have for years been among the scenarios most feared by Western intelligence agencies.

And such attacks have long since become reality. In 2017, an attack on a Saudi Arabian oil refinery was discovered. Russian attackers attempted to manipulate the facility’s security mechanisms. One year ago, U.S. justice officials indicted GRU agent Evgeny Gladkikh for the incident. Officially, the suspected hacker had been working for a scientific research institution, which also provides financing to Vulkan.

Such attacks are described in detail in the training program developed by Vulkan. The focus is on "unauthorized access” to critical networks and the "detection of points of weakness” in the targeted system. An additional lesson module teaches denial-of-service attacks as a way of blocking access to web-based services. Recruits are to learn all those skills from both theory-based instruction and practical laboratory simulations.

But Vulkan isn’t just training the next generation of cyberwarriors, it is also seeking to arm them with new tools – which is why Vulkan programmers came up with "Scan-V.” The system is aimed at making cyberattacks far easier to plan, cutting down on the weeks and months it often takes to prepare such assaults. Targets must first be comprehensively investigated: How is the IT system structured? What operating systems have been installed and where are their weaknesses to be found?

According to the leaked documents, "Scan-V” is intended to automate these steps. The information gathered is then analyzed and proposals are made for how an attack might be structured.

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It "reminds me of old military movies,” says Gabby Roncone, from the IT security firm Mandiant, "where people stand around … and place their artillery and troops on the map.” They then try to "understand where they need to strike first to break through the enemy lines.”

Experts have classified "Scan-V” as an offensive weapon, primarily developed for hacker units that frequently launch large-scale attacks. And which want to become even more powerful.

In May 2020, a Vulkan team was planning a visit to one of the company’s most important clients. The destination was Khimki, an industrial city just outside of Moscow. "Please provide your passport details” ahead of time, wrote the "Scan-V” project head Oleg N. on May 27 in an email to his team. The site they would be visiting had extremely tight security and access was strictly controlled. The meeting may well have been scheduled to be held in a 20-floor, glass high-rise on the banks of the Moskva River. Western security officials know it well.

It even appeared in an indictment from 2018 that caused a stir around the world. The indictment stemmed from the investigation by Special Counsel Robert Mueller into Russian influence on the 2016 presidential election in the U.S. In the document, the high-rise in Khimki is referred to as "The Tower.” The unit from the military intelligence agency GRU, which is based here, is thought to have participated in the surveillance of Hillary Clinton’s campaign team in an effort to get Donald Trump elected. Officially, the military hackers are identified by their military postal service number: 74455. But they are better known under their codename: "Sandworm.” They are the most notorious cyberwarriors in the world.

"The Tower": The GRU unit known as 74455 is thought to operate out of this high-rise. Foto: Alexander Zemlianichenko / AP / picture alliance

Many of the most spectacular hacks and cyberattacks performed in recent years are thought to have been perpetrated by the hackers operating behind the glass façade of The Tower. The man considered to be the unit’s new commander, Evgenii Serebriakov, doesn’t appear particularly dangerous in his passport photo, but a few years ago, he and three others were discovered attempting to attack the Organization for the Prohibition of Chemical Weapons in The Hague. The Dutch discovered them in the act, confiscated their laptops and mobile phones, and threw them out of the country.

The embarrassing incident doesn’t seem to have hurt Serebriakov’s career, a fact that doesn’t come as a surprise to high-ranking officials who have spent extensive time observing the Russian secret services. Demonstrations of strength and courage are often more important in Moscow than operational success. Russia intentionally crosses boundaries in order to strike fear in the hearts of its adversaries, says one intelligence official, adding that Russian hackers are frequently careless when they go on the attack. "Maybe the attack wasn’t particularly sophisticated and didn’t achieve its goal. But that almost doesn’t matter. The message is: We don’t just issue threats, we also take action.”

That is particularly true of the GRU, the most ferocious of all the Russian secret services. Some 37,000 people work there, including 25,000 elite soldiers from Spetsnaz. Western intelligence services believe that the agency also employs several thousand hackers. One espionage expert describes the GRU's approach as "impact over cover." GRU’s arsenal of "active measures” includes sabotage and subversion, disinformation and assassination. The goal: unleashing chaos and damaging Western democracies.

$10 million reward: The FBI in the U.S. used wanted posters in the search for the "Sandworm" hackers. Foto: FBI

The attacks perpetrated against Ukrainian targets by "Sandworm” – which have been going on for around the last 10 years, are particularly spectacular and unrelenting. Just before Christmas in both 2015 and 2016, Russian hackers managed to successfully attack Ukraine’s power supply, resulting in the first blackouts ever triggered by cyberattacks. A clear demonstration of power.

A few months later, Moscow launched an attack considered to be the most consequential hack ever performed. The perpetrators used a popular Ukrainian tax software to disseminate a malware program called "NotPetya.” It spread rapidly, encrypting infected computers and making them unusable. Because multinational companies were infected, the effects of the attack quickly spread beyond the borders of Ukraine – and soon, around the world. Companies like the logistics giant Maersk and the cosmetics multi-national Beiersdorf were forced to completely rework their IT systems. The attacks caused an estimated $10 billion in damages.

The Russians are currently going after Ukrainian companies with "Wiper” attacks, destructive malware programs that seek to make infected computers unusable. In a recent analysis, Microsoft has identified nine different "Wiper” families that have been used to attack more than 100 Ukrainian companies and government agencies since the invasion. As part of an operation against the national news agency Ukrinform that was uncovered in January, "Sandworm” deployed five of these programs at once.

At the beginning of the invasion of Ukraine, cyberattacks were conducted in concert with conventional attacks. Russia would launch rockets or missiles at targets that had previously been the subject of cyberattacks.

Kyiv, Feb. 28, 2022

Just a few days after the Russian invasion, hackers infiltrate a Kyiv media company, according to Microsoft. The next day, the television tower is attacked from the air.

Attack on the television tower of Kyiv on March 1, 2022. Source: Twitter / Rob Lee

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Zaporizhzhia, March 2, 2022

A Russian group hacks deep into the network of a Ukrainian nuclear power plant operator. One day later, Putin’s troops attack Ukraine’s largest nuclear power plant, located in Zaporizhzhia. They take control of it on March 4.

Fighting at the gate of the nuclear power plant in Zaporizhzhia on March 3, 2022. Source: Twitter / BeMilInterest

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Dnipro, March 11, 2022

A government agency in Dnipro is attacked by malware. The same day, the city is attacked from the air.

A rocket detonates in Dnipro on March 11, 2022. Source: Twitter / m_osint

Lviv, April 18, 2022

Several cruise missiles detonate in the city. One day later, a local logistics company is attacked by malware. On April 29, the hackers again launch an attack, this time targeting networks used by logistics companies in Lviv. A few days later, an electrical substation belonging to the rail company is attacked from the air. According to Microsoft, the cyberattacks were performed by the group “Sandworm.“

Russian air attacks on Lviv on April 18, 2022. Source: Twitter / nexta_tv

According to numerous IT security experts and Western intelligence agents that DER SPIEGEL spoke to, "Scan-V” would be a useful tool that could be used to prepare such attacks. It is unclear, however, whether the GRU has in fact deployed or purchased "Scan-V.”

It does seem to be clear, however, that the GRU closely followed the development of this tool. An 11-page document, full of jargon about processing systems and data analysis, provides clear evidence of that interest. The coversheet identifies it as a protocol for "Scan-V,” focusing on "data exchange between the sub-systems PU-L, PSAP, Scan-AS.” In the upper left corner is the notification: "Authorized representative of military unit 74455.” The "Sandworm” unit.

The tools were successively refined by Vulkan over the course of several years. And 10 years ago, one of the company’s employees was involved in a global attack launched by one of the best Russian hacker groups – a finding from an analysis performed by Google, which DER SPIEGEL is now making public for the first time.

The attack, which researchers christened "MiniDuke,” targeted official state computers in countries like Germany, the U.S. and Ukraine. The goal: stealing secret information from agency networks. The computers of at least three Western government representatives were successfully infiltrated and more than 100 servers around the world were infected, according to IT security experts. Behind the attacks was a group called "The Dukes,” also known as "Cozy Bear” – linked to the Russian foreign intelligence agency SVR. Later, the hackers went after the Pentagon.

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In late 2012, Google identified an email address that was later linked to "MiniDuke.” "We observed that gmail address send an apparent test message to an email address with the ntc-vulkan.ru domain,” the company said in a statement. Such test emails are frequently used to determine if Google filters recognize their viruses or hacking tools. The tests were apparently successful, because later, the hackers used that same email address to send out the malware that circled the world as "MiniDuke.” Diplomats, government officials, members of the military and others in numerous Western countries received customized emails from Moscow with attachments bearing titles like "Ukraine’s NATO Membership Action Plan (MAP) Debates” or an incredibly realistic-looking invitation to an "Asia-Europe Meeting (ASEM) Seminar on Human Rights.” As soon as the documents were open, the computer was infected.

Cryptic posts began appearing on Twitter in parallel from anonymous accounts - things like "Albert my cousin. He is working hard,” followed by a seemingly random list of characters. For Twitter users, it looked like nonsense, but for infected computers, those posts contained orders to covertly download the next tier of the malware program. Experts would later refer to the system as "extremely effective.”

But Google was able to draw a line from "MiniDuke” to Vulkan due to a mistake made by the hackers: They used the same IP address to rent a control server that they had also used when registering the Google account that was used to send the malware. "Definitely a slip-up,” says an IT security expert from Google. The discovery led Google to block the email account, but the global hacking campaign could no longer be stopped.

Early coups such as that one likely contributed to Vulkan receiving funding over several subsequent years to further develop its capabilities. The company was paid numerous installments adding up to several million euros from institutes closely linked to Russian secret service agencies and the military. In over 17,000 money transfers of Vulkan for which the international reporting team has documentation, the system names "Scan-V,” "Amezit” and "Crystal-2V” are regularly noted as the reason for payment.

It also appears that the Russian hackers are urgently searching for ways to further boost the efficiency of their massive cyberattacks. Ukraine is currently being bombarded by such attacks on an almost daily basis. They frequently resemble an onslaught from March 28, 2022.

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That morning, Kyrylo Hontsharuk was awakened by the ringing of his mobile phone. It was his 40th birthday. The caller, though, was not a well-wisher, but a distraught employee of his company. Hontsharuk is the chief information officer (CIO) of the Ukrainian internet service provider Ukrtelecom. He had been expecting a hacker attack since the beginning of the war, and now it was here. The attackers had managed to infiltrate the account of a Ukrtelecom employee. From there, they found their way into the company’s internal systems and obtained administrative rights, thus giving them the ability to change programming code. Hontsharuk immediately realized that if the hackers progressed any further, they would have access to specific users.

Hontsharuk figured he only had one choice: He had to take the servers offline to prevent lasting damage. But doing so would cut off hundreds of thousands of Ukrainians from the internet. And many of them were trapped in bunkers, with the internet as their only source of information about where and how the Russian military was advancing, and whether their families were still safe.

Hontsharuk’s team worked through the night to remove the Russian saboteurs from the system. "Such an attack must never be allowed to happen again,” says Hontsharuk. "But there is no such thing as 100 percent protection.”

The Russian cyber-soldiers, though, aren’t just targeting their presumed enemies abroad. Increasingly, they are turning their weapons inward. Under Putin, Russia has long since become an intelligence state, and his confidants from the shady world of espionage, the "siloviki,” have become the new nobility. The importance of this bubble for Putin, say high-ranking Western security officials, is almost impossible to overstate.

He is relying on his old connections to solidify his power. The West doesn’t trust Putin, says a Western intelligence official, but his own people likely trust him even less. Which is why Putin’s intelligence services have been tasked with gathering and saving as much information as possible, whether or not it is of immediate use.

Vulkan helps with that effort as well. At the behest of the FSB, the company’s software engineers developed surveillance software to control the Russian population – codename: "Fraction.” The goal is the automated surveillance of online activities. "A system,” as it is described in the documents, "to monitor and identify activities in social networks.” A web-based "Big Brother” designed to scan social media posts for suspicious content and then save that content. It is a way to filter out those who are critical of Putin.

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Not all Vulkan employees are pleased about developing instruments for the suppression of their fellow Russians. For some, it crosses the line. When he learned about the cooperation among intelligence services in this area, says Yevgeny, it became clear to him "that I didn’t want to support the regime.” Yevgeny is not his real name. He worked for Vulkan for several years, but now lives in the West. His precise location and the projects he worked on cannot be revealed so as not to put him in danger.

Yevgeny is one of the more the 90 current and former Vulkan employees who were contacted during the reporting on this project. He is a quiet IT nerd, a far cry from the militaristic bombast he says the two company founders exude. "I was always a bit afraid of them,” he says. The work itself, though, was "fun,” with an atmosphere similar to that of a startup. And his salary was above average.

The Vulkan open-space offices may have all the charm of an insurance agency, with the brown carpeting and yellow walls. But the mood was quite relaxed, says Yevgeny, and people were friendly with each other. After one party, he says, co-workers grabbed the unfinished bottles of schnapps to continue drinking together, and they would also go fishing together on company outings. One time, they drove tanks across a military exercise ground. He says that some in the company derisively refer to Putin as "grandpa in the bunker,” and they even talked about the invasion of the Crimea inside the company, with some at Vulkan voicing their opposition.

The full palette of the projects that Vulkan was working on only slowly became clear to Yevgeny. It was knowledge that he wasn’t supposed to obtain, with the employees sworn to secrecy, even within the company, about the projects they were working on. The increasingly brutal methods employed by the Russian regime ultimately transformed Yevgeny into an opponent of the Kremlin and a follower of opposition leader Alexei Navalny. "The total surveillance of activists cannot be a feature of a modern country,” he says.

Yevgeny has now managed to build a life for himself in a Western country and says he never wants to return to his homeland. "This regime is a police state and one of the pillars of this state is made up of companies like Vulkan.”

His former co-workers continue on their mission. The Russian cyberwar machine needs an uninterrupted supply of soldiers and weapons. For "Sandworm” and "Cozy Bear,” for Vulkan and all the others, a golden age has apparently dawned.

Because for Putin and his military, the internet is not the battlefield of the future, but of the present.

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Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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Cooperate with objective and ethical thinking…

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Even those who resist dying may pass away… Donald Trump Is Indicted in New York

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Foreword…

Even Melania Must Know Trump Blew It

NYT, Nov. 14, 2022, By Michelle Cottle

Ms. Cottle is a member of the editorial board.

…Marriage is hard. Even the happiest couples will occasionally bicker, nitpick or wear on each other’s nerves. So consider just how bumpy things could get if someone’s thin-skinned, emotionally erratic, accountability-averse husband started criticizing her for his high-profile screw-ups.

This apparently has been happening at Mar-a-Lago, where, post-election, Donald Trump is flipping out over his key role in the Republicans’ face-plant in the Pennsylvania Senate race. Mr. Trump backed his old buddy Mehmet Oz, and the celebrity doctor turned out to be a loser. The former president has since been shifting the blame for his poor pick onto everyone else — including Melania Trump, according to The Times. (Mr. Trump, of course, hopped on Truth Social to denounce the “Fake Story” and insist he “was not at all ANGRY.”)

By now, Mrs. Trump must be somewhat accustomed to her hubby’s tantrums. Still, this round of ragey finger-pointing must be particularly galling, considering that Mr. Trump didn’t just undermine Republicans’ chances in an eminently winnable Senate race. He helped kneecap the party up and down the Pennsylvania ballot, giving the Democrats in the crucial swing state one of their best Election Days in ages.

How Mr. Trump manages to turn perfectly winnable races and states into big-time losers might be worth a little reflection (read: panic) among Republicans as the former president prepares for his third White House run. This guy has the Midas touch in reverse, yet still he’s planning a “Special Announcement” on Tuesday night — despite even some of his former aides’ urging him to slow his roll. Mr. Trump likes to move fast and furious, to keep heads spinning. His embrace of wing-nut candidates in Pennsylvania, Arizona, Michigan and New Hampshire not only probably cost Republicans potential victories in those battleground states but also offers a sneak peek at what Mr. Trump could do to his party in 2024 if he’s once more at the top of the ticket.

Of all the places where Mr. Trump proved toxic, Pennsylvania may be where he did the most impressive damage — a state that will be key to any winning Republican presidential contender in 2024. The Trumpian fiasco there shows what happens when candidates make the race all about themselves, embracing MAGA and being out of step with the electorate.

In the high-stakes fight for control of the Senate, Pennsylvania was a hot spot, widely considered the Democrats’ best opportunity to flip a Republican-held seat and, by extension, a must-hold for the G.O.P. Dr. Oz’s high-profile flop was a particularly painful one for Mr. Trump’s party. But there’s more: The Democrats scored a huge win in the governor’s race as well, where Josh Shapiro had the good fortune of running against Doug Mastriano, a Trump-endorsed MAGA extremist so unsettling you have to wonder if he is secretly related to Marjorie Taylor Greene. The Democrats also triumphed in House races, holding onto vulnerable seats, including the hotly contested 8th and 17th Districts. And while a couple of tight races have yet to be called, party leaders are thrilled about already netting 11 seats and being this close to possibly flipping the state House, putting Democrats in control of the chamber for the first time in more than a decade. All of this was a step up for them from 2020, when voters went for Joe Biden over Donald Trump but picked Republicans in some other statewide races.

A new legislative map helped boost Democrats in the state House battle. But at the core of their success in Pennsylvania was candidate quality. The new governor-elect, Mr. Shapiro, is considered a gifted politician who by all accounts ran a top-notch campaign, stumping tirelessly and raking in campaign cash. “In Philly he gave us all the resources we could have needed,” said Bob Brady, a former congressman and longtime chairman of the Philadelphia Democratic Party.

And while Mr. Fetterman, the state’s lieutenant governor, gave his party some anxious moments in his Senate run, many related to the stroke he suffered days before the May primaries, he is a promising model for Democrats looking to compete in other tricky purple places. Mr. Fetterman’s blue-collar, anti-establishment brand helped him sell himself as not just another politician — and certainly not some snooty blue-state elite. Looking to woo voters from beyond his party’s usual enclaves, he adopted “Every county, every vote” as his campaign mantra and worked the state accordingly — and successfully. In addition to racking up votes in the areas around Philadelphia and Pittsburgh, he cut into Dr. Oz’s margins in more conservative regions. Independents and moderates broke strongly for Mr. Fetterman, according to CNN’s exit polling.

The myriad charms of the top Democratic candidates aside, they indisputably benefited from facing Trump-approved opponents who, in their respective ways, drew on a Trumpian playbook ill suited to woo Pennsylvanians. First, Dr. Oz. This was arguably Mr. Trump’s most straightforward bet that celebrity logically translates into political success. But the daytime-TV host, a longtime resident of New Jersey, was ripe for caricature as a slick, rich, elitist carpetbagger. This proved to be an especially fun project for Mr. Fetterman, who is devoted to the grittier, redder western region of the state. When asked during his lone debate with Dr. Oz about his loyalties in the fierce intrastate football rivalry between the Eagles and Steelers, Mr. Fetterman did not dissemble. “Always for the Steelers,” he said, with a look suggesting the very question was absurd.

From the moment Dr. Oz won the nomination, Team Fetterman moved to paint him as a Jersey interloper, creatively slamming him on social media at every turn. This played into the larger narrative of the Republican as “a phony,” said Sharif Street, the state’s Democratic Party chair. Dr. Oz had no core values, no clear political identity and no real message, Mr. Street argued, adding that he kept trying to have it “both ways” — presenting himself as a reasonable moderate in the Philly suburbs while playing up his MAGAness in redder, more rural regions.

“Everything Oz did just appeared to be synthetic,” said Fletcher McClellan, a political scientist at Elizabethtown College and longtime analyst of the state’s politics.

There is little question that Democrats were more afraid of and would have had a tougher time beating David McCormick, Dr. Oz’s chief opponent in the Republican primary. “They really dodged a bullet there,” Mr. McClellan said.

Mr. Mastriano, a Republican state senator, was an even bigger boon to the Democrats. Unlike Dr. Oz, this ultra-MAGA warrior had plenty of core values. “Dark, dark values,” Mr. Street quipped.

Mr. Trump liked Mr. Mastriano’s passionate embrace of the former president’s election-fraud lies. But Mr. Mastriano also went all in on the culture warring, taking a hard-right line on everything from abortion to transgender rights to public school curriculums. At no point did he seem interested in reaching beyond his base. “It never seemed to me like he wanted to be governor — more like the leader of a movement,” Mr. McClellan observed.

Mr. Mastriano was so out there that several of the state’s former G.O.P. officials announced their support for Mr. Shapiro. No one was surprised when the Republican fell flat on Election Day.

Still, no one disputes that Mr. Trump’s pathetic candidates helped turn Pennsylvania a much bluer shade of purple this cycle. For now at least, the state’s Democrats may be feeling more fondly toward the former president than many in his own party — and perhaps even his wife.

Image: Germán & Co. Mr. Trump will be the first former president to face criminal charges. The precise charges are not yet known, but the case is focused on a hush-money payment to a porn star during his 2016 campaign.

Donald Trump Is Indicted in New York…

NYT, March 30, 2023, updated March 31, 2023

A Manhattan grand jury indicted Donald J. Trump on Thursday for his role in paying hush money to a porn star, according to people with knowledge of the matter, a historic development that will shake up the 2024 presidential race and forever mark him as the nation’s first former president to face criminal charges.

On Thursday evening, after news of the charges had been widely reported, the district attorney’s office confirmed that Mr. Trump had been indicted and that prosecutors had contacted Mr. Trump’s attorney to coordinate his surrender to authorities in Manhattan.

Mr. Trump is likely to turn himself in on Tuesday, at which point the former president will be photographed and fingerprinted in the bowels of a New York State courthouse, with Secret Service agents in tow. He will then be arraigned, at which point the specific charges will be unsealed. Mr. Trump faces more than two dozen counts, according to two people familiar with the matter.

Mr. Trump has for decades avoided criminal charges despite persistent scrutiny and repeated investigations, creating an aura of legal invincibility that the indictment now threatens to puncture.

But unlike the investigations that arose from his time in the White House — which examined his strong-arm tactics on the international stage, his attempts to overturn the election and his summoning of a mob to the steps of the U.S. Capitol — this case is built around a tawdry episode that predates Mr. Trump’s presidency. The reality star turned presidential candidate who shocked the political establishment by winning the White House now faces a reckoning for a hush-money payment that buried a sex scandal in the final days of the 2016 campaign.

In a statement, Mr. Trump lashed out at the district attorney, Alvin L. Bragg, a Democrat, and portrayed the case as the continuation of a politically motivated witch hunt against him.

“This is political persecution and election interference at the highest level in history,” Mr. Trump said in the statement, calling Mr. Bragg “a disgrace” and casting himself as “a completely innocent person.”

Mr. Trump, who has consistently denied all wrongdoing, has already called on his followers to protest his arrest, in language reminiscent of his social media posts in the weeks before the Jan. 6, 2021, attack on the Capitol by his supporters. He has also denied any affair with the porn star, Stormy Daniels, who had been looking to sell her story of a tryst with Mr. Trump during the 2016 campaign.

“President Trump did not commit any crime,” Mr. Trump’s lawyers, Susan R. Necheles and Joseph Tacopina, said in a statement. “We will vigorously fight this political prosecution in court.”

The first sign that an indictment was imminent on Thursday came just before 2 in the afternoon, when the three lead prosecutors on the Trump investigation walked into the Lower Manhattan building where the grand jury was sitting. One of them carried a copy of the penal law, which was most likely used to read the criminal statutes to the grand jurors before they voted.

The team prosecuting Mr. Trump was led by Matthew Colangelo, center, and Susan Hoffinger, center left, as well as Chris Conroy.Credit...Dave Sanders for The New York Times

Nearly three hours later, the prosecutors walked into the court clerk’s office through a back door to begin the official process of filing the indictment, arriving about two minutes before the office closed for the day.

For weeks, the atmosphere outside the district attorney’s office had resembled a circus, with television trucks and protesters surrounding the building. But the fervor had cooled by Thursday, and the outskirts of the office were emptier than they had been in weeks.

Mr. Bragg is the first prosecutor to indict Mr. Trump, but he might not be the last. Mr. Trump’s actions surrounding his electoral defeat are now the focus of a separate federal investigation, and a Georgia prosecutor is in the final stages of an investigation into Mr. Trump’s attempts to reverse the election results in that state.

But the Manhattan indictment, the product of a nearly five-year investigation, kicks off a volatile new phase in Mr. Trump’s post-presidential life as he makes a third run for the White House. And it will throw the race for the Republican nomination — which he is leading in most polls — into uncharted territory.

Under normal circumstances, an indictment would deal a fatal blow to a presidential candidacy. But Mr. Trump is not a normal candidate. He has already said that he would not abandon the race if he were charged, and the case might even help him in the short term as he paints himself as a political martyr.

The indictment also raises the prospect of an explosive backlash from Mr. Trump, who often uses his legal woes to stoke the rage of die-hard supporters. Already, the former president has used bigoted language to attack Mr. Bragg, the first Black man to lead the district attorney’s office, calling him a “racist,” an “animal” and a “radical left prosecutor.”

Mary Kelley, a supporter of Mr. Trump, on the bridge outside of Mar-a-Lago Club in Palm Beach, Fla., on Thursday.Credit...Josh Ritchie for The New York Times

In the past, Mr. Trump has lashed out when feeling cornered, encouraging the violent attack on the Capitol as he contested the results of the 2020 presidential election. That assault on the seat of government demonstrated that Mr. Trump’s most zealous followers were willing to resort to violence on his behalf as he sought to overturn the election results.

While the specific charges in the Manhattan case against the former president remain unknown, Mr. Bragg’s case centers on a $130,000 hush-money payment to Ms. Daniels.

Mr. Trump’s longtime fixer, Michael D. Cohen, made the payment in the final days of the 2016 campaign. Mr. Trump later reimbursed him, signing monthly checks while serving as president.

Mr. Bragg’s prosecutors appear to have zeroed in on the way Mr. Trump and his family business, the Trump Organization, handled the reimbursement to Mr. Cohen. In internal documents, Trump Organization employees falsely recorded the repayments as legal expenses, and the company invented a bogus retainer agreement with Mr. Cohen to justify them.

Mr. Cohen, who broke with Mr. Trump in 2018 and later testified before Congress as well as the grand jury that indicted Mr. Trump, has said that the former president knew about the phony legal expenses and retainer agreement.

In New York, it can be a crime to falsify business records, and Mr. Bragg’s office is likely to build the case around that charge, according to people with knowledge of the matter and outside legal experts.

But to charge falsifying business records as a felony, rather than a misdemeanor, Mr. Bragg’s prosecutors must show that Mr. Trump’s “intent to defraud” included an effort to commit or conceal a second crime.

That second crime could be a violation of election law. Mr. Bragg’s prosecutors might argue that the payment to Ms. Daniels represented an illicit contribution to Mr. Trump’s campaign: The money silenced Ms. Daniels, aiding his candidacy at a crucial time.

“Campaign finance violations may seem like small potatoes next to possible charges for his attempt to overthrow the 2020 election, but they also go to the heart of the integrity of the electoral process,” said Jerry H. Goldfeder, a special counsel at Stroock & Stroock & Lavan LLP and a recognized expert in New York state election law.

If Mr. Trump were ultimately convicted, he would face a maximum sentence of four years, though prison time would not be mandatory.

Yet a conviction is not a sure thing, and Mr. Bragg’s case might apply a legal theory that has yet to be evaluated by judges. A New York Times review of relevant cases and interviews with election law experts strongly suggest that New York State prosecutors have never before filed an election law case involving a federal campaign.

An untested case against any defendant, let alone a former president of the United States, carries the risk that a court could throw out or limit the charges.

Mr. Trump will not be the first person charged over the hush-money payment. In 2018, Mr. Cohen was federally prosecuted for the payment and pleaded guilty to campaign finance violations.

Mr. Cohen is likely to become Mr. Bragg’s star witness at trial. While his past crimes will make him a target for Mr. Trump’s lawyers — who can be expected to attack the former fixer’s credibility at every turn — prosecutors will be likely to counter that Mr. Cohen lied on behalf of Mr. Trump, and that his story has been consistent for years.

In a statement, Mr. Cohen said he took “solace in validating the adage that no one is above the law; not even a former president.”

His lawyer, Lanny J. Davis, said that “Michael Cohen made the brave decision to speak truth to power and accept the consequences,” and that “he has done so ever since.”

Mr. Cohen will not be the prosecution’s only witness: David Pecker, a longtime ally of Mr. Trump and the former publisher of The National Enquirer, testified before the grand jury twice this year. He is likely to be able to corroborate important aspects of Mr. Cohen’s story, including that Mr. Trump wanted to bury embarrassing stories to protect his presidential campaign, not just his family, as his lawyers contend.

Soon after Mr. Trump began his campaign in 2015, he hosted Mr. Pecker for a meeting at Trump Tower, during which the publisher agreed to look out for stories that might damage Mr. Trump’s candidacy.

One such story arose in the summer of 2016, when Karen McDougal, Playboy’s playmate of the year in 1998, said that she had had an affair with Mr. Trump. She reached a $150,000 agreement with the tabloid, which bought the rights to her story to suppress it, a practice known as “catch and kill.”

When Ms. Daniels tried to secure a similar arrangement, Mr. Pecker didn’t take the deal. But he and the tabloid’s former top editor helped broker Mr. Cohen’s payment to Ms. Daniels.

Despite the potential legal obstacles, and questions about Mr. Cohen’s credibility, if the case does go to trial, the salacious details could sink Mr. Trump. While white-collar prosecutions are often dry and procedural, this one will likely have some built-in jury appeal: a defendant charged with a seedy crime in a city where he is loathed by many.

Any trial is months away. It will take time for Mr. Trump’s lawyers to argue that the case should be thrown out. That timeline raises the extraordinary possibility of a trial unfolding in the thick of the 2024 presidential campaign.

The case would come before a jury more than five years after Mr. Cohen’s federal guilty plea prompted the district attorney’s office to open an investigation into Mr. Trump’s role in the hush-money saga. The inquiry began under Mr. Bragg’s predecessor, Cyrus R. Vance Jr., who did not seek re-election.

Over the years, the investigation expanded to include whether Mr. Trump had lied about his net worth on annual financial statements. Although Mr. Vance’s prosecutors were marching toward an indictment of Mr. Trump for inflating his net worth, soon after Mr. Bragg took office, he developed concerns about proving the case.

But he continued to scrutinize Mr. Trump. And in January, a few months after his prosecutors began revisiting the potential hush-money case, Mr. Bragg impaneled the grand jury that has now indicted Mr. Trump.

Conspiracy theorists online grasp for explanation behind indictment.

On social media channels associated with extremists and conspiracy theorists, people searched for an explanation behind former President Donald J. Trump’s indictment on Thursday, with some calling him a victim of a Democratic witch hunt to suppress his influence and others describing him as a grand master playing political chess to reclaim the presidency.

The scattered response reflects the shift in Mr. Trump’s power since a large group of his supporters stormed the Capitol after he lost the 2020 election. In the years since, Mr. Trump’s political movement experienced multiple electoral defeats. Some supporters were jailed after the attack on the Capitol. The social media landscape shifted, and Mr. Trump’s digital reach remains limited by an obligation that he first post on Truth Social, the social network he started last year that has far fewer users than Twitter and Facebook.

Mr. Trump tried rallying his base as the expected indictment drew near — and he earned widespread support from Republicans. Mr. Trump’s recent calls for supporters to protest his potential arrest received a muted response.

Online conversations about the indictment on Thursday seemed to reflect the absence of clear direction. QAnon accounts on Telegram began posting slogans associated with the conspiracy theory, such as “trusting the plan” and “the storm is upon us,” in support of Mr. Trump. Dan Bongino, a radio host who has echoed Mr. Trump’s false claims of voter fraud, wrote on Truth Social that “the police state is here.” Some users claimed that the indictment would only strengthen support for Mr. Trump and help him win re-election in 2024.

Exaggerated accounts of the connections between Alvin L. Bragg, the Manhattan district attorney overseeing the case, and George Soros, the financier and Democratic megadonor, continued to spread. Representative Paul Gosar, a Republican from Arizona, wrote on the social network Gab that Mr. Bragg was “a Soros D.A.,” although a spokesman for Mr. Soros has said that he has never met Mr. Bragg nor donated directly to his campaign. (Mr. Soros donated $1 million to the political arm of Color of Change, a progressive criminal justice group that endorsed Mr. Bragg.)

Threats directed at Mr. Bragg and Mr. Soros peppered online discussions of the indictment — including claims that people were watching Mr. Bragg’s house and children, appeals for Trump supporters to “pick up your rifles” and posts asking “when is go time.” On Truth Social, some called for an armed defense of Mar-a-Lago, the former president’s residence in Florida.

Much of the chatter on far-right channels appeared to be an effort to vent or prognosticate, rather than attempt any coordinated effort. Some users called for peaceful protest and urged others to resist acting on their emotions until more was known about the indictment.

Mike Pence, on a previously booked TV interview, calls the indictment ‘an outrage.’

Mike Pence, who was Donald J. Trump’s vice president, defended his former running mate on Thursday night, describing Mr. Trump’s indictment in a hush-money case as “an outrage.”

“The unprecedented indictment of a former president of the United States on a campaign finance issue is an outrage,” Mr. Pence told the host Wolf Blitzer on CNN.

He accused Alvin Bragg, the Manhattan district attorney, of having “literally ran” his campaign vowing to go after Mr. Trump. Mr. Bragg talked about Mr. Trump during his campaign in 2021.

Mr. Pence, who is considering a run for president, added that the indictment had no bearing on his own decision about the 2024 race.

But by virtue of being previously booked on CNN, Mr. Pence was one of the few prospective candidates to comment. Chris Christie and Senator Tim Scott did not comment. Neither did Nikki Haley, who declared her candidacy last month.

Gov. Ron DeSantis of Florida, who is expected to run but has not yet announced his campaign, called the indictment of Mr. Trump “un-American.” Vivek Ramaswamy, one of the lesser-known Republican contenders, also weighed in, condemning the indictment in a statement as undermining “public trust in our electoral system and our justice system” and urging other candidates to join him in denouncing it.

Two weeks ago, Mr. Pence delivered his strongest public rebuke yet of Mr. Trump, saying that “that history will hold Donald Trump accountable” for the Jan. 6, 2021, attack on the Capitol, which he called “a disgrace.

Democratic reaction focuses on a theme: accountability.

Some Democrats cheered. Others were somber.

But from New York to New Mexico, the early Democratic reaction to news of Donald J. Trump’s indictment had one common message: No one is above the law.

In statements and interviews, party chairs, representatives from left-leaning organizations and other Democratic officials cast the indictment as a critical measure of accountability for a politician who has long trafficked in lies and now faces a morass of legal difficulties.

“This indictment is a long-overdue step in holding Trump accountable for his flagrant disregard for our laws and democracy,” said Jessica Velasquez, chair of the Democratic Party of New Mexico. “The legal system is finally holding him accountable for past transgressions, but it’s up to the voters to hold him accountable in his current run for president.”

“Trump is being held accountable for breaking the law,” added Jane Kleeb, her counterpart in Nebraska.

While he is innocent until proven guilty, Mr. Trump was indicted on Thursday by a special grand jury in connection with his role in paying hush money to a porn star, making him the first former president to face criminal charges in American history.

The specific charges are not yet known, and some Democrats warned against making sweeping judgments without more information.

“In America we believe in the rule of law,” Representative Ruben Gallego, who is running for the Senate in Arizona, said in a statement. “We should wait to hear from the grand jury before jumping to conclusions.”

Mayor Randall L. Woodfin of Birmingham, Ala., stressed that “grand juries are a serious matter.”

“Since 2016, American politics have been a mess, an embarrassing mess,” he said in an interview, saying that Mr. Trump had done things “where many just thought he was above the law. I want to be totally clear when I say this: Nobody’s above the law.”

But it is not yet clear how much, if at all, leading Democrats will lean into discussing the indictment in a political context, especially until charges are known.

In a statement, the Democratic National Committee made only a passing reference to the development before shifting to lash Republicans over more traditional political fare concerning abortion rights and the social safety net, as well as Republican efforts to undermine “free and fair elections.”

“No matter what happens in Trump’s upcoming legal proceedings, it’s obvious the Republican Party remains firmly in the hold of Donald Trump and MAGA Republicans,” said Ammar Moussa, a representative for the D.N.C. “We will continue to hold Trump and all Republican candidates accountable for the extreme MAGA agenda.”

Others, like Representative Adam B. Schiff, didn’t hold back. Mr. Schiff, who is running for the Senate in California and who led the first impeachment trial of Mr. Trump, is already fund-raising off the development.

“Donald Trump was just indicted,” the appeal said. “Adam has always championed progressive values and led the fight to protect our democracy. Now, taking his fight to Trump’s biggest defenders in the Senate is more important than ever.”

Image: Germán & Co

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Cooperate with objective and ethical thinking…

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News round-up, March 29, 2023

A word from the Editors…

Bad memories from the future…

It is said that we so-called human beings have short memories not because of neurodegenerative problems that come with age but because our personal interests, especially our political ambitions, outweigh those of humanity. Time and time again, we make blunders that have ruthless repercussions on society, especially politicians. Regrettable but true...

Warning against Appeasement…

Alexander Solzhenitsyn, Warning to the West,   2016.

…”Solzhenitsyn’s warnings take several forms in this work. Most persistently, he calls for the West to stop providing aid to the Soviet Union, to stop signing treaties with the Soviet Union, and to quit believing in détente, which Solzhenitsyn saw as nothing more than a sham. For one, the Soviet Union would never have admitted to having received help from the West. Solzhenitsyn’s case in point is the American Relief Administration (ARA), which was led by future President Herbert Hoover shortly after the First World War. The effort employed “more than 120,000 Russians and fed 10.5 million people daily,” according to Infogalactic. According to Solzhenitsyn, the Soviet authorities later denounced the ARA as a spy operation. The ARA ceased its operations in the Soviet Union in 1923 when they discovered that the Soviets were once again exporting grain. Solzhenitsyn further elaborates on how modern Western leaders were all too eager to sign accords with the Soviets while remaining blind to how the Soviets had always violated those accords:

Take the SALT [Strategic Arms Limitations Talks] alone: in these negotiations, your opponent is continually deceiving you. Either he is testing radar in a way which is forbidden by the agreement, or he is violating the limitations on the dimensions of missiles, or he is violating the limitations on their destructive force, or else he is violating the conditions on multiple warheads.

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Most read…

EU threatens more sanctions if Russia moves nukes to Belarus

Borrell tweeted: “Belarus hosting Russian nuclear weapons would mean an irresponsible escalation & threat to European security. Belarus can still stop it, it is their choice. The EU stands ready to respond with further sanctions.”

Euronews  with AP, 28/03/2023

Here’s How to Handle North Korea: Give Peace a Chance

Nuclear weapons are in North Korea, since last year, it has tested a record number of missiles, including potent ICBMs thought to be capable of dropping a warhead anywhere on American soil.

NYT by Dan Leaf, March 29, 2023

EU countries seek legal option to stop Russian LNG imports

This month, EU Energy Commissioner Kadri Simson advised European businesses not to enter into new LNG contracts with Russia, a recommendation from Spanish Energy Minister Teresa Ribera.

REUTERS By Kate Abnett

Russia March fuel oil exports to Singapore and Malaysia hit record-traders, data

Russian fuel oil and VGO shipments might amount to more than 4.5 million tonnes and be at their highest level since October 2022 as traders try to eliminate excess volumes following loading delays brought on by bad weather in February.

Reuters

Our stove is the first appliance to get a battery, but not the last…

It's going to revolutionize the game, says Baker. "Absorbing this [electricity] locally actually makes financial sense. Using appliances to complete the task is optimal.

TWP Advice by Michael J. Coren, March 28, 2023 

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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Image: www.taz.de "Alexander Solzhenitsyn on his return from exile, 1994. President W. Putin, Germán & Co by Shutterstock

EU threatens more sanctions if Russia moves nukes to Belarus

Borrell tweeted: “Belarus hosting Russian nuclear weapons would mean an irresponsible escalation & threat to European security. Belarus can still stop it, it is their choice. The EU stands ready to respond with further sanctions.”

Euronews  with AP, 28/03/2023

The EU's foreign policy chief Josep Borrell has cautioned Belarus about allowing Russia to station tactical nuclear weapons on its territory.

In an interview on Saturday, Russian President Vladimir Putin said the move was triggered by Britain’s decision last week to provide Ukraine with armour-piercing rounds containing depleted uranium.

Tactical nuclear weapons are intended for use on the battlefield. They have a short range and a low yield compared with much more powerful nuclear warheads fitted to long-range missiles. 

The move also drew swift condemnation from NATO spokesperson Oana Lungescu, who called it "dangerous and irresponsible".

The US says there has been no indication Russia has moved nuclear weapons across its border. 

"We have not seen any reason to adjust our own strategic nuclear posture," the US Defense Department said in a statement.

On Sunday, Ukraine called for an urgent meeting of the UN Security Council, with Ukrainian Security Council Secretary Oleksiy Danilov saying the Kremlin had taken Belarus "nuclear hostage". 

It is a "step towards the internal destabilisation of the country," he added. 

Putin said Russia planned to maintain control over the nukes it sends to Belarus, with the construction of storage facilities to be completed by 1 July.

He didn’t say how many nuclear weapons Russia would keep in Belarus, which shares a long border with Ukraine and NATO members Poland, Lithuania and Latvia. 

The US government believes Russia has about 2,000 tactical nuclear weapons, including bombs that can be carried by tactical aircraft, warheads for short-range missiles and artillery rounds.

Putin argued that by deploying its tactical nuclear weapons in Belarus, Russia was following the lead of the United States, noting the country has nukes in Belgium, Germany, Italy, the Netherlands and Turkey.

“We are doing what they have been doing for decades, stationing them in certain allied countries, preparing the launch platforms and training their crews,” Putin said, speaking in an interview on state television that aired Saturday night. 

“We are going to do the same thing.”

The Russian leader claimed the move would not violate existing nuclear-non-proliferation agreements. 

Russia currently stores tactical nuclear weapons at dedicated depots on its territory. 

Moving part of the arsenal to a storage facility in Belarus would up the ante in the Ukrainian conflict by placing them closer to the combat zone and NATO states.

This will be the first time Moscow has based nuclear weapons outside of its borders. 

Before the collapse of the Soviet Union in 1991, it stationed nukes in Ukraine, Belarus and Kazakhstan. However, they were transferred back to Russian territories in 1996. 

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Image: Germán & Co by Shutterstock

Here’s How to Handle North Korea: Give Peace a Chance

Nuclear weapons are in North Korea, since last year, it has tested a record number of missiles, including potent ICBMs thought to be capable of dropping a warhead anywhere on American soil.

NYT by Dan Leaf, March 29, 2023

Mr. Leaf is a retired U.S. Air Force lieutenant general and a former deputy commander of the U.S. Indo-Pacific Command

Not many people know how to wage nuclear war. I’m one of them.

As a young U.S. Air Force fighter pilot in the late 1970s, I was trained to carry out nuclear strikes in a rigorous process designed to ensure that no contingencies — mechanical or ethical — deter your mission. Certain things remain burned into my memory: Maps and photos of my target and the realization of the Armageddon I would leave in my wake. Training culminated with a sworn pledge to vaporize that target without hesitation.

Much of my 33-year career was spent as a nuclear warrior — I later oversaw the U.S. intercontinental ballistic missile fleet and served as deputy commander of American military forces in the Pacific — experience that informs my deep alarm over the growing risk of nuclear conflict with North Korea.

The United States has tried for decades to prevent the country from becoming a nuclear threat, veering from diplomacy to pressure to patience. None of these approaches have worked.

North Korea has nuclear weapons. It has conducted missile tests at a record pace since last year, including powerful ICBMs believed to be capable of delivering a warhead anywhere in the continental United States. In January, Kim Jong-un, North Korea’s leader, ordered an “exponential” expansion of the country’s nuclear arsenal, and last year his government passed a law authorizing a pre-emptive nuclear strike. In response, President Yoon Suk Yeol of South Korea has said his country may consider developing nuclear weapons.

In this hair-trigger environment, one bad decision or misunderstanding could kill millions.

I spent four years in South Korea, including in high-level positions at the headquarters of combined U.S., South Korean and U.N. forces, overseeing the vast destructive forces amassed for a war that was no longer being fought. In my time in the region, I went from scratching my head to pulling my hair out. The standoff is one of the great absurdities in global geopolitics.

You must be aggressive to win wars but assertive to make peace. No matter how challenging the negotiations and politics of securing peace on the Korean Peninsula may prove, they are nothing compared to nuclear war.

A permanent peace agreement would undermine Mr. Kim’s portrayal of the United States as an existential threat and his justification for building up his conventional and nuclear arsenal. It could also short-circuit the siege mentality underlying his repressive regime. Sanctions relief and economic development could follow, leading to long-hoped-for improvements in the quality of life and human rights for North Korea’s 25 million people.

The United States, North Korea and South Korea have all pledged in recent years to pursue a lasting peace agreement. Separate meetings that President Donald Trump and then-President Moon Jae-in of South Korea held with Mr. Kim in 2018 committed to that goal. It brought an immediate easing of tensions. Land mines were removed from portions of the Korean Demilitarized Zone, Korean families held reunions, Mr. Kim declared a moratorium on long-range missile and nuclear tests, the North returned remains of U.S. servicemen and released three detained Americans. Even after Mr. Trump’s outreach to Mr. Kim collapsed in 2019, Mr. Kim indicated he was still open to diplomacy.

There is currently a bill in the House of Representatives calling for a peace deal. The Peace on the Korean Peninsula Act would require the secretary of state to submit a “clear road map for achieving a permanent peace agreement”; pursue “serious, urgent” diplomacy in pursuit of a binding agreement; and begin to address America’s lack of diplomatic relations with North Korea by establishing liaison offices on each other’s soil.

The bill is imperfect. Much of it focuses on creating the conditions for Korean Americans to visit relatives in the North. (U.S. law currently bars travel by Americans to North Korea unless it serves an ill-defined “national interest.”) It also lacks other steps necessary to entrench peace, such as a process for U.S.-North Korean reconciliation, normalization of disputed maritime boundaries and a framework for talks between the opposing military forces.

There is an urgent need for progress. After the diplomatic overtures of recent years fell apart, Mr. Kim has only become more belligerent and the risk of conflict is more acute. Passage of a strengthened Peace on the Korean Peninsula Act is essential to securing a lasting solution, yet the current bill has not advanced since it was first introduced in 2021.

Critics argue that a peace agreement may actually increase the risk of war by undermining safeguards put in place by the armistice nearly 70 years ago. These include specific demarcation lines and protocols for communications, movement and other actions within the DMZ. But there is nothing foolproof about the armistice. President Bill Clinton considered bombing North Korea in 1994, and Mr. Trump reportedly discussed using nuclear weapons in 2017. North Korea occasionally carries out provocations, and the North and South have exchanged artillery fire on several occasions.

There are other risks: Pyongyang may use a peace agreement as a pretext to demand the removal of U.S. troops from South Korea, which is a matter between Seoul and Washington.

But the hardest part of ending the war might be building the political will for it in Washington. Accommodating North Korea would inevitably lead to accusations that we are rewarding bad behavior and legitimizing a totalitarian regime. But the Kim family has ruled for 75 years; it’s time to accept that this is unlikely to change anytime soon.

At this moment, the next generation of men and women north and south of the DMZ are preparing for nuclear war. May they never have to put their training to use.

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Image: LNG tanker SCF La Perouse sails along Nakhodka Bay near the port city of Nakhodka, Russia June 13, 2022. REUTERS/Tatiana Meel

EU countries seek legal option to stop Russian LNG imports

This month, EU Energy Commissioner Kadri Simson advised European businesses not to enter into new LNG contracts with Russia, a recommendation from Spanish Energy Minister Teresa Ribera.

REUTERS By Kate Abnett

LNG tanker SCF La Perouse sails along Nakhodka Bay near the port city of Nakhodka, Russia June 13, 2022. REUTERS/Tatiana Meel

BRUSSELS, March 28 (Reuters) - European Union countries agreed on Tuesday to seek a legal option to stop Russian companies sending liquefied natural gas to EU nations, by preventing Russian firms from booking infrastructure capacity.

EU countries' energy ministers proposed that new EU gas market rules should include the option for governments to temporarily stop Russian and Belarusian gas exporters from bidding up-front for capacity on the infrastructure needed to deliver LNG into Europe.

The proposal is part of countries' negotiating position on new EU gas market rules. It must be negotiated with the European Parliament - a process that can take months.

The 27-country EU has pledged to ditch Russian gas in response to Moscow's invasion of Ukraine. Europe's pipeline imports of gas from Russia have plunged since the invasion, but LNG imports have increased.

Russian LNG deliveries to Europe increased last year - to 22 bcm, up from around 16 bcm in 2021, according to EU analysis.

Lithuanian Vice Minister for Energy Albinas Zananavicius said the proposal would avoid a situation where LNG infrastructure designed to help countries swap Russian gas for alternatives, was in fact being used to import more from Moscow.

"You build the infrastructure to get rid of the supplier who manipulated your (gas) markets and caused great difficulties to you - and then you accept the same supplier through LNG? There's something wrong with the logic," he told Reuters.

If approved, the proposal would offer member states a route to stop Russian LNG imports without using sanctions - which are politically harder to greenlight because they need unanimous approval from all 27 EU member states.

Hungary said it could not support the negotiating position on the new EU gas market law, which also includes a raft of new rules to integrate more low-carbon gases.

EU Energy Commissioner Kadri Simson this month urged European companies not to sign new Russian LNG deals - a request also made by Spanish Energy Minister Teresa Ribera to firms in Spain.

However, such requests are not binding, since Russian gas and LNG are not subject to EU sanctions. The EU does have a ban on seaborne crude oil and oil products imports from Russia.

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Image: Germán & Co

Russia March fuel oil exports to Singapore and Malaysia hit record-traders, data

Russian fuel oil and VGO shipments might amount to more than 4.5 million tonnes and be at their highest level since October 2022 as traders try to eliminate excess volumes following loading delays brought on by bad weather in February.

Reuters

MOSCOW, March 29 (Reuters) - Russia has sent record volumes of sea-borne fuel oil and vacuum gasoil (VGO) to Singapore and Malaysia in March, adding to oversupplied Asian markets, traders said and Refinitiv data showed.

The European Union's full embargo on Russian oil products came into effect on Feb. 5 and the bulk of Russia's fuel oil and VGO was redirected to other regions, mostly Asia, long before the deadline.

According to Refinitiv data, in March fuel oil and VGO shipments from Russian ports to Singapore and Malaysia could exceed 1.1 million tonnes, in line with loadings from the United Arab Emirates (UAE).

In total, Russian fuel oil and VGO exports could be at their highest since October, 2022, and reach more than 4.5 million tonnes, as traders look to get rid of surplus volumes after loading delays in February due to storm weather.

Meanwhile, Fujairah as a major trading hub in the UAE has also received volumes of Russian dirty oil products, which could total this month at least 300,000 tonnes.

Some Russian oil products are shipped to Asia via ship-to-ship (STS) loadings, and this month dirty oil product flows from Russian ports to STS loadings near Kalamata port are expected to reach between 0.8 and 1.0 million tonnes, Refinitiv figures showed.

Several tankers loaded in Russian ports also have no final destinations yet, so the real total of fuel oil shipments in March from Russia to Singapore and Malaysia could be much higher than 1 million tonnes, traders said.

"I believe that a huge part of those supplies will be `on the water`, for storage", one trader said.

About 350,000-400,000 tonnes of fuel oil and VGO loaded from Russian ports in March could end up in Turkey, while supplies to India have fallen drastically to less than 100,000 tonnes, according to Refinitiv data.

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Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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Image: Illustration by Emily Sabens/The Washington Post; iStock.

Our stove is the first appliance to get a battery, but not the last…

It's going to revolutionize the game, says Baker. "Absorbing this [electricity] locally actually makes financial sense. Using appliances to complete the task is optimal.

TWP Advice by Michael J. Coren, March 28, 2023 

Your appliances, you should know, will come loaded with batteries. We’ll probably have energy storage in our stoves and water heaters, perhaps even our washers and dryers.

Traditionally, batteries’ main purpose was to make gadgets portable. Today, they’re emerging as a shortcut on our path to “electrify everything.”

To switch from fossil fuels, we’ll need to plug in a bunch of new things: our cars, our stoves, our heaters and more. Many homes were not designed to carry this kind of load. Installing high-voltage wires, upgrading panels and rewiring your connection to utility poles is like building an electric highway into your home when all you have is a country road.

These retrofits are expensive — if you can find someone to do them, given the crush of new demand. Instead of rewiring our homes and upgrading grid infrastructure, appliances with batteries will allow us to stash energy around the house for when we need it, eliminating a final barrier to stop burning natural gas and heating oil inside our homes.

This is one of our best shots to decarbonize existing buildings. In the transportation and electricity sector, only a few hundred companies, automakers and utilities, must change their practices to phase out fossil fuels. But tamping down buildings’ emissions requires millions of individual households and property owners to make expensive, unfamiliar investments.

Little batteries are here to help…

Induction stoves

Induction stoves are the first major appliances to come with batteries. While a standard 120-volt plug can handle most daily cooking routines, running an electric oven and four burners draws a blistering 10 kilowatts, equivalent to more than 10 space heaters running full blast simultaneously. To handle that much juice, if only for a few minutes, you need a 240-volt outlet, like the ones for clothes dryers or conventional electric ovens.

Millions of homes do not have one, especially in the kitchen. In my own 1940s condominium, my electrician estimated running the wiring for a 240-volt outlet for an induction stove will cost $3,800. Battery-enabled stoves avoid this by plugging into an existing 120-volt outlet. When a burst of electricity is needed, the battery discharges energy. No new wiring necessary.

These little batteries are not quite here yet. For now, no major manufacturers are integrating batteries into their appliances. Rheem, a global water heater manufacturer, released the first 120-volt water heater heat pump last year, although it doesn’t include energy storage.

But start-ups are rushing into this space.

San Francisco-based Impulse Labs plans to sell its first battery-enabled induction stove in the next year or so. Its 3-kilowatt-hour battery packs enough electricity to roast a Thanksgiving turkey with all the fixings, or cook three meals during a blackout, says founder Sam D’Amico. Channing Street Copper will ship its full-range Charlie model later this year for $5,999 before incentives. Charlie offers the option to plug other appliances into the stove, like your refrigerator or phone, as backup power. Both appliances use batteries to supplement, rather than replace, electricity from the 120-volt outlet. The batteries’ lithium-ion phosphate chemistry is more stable and environmentally friendly than traditional lithium-ion batteries in electric vehicles or phones.

Neither is aimed at the lower end of the market, even after generous rebates. But both start-ups say prices will come down, and for people wanting to have backup power storage in their home, it will be much cheaper to buy plug-in-ready batteries within appliances than installing stand-alone energy storage. By some estimates, it is 3 to 10 times more expensive to install equipment like home batteries, compared to the batteries themselves. Eventually, these companies plan to integrate their customers’ batteries into massive networks that represent many megawatts of flexible energy storage.

“We won’t stop at doing stoves,” says D’Amico. “You’ll get a number of appliances, and all of them will come with appropriately sized batteries. As you incrementally electrify your house, you get incremental energy storage. It’s like getting a Tesla Powerwall without ever getting a Powerwall.”

Backing up your home grid

Little affordable batteries could help countries leapfrog into a renewable future, rather than wait for utilities to invest billions of dollars in new transmission, better home connections and energy storage.

Right now, your appliances use little energy for most of the day. Yet each morning and evening, your home’s energy use spikes when water heaters click on or the oven fires up. Multiply this intense burst of electricity by millions of appliances. You can see the problem.

In the United Kingdom, there’s a name for this phenomenon: the kettle surge. During breaks in popular TV programs, millions of electric kettles turn on at once, leading to a massive, destabilizing surge of demand. To meet it, a dedicated “grid energy balancing” team at the national utility uses computer models to forecast electricity consumption, even tracking popular TV dramas. A standard soap opera episode might imply an extra 300 megawatts of power during breaks, but if a main character dies during the episode, the audience might need 600 megawatts or more.

Smoothing out spikes like this means the U.K. must run power plants on standby, or import huge volumes of energy from mainland Europe.

But small batteries could step up to the plate.

Stoves, heat pumps, washers and dryers. Even kettles. At a national scale, these could soak up cheap power when renewables are plentiful, and dispatch it during the peak hours in the mornings and evenings when electricity supplies are tight. As people swap gas for electricity, and less consistent wind and solar energy comes online, this will only become more valuable. It will help manage spikes — and maybe even earn you money from selling power to the grid or dodging peak electricity prices.

Energy companies and appliance manufacturers like Impulse and Channing Street Copper are already vying to manage the megawatts of power stored in millions of appliances.

It seems like a clear climate win. But since battery manufacturing is so energy-intensive, it’s not clear if installing so many batteries guarantees lower overall emissions. “It’s an open question still whether or not getting batteries into the home is on its face a decarbonization strategy,” Wyatt Merrill, who works on building electrification at the Department of Energy, told the climate podcast Volts. “It definitely has the potential to be. But when you think about the entire life cycle of mining lithium and developing the batteries and shipping them around, you really have a hole to dig out of.”

Still, economic forces may usher in a world of little batteries everywhere faster than we think. Priced at more than $10,000, large stationary batteries like Tesla Powerwalls — another solution to support a clean grid — remain too expensive for many homes. With utilities imposing time-of-use rates and curtailing homeowners’ ability to sell solar electricity back to the grid, storage in your home will only become more valuable.

Kyri Baker, an assistant professor of engineering at the University of Colorado at Boulder, says these new appliances can deliver low-cost energy storage at home while building the grid’s capacity to absorb clean, excess energy.

“It’s going to be a game changer,” says Baker. “It really makes financial sense to absorb this [electricity] locally. The best way is to let appliances do it.”

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Cooperate with objective and ethical thinking…

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News round-up, March 28, 2023

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Most read…

Fed’s Barr Calls Silicon Valley Bank a ‘Textbook Case of Mismanagement’

Top bank regulator to testify Tuesday alongside other officials

TWSJ By Andrew Ackerman and Andrew Duehren, March 27, 2023

Netanyahu Cannot Be Trusted

The Israeli prime minister is acting irrationally for the first time, endangering not only Israelis but also crucial American interests and principles.

NYT By Thomas L. Friedman, March 28, 2023

Exclusive: US plans ultimatum in Mexico energy dispute, raising threat of tariffs

According to three people familiar with the negotiations, the Office of the United States Trade Representative (USTR) will present what has been dubbed a "final offer" to Mexico's negotiators in order to get it to open its markets and accept more oversight.

REUTER By Jarrett Renshaw and David Lawder

The House GOP Moves on Energy

Will Democrats in swing districts and states oppose a bill to expand production?

TWSJ By The Editorial Board, March 26, 2023

Russia fires anti-ship missiles at mock target in Sea of Japan

Russia's Pacific fleet drills came a week after Japanese Prime Minister Fumio Kishida visited Ukraine.

Le Monde with AFP, NOW 

NATO criticizes Putin for 'dangerous' rhetoric over Belarus nuclear weapon deployment

Putin says the move does not violate any nonproliferation agreements and that he’s not doing anything the U.S. hasn’t done for decades in stationing its weapons in Europe.

CBC NEWS by Leila Sackur

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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Image: Michael Barr, the Federal Reserve’s top banking regulator, says the central bank is reviewing its supervision of Silicon Valley Bank. PHOTO: MANUEL BALCE CENETA/ASSOCIATED PRESS

Fed’s Barr Calls Silicon Valley Bank a ‘Textbook Case of Mismanagement’

Top bank regulator to testify Tuesday alongside other officials

TWSJ By Andrew Ackerman and Andrew Duehren, March 27, 2023

WASHINGTON—The failure of Silicon Valley Bank demonstrates a “textbook case of mismanagement,” the Federal Reserve’s top banking regulator is expected to tell Senate lawmakers on Tuesday, while acknowledging there may have been shortcomings in the central bank’s oversight. 

“SVB failed because the bank’s management did not effectively manage its interest-rate and liquidity risk, and the bank then suffered a devastating and unexpected run by its uninsured depositors,” said Michael Barr, the Fed’s vice chairman for supervision, in written testimony released by the central bank. 

Mr. Barr is set to appear on Capitol Hill as officials across Washington probe the collapses of SVB, the second-biggest bank failure in U.S. history, and Signature Bank in New York. Fearing their failures could spread contagion to the rest of the financial system, federal regulators this month used emergency powers to guarantee all depositors at those two banks would get their money back.

Mr. Barr is leading a review of the Fed’s supervision of SVB, which is due by May. He said in the prepared remarks that the central bank is committed to ensuring it “fully accounts for any supervisory or regulatory failings, and that we fully address what went wrong.” 

Federal Deposit Insurance Corp. Chairman Martin Gruenberg, who will also appear before the Senate Banking Committee Tuesday, plans to say that his agency will produce by May 1 a report on its supervision of Signature and a separate review of the deposit insurance system.

The regulators’ decision to guarantee all deposits at the two failed banks has prompted some banks and lawmakers to explore whether deposit insurance should be expanded beyond the $250,000 per depositor that is currently protected.

Mr. Gruenberg said the FDIC will consider policy options for changing deposit insurance levels, among other elements of the system.

Both regulators said in prepared remarks that the broader banking system is sound after the events of the past few weeks. They will be joined at the hearing and at one in the House Wednesday by Nellie Liang, a top Treasury official.

The FDIC announced early Monday that First Citizens BancShares Inc., one of the nation’s largest regional banks, is acquiring large pieces of SVB more than two weeks after the lender’s collapse sent tremors through the banking system. Regulators took control of Santa Clara, Calif.-based SVB on March 10.

Worries about American banks have centered on other regional lenders that are perceived to be at risk of deposit flight. Both SVB and Signature had large amounts of uninsured deposits. According to Mr. Gruenberg’s prepared testimony, the 10 largest deposit accounts at SVB held $13.3 billion.

Mr. Gruenberg said that banks with large amounts of uninsured deposits face challenges, “particularly in today’s environment where money can flow out of institutions with incredible speed in response to news amplified through social media channels.” He said outflows at banks that had faced deposit flight had slowed after the federal intervention for SVB’s and Signature’s depositors.

Losses to the government’s deposit insurance fund from protecting deposits at SVB are expected to be roughly $20 billion, while losses tied to Signature will cost the fund about $2.5 billion, according to Mr. Gruenberg. The government will charge banks a fee to cover those losses.

Mr. Barr said in his prepared remarks that the Fed is considering whether its bank supervisors have the tools to mitigate threats they see to a firm’s safety and soundness. He said it is also looking at whether “the culture, policies, and practices of the board and Reserve Banks support supervisors in effectively using these tools.”

He also said the Fed is weighing whether a Trump-era rollback of financial rules allowed SVB to escape more stringent stress tests and other standards. 

“We are evaluating whether application of more stringent standards would have prompted the bank to better manage the risks that led to its failure,” he said. 

The Fed is also assessing whether, if it had imposed stricter regulatory requirements, SVB would have had higher levels of capital and liquidity that would have prevented its failure or made it more resilient, Mr. Barr said. He said his review would be thorough and that his report would include supervisory assessments and exam material.

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Image: Demonstrators in Jerusalem supporting a proposal to overhaul the judiciary held Likud flags and signs reading “high court dictatorship” on Monday.Credit...Avishag Shaar-Yashuv for The New York Times

Netanyahu Cannot Be Trusted

The Israeli prime minister is acting irrationally for the first time, endangering not only Israelis but also crucial American interests and principles.

NYT By Thomas L. Friedman, March 28, 2023

Opinion Columnist

Thank goodness that Israel’s civil society has forced Prime Minister Benjamin Netanyahu to pause, for now, his attempt to impose his control over Israel’s independent judiciary and gain a free hand to rule as he wishes. But this whole affair has exposed a new and troubling reality for the United States: For the first time, the leader of Israel is an irrational actor, a danger not only to Israelis but also to important American interests and values.

This demands an immediate reassessment by both President Biden and the pro-Israel Jewish lobby in America. Netanyahu essentially told them all: “Trust the process,” “Israel is a healthy democracy” and, in a whisper, “Don’t worry about the religious zealots and Jewish supremacists I brought into power to help block my trial for corruption. I will keep Israel within its traditional political and foreign policy boundaries. It’s me, your old pal, Bibi.”

They wanted to trust him, and it all turned out to be a lie.

From Day 1, it has been obvious to many of us that this Israeli government would go to extremes that none before it ever dared. With no real guardrails, it would take the United States and world Jewry across redlines they never imagined crossing, while possibly destabilizing Jordan and the Abraham Accords, eliminating hope of a two-state solution and bringing Israel in its 75th anniversary year to the edge of civil war.

That is because the key to implementing the government’s radical agenda was always, first, getting control over Israel’s Supreme Court — the only legitimate independent brake on the ambitions of Netanyahu and his extremist coalition partners — through a process disguised as “judicial reform.”

With the judiciary brought to heel, Israel would be governed more like elected autocracies, such as Hungary and Turkey, than the Israel the world has always known. And Netanyahu and his partners have pursued that kind of political control of the courts over and above any other priority they ran on, bringing the country to the brink of “civil war” — as Netanyahu admitted in his national address on Monday night.

Staring in the face of such a civil war — after an unprecedented weekend revolt by a huge cross-section of Israeli society, its armed forces and even some members of his own party — Netanyahu offered to suspend his takeover efforts and give roughly a month for negotiations with the opposition to see if a compromise can be forged.

Let’s see what happens. But one thing is clear already: Netanyahu has become the definition of an irrational actor in international relations — someone whose behavior we can no longer predict and whose words President Biden should not trust. For starters, the U.S. needs to make sure Netanyahu does not use U.S. weapons to engage in any kind of war of choice with Iran or Hezbollah without the full and independent endorsement of Israel’s military high command, which has opposed his judicial putsch.

Why do I insist that Netanyahu has become an irrational actor and a danger to our interests and values? It’s a question that can be answered with a question:

How would you describe an Israeli prime minister and his son who, after 50 years of the United States sending Israel billions and billions of dollars in economic and military assistance, have been disseminating the lie that the U.S. government was behind the massive demonstrations against the prime minister — that this couldn’t possibly be an authentic grass-roots mainstream protest? It had to be U.S.-funded.

Yair Netanyahu, his father’s closest political adviser, last week shared conspiratorial tweets with his many Twitter followers on the Israeli right, The Jerusalem Post reported, like this one: “The American State Department is behind the protests in Israel, with the aim of overthrowing Netanyahu, apparently in order to conclude an agreement with the Iranians.”

I wonder where that came from? Well, two weeks ago, The Times of Israel reported that while Netanyahu the elder was on an official visit to Rome, a “senior official” in his traveling party (which everyone in the Milky Way galaxy knows is code for the prime minister himself) was quoted as saying (without a shred of evidence): “This protest is financed and organized with millions of dollars. … This is a very high-level organization.” The story continued: “Another member of the premier’s entourage confirmed that the senior official was referring to the United States.”

This is the same conspiracy thinking that Iran’s leaders have been deploying to discredit the authentic democracy movement in Iran, led by Iranian women.

That Netanyahu and his son would turn on America with the same pathetic cynicism as Iran is shameful — and crazy. Neither man should be allowed into America until they apologize.

This is not the only sign of what an irrational actor Netanyahu has become. Ask yourself: What rational Israeli prime minister would risk fracturing his military — which this judicial takeover attempt has been doing — at a time when Iran can now whip up enough fissile material for a nuclear bomb in under two weeks, and is racking up diplomatic achievements with Israel’s Arab allies?

A little over a week ago, Netanyahu’s defense minister, Yoav Gallant, a respected military leader who began as a naval commando, gave the prime minister a choice: freeze his attempt at a judicial coup without a national dialogue or go ahead with it, have his defense minister resign and have large segments of the army and air force reserves refuse to show up for duty.

Netanyahu then made the remarkable move of firing Gallant. As Haaretz military correspondent Amos Harel put it: “It’s hard to think of one senior defense official who wasn’t shocked to the core by Netanyahu’s decision. … Among both current and former senior I.D.F. officers, the discussion Sunday night focused on whether a mass resignation of major generals and brigadier generals was necessary to stop the madness.”

Consider this as well: What rational Israeli prime minister would risk one of the greatest achievements of U.S. and Israeli diplomacy in the Middle East, the Abraham Accords, in order to push through a judicial takeover that would give a free hand to the Jewish supremacists and nationalist zealots in his cabinet? I am talking about the likes of Netanyahu’s finance minister, Bezalel Smotrich, who, as Axios described it, last week “gave a speech in Paris at a podium featuring a map that included Jordan and the occupied West Bank as part of Israel and said the Palestinian people were ‘an invention.’”

This totally freaked out the U.A.E. and Bahrain, not to mention Jordan, which is a critical pillar of American Middle East strategy. If Netanyahu and company destabilize Jordan, they will sow the wind and reap the whirlwind.

And what Israeli prime minister would try to pass a law so he can appoint a thrice-convicted tax cheat and financial scammer — Shas Party leader Aryeh Deri — as his health and interior minister, with a promise to make him finance minister at the next cabinet reshuffle?

In 1993, Deri was ordered by the Supreme Court to resign from the cabinet over corruption charges, but he remained Shas leader until 1999, when he was sentenced to three years in prison for taking bribes. Then in 2021, as The Times of Israel reported, Deri accepted a plea deal in which he admitted “to a pair of tax offenses in exchange for resigning from the Knesset” and paying a fine. In January, the Supreme Court ruled that Deri was not fit to serve in government.

In case you missed it, besides everything else going on, Netanyahu has been trying to rush through legislation to override the Supreme Court so that this crony of his who defrauded the Israeli Treasury — to which American taxpayers have donated billions in aid to over the last half century — can eventually be put in charge of that same Treasury.

The contempt that all of this shows for Israeli taxpayers, for the rule of law in Israel, for the Israeli Supreme Court and for America is just more evidence of a leader who has come completely loose of any ethical moorings.

It is finally time that the American government, the American Congress and American Jewish leaders and lobbyists, who too often have been Netanyahu’s enablers, make it unmistakably clear that they are also marching with all those Israelis — from the military, the high-tech community, the universities, traditional religious communities, doctors, nurses, air force pilots, bankers, labor unions and even settlements — who took to the streets in the last week to ensure the 75th anniversary of Israeli democracy will not be its last.

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Image: U.S. President Joe Biden meets his Mexican counterpart Andres Manuel Lopez Obrador at North American Leader's Summit, at the National Palace in Mexico City, Mexico January 10, 2023. REUTERS/Henry Romero

Exclusive: US plans ultimatum in Mexico energy dispute, raising threat of tariffs

According to three people familiar with the negotiations, the Office of the United States Trade Representative (USTR) will present what has been dubbed a "final offer" to Mexico's negotiators in order to get it to open its markets and accept more oversight.

REUTER By Jarrett Renshaw and David Lawder

March 27 (Reuters) - The Biden administration plans to send Mexico an "act now or else" message in coming weeks in an attempt to break a stalemate in an energy trade dispute as bipartisan calls grow for the U.S. to get tougher with its southern neighbor, according to people familiar with the discussions.

The move would represent a significant escalation in already-strained tensions between U.S. President Joe Biden and his Mexican counterpart, Andres Manuel Lopez Obrador.

Obrador's decision to roll back reforms aimed at opening Mexico's power and oil markets to outside competitors sparked the trade dispute.

The Office of the United States Trade Representative (USTR) is expected to make what was described as a "final offer" to Mexico negotiators to open its markets and agree to some increased oversight, three people familiar with the talks told Reuters. If not, the U.S. will request an independent dispute settlement panel under the Unites States Mexico Canada Agreement, or USMCA, they said.

The United States and Canada demanded dispute settlement talks with Mexico in July, 250 days ago. Under USMCA rules, after 75 days without a resolution they were free to request a dispute settlement panel, a third party that rules on the case.

At an event on Monday, Mexico's Economy Minister Raquel Buenrostro said the United States has been entitled to call for a panel since Oct. 3.

If the panel rules against Mexico and it fails to take corrective action, Washington and Ottawa could ultimately impose billions of dollars in retaliatory tariffs on Mexican goods.

The White House has hoped to avoid escalating trade tensions with Mexico as it sought help on immigration and drug trafficking. But months of talks have yielded little progress and the administration has run out of less-combative options, the sources told Reuters.

Raising the stakes in the dispute carries significant risk for Biden, who is expected to launch a re-election bid in coming weeks and will face Republican criticism over his handling of immigration and drug trafficking. Biden needs Mexican help to control the border after COVID-era restrictions are lifted on May 11.

A U.S. official acknowledged growing frustration with the lack of progress in the discussions. "We want to see clear progress on this issue and address the concerns that have been raised by our negotiating teams," said the official, who declined to be named because the discussions were private.

A USTR spokesperson declined comment on the energy consultations with Mexico, but Trade Representative Katherine Tai hinted at possible escalation during a Senate Finance Committee hearing on Thursday when questioned about the talks.

"We are engaging with Mexico on specific and concrete steps that Mexico must take to address the concerns set out in our consultations request. This is still very much a live issue," Tai said.

She later added: "We know that all the tools in the USMCA are there for a reason."

U.S. oil companies, such as Chevron (CVX.N) and Marathon Petroleum (MPC.N), along with solar and wind power companies, have struggled to get permits to operate in Mexico in recent years.

Mexico's Buenrostro said the challenges of transitioning to renewable energy and getting those projects connected to the power grid were at the bottom of the issue.

"It is not that they are being given discriminatory treatment, it is that we have difficulties of a technical nature," Buenrostro said, adding investments in power distribution were being made to address the issues.

The potential move by the Biden administration comes just weeks after USTR escalated another trade dispute with Mexico over its plans to ban genetically modified corn for human consumption, requesting formal consultations. The energy dispute is a step ahead under the USMCA's enforcement mechanism.

The Biden administration alleges Obrador is favoring state oil company Petroleos Mexicanos (Pemex) and national power utility Comision Federal de Electricidad (CFE), and discriminating against U.S. companies.

"I think you're going to increasingly see folks looking for ... the next step of establishing a panel relatively soon," a congressional aide said, noting patience on Capitol Hill over the talks was wearing thin.

Ron Wyden, a Democrat senator from Oregon and chair of the Senate Finance Committee, told Tai on Thursday that Mexico was "flouting" its USMCA obligations by shutting out U.S. renewable energy firms.

"Eight months have passed. American clean energy producers are still waiting for access. In my view, it’s long past time to say enough is enough and escalate this into a real dispute settlement case," Wyden said.

U.S. imports from Mexico totaled $455 billion in 2022 against exports of over $324 billion, for a record U.S. trade deficit of $130.5 billion, according to government data.

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Image: ETIENNE LAURENT/SHUTTERSTOCK

The House GOP Moves on Energy

Will Democrats in swing districts and states oppose a bill to expand production?

TWSJ By The Editorial Board, March 26, 2023

President Biden’s energy policy is summed up by last year’s $370 billion gift to the climate lobby, aka the Inflation Reduction Act. That leaves an opening for Congress, where House Republicans unveiled their energy agenda this month. The plan should have a shot if self-described moderate Democrats stand by their claims.

Majority Leader Steve Scalise’s Lower Energy Costs Act includes reforms to unburden energy producers and cut costs for consumers. It would repeal the Energy Department’s power to block cross-border purchases and sales of natural gas, letting producers import and export without months of preapproval.

The move is inspired by Congress’s elimination of the oil-export ban in 2015, which helped U.S. producers become the global leader as domestic drilling surged. Progressives urged President Biden to ban natural-gas exports last year before an expected price spike in the winter, but trade amid global shortages boosts investment and increases supply.

The bill also promotes the production of minerals that are critical to manufacturing, especially for electric vehicles. It allows the Energy Department to grant easements lasting up to 50 years for mineral extraction, and it reduces the federal fee on sales.

The bill’s most important plank reforms permitting, which stymies projects of all kinds—renewable energy and fossil fuels—and has become a national embarrassment. The bill mandates a one-year time limit to determine whether a project will have a significant environmental impact, and a two-year maximum for extensive reports on certain projects’ effects. It also streamlines the process for lawsuits that activists use to kill projects by delaying them for years. The bill requires opponents to opine during the public comment period before suing, limits their suit to the topic of their comment, and gives them 120 days to file.

House Republicans also plan to block wasteful and counterproductive programs in the Inflation Reduction Act. Their bill would repeal the fee that the last Congress imposed on methane emissions, which takes effect next year at $900 per metric ton and rises to $1,500 in 2026. The fee will be an obstacle to production for smaller companies. The new bill would also cancel the $27 billion “green bank,” which is gearing up to fund local climate-friendly investments with federal dollars. It is pure green pork.

Majority Leader Chuck Schumer denounced the House bill as “dead on arrival” in the Senate. Yet cheaper energy is popular and is a broad cause on Capitol Hill. Such vulnerable Senators as West Virginia’s Joe Manchin and Kyrsten Sinema of Arizona may feel pressure to give the plan a fair hearing. Republicans John Barrasso and Shelley Moore Capito will lead the push in the Senate and could explore the possibility of a compromise.

Stranger political things have happened. If House Republicans pass the bill and pick up the votes of some House Democrats, who knows how the politics might evolve if energy prices spike as an election approaches. Republicans campaigned on promoting more U.S. energy production and distribution, and the Scalise bill honors that promise.

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In this photo made from video provided by the Russian Defense Ministry press service on Tuesday, March 28, 2023, a Russian navy boat launches an anti-ship missile test in the Peter The Great Gulf in the Sea of Japan. AP

Russia fires anti-ship missiles at mock target in Sea of Japan

Russia's Pacific fleet drills came a week after Japanese Prime Minister Fumio Kishida visited Ukraine.

Le Monde with AFP, NOW 

In this photo made from video provided by the Russian Defense Ministry press service on Tuesday, March 28, 2023, a Russian navy boat launches an anti-ship missile test in the Peter The Great Gulf in the Sea of Japan. AP

Russia's defence ministry said on Tuesday, March 28, that its navy had fired test anti-ship missiles at mock targets in the Sea of Japan during military exercises.

Russia's Pacific fleet drills came a week after Tokyo's Prime Minister Fumio Kishida visited Ukraine.

"In the waters of the Sea of Japan, missile boats of the Pacific Fleet fired Moskit cruise missiles at a mock enemy sea target," the ministry said on Telegram early on Tuesday. It said two ships took part in the exercise.

"The target, located at a distance of about 100 kilometers, was successfully hit by a direct hit from two Moskit cruise missiles."

Moscow said its naval aviation oversaw the "safety of the combat exercise."

Last week, Russia said two of its Tu-95 strategic bomber planes performed "flights in the airspace over neutral waters in the Sea of Japan."

The bomber jet flights came after Japan's Kishida visited Kyiv to meet with Ukrainian leader Volodymyr Zelensky.

Japan has joined Western allies in sanctioning Russia over its offensive in Ukraine. Russia's far eastern Pacific coast is separated from Japan by the narrow Sea of Japan.

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Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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Image: A Russian Iskander-E missile launcher on display during the International Military Technical Forum in Moscow in August. CBC NEWS.

NATO criticizes Putin for 'dangerous' rhetoric over Belarus nuclear weapon deployment

Putin says the move does not violate any nonproliferation agreements and that he’s not doing anything the U.S. hasn’t done for decades in stationing its weapons in Europe.

CBC NEWS by Leila Sackur

NATO called his rhetoric “dangerous and irresponsible,” while Ukraine accused President Vladimir Putin of making Belarus a “nuclear hostage” with his announcement that Russia was going to store tactical nuclear weapons in the country, which both nations border.

Insisting that such a move would not violate nuclear nonproliferation agreements, in an interview with state television on Saturday, Putin likened his plans to the U.S. stationing its weapons in Europe.

“There is nothing unusual here,” he said, adding that “the United States has been doing this for decades.” He added that Russia and Belarus had agreed to “do the same thing, without, I would like to highlight, going against our international duties and agreements on the nondistribution of nuclear weapons.”

Russia would not be transferring control of the weapons to Belarus, he said, although he added that his country was planning to complete the construction of a storage facility for them by the summer.

Moscow had already stationed 10 aircraft capable of carrying tactical nuclear weapons in the country, he said. He added that a number of Iskander tactical missile systems that can launch nuclear weapons had also been stationed in the country.

The Iskander-M contains two guided missiles with a range of up to 300 miles and can carry conventional or nuclear warheads.

Putin said that Belarusian President Alexander Lukashenko had long requested the deployment. There was no immediate reaction from Lukashenko.

Belarus, Ukraine and Kazakhstan had nuclear weapons stationed on their territory but handed them over to Russia after the 1991 collapse of the Soviet Union, so this could be the first time since then that Russia has based such weapons outside the country.

American reaction to Putin’s announcement was muted. National Security Council spokesperson Adrienne Watson told NBC News late Saturday that the U.S. had “not seen any reason to adjust our own strategic nuclear posture nor any indications Russia is preparing to use a nuclear weapon.”

But Oleksiy Danilov, the secretary of Ukraine’s National Security and Defense Council, tweeted that the Kremlin “took Belarus as a nuclear hostage.”

U.S. and NATO criticize Russia’s plan to store nuclear weapons in Belarus

While the Belarusian army has not formally fought in Ukraine, the country has a close relationship with Russia, and Minsk allowed Moscow to use its territory to send troops into Ukraine last year. The two nations have stepped up joint military training. Russia is also Belarus’ largest and most important political and economic partner.

Calling Russia’s nuclear rhetoric “dangerous and irresponsible,” NATO spokesperson Oana Lungescu said the organization was “closely monitoring the situation.”

“We have not seen any changes in Russia’s nuclear posture that would lead us to adjust our own,” Lungescu said. “We are committed to protect and defend all NATO allies.” NATO added that Moscow had “consistently broken its arms control commitments,” most recently suspending its participation in the New START Treaty — a key nuclear arms control treaty between the U.S. and Russia, the world’s two largest nuclear powers.

Hamish de Bretton-Gordon, a former commanding officer of Britain and NATO’s joint chemical, biological, radiological and nuclear regiment called the plan a “strategic error” and “another sign of desperation coming out of the Kremlin,” after 13 months of war in Ukraine and few victories to show for it.

“It seems that Putin is clutching at straws,” he said, adding that Russian forces had been “hammered” around Bakhmut, where brutal battles for control of the eastern city have raged for months, with neither side gaining much ground.

Moving such weapons closer to NATO nations like Germany, Poland and Lithuania was likely to “hasten Western weapons” to Ukraine, he said. Germany, which has previously been cautious about providing military aid to Ukraine, “might be encouraged” by the potential threat of closer nuclear weapons, he added.

For Keir Giles, the author of a forthcoming report on Russia’s nuclear threat for Chatham House, an international affairs think tank in London, the biggest threat from the weapons was to Belarus itself. 

“There’s a long tradition of Putin saying what he wants Belarus to do and claiming 'Belarus asked us,' but not a peep about it from Minsk,” he said.  

“This is not in the category of ‘escalation to scare us,’ it’s more ‘what they have always wanted to do and now Belarus is not in a position to resist anymore,” he said.

De Bretton-Gordon agreed. “Belarus is now a target in a nuclear standoff, an unintended consequence Lukashenko has not fully appreciated,” he said, adding that the announcement might embolden opposition voices in Belarus, who have long been against the war. 

And Svetlana Tsikhanouskaya, who fled Belarus in 2020 after standing against Lukashenko in a disputed presidential election that led to widespread protests across the country, took to Twitter Sunday to complain about the deal.

She said the deal had been announced on “Freedom Day — when Belarusians celebrate the 105th anniversary of Belarus’ independence,” saying that this was “not accidental.”

“Russia acts as the occupying force, violating national security and putting Belarus on the collision course with its neighbors and the international community,” she said

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Cooperate with objective and ethical thinking…

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News round-up, March 27, 2023

Reflections by the editor…

"We are our memory, we are that chimerical museum of inconstant forms, that heap of broken mirrors".

Jorge Luis Borges, (born August 24, 1899, Buenos Aires, Argentina—died June 14, 1986, Geneva, Switzerland), Argentine poet, essayist, and short-story writer whose works became classics of 20th-century world literature.

By way of the XXVIII Ibero-American Summit, held in Santo Domingo, Dominican Republic, this Saturday, March 25. On March 17, 2022, ECLAC’s executive secretary, Ms. Alicia Bárcena, delivered a keynote speech at FAO's regional headquarters. She warns us that inequality generates in Latin America, the product of a culture of privilege that restricts access and opportunities and distorts public policy.

...Latin America and the Caribbean are not the poorest regions in the world, but they remain the most unequal. She said.

The UN official also warned that:

"We are no longer in an era of change, but in a real change of era.  This requires rethinking development and putting equality at the centre.  This requires social pacts," she said.

Alicia Bárcena also discussed the profound asymmetries between developed and developing countries, exacerbated by the COVID-19 pandemic.  For example, she pointed out that Latin America and the Caribbean emit only 8.3% of global greenhouse gases but are highly vulnerable to climate change.

"There is a tremendous asymmetry, and we have forgotten the principle of common but differentiated responsibilities.  We must take positions because the evidence shows us that these asymmetries are unacceptable and that developed countries have a historical debt with developing countries,".

In the same vein, in the document published by the Inter-American Development Bank (IDB), entitled: “The trade fallout of the war in Ukraine on Latin America and the Caribbean, subscribed by Paolo Giordano and Kathia Michalczewsky, in June of last year (2022), indicates the following: 

“The Russian invasion of Ukraine is a significant shock to the global economy, unfolding as Latin America and the Caribbean (LAC) are still recovering from the pandemic.  For some countries, it may slow growth and result in a sizeable food security shock like that experienced in 2008 and 2011.  Although the impact on direct trade is expected to be limited, the indirect consequences are poised to be very relevant, if heterogeneous, across countries.  In the short term, the main channels of transmission of the disruption are the surge in the prices of food and energy, the reduction in  global growth, the rise in inflation, and possible contagion in financial markets. 

As if this were not enough:

Over the last week, there has been turmoil in the international financial markets due to the repercussions on the global banking system from the failure of Silicon Valley Bank.  This financial crisis has generated significant concerns in the banking sector worldwide and has been reflected in Latin American stock market indices.

The crisis of confidence in banks is also affecting traders in emerging countries.  In this context, the leading indices of the Latin American Integrated Market (MILA) stock exchanges have declined this week.  Colombia is the most affected, with a fall of -6.08%, followed by Chile and Mexico with -3.56% and -1.23%, respectively.

Conversely, this event could negatively impact foreign investment in the region's countries.  Investors may feel less confident about investing in these countries due to uncertainty in the banking sector.

In addition, the banking crisis may also affect lending and the financing of investment projects.  Banks may be forced to reduce lending and be more cautious in granting financing, thus harming the economy of and growth in Latin American countries.  The national banking crisis and its effects on Latin America

In conclusion, all indications are that Latin America has a good chance of continuing in its complex history of broken mirrors.

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Most read…

Morning Bid: Banks are leaking money

There is some relief that negotiations to acquire Silicon Valley Bank by First Citizens BancShares Inc. (FCNCA.O) are advanced (SIVB.O). As a further measure to reassure depositors, there was also some discussion about the Federal Reserve expanding its new lending program for banks.

REUTERS

First Citizens Bank to buy Silicon Valley Bank after collapse, FDIC says

The announcement that First Citizens, based in Raleigh, N.C., would buy the Northern California bank is a significant step in the efforts to quell the chaos that unfolded after Silicon Valley Bank collapsed this month, setting off wider unease across the global financial sector.

TWP, by Bryan Pietsch, March 27, 2023 

ANZ CEO: Banking turmoil has potential to trigger financial crisis

"It's a crisis for some obviously, but is it a financial crisis, who knows? Does it have the potential to be one? Yes, it does have the potential to be one," CEO Shayne Elliott said in an interview on the bank's website.

REUTERS by Renju Jose

In inflation-hit Germany, massive strike over pay to cripple transport

"It is a matter of survival for many thousands of employees to get a considerable pay rise," Frank Werneke, head of the Verdi labour union, told Bild am Sonntag.

REUTERS by Klaus Lauer and Tom Sims

Big Oil is selling off its polluting assets — with unintended consequences

Shell’s divestments in Nigeria help the company meet its green goals. But villagers and watchdogs say conditions have worsened after the sales.

TWP by Rachel Chason, March 27, 2023

Brazil's Lula cancels trip to China because of pneumonia

Brazil's leftist leader Luiz Inacio Lula da Silva, who was due to head to China for key talks with President Xi Jinping, has indefinitely postponed his trip to recover from pneumonia, the government said Saturday.

Le Monde with AP and AFP on March 25, 2023

Ibero-American Summit strengthens integration between the two sides of the Atlantic

The 22 countries of the Ibero-American community close the meeting in Santo Domingo with consensus on climate change, food security, and digitalization.

El País by Francesco Manetto, Santo Domingo - 26 MAR 2023 

Russia may demand compensation over Nord Stream pipeline explosions - diplomat

In an interview with the news agency, Dmitry Birichevsky, the director of the department for economic cooperation in the Russian Foreign Ministry, stated, "We do not rule out the subsequent raising of the question of compensation for damage as a result of the explosion of the Nord Stream gas pipes."

Reuters

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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Image: A trader works at Frankfurt's stock exchange in Frankfurt, Germany, March 12, 2020. REUTERS/Ralph Orlowski

Morning Bid: Banks are leaking money

There is some relief that negotiations to acquire Silicon Valley Bank by First Citizens BancShares Inc. (FCNCA.O) are advanced (SIVB.O). As a further measure to reassure depositors, there was also some discussion about the Federal Reserve expanding its new lending program for banks.

Reuters

A look at the day ahead in European and global markets from Wayne Cole

It's been a quiet Monday so far with Asian share markets mixed but U.S. and European stock futures higher, perhaps because they got through a weekend without another bank collapsing.

There is some relief that First Citizens BancShares Inc (FCNCA.O) is in advanced talks to acquire Silicon Valley Bank (SIVB.O). There was also some talk the Federal Reserve could expand its new lending programme for banks as another step to reassuring depositors.

Money is clearly flowing out of smaller banks toward their bigger siblings and to money market funds, which have seen an inflow of more than $300 billion in the past month to a record $5.1 trillion. BofA notes the prior two events like this in 2008 and 2020 were followed by Fed rate cuts.

Fund futures now show an 88% chance the Fed stands pat in May, while a July cut is priced at better than 90%.

Deposits at small banks fell by $120 billion in the week to March 15, while borrowing jumped $253 billion and presumably much of that was from the Fed.

Capital Economics points out that deposits across all the banks have fallen by $663 billion in the past year as customers search for higher yield.

"Unless banks are willing to jack up their deposit rates to prevent that flight, they will eventually have to rein in the size of their loan portfolios, with the resulting squeeze on economic activity another reason to expect a recession is coming soon," they warn.

European banks face similar strains, with the added speculative stress on Deutsche Bank (DBKGn.DE) and a general jump in the cost of credit default swaps. Deutsche Bank's five-year CDS hit 222 bps on Friday, the highest since late 2018, while UBS CDS shot up to 139 bps.

Credit Suisse had to tap the Swiss National Bank for "a large multi-billion amount" to secure its liquidity. Not only were customers withdrawing money but counterparties were demanding guarantees to keep doing business, hardly an encouraging sign when interbank lending relies so much on trust.

Key developments that could influence markets on Monday:

- German IFO survey for March is seen around 91.0

- Bank of Spain´s Governor Pablo Hernandez de Cos delivers speech on economy. ECB Board members Frank Elderson and Isabel Schnabel speak, as does Andrew Bailey Governor of the Bank of England

- Federal Reserve Board Governor Philip Jefferson speaks on "Implementation and Transmission of Monetary Policy"

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Image: Media

First Citizens Bank to buy Silicon Valley Bank after collapse, FDIC says

The announcement that First Citizens, based in Raleigh, N.C., would buy the Northern California bank is a significant step in the efforts to quell the chaos that unfolded after Silicon Valley Bank collapsed this month, setting off wider unease across the global financial sector.

TWP, by Bryan Pietsch, March 27, 2023 

First Citizens Bank has agreed to purchase Silicon Valley Bank, which collapsed after a bank run, the Federal Deposit Insurance Corp. said Sunday.

All of Silicon Valley Bank’s 17 branches will open as First Citizens branches on Monday, the FDIC said in a release.

News in progress…

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Image: The logo of the ANZ Banking Group is displayed in the window of a branch in central Sydney, Australia, Aprl 30, 2016. REUTERS/David Gray/File Photo

ANZ CEO: Banking turmoil has potential to trigger financial crisis

"It's a crisis for some obviously, but is it a financial crisis, who knows? Does it have the potential to be one? Yes, it does have the potential to be one," CEO Shayne Elliott said in an interview on the bank's website.

REUTERS by Renju Jose

SYDNEY, March 27 (Reuters) - Australia and New Zealand Banking Group's (ANZ.AX) CEO said on Monday the latest turmoil in the global banking system had the potential to trigger a financial crisis though it was early to predict it could bring one similar to that in 2008.

Authorities around the world are on high alert for the fallout from the recent turmoil at banks following the collapse of Silicon Valley Bank (SVB) and Signature Bank (SBNY.O) in the U.S. and the emergency takeover of Credit Suisse.

"It's a crisis for some obviously, but is it a financial crisis, who knows? Does it have the potential to be one? Yes, it does have the potential to be one," CEO Shayne Elliott said in an interview on the bank's website.

But he said it was premature to assume the current condition could result in "another GFC", referring to the global financial crisis around 15 years ago that plunged the world's major advanced economies into their worst recession since the Great Depression in the 1930s.

Australian banks did not suffer as much as those in the U.S. and Britain during the 2008 crisis, thanks in part to tighter lending standards and a more resilient home economy.

"This is a different issue. This is really to do with the global war on inflation and how central banks are raising rates very quickly in order to combat that, and that has casualties," Elliott, the top executive at the country's no.4 lender, said.

Australia's banking regulator, soon after the collapse of startup-focused lender SVB, flagged it had intensified supervision of local banks.

Global regulators have acted much quicker to support banks this time, having learned lessons from the prior crises, Elliott said.

"Having said all that, it's clearly not over. I don't think you can sit here and say, 'Well, that's all done, Silicon Valley Bank and Credit Suisse and, you know, life will go back to normal'. These things tend to roll through over a long period of time."

Rachel Slade, personal banking group executive at the country's second-largest lender, National Australia Bank Ltd (NAB.AX), told the Australian Financial Review on Monday that mortgage customers had started showing first signs of strain after 10 straight rate rises, but there were no spikes yet on defaults.

Treasurer Jim Chalmers has said Australia was in a good position to hold out against some of the volatility because its banks were well capitalised, while the Reserve Bank of Australia last week flagged the banks were "unquestionably strong".

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Image: Workers protest at Munich's main train station during a nationwide strike called by the German trade union Verdi over a wage dispute in Munich, Germany, March 27, 2023. REUTERS/Lukas Barth

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In inflation-hit Germany, massive strike over pay to cripple transport

"It is a matter of survival for many thousands of employees to get a considerable pay rise," Frank Werneke, head of the Verdi labour union, told Bild am Sonntag.

REUTERS by Klaus Lauer and Tom Sims

BERLIN/FRANKFURT, March 27 (Reuters) - A massive strike in Germany was set to begin early Monday, crippling mass transport and airports in one of the biggest walkouts in decades as Europe's largest economy reels from soaring inflation.

In the hours running up to the strike, both sides dug in their heels, with union bosses warning that considerable pay hikes were a "matter of survival" for thousands of workers and management calling demands and the resulting action "completely excessive".

The strikes, which were scheduled to mainly start just after midnight and affect services throughout Monday, are the latest in months of industrial action that has hit major European economies as higher food and energy prices dent living standards.

Germany, which was heavily dependent on Russia for gas before the war in Ukraine, has been particularly hard hit by higher inflation as it scrambled for new energy sources, with inflation rates exceeding the euro-area average in recent months.

German consumer prices rose more than anticipated in February - up 9.3% from a year earlier - pointing to no let-up in stubborn cost pressures that the European Central Bank has been trying to tame with a series of interest-rate increases.

It has been a painful adjustment for millions of workers throughout the country as costs of everything from butter to rents rise after years of fairly stable prices.

"It is a matter of survival for many thousands of employees to get a considerable pay rise," Frank Werneke, head of the Verdi labour union, told Bild am Sonntag.

France has also faced a series of strikes and protests since January as anger mounts over the government's attempt to raise the state pension age by two years to 64.

But officials in Germany have made clear that their fight is only about pay.

The Verdi union is negotiating on behalf of around 2.5 million employees in the public sector, including in public transport and at airports. Railway and transport union EVG negotiates for around 230,000 employees at railway operator Deutsche Bahn (DBN.UL) and bus companies.

Verdi is demanding a 10.5% wage increase, which would see pay rising by at least 500 euros ($538) per month, while EVG is asking for a 12% raise or at least 650 euros per month.

Deutsche Bahn on Sunday said the strike was "completely excessive, groundless and unnecessary".

Employers are also warning that higher wages for transport workers would result in higher fares and taxes to make up the difference.

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Image: Oil from illegal extraction in Bodo, Nigeria, shines on water after a spill. (Andrew Esiebo for The Washington Post)

Big Oil is selling off its polluting assets — with unintended consequences

Shell’s divestments in Nigeria help the company meet its green goals. But villagers and watchdogs say conditions have worsened after the sales.

TWP by Rachel Chason, March 27, 2023

NEMBE, Nigeria — When Lambert Ogbari learned that the oil giant Shell was selling its local operations to a Nigerian firm, he said he felt hopeful his living conditions would finally improve. But he quickly noticed that maintenance on the oil wells surrounding his village had declined.

Then, one night, Ogbari woke up to a loud bang, followed by the smell of gas. Crude oil was shooting out of a well near his home with such force that people hundreds of yards away could hear the roar.

As the world wrestles with climate change, major oil companies are selling off polluting assets around the globe. Shell, which announced in 2021 that it is looking to exit Nigeria’s onshore market completely, has repeatedly said in annual reports over the past eight years that divestments in Nigeria and elsewhere have played an important role in decreasing the company’s own greenhouse gas emissions. Shell’s withdrawal is part of an exodus by some of the world’s top energy companies from the Niger Delta, which had long made Nigeria the largest oil producer in Africa.

But interviews with residents, local officials and environmental groups show the divestments made in Nigeria over the past decade have had negative consequences for communities that Shell and other international companies leave behind — and for the environment they say they are aiming to protect.

Local companies that have acquired the Niger Delta assets from international firms have failed to respond quickly to oil spills such as the one in Nembe, environmental activists say. Greenhouse gas emissions from gas flaring — the burning off of natural gas, a byproduct of oil extraction — have increased dramatically in multiple cases after Nigerian companies took over, according to data from flare tracker Capterio and reports by the Environmental Defense Fund and Stakeholder Democracy Network. At the same time, according to several analyses by these two groups and others, information about those effects has become scarce, because the local companies tend to make fewer environmental commitments and set fewer reporting standards.

In the Nembe area, where villages emerge from the thick mangrove swamps, oil sprayed for more than a month before the local company stopped the leak, villagers recalled. On a recent afternoon, 15 months after the spill was cleaned up, nearby water was still covered with an oil sheen, and mangrove roots were cloaked in black. Fishermen are still catching just a tiny fraction of what they once were, Ogbari said, his voice raised in anger, and locals say they have seen their already poor health deteriorate.

“We were excited to see our brothers in control,” Ogbari said, referring to the purchase in 2015 of Shell’s local oil license by the Aiteo Group, a Nigerian company. “We thought they would understand our needs. … But it has gone from bad to worse.”

Rethinking Nigeria’s oil

The Niger Delta’s history with oil began in the 1930s, when Shell started exploration here. Shell exported its first barrel of oil in 1958, when Nigeria was still a British colony. Oil giants including ExxonMobil, Chevron, Eni and Total Energies arrived in Nigeria over the years that followed, entering into arrangements with the government that proved extremely lucrative for the state and oil companies but did little for average Nigerians. The Niger Delta, according to the United Nations, became one of the most polluted places on Earth.

The international companies began a first wave of divestments around 2010, according to Etienne Kolly, associate director at S&P Global Commodity Insights. Oil theft by gangs and militants was proving a massive headache, and Nigeria’s government was pushing for more local ownership in the industry.

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Image: São PauloSão Paulo, Brazil - 10, 16, 2022: Former President Luís Inácio Lula da Silva and President Bolsonaro participate in presidential debate on Brazil. Germán & Co by Shutterstock. 

Brazil's Lula cancels trip to China because of pneumonia

Brazil's leftist leader Luiz Inacio Lula da Silva, who was due to head to China for key talks with President Xi Jinping, has indefinitely postponed his trip to recover from pneumonia, the government said Saturday.

Le Monde with AP and AFP on March 25, 2023

Brazil’s President Luiz Inácio Lula da Silva has canceled his trip to China after contracting pneumonia, the presidential palace said on Saturday, March 25.

Lula, 77, was admitted to a hospital in the capital of Brasilia with flu-like symptoms and was diagnosed with “bacterial and viral bronchopneumonia due to influenza A,” the palace said in a statement, quoting a medical note signed by Dr. Ana Helena Germoglio. The leftist leader’s health was reassessed on Saturday and, despite improvement, he was advised to “postpone the trip to China until the cycle of viral transmission ends,” the medical note said. His press office later confirmed that the trip had been canceled.

Chinese authorities have been informed, “with the reiteration of the desire to schedule the visit on a new date,” the palace said.

Lula had been expected to leave for China on a multi-day visit on Friday or Saturday, but the trip was pushed back on Friday.

China is Brazil’s biggest trade partner

A delegation composed of ministers, senators, lawmakers and hundreds of businessmen had been set to accompany Lula during his first state visit to Brazil’s biggest trade partner since taking office in January. The Brazilian president and his Chinese counterpart Xi Jinping were scheduled to meet next Tuesday.

Trade, investment and climate change were on the agenda and 20 bilateral agreements had been expected to be signed, according to a statement Thursday from the presidential palace.

Lula, who rarely postpones or cancels trips due to health reasons, traveled to Argentina in January and the US in February, marking a departure from Brazil’s foreign policy under former far-right President Jair Bolsonaro, who showed little interest in international affairs or travel abroad.

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Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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Image: Luis Abinader, President of the Dominican Republic and the King of Spain Felipe VI. El País by Mónica González Islas.

Ibero-American Summit strengthens integration between the two sides of the Atlantic

The 22 countries of the Ibero-American community close the meeting in Santo Domingo with consensus on climate change, food security, and digitalization.

El País by Francesco Manetto, Santo Domingo - 26 MAR 2023 

The Ibero-American Summit in Santo Domingo (Dominican Republic) concluded on Saturday night with a central message of cohesion that strengthens the path towards regional integration and a rapprochement between the two sides of the Atlantic. The 28th meeting of the 22 countries of the community showed the vocation of this forum as opposed to other international conferences that are more conditioned by the corset of diplomacy. The debate revealed ideological severe clashes, and there were even clashes of accusations between Latin American countries. But the essential thing was the consensus of all members on a series of instruments that consolidated the alliance. The Santo Domingo Declaration adopts three planned documents: climate change, food security, and digitalization. Peace, even without directly mentioning the Russian invasion of Ukraine, the severe crisis in Haiti, and migration were other key challenges.

The Ibero-American Secretary General, the Chilean diplomat Andrés Allamand, called for "maintaining Ibero-America as a privileged space for dialogue, political articulation, consensus, and cooperation." Under this umbrella, the discussion of presidents, heads of state, vice presidents, and foreign ministers highlighted that dialogue could prosper and unity can be tested despite differences.

At the summit, for example, an essential agreement on reforming an international financial architecture and access to credit fell through, frustrated by the opposition of Cuba, whose president, Miguel Díaz-Canel, charged against the "bubbles of financial capitalism." However, the community of Ibero-American countries has pledged to continue trying, with a view to the next summit to be held on 29 November 2024 in Quito, and issued a brief communiqué that stresses "the need for a structural reform of the international financial architecture, which allows a greater flow of resources destined for sustainable development and expands the limits of access that Ibero-American countries have in terms of financing." The text questions the "loan overcharges" and calls for the adoption of "innovative financial instruments, with conditions that facilitate sustainable borrowing."

Russia's invasion of Ukraine was another of the discussions that indirectly hovered over the summit. Chile's president, Gabriel Boric, openly condemned it in his speech, calling it "unacceptable." However, achieving a unanimous and explicit position in a forum that, in addition to Cuba, includes countries such as Nicaragua, Venezuela, Bolivia, and El Salvador, which did not condemn Russian President Vladimir Putin's offensive at the UN, was an arduous task. Everything was thus left in a pact of minimums through references to peace on the international chessboard. In it, everyone pledges to work for "comprehensive, just and lasting peace throughout the world," respecting "the principles of the Charter of the United Nations, including the principles of sovereign equality and territorial integrity of states, which will also contribute to ending the adverse effects of war, including loss of life, food, financial, energy and environmental security crises."

How to help Haiti

The humanitarian crisis in Haiti, a country bordering the Dominican Republic, cornered by criminal gangs and sinking into a whirlwind of corruption, misery, and the absence of the state, was an unavoidable urgency at the Santo Domingo meeting. The situation, aggravated by the assassination of President Jovenel Moïse in July 2021, prompted the local government, headed by Luis Abinader, to ask for support. "There is no other way to help Haiti than to go and pacify Haiti," he said. The Costa Rican leader threw a wrench in the debate with a call for international responsibility. The paragraph included in the final declaration recognizes the need for multilateral mobilization, although it does not mention a peacekeeping force. "We call on the international community and international organizations to join efforts to find a way out of this complex crisis, based on the principles of solidarity and international cooperation, with the consent and participation of Haiti," the text states.

The Summit was attended by 13 delegations headed by their heads of state or government - in the case of Spain and Portugal, they were represented twice by the King, the president, and the prime minister, respectively - three vice-presidents, five foreign ministers, and only Mexico delegated the defence of its positions to a director general of the Ministry of Foreign Affairs. The most significant absence was that of Andrés Manuel López Obrador, whose government also failed to send a foreign minister to other international meetings. Luiz Inácio Lula da Silva excused himself because he had scheduled a trip to China, which was finally postponed due to pneumonia. And Nicolás Maduro, as usual, kept his attendance unknown until the end, which was finally cancelled due to suspicion of Covid-19 infection.

Migration, the challenge that affects us all

All the leaders, present and absent, must face a daily challenge that affects the entire region: migration. Most of the more than seven million Venezuelans who left searching for opportunities have settled in Latin American countries, mainly Colombia, Peru, Chile, and Ecuador. Between Colombia and Panama, hundreds of people risk their lives every day crossing the Darién jungle, one of the planet's most inhospitable and dangerous territories. Thousands of migrants pile up on Mexico's southern and northern borders while the US Supreme Court is pending a decision on Title 42, a measure allowing hot returns to Mexico. The Santo Domingo Declaration advocates "safe, orderly and regular migration" but at the same time calls for "mechanisms that guarantee adequate management of migratory flows, agile and accessible migration regularisation processes, the socio-economic integration of migrants, support for host communities and the coordinated fight against transnational organised crime." With these premises, a forum on migration will be held in Ecuador in the second half of this year.

Borrell: a "key" year for relations between Europe and Latin America

The European Union's High Representative for Foreign Policy, Josep Borrell, took part in the 28th Ibero-American Summit as a special guest. In his speech, Borrell pointed out that 2023, which will coincide with the Spanish Presidency of the Council of the EU in the second half of the year, will be a "key" year for relations between Brussels and Latin America. He said that both the Santo Domingo meeting and the Summit of the Community of Latin American and Caribbean States (CELAC) scheduled for next July send "a powerful message and show our desire for greater collaboration." "It will be the first EU-CELAC summit since 2015. We have done something wrong for so much time to have passed without sharing a common reflection," he said.

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Cooperate with objective and ethical thinking…

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Image: Germán & Co

Russia may demand compensation over Nord Stream pipeline explosions - diplomat

In an interview with the news agency, Dmitry Birichevsky, the director of the department for economic cooperation in the Russian Foreign Ministry, stated, "We do not rule out the subsequent raising of the question of compensation for damage as a result of the explosion of the Nord Stream gas pipes."

Reuters

MOSCOW, March 27 (Reuters) - Moscow may seek compensation over damage from last year's explosions on the Nord Stream gas pipelines, news agency RIA Novosti reported on Monday, citing a Russian diplomat, who also said that the future of the projects was unknown.

The pipelines, which connect Russia and Germany under the Baltic Sea, were hit by unexplained blasts last September in what Moscow called an act of international terrorism.

"We do not rule out the later raising of the issue of compensation for damage as a result of the explosion of the Nord Stream gas pipelines," Dmitry Birichevsky, the head of Russia's Foreign Ministry department for economic cooperation, said in an interview with the news agency.

He did not say from whom Russia would seek damages over the incidents at the pipelines, which were jointly able to export 110 billion cubic metres (bcm) of gas per year, more than Russia's total gas exports of 101 bcm outside the former Soviet Union in 2022.

Birichevsky also said the future of the pipelines was not clear.

"At the moment, it's very difficult to speak about the future of the Nord Stream pipelines system. On the whole, according to experts, the damaged lines could be restored," he said.

The Kremlin has said it was for all shareholders to decide whether the Nord Stream pipelines should be mothballed.

Sources familiar with the plans told Reuters last week that the ruptured Nord Stream 1 and Nord Stream 2 pipelines, built by Russia's state-controlled Gazprom (GAZP.MM), were set to be sealed up and mothballed as there were no immediate plans to repair or reactivate them.

Nord Stream 1 had started operations in November 2011 having cost 7.4 billion euros ($8 billion). Construction of the $11 billion Nord Stream 2 was completed in September 2021, but it never entered into operations after Germany shunned the project days before Russia sent troops into Ukraine on Feb. 24, 2022.

Birichevsky added that Western countries were opposing a Russia-prepared draft U.N. Security Council resolution urging an independent international investigation of the Nord Stream blasts.

"Despite this, we intend to continue to insist on a comprehensive and open international investigation with the mandatory participation of Russian representatives," Birichevsky said.

News round-up, March 24, 2023

Reflections by the editor…

Calligrammes; “poèmes de la paix et da la guerre”, 1913-1916, by Guillaume Apollinaire; 1918; Paris.

Guillaume Apollinaire, (26 August 1880 – 9 November 1918) was a French poet, playwright, short story writer, novelist, and art critic of Polish descent. Apollinaire is considered one of the foremost poets of the early 20th century, as well as one of the most impassioned defenders of Cubism and a forefather of Surrealism. He is credited with coining the term "Cubism" in 1911 to describe the emerging art movement, the term Orphism in 1912, and the term "Surrealism" in 1917 to describe the works of Erik Satie. He wrote poems without punctuation attempting to be resolutely modern in both form and subject. Apollinaire wrote one of the earliest Surrealist literary works, the play The Breasts of Tiresias (1917), which became the basis for Francis Poulenc's 1947 opera Les mamelles de Tirésias.

while we may call snow a flute — which among all the flutes
of language is the finest stem — the deepest well to hide
sounds, the fanfares of interwar silence, so beloved of the lieu-
tenant: who tells his soldiers to study the military trade

snow in the business of war is no fault of flutes or fanfares
a plane flies like an angel through the heavens, scattering the feathers
of the hawk’s victim wrapped in white, like a cut-out sheet of darkness
nervously sealing the holes in the flute’s ragged corpse

perhaps in that music between silver and bronze — all snow and water —
it rises like a sail, like a ship’s pitch-covered bottom —
the lieutenant forgets orders and hallucinates: the almonds will flower
and the soldiers melt like snow through the village, seeking port wine

lucid in his dreams, he bleeds from his head — Apollinaire
has forgotten something — in the end he’ll ask for pickled cabbage juice,
but there are no villagers here, the angel of death arrives, opens the door
shuts his eyes, wraps him in music, and then cuts loose

his boat on the river, the soldiers bring wine, sit downcast on the hilltop,
make a tent from their rifles and pull dried bread from their pockets
washing it down with their wine, sadness and surrealism —
death is here — all around them lurk ravens and foxes

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Most read…

Humanity Is Facing a Great Injustice.

The World Bank Must Respond…

The World Bank and the donor countries that control it can do more to step up and tackle this generational challenge.

NYT By The Editorial Board, March 18, 2023

No Trump bump in New Hampshire as possible criminal charges loom

The vice chair of the Republican Party in Belknap, the most red county in the state, Lambert said, "With my primary vote I want to make sure that I put somebody up that I can agree with, that supports my principles, but is also electable." Lambert supported for Trump in both 2016 and 2020.The vice chair of the Republican Party in Belknap, the most red county in the state, Lambert said, "With my primary vote I want to make sure that I put somebody up that I can agree with, that supports my principles, but is also electable." Lambert supported for Trump in both 2016 and 2020.

Reuter By Nathan Layne

Geothermal Power, Cheap and Clean, Could Help Run Japan. So Why Doesn’t It?

For decades, new plants have been blocked by powerful local interests, the owners of hot spring resorts, that say the sites threaten a centuries-old tradition.

NYT by Hiroko Tabuchi, Photographs and Video by Chang W. Lee

Tabuchi and Lee traveled across Japan to understand the resistance to a valuable energy source in the climate fight.

Scotland's offshore wind winners set to cut North Sea carbon emissions

Initial investments from BP's Alternative Energy Investments and TotalEnergies total 1,670,917 pounds each

Reuters

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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CreditCredit...Illustration by Rebecca Chew/The New York Times; photographs by Getty Images

Humanity Is Facing a Great Injustice.

The World Bank Must Respond…

The World Bank and the donor countries that control it can do more to step up and tackle this generational challenge.

NYT By The Editorial Board, March 18, 2023

The editorial board is a group of opinion journalists whose views are informed by expertise, research, debate and certain longstanding values. It is separate from the newsroom.

It’s one of the great injustices of this era that countries contributing negligible amounts to global carbon emissions are now feeling the most harrowing impacts of climate change. Pakistan, which makes up less than 1 percent of the world’s carbon footprint, had a third of its territory under water in last year’s floods. Parts of Kenya, Ethiopia and Somalia are experiencing the worst drought in 70 years of record-keeping, threatening millions with famine, even though the entire continent of Africa contributes less than 4 percent of global carbon emissions. Small island developing countries such as Papua New Guinea account for less than 1 percent of global carbon emissions, yet they stand to lose the most when sea levels rise.

The World Bank and the donor countries that control it can do more to step up and tackle this generational challenge. To make the World Bank and other multilateral lending institutions fit for purpose in the 21st century, leaders need to figure out how to raise and leverage the massive amounts of capital that are going to be necessary in the coming years to help countries adapt to and mitigate a changing climate.

For years, climate financing took a back seat to the bank’s twin goals of reducing extreme poverty and promoting shared prosperity. Today, it is integral to achieving those goals. Helping the poorest of the poor will increasingly mean ensuring access to drought-resistant seeds and access to water as lakes dry up. In middle-income countries, promoting shared prosperity will increasingly mean expanding access to reliable, affordable clean energy. The World Bank has played an active role in making progress in those areas. It has begun to help countries incorporate climate change into their overall economic development plans and should continue this necessary work.

Climate-related funding has already grown in importance at the bank; in fact, some of the poorest countries are already worried that it will cut into funding for basics like education and health care. That’s why additional funding is needed to assure them that taking global action on climate won’t come at the expense of their development. About 36 percent of the money the World Bank lent last year was classified as climate related, although questions have been raised about how classifications are made. That comes to nearly $32 billion — a big jump from previous years, but still far short of what is needed.

In 2009, donor countries promised to mobilize $100 billion a year by 2020 to help lower income countries with mitigation and adaptation. They only mustered $83 billion, $36.9 billion of which came from multilateral development banks and climate funds, in 2020. Those unfulfilled promises haven’t gone unnoticed. According to Ephraim Mwepya Shitima, chair of the African Group of Negotiators on climate change, many developing countries, including those in Africa, have put forth ambitious plans to curb emissions in the future, but have been “hampered by the pledged financial support, which are falling short of expectations.”

A changing climate, a changing world

Climate change around the world: In “Postcards From a World on Fire,” 193 stories from individual countries show how climate change is reshaping reality everywhere, from dying coral reefs in Fiji to disappearing oases in Morocco and far, far beyond.

The role of our leaders: Writing at the end of 2020, Al Gore, the 45th vice president of the United States, found reasons for optimism in the Biden presidency, a feeling perhaps borne out by the passing of major climate legislation. That doesn’t mean there haven’t been criticisms. For example, Charles Harvey and Kurt House argue that subsidies for climate capture technology will ultimately be a waste.

The worst climate risks, mapped: In this feature, select a country, and we'll break down the climate hazards it faces. In the case of America, our maps, developed with experts, show where extreme heat is causing the most deaths.

What people can do: Justin Gillis and Hal Harvey describe the types of local activism that might be needed, while Saul Griffith points to how Australia shows the way on rooftop solar. Meanwhile, small changes at the office might be one good way to cut significant emissions, writes Carlos Gamarra.

Although Covid, inflation and the energy crisis related to the war in Ukraine have strained government budgets everywhere, it would be shortsighted to ignore the significance and potential of investing in climate financing. According to Devesh Kapur, a professor at Johns Hopkins and co-author of a history of the World Bank, raising an additional $100 billion in lending capacity for the World Bank could require donors to put up about $20 billion in cash. The cost to the United States, which holds 16 percent of shares, would be $3.2 billion, an amount that could be paid out over five years.

Getting new money in the door is important, but it’s not enough. The bank also should adopt new strategies and new rules that will allow it to funnel money more quickly to where it is needed the most and will be used most effectively. For instance, some small island states have per capita incomes that are too high for concessional loans according to World Bank rules, despite their acute vulnerability to climate change. Those rules should be revisited, in some cases, to make sure that climate financing is prioritizing the areas that will make the biggest difference.

The bank should also provide more grants and below-market financing related to climate, as Senator Ed Markey of Massachusetts has called for. The World Bank and multilateral development banks provided only 15 percent of their adaptation finance and less than 5 percent of mitigation finance through grants — a fraction he called “shockingly low.” By comparison, Green Climate Fund, a multilateral climate fund, issued grants 41 percent of the time for adaptation and mitigation projects.

The transformation that is required at the World Bank will not be easy. But the departure of its former president, David Malpass, who says he will resign in June, might help build confidence in the bank’s climate work. Mr. Malpass, who was nominated by the Trump administration in 2019, has been the subject of controversy since his bewildering public refusal last year to acknowledge the role of human activity in extreme weather resulting from climate change.

Ajay Banga, the former chief executive of Mastercard, is President Biden’s nominee to lead the bank, and is likely to be confirmed next month. The leadership change presents an opportunity to clarify the bank’s role and lay out an ambitious vision for its future. Mr. Banga, who has recently visited several African countries, has said that he sees the bank’s goals of addressing poverty, shared growth and climate as “intertwined.”

Treasury Secretary Janet Yellen, who has been at the forefront of calls to overhaul the bank and to elevate the issue of climate, also noted the need for more concessional financing in a recent speech at the Center for Strategic and International Studies. The bank was designed to lend to individual countries to spur economic growth within their own borders, but that model doesn’t work to address global problems like climate change, she said, because the benefits “stretch far beyond the borders of the country where a given project takes place.”

If the benefits of investing in climate change adaptation and mitigation are shared, so should the costs.

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Image: Germán & Co

No Trump bump in New Hampshire as possible criminal charges loom

The vice chair of the Republican Party in Belknap, the most red county in the state, Lambert said, "With my primary vote I want to make sure that I put somebody up that I can agree with, that supports my principles, but is also electable." Lambert supported for Trump in both 2016 and 2020.The vice chair of the Republican Party in Belknap, the most red county in the state, Lambert said, "With my primary vote I want to make sure that I put somebody up that I can agree with, that supports my principles, but is also electable." Lambert supported for Trump in both 2016 and 2020.

Reuter By Nathan Layne

LACONIA, New Hampshire, March 24 (Reuters) - Longtime Donald Trump supporter Doug Lambert agrees with the former president that the potential criminal charges he faces in New York are being cooked up by his enemies on the left. But, Lambert worries about the "messiness" of a Trump presidential candidacy and is leaning towards voting for someone else.

Like other Republicans in New Hampshire, which traditionally holds the second nominating contest in presidential election years, Lambert, 58, the owner of a manufacturing company, will be among the earliest to weigh in on Trump's viability for the Republican nomination in 2024.

"With my primary vote I want to make sure that I put somebody up that I can agree with, that supports my values, but is also electable," said Lambert, who voted for Trump in both 2016 and 2020 and is vice chair of the Republican Party in Belknap, the state's reddest county.

"If I was voting today I would vote for Ron DeSantis," he said, referring to the Florida governor who has not yet officially announced a White House run but is seen as a leading contender for the nomination and is Trump's biggest challenger.

Trump has sought to solidify support for his candidacy by presenting himself as a victim of a politically motivated investigation by New York prosecutors that could lead to his indictment for alleged hush money payments he made to porn star Stormy Daniels during his 2016 election campaign. Trump has denied making the payments.

But interviews with a dozen Republican voters in Belknap this week found that while Trump supporters still held affection for the former president and were considering his candidacy, many were also looking at who else is in the field.

A majority of those interviewed said they agreed with Trump's allegations - for which he has offered no evidence - that Democrats were using the legal system to hurt his candidacy, but none saw the indictment as a persuasive argument to firmly back him.

Nearly all said they were also interested in DeSantis, who is visiting New Hampshire next month, as well as their own state's governor, Chris Sununu, who is flirting with a run.

"I think our governor here in New Hampshire would be a very good choice. He's a real level-headed guy," said Raymond Peavey, 56, a former Marine who voted for Trump twice but wants to assess the other candidates before committing to him again.

POLLING IS MIXED

Benefiting from a large field of candidates and tapping into the angst of working-class voters, Trump handily won the New Hampshire primary in 2016 in a prelude to victories across the Northeast and ultimately the Republican nomination.

With at least 10 months to go before the primary, surveys have provided a mixed picture of Trump's chances in 2024.

In a University of New Hampshire poll in January, likely Republican voters preferred DeSantis over Trump by a 12-point margin, 42% to 30%, with Sununu at 4%. That contrasts with an Emerson College poll released this month before Trump announced he would be arrested that showed the former president with 58% support in the state, trouncing DeSantis at 17%.

Dante Scala, a politics professor at the University of New Hampshire, said he believed most Republican voters would shrug off any charges brought by Manhattan District Attorney Alvin Bragg, a Democrat who Trump has accused of reviving a case already reviewed by federal prosecutors for political ends.

"But when you get to the case in Georgia or indictments concerning January 6th, they might be more serious problems," he said, referring to a Fulton County, Georgia investigation into Trump's efforts to overturn the 2020 election results there and a separate federal probe into his role in the Jan. 6, 2021 attack by his supporters on the U.S. Capitol.

"The more indictments, the more points of leverage a DeSantis or whoever can use to make the case against Trump."

Even with its relatively small population of 1.4 million, New Hampshire has for decades held the second nominating contest in presidential election cycles, giving its voters outsized influence in the pivotal early days of White House campaigns.

While Trump is seen as having a lock on 25-30% of Republican voters, there are signs across the country that many Republicans are looking for an alternative candidate who can achieve conservative policy wins but without the drama the real estate magnate brought to the White House.

Political strategists and analysts say if Trump is charged he may succeed in rallying diehard supporters to his side but that independents and Republican moderates will almost certainly distance themselves.

Prudy Veysey, a Republican from Belknap, is hoping her state will send an early message on Trump's viability.

"We’ve seen the chaos and the havoc," said the 63-year-old retired office manager who has never voted for the former president. "It's just time to move on from Trump."

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Image: Chang W. Lee is a staff photographer. He was a member of the staff that won two 2002 Pulitzer Prizes: one for Breaking News Photography and the other for Feature Photography. Follow him on Instagram @nytchangster. 

Geothermal Power, Cheap and Clean, Could Help Run Japan. So Why Doesn’t It?

For decades, new plants have been blocked by powerful local interests, the owners of hot spring resorts, that say the sites threaten a centuries-old tradition.

NYT by Hiroko Tabuchi, Photographs and Video by Chang W. Lee

Tabuchi and Lee traveled across Japan to understand the resistance to a valuable energy source in the climate fight.

A treasured getaway for travelers in Japan is a retreat to one of thousands of hot spring resorts nestled in the mountains or perched on scenic coasts, some of which have been frequented for centuries.

All are powered by Japan’s abundant geothermal energy. In fact, Japan sits on so much geothermal energy potential, if harnessed to generate electricity, it could play a major role in replacing the nation’s coal, gas or nuclear plants.

For decades, however, Japan’s geothermal energy ambitions have been blocked by its surprisingly powerful hot spring owners.

“Rampant geothermal development is a threat to our culture,” said Yoshiyasu Sato, proprietor of Daimaru Asunaroso, a secluded inn set next to a hot spring in the mountains of Fukushima Prefecture that is said to date back some 1,300 years. “If something were to happen to our onsens,” he said, using the Japanese word for hot springs, “who will pay?”

Japan, an archipelago thought to sit atop the third-largest geothermal resources of any country on earth, harnesses puzzlingly little of its geothermal wealth. It generates about 0.3 percent of its electricity from geothermal energy, a squandered opportunity, analysts say, for a resource-poor country that is in desperate need of new and cleaner ways of generating power.

A solitary hot spring at Yoshiyasu Sato’s property in the mountains of Fukushima Prefecture.

Mr. Sato, who leads the Society to Protect Japan’s Secluded Hot Springs, and the monitoring gear he installed.

A small geothermal site near a hot spring resort in Oguni, Japan.

One answer to that puzzle lies in Japan’s venerable hot springs like the one at the inn run by Mr. Sato. For decades, inns like his have resisted geothermal projects out of fears that they will damage their mineral-rich hot springs.

In a pre-emptive move, Mr. Sato has fit Asunaroso with monitoring equipment that tracks water flows and temperatures in real time, and is pushing for onsens across the country to do the same. He has led the opposition to geothermal development as the chairman of an organization that translates loosely as the Society to Protect Japan’s Secluded Hot Springs.

Understand the Latest News on Climate Change

Running out of time. A new report by the Intergovernmental Panel on Climate Change, a body of experts convened by the United Nations, said that Earth is likely to cross a critical threshold for global warming within the next decade, and nations will need to make an immediate and drastic shift away from fossil fuels to prevent the planet from overheating dangerously beyond that level.

A species in danger. Federal officials said that sunflower sea stars, huge starfish that until recently thrived in waters along the west coast of North America and that play a key role in keeping marine ecosystems balanced, are threatened with extinction and should be protected under the Endangered Species Act.

PFAS chemicals. The E.P.A. announced that the U.S. government intends to require utilities to remove from drinking water perfluoroalkyl and polyfluoroalkyl substances, part of a class of chemicals known as PFAS. Exposure to the chemicals, which are found in countless household items, has been linked to cancer, liver damage and other health effects.

Measuring droughts and deluges. Scientists have long cautioned that warming temperatures would lead to wetter and drier global extremes such as severe rainfall and intense droughts. A new study that used satellites that can detect changes in gravity to measure fluctuations in water shows where that may already be happening.

Bureaucrats in Tokyo, Japan’s giant electrical utilities and even the nation’s manufacturing giants have been no match. “We can’t forcibly push a project forward without the proper understanding,” said Shuji Ajima of the Tokyo-based Electric Power Development Company, also called J-Power, which operates just one geothermal plant in Japan, accounting for 0.1 percent of its power generation. The utility has been forced to give up on a number of geothermal projects in past decades.

“Geothermal plants are never going to be game-changers, but I believe they can still play a role in carbon-free energy,” he said.

‘It’s All the Things Japan Needs’

Hot springs are a small miracle of nature, fed by rainwater that seeps into the rock that is heated by the earth’s interior before bubbling up to the surface, a process that takes years, even decades.

More than 13,000 onsen inns and baths dot the country. There are strict rules, displayed in numerous languages on posters plastered on onsen walls. No bathing suits. No soapy bodies allowed. And an additional Covid-era requirement, “mokuyoku,” or silent bathing — no chatter in the baths.

Geothermal power plants, on the other hand, draw on wells drilled deeper in the earth’s crust, pumping up steam and hot water to power giant turbines that generate electricity. Developers say that because plants draw from sources deep beneath onsen springs, there is little possibility one will affect the other.

Still, the interconnection between hot springs and deeper geothermal heat remains something of a mystery. When hot spring flows change, it’s often difficult to pin down a cause.

“We don’t yet fully understand the full consequences of geothermal development, said Yuki Yusa, a professor emeritus and expert in geothermal sciences at Kyoto University.

Japan, the world’s fifth-largest emitter of planet-warming gases, needs more clean energy to meet its climate goals and to rein in its dependence on fossil fuel imports. Much of its nuclear power program remains shuttered after the 2011 Fukushima nuclear disaster. Geothermal power’s green credentials, combined with its relatively low cost and its ability to produce electricity consistently round the clock, have made it a promising source of renewable energy.

The Japanese government, which seeks to triple the country’s geothermal capacity by 2030, has tried to smooth the way for more projects by opening up geothermal development in national parks and speeding up environmental assessments.

If Japan were to develop all of its conventional geothermal resources for electricity production, it could provide about 10 percent of Japan’s electricity, according to the Institute for Sustainable Energy Policies in Tokyo. That would be more electricity than Japan generated from hydropower, solar, wind or nuclear in 2019.

“It’s domestic, it’s renewable,” said Jacques Hymans, an energy expert at the University of Southern California. “It’s all the things Japan needs.”

But across Japan, local governments have recently introduced a fresh round of restrictions. Kusatsu, an onsen resort town north of Tokyo, passed an ordinance last year that would place the onus on developers seeking the town’s approval to prove that a geothermal project wouldn’t affect local hot springs, a difficult hurdle. Oita, a prefecture that has more onsen springs than any other in Japan, recently expanded a no-drill zone in the city of Beppu, considered Japan’s onsen capital.

“We understand the nation’s energy needs,” said Yutaka Seki, an executive director at the National Hot Spring Association, which represents inns nationwide. “We aren’t opposed to geothermal energy for the sake of opposing it,” he said. “But we strongly caution against unchecked large-scale development.”

A Town Defined by Steam

In Beppu, steam is everywhere. It courses through its streets and envelopes its townhouses.

For decades, large hotels, inns, and even private residences drew from the region’s onsens, severely depleting the thermal spring resources. Most of its onsens now use pumps to force hot water from the ground.

Steam rises from the streets of Beppu, a resort town on the southern island of Kyushu.

There’s so much steam in Beppu that some restaurants use it to cook.

“Blood Pond Hell,” a thermal pool in Beppu that is naturally red from minerals and geothermal heat.

Large-scale geothermal development is out of the question. “We’re talking about what we must do to sustain Beppu’s culture, its established way of life,” said Hidehiko Hida, head of the city office responsible for onsens.

Some 40 miles away stands a rarity: A big geothermal plant. It’s the nation’s largest. But it’s also four decades old, and Kyushu Electric, the regional utility, hasn’t been able to build plants of a similar scale since.

“It’s difficult to find a place that’s willing to say yes,” said Takanori Senju, who heads the utility’s geothermal survey team.

A generous government policy that pays above-market prices for geothermal power has more recently spurred a flurry of smaller geothermal projects. But most plants built since the policy was adopted are tiny, powering perhaps just a few hundred homes. That way they can avoid environmental assessments and restrictions.

But they’re too little to have a significant effect on Japan’s overall energy market, experts say.‌

Signs of Change

The Abe Ryokan resort in the town of Yuzawa.

Yuzawa, in the snowy northern province of Akita, is a rare example of a hot spring town that has embraced geothermal energy.

An early developer, Dowa Mining, involved local community leaders in its planning, hiring the city’s best graduates, sending officials to local festivals and even offering to drill springs for local onsens. The local government, for its part, was eager to foster a new industry in a remote region of Japan. A local milk farmer now uses the hot spring water to pasteurize his milk and yogurt.

Japan had hoped for more Yuzawas. The nation opened its first commercial, large-scale geothermal power plants in 1966, and in the following decades operators added about a dozen more, including one in Yuzawa. But with rising local opposition from hot spring inns, Japan has added almost no geothermal capacity since the 1990s. 

That’s even as Japanese manufacturing giants, like Toshiba, have come to dominate the global market for geothermal turbines. Very little of their business is on their home turf.

A shop in Yuzawa uses geothermal power to pasteurize milk and yogurt.

“I can’t say I’m not concerned,” said Masami Shibata, owner of the Abe Ryokan resort.

A bather at Abe Ryokan.

So in 2019, when Japan’s first large geothermal plant in 23 years opened in Yuzawa, with the ability to power almost 100,000 homes, it was a breakthrough.

The toughest challenge facing any geothermal project in Japan isn’t related the geology or technology, said Shun Iwata, a retired Dowa Mining executive who embedded in Yuzawa for nearly two decades to bring locals round on the idea. He is now an adviser to the city. “What’s more important is working on the community and building relationships,” he said.

Even in Yuzawa, though, there has been controversy. Since late 2020, a local inn has had to periodically close after its spring dwindled.

Yuzawa city maintains the city’s geothermal development wasn’t the cause.

“I can’t say I’m not concerned,” said Masami Shibata of Abe Ryokan, one of Yuzawa’s hot spring inns. Still, geothermal energy has become a part of Yuzawa city’s fabric, she said. “I think it’s possible for both hot springs and geothermal to coexist.”

Hiroko Tabuchi is an investigative reporter on the Climate desk, reporting widely on money, influence and misinformation in climate policy. @HirokoTabuchi • Facebook

Chang W. Lee is a staff photographer. He was a member of the staff that won two 2002 Pulitzer Prizes: one for Breaking News Photography and the other for Feature

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Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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General view of the Walney Extension offshore wind farm operated by Orsted off the coast of Blackpool, Britain September 5, 2018. REUTERS/Phil Noble//File Photo

Scotland's offshore wind winners set to cut North Sea carbon emissions

Initial investments from BP's Alternative Energy Investments and TotalEnergies total 1,670,917 pounds each

Reuters

LONDON, March 24 (Reuters) - BP (BP.L), TotalEnergies and UK renewable companies were among 13 awarded leases to develop offshore wind to supply power mainly to North Sea oil and gas platforms to lower the sector's emissions, Crown Estate Scotland said on Friday.

The 13 were chosen from 19 bidders for agreements to start offshore wind development work for total initial investment of around 260 million pounds ($317.28 million).

Those set to be the biggest investors are Flotation Energy and Cerulean Winds, who are spending respectively almost 96 million pounds Sterling and 138 million pounds.

BP's Alternative Energy Investments is set to initially invest 1,670,917 pounds and TotalEnergies 200,000 pounds.

The Crown Estate is an independent commercial business that oversees the seabed around Britain.

Through a leasing process called INTOG (Innovation and Targeted Oil and Gas), it aims to attract investment in innovative offshore wind projects in Scottish waters to help decarbonise North Sea operations.

The maximum capacity of all the projects that are awarded contracts to supply power to oil and gas installations is 5 gigawatts (GW), and 500 megawatt (MW) for smaller innovative projects, Crown Estate Scotland said.

Crown Estate Scotland will offer a seabed lease of 25 to 50 years for these projects, it said.

Britain is a world leader in wind power, which generated a record amount of energy in the country in 2022, supplying more than 25% of its electricity, National Grid says.

As the largest renewable source in Britain, offshore wind can power about 40% of UK homes, the Crown Estate said

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Cooperate with objective and ethical thinking…

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News round-up, March 23, 2023

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Most read…

The Fed, Still Inflation-Focused, Raised Rates Amid Bank Uncertainty

Federal Reserve officials raised interest rates by a quarter-point while they noted that bank turmoil could help slow the economy.

NYT by Jeanna Smialek

Donald Trump Grand Jury Is Called Off for Wednesday

Panel’s activities are closely watched as hush-money investigation nears its end

TWSJ by Corinne Ramey and Jennifer Calfas

Big Oil Eyes New Deals in North Africa Amid Rising Energy Demand

Halliburton and Honeywell in advanced talks to develop oil fields and refineries in Libya; Eni importing more oil and gas from Algeria

“North Africa’s massive oil-and-gas reserves and its proximity to Europe make it an attractive alternative energy supplier to Russia.

By Chao Deng and Benoit Faucon, March 23, 2023

Xi’s delay of Siberia pipeline signals limits to his embrace of Putin

Putin is desperately scouting for hungry new gas markets after Russia lost the bulk of its most important export market, Europe, following his invasion of Ukraine. That loss included Putin’s ill-considered move to cut gas supplies to Germany through a significant pipeline last year.

TWP By Robyn Dixon, March 22, 2023

Corporate profits: Macron favors 'exceptional contribution' over tax

The government wants to require companies that employ more than 5,000 people and that are buying back shares to better share profits with employees.

Le Monde by Elsa Conesa and Audrey Tonnelier, published on March 23, 2023

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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Note: The rate since December 2008 is the upper limit of the federal funds target range. Source: Federal Reserve. By Karl Russell

The Fed, Still Inflation-Focused, Raised Rates Amid Bank Uncertainty

Federal Reserve officials raised interest rates by a quarter-point while they noted that bank turmoil could help slow the economy.

NYT by Jeanna Smialek

WASHINGTON — Federal Reserve officials raised interest rates by a quarter-point on Wednesday as they tried to balance two conflicting problems: the risk that inflation could remain rapid and the threat that turmoil in the banking system could slow the economy drastically.

The Fed on Wednesday pushed interest rates to a range of 4.75 percent to 5 percent, and officials forecast one more rate increase in 2023 — though they hinted even that was uncertain. In doing so, policymakers tried to signal that they remained focused on wrestling down price increases but were also paying attention to financial threats.

“In assessing the need for further hikes, we’ll be focused on incoming data and the evolving outlook, and in particular on our assessment of the actual and expected effects of credit tightening,” Jerome H. Powell, the Fed chair, suggested at his post-meeting news conference.

The Fed’s statement said that some additional rate moves “may be” warranted, and Mr. Powell emphasized that “may” was crucial: Officials do not know that yet.

His comments underlined that the outlook for whether rates would rise further — and, if so, by how much — had been made uncertain by turmoil in the banking industry that could make loans harder to come by, slowing the economy.

Officials forecast that next year they would lower rates more slowly than they had anticipated, so that rates linger at 4.3 percent by the end of 2024, up from 4.1 percent. That suggested that the fight for stable inflation could be a longer and more gradual one than many had expected even a few months ago, though the outlook is complicated by the bank turmoil.

The forecasts and Mr. Powell’s remarks together underlined that his central bank is confronting a complicated moment — and trying to buy itself the time to decide how to react.

The Fed has raised interest rates at the fastest pace since the 1980s over the past year to try to cool a hot economy. Yet inflation has been surprisingly stubborn, and the job market remains strong. Those facts would likely have called for a more aggressive Fed response.

But high-profile bank collapses in recent weeks have underscored the risk that rapid Fed rate moves could stoke financial instability. Silicon Valley Bank, which failed on March 10, did so partly because it had amassed big losses on its portfolio of securities as interest rates climbed. And even more critically, the bank problems threaten to weigh on lending and spending, which ramps up the risk of a recession.

“The bottom line is: Credit conditions are going to tighten, and the Fed is acknowledging that,” said Diane Swonk, the chief economist at KPMG. The Fed “would like a slow cooling,” she added. “They just don’t want a deep freeze. And this increases the chances that the economy falls through the ice.”

Stocks, which initially jumped after the Fed’s decision was announced, fell sharply on Wednesday, finishing the day down 1.65 percent as investors digested the Fed’s interest rate move and comments by Janet Yellen, the Treasury secretary, suggesting that the government was not looking into a plan to extend broad protection for uninsured deposits.

The continuing jitters about the banking system come at a time when the economy has otherwise appeared strong — in spite of the Fed’s policy adjustments.

The Fed has been rapidly raising its policy interest rate since March 2022, making it more expensive to borrow money in hopes of cooling spending and eventually weighing down inflation. Officials made four straight three-quarter-point rate increases last year before slowing to a half-point in December and a quarter-point in early February.

Just two weeks ago, many economists and investors thought central bankers might speed their rate moves back up at this meeting because incoming economic data had retained so much momentum. Policymakers had hinted that they might revise up their forecasts for how much interest rates would rise in 2023.

“As of a couple of weeks ago, it looked like we’d need to raise rates — over the course of the year — more than we’d expected,” Mr. Powell acknowledged on Wednesday.

But the Fed chair explained that the bank problems had changed the outlook. By making it harder for consumers to access credit to buy houses or cars, or make other big purchases, the issues could weigh on demand, allowing the Fed to adjust interest rates less drastically.

“Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation,” the Fed’s policy committee said in its post-meeting statement. “The extent of these effects is uncertain.”

Economists at Goldman Sachs estimate that the effect could be equivalent to the slowdown prompted by one or two Fed rate increases. Mr. Powell seemed to suggest during his news conference that his estimate — while far from clear — was in that ballpark.

“You can think of it as being the equivalent of a rate hike, or perhaps more than that,” he said. “Of course, it’s not possible to make that assessment today with any precision whatsoever.”

How the Fed’s projections for future interest rates have evolved

The evolution of the federal funds target rate from March 2018 to March 2023. As of March 2023, the target rate is 5 percent. The latest projections show, on average, an increase by the end of 2023 and decreases in subsequent years.

But even with a bank-induced hit to the economy, the process of restoring stable inflation could take time.

Policymakers expected rapid price increases to be a more lasting problem, based on their fresh economic estimates. Officials thought inflation would finish 2023 at 3.3 percent, up from 3.1 percent in their December projections. That inflation measure was 5.4 percent in January.

Central bankers aim for 2 percent inflation on average over time. While price increases have been slowing from very elevated levels last year — the Fed’s preferred inflation index peaked at about 7 percent last summer — that progress has not been as steady as many hoped.

Continued price increases are weighing on family budgets, and there is a risk that a long period of quick inflation could make price increases a more permanent feature of the American economy.

That is what central bankers are trying to avoid. By lifting rates quickly over the past year, they have hoped to cool growth and bring inflation under control promptly. While brisk monetary policy adjustments increase the risk of financial turmoil and other problems, central bankers have worried that inflation will be harder and more painful to stamp out if it becomes entrenched in daily household and business behavior.

Once people are used to asking for big pay raises to cover climbing costs, and companies are used to making regular price increases, it could take a bigger economic downturn to rewire those habits and change the course of price increases.

“We have to bring inflation down to 2 percent,” Mr. Powell said. “The costs of failing are much higher.”

Jerome H. Powell said that the Federal Reserve raised interest rates to combat inflation amid turmoil in the banking system.CreditCredit...T.J. Kirkpatrick for The New York Times

A critical question is whether the Fed will be able to slow the economy enough to cool inflation without a recession. Mr. Powell suggested that he still thought such a “soft landing” was possible — though he acknowledged that the recent banking upheaval has not helped.

“I think that pathway still exists,” Mr. Powell said. “We’re certainly trying to find it.”

Wall Street analysts have pointed out that the risks are greater in a world with financial turmoil, given that problems in the banking sector can easily spill over to hit Main Street.

“You have the trigger that can make it into a deeper recession — can make it into a hard landing,” said Priya Misra, the head of global rates strategy at TD Securities.

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Image: Germán & Co

Donald Trump Grand Jury Is Called Off for Wednesday

Panel’s activities are closely watched as hush-money investigation nears its end

TWSJ by Corinne Ramey and Jennifer Calfas

The Manhattan grand jury investigating Donald Trump’s role in a hush-money payment to a porn star was instructed not to meet Wednesday, according to people familiar with the matter, delaying any potential indictment of the former president.

The district attorney’s office notified court officials Tuesday night about the change in plans, the people said. The grand jury is now scheduled to reconvene Thursday, according to the people. It wasn’t clear what prompted the change.

A spokeswoman for Manhattan District Attorney Alvin Bragg said the office couldn’t comment on grand-jury matters. 

The change in schedule was earlier reported by Insider.

The grand jury’s activities have been closely watched as the hush-money investigation into Mr. Trump, run by Mr. Bragg, nears its end. The jury could still hear from additional witnesses, or prosecutors could formally present charges, which is the final step before the panel votes on whether to indict.

Any potential indictment wouldn’t be public until it is unsealed by a judge. While the timing of any possible surrender by Mr. Trump is unknown, law-enforcement officials said they anticipated it likely wouldn’t happen this week.

Mr. Trump has said he didn’t do anything wrong and accused Mr. Bragg, a Democrat, of damaging his electoral prospects. On Tuesday he criticized Michael Cohen, a key potential prosecution witness who served as his personal lawyer at the time of the payment, on the eve of the 2016 presidential election. “In the history of our Country there cannot have been a more damaged or less credible witness at trial than fully disbarred lawyer and felon, Michael Cohen,” Mr. Trump wrote on his social-media network. Over the weekend, he called on his supporters to protest.

Meanwhile, police have erected barricades around and near a lower Manhattan courthouse as people in the city and across the U.S. await the grand jury’s vote. Very few demonstrators of any political persuasion had gathered by mid-day Wednesday. Television-news crews packed the sidewalks near the court building, while reporters and a handful of lookers-on awaited the potential arrival of witnesses. A tour guide chaperoning a group past the scene asked the scrum, “any Trump sightings yet?”

On a street corner across from the city’s Collect Pond Park, California painter John Paul Marcelo contemplated his canvas, adding a stroke of pale yellow to capture the late-morning light shining on the court buildings he was painting. “It’s the first time in American history that this is happening,” he said, referring to the potential indictment of a former president. “And if it does happen, I feel like that’s a super rare thing to paint.”

The New York Police Department said it was ready to respond to any protests or counter protests. A department representative said there would be an uptick in uniformed officers in each of the city’s five boroughs. New York City Mayor Eric Adams said Monday the city was monitoring comments on social media and police were “making sure that there’s no inappropriate actions in the city.”

The grand jury has been hearing testimony about the payment to porn star Stormy Daniels and its aftermath since late January. Robert Costello, a lawyer who briefly advised Mr. Cohen, appeared Monday at the request of Mr. Trump’s lawyers. He told reporters after his testimony that in 2018, Mr. Cohen said the payment to Ms. Daniels was intended to protect Mr. Trump’s wife.

Mr. Cohen has said publicly that Mr. Trump told him to pay Ms. Daniels to keep her from going public about an alleged affair with Mr. Trump, which he denies.

Prosecutors have considered charging Mr. Trump with falsifying business records because reimbursements to Mr. Cohen were falsely labeled as legal expenses.

All of the major players involved in the payment, including Mr. Cohen, have testified before the grand jury. While Ms. Daniels has met virtually with prosecutors, she hasn’t appeared before the panel.

At Trump Tower in Midtown Manhattan Wednesday morning, barricades were present at the Fifth Avenue building, as well as at stores across the street. Inside, Trump Tower’s lobby was open to the public with a couple of police officers by the entrance.

Law-enforcement officials met this week to make security plans and the Secret Service is working with local authorities on discussions.

In Washington, D.C., the Metropolitan Police Department was monitoring the situation, according to a spokesman. He said he wasn’t aware of any plans related to the possible indictment. A representative for Capitol Police said Tuesday the department “cannot discuss potential security plans.”

—James Fanelli  and Will Parker contributed to this article.

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Image: TWSJ

Big Oil Eyes New Deals in North Africa Amid Rising Energy Demand

Halliburton and Honeywell in advanced talks to develop oil fields and refineries in Libya; Eni importing more oil and gas from Algeria

“North Africa’s massive oil-and-gas reserves and its proximity to Europe make it an attractive alternative energy supplier to Russia.

By Chao Deng and Benoit Faucon, March 23, 2023

CAIRO—After years of underinvestment in North Africa’s energy infrastructure, global oil-and-gas giants from Halliburton Co. and Chevron Corp. to Eni SpA are ramping up their presence in the region as demand from Europe grows.

Executives in the industry are betting it is worth drilling again in some of the hardest places to do business in the world as Europe increasingly turns to other sources for its energy needs after shunning its main supplier, Russia, over the invasion of Ukraine. In recent months, a string of European officials have visited the region to help advance talks over potential supply deals.

Halliburton and Honeywell International Inc. are hammering out $1.4 billion worth of deals to develop an oil field and refinery with National Oil Corporation in Libya, which has the largest known oil reserves in Africa, according to the chairman of state-owned firm, Farhat Bengdara. Italy’s Eni is planning investments aimed at replacing nearly half of the gas it was importing from Russia with gas from Algeria.

Chevron is also looking to seal an energy exploration deal in Algeria, The Wall Street Journal reported last month. In January, the U.S. oil major announced a sizable natural-gas discovery in Egypt.

“North Africa has been slow to develop its potential because of political risks, either related to insecurity or bureaucracy,” said Geoff Porter, president of U.S.-based North Africa Risk Consulting Inc. But with Europe needing to replace Russian energy, “this is their moment,” he said.

Western oil executives say they see a more stable political climate in North Africa, especially in countries such as Libya where fighting between local militias has been subdued in the past two years following nearly a decade of civil war. Many American firms had pulled back from the region, viewing it as politically too risky, to focus on shale production at home. The region’s proximity to Europe and massive reserves, with Algeria holding the third-largest recoverable shale resources in the world, also make doing business there worth the risk, they say.

At the same time, state-owned firms in the North African region have been eager to strike deals, as they see an opportunity to fill a gap left by Russia and take advantage of higher global commodity prices. Some countries, such as Egypt, are eager to bring in additional revenue from selling energy, as their economies struggle with higher import costs including for food. The Ukraine war has disrupted shipments and pushed up global commodity prices.

“I think we can be a good replacement for Russian gas to Europe,” NOC’s Mr. Bengdara said.

Farhat Bengdara, chairman of National Oil Corporation in Libya, which he says has the largest known oil reserves in Africa.

The Libyan state-owned company is expected to soon sign a $1 billion agreement with Halliburton that will allow the U.S. firm to rebuild the al-Dhara oil field, according to Mr. Bengdara. The oil field in central Libya was destroyed by Islamic State militants in 2015 and is now run by ConocoPhillips and TotalEnergies SE, Mr. Bengdara said. It would be one of the biggest deals for the U.S. oil-services giant clinched in the Middle East and North Africa in recent years.

Halliburton and Total didn’t respond to requests for comment. ConocoPhillips declined to comment.

Libya’s NOC and Honeywell are set to unveil a contract related to the construction of a refinery in southern Libya, Mr. Bengdara and a spokesman for the American firm said. The initial deal, expected to be announced this weekend, is for the design of the plant, the spokesman said, which would be followed by a $400 million pact to build the entire plant.

Libya relies heavily on its oil resources for income, although it has struggled for years to turn its own crude into motor fuel, making it largely dependent on costly gasoline imports.

As of last year, the North African nation was divided politically again, with a United Nations-appointed prime minister, Abdul Hamid Dbeibeh, remaining in control of the capital Tripoli and a rival prime minister taking charge of the country’s east. The country is again pushing to hold presidential and legislative elections this year, after plans fell through in 2021.

State-owned firms in the North African region have been eager to strike deals with Europe.

Still, there have been no serious clashes since last summer and its eastern government in recent months has unlocked some of the budget needed by the state oil company to clinch deals with international companies.

Secretary of State Antony Blinken told a senate committee on Wednesday that the U.S. was actively working to reopen an embassy in Libya, in part so it could better support the prospect of Libyan elections. The U.S. shut its embassy in Tripoli in 2014 following violent clashes between militias.

The U.S. also pressured a top Libyan commander in mid-January to expel Russia’s paramiliatry Wagner Group, the Journal reported last month, amid fears the unit may tap into the country’s oil riches. Khalifa Haftar, commander of a faction that controls eastern Libya, is aligned with the government in Tripoli.

“There is recognition in the U.S. that Libya is a workable environment,” said Mr. Porter, who advises U.S. oil companies in the region. He added that firms now see it as “an environment in which you can operate reasonably safely, where you can more predictably invest in ways that you could not have a few years ago.”

NOC exports most of its gas to Europe through a pipeline from Libya to Italy. Over the next three to five years, it aims to increase oil production to 2 million barrels a day, from around 1.2 million currently, and to produce 4 billion standard cubic feet of gas a day, up from roughly 2.6 billion.

In January, NOC and Eni, which produces the majority of the country’s gas, signed an $8 billion deal for the Italian energy giant to develop two gas fields to pump 850 million cubic feet a day for 25 years. Under the agreement, production of gas will start in 2025, ramping up to full capacity of 850 million cubic feet a day by 2026.

In Algeria, Eni is aiming to export an additional 3 billion cubic meters of gas annually, starting this year, to help make up for gas that used to flow from Russia. Algeria will become the firm’s top region for investment in the next four years.

“Algeria is a reliable partner of absolute strategic importance,” said Italian Prime Minister Giorgia Meloni during a visit to Algiers in January.

From Egypt, Eni aims to export three billion cubic meters of liquefied natural gas to Italy starting this year, after regas capacity was built up on the receiving end. That compares with roughly 1 billion cubic meters being exported last year.

Egypt’s ability to export gas is limited given the growing electricity demand of its more than 100 million population. It doesn’t have any pipelines to Europe. Still, the country has ambitions to become a hub for energy distribution in the Mediterranean, importing more gas from Israel and exporting liquefied gas on ships to Italy.

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Image: Snow covers sections of pipework at Gazprom's Atamanskaya compressor station near Svobodny, Russia, on Dec. 11, 2019. (Andrey Rudakov/Bloomberg News)

Xi’s delay of Siberia pipeline signals limits to his embrace of Putin

Putin is desperately scouting for hungry new gas markets after Russia lost the bulk of its most important export market, Europe, following his invasion of Ukraine. That loss included Putin’s ill-considered move to cut gas supplies to Germany through a significant pipeline last year.

TWP By Robyn Dixon, March 22, 2023

Snow covers sections of pipework at Gazprom's Atamanskaya compressor station near Svobodny, Russia, on Dec. 11, 2019. (Andrey Rudakov/Bloomberg News)

RIGA, Latvia — Russian President Vladimir Putin this week called the Power of Siberia pipeline, which carries Russian gas to China, the “deal of the century.” But Putin’s hopes of swiftly securing a sequel of the century — the giant Power of Siberia 2 — deflated over two days of talks with Chinese leader Xi Jinping this week.

Putin is desperately scouting for hungry new gas markets after Russia lost the bulk of its most important export market, Europe, following his invasion of Ukraine. That loss included Putin’s ill-considered move to cut gas supplies to Germany through a major pipeline last year.

Russian gas giant Gazprom has been pushing the Siberia pipeline plan for years, and all eyes were on the meetings with Xi this week for signs of agreement. It never materialized.

Xi’s support for Putin, despite his invasion of Ukraine, is a geopolitical milestone — the Chinese leader called it a change “that hasn’t happened in 100 years” — as Beijing positions itself for an era of growing confrontation with the United States and presses for a multipolar world to end Washington’s global dominance.

But Xi’s failure to give Russia the additional symbolic boost of a giant gas pipeline deal showed that he would not sacrifice China’s economic self-interest, and it highlighted Putin’s weakness and growing dependence on his “dear friend.”

Even if there had been an agreement, the pipeline would take many years to build and would not help Russia’s short-term economic problems with its shrinking revenue due to sanctions.

Xi’s trip offered Putin important moral support, and Chinese trade has bolstered Russia’s economy, but the lack of a deal on Power of Siberia 2 showed the limits of what Xi is willing to do, said Janis Kluge, an expert on Russia’s economy with the German Institute for International and Security Affairs.

“Russia needs a lot from China right now, and it’s in a very weak position,” Kluge said.

“Basically, it would be a gesture of trust or loyalty from the Chinese side because, of course, these gas deals are always very long-term commitments,” he said, adding that it was questionable if Power of Siberia 2 pipeline would ever be built, which in turn raises doubts about whether Russia’s western Siberian gas would ever be exported.

China does not want Russia to lose the war in Ukraine or to see the collapse of Putin’s regime, Kluge continued. “But this doesn’t mean that the relationship is blossoming,” he said. “There is now a clear dependency where there used to be a more symmetrical relationship. We can see that China is not offering anything more than the symbolics of this visit, and we can see that China is also more careful in its dealings with Moscow.”

Putin said on Tuesday that “practically all the parameters” of the Power of Siberia 2 deal had been agreed, but his comments concealed a defeat of Russian efforts to get final agreement from China.

“Unfortunately, ‘almost all’ is not ‘all’ of the parameters,” wrote Moscow-based analytical firm BKS, adding that “the agreement has been discussed in one form or another since 2004 or earlier, but the price issue has been a stumbling block again and again.

“If this aspect is not resolved, serious negotiations are still ahead and success is not guaranteed,” BKS wrote.

The leaders’ joint statement referred vaguely to “strengthening the comprehensive partnership in the energy sector” but, tellingly, only agreed to “make efforts to advance work on studying and agreeing” on the landmark project.

At the conclusion of Xi’s state visit, Deputy Prime Minister Alexander Novak could only say that details of the deal were yet to be worked out and that he hoped an accord would be reached sometime this year.

Konstantin Simonov, director of the National Energy Security Fund, a think tank, said Xi and Putin had been expected to sign the deal during their meetings.

“It is obvious that Russia needs the contract,” Simonov told Business FM, a Russian radio station. “Gazprom needs the contract, because last year we had a drop in supplies to the European Union of over 80 billion cubic meters. This is quite a serious volume, and this year we may lose another 30 to 40 billion cubic meters.”

“The fact that the contract has not been signed so far means that China believes that today Russia needs this project more, and it tries to drag out this delay in order to, most likely, get the most favorable conditions for itself,” he said.

…”Xi and Putin showcase alliance but offer no path to peace in Ukraine

Kremlin spokesman Dmitry Peskov denied reports that the failure to get a deal was a defeat for Putin, calling these “low-quality fake stories.”

“The reality is totally different,” Peskov said. “The expansion [of cooperation] was discussed.”

But there are plenty of uncertainties, including the expected level of Chinese gas demand in the 2030s, the price of gas at that time, China’s ready access to many other global suppliers and its capacity to increase its own domestic gas production.

From 2019 to 2020, Russia supplied 3 percent of China’s natural gas, compared with 10 percent from Turkmenistan and 12 percent from Australian liquefied natural gas (LNG), according to the Energy Policy Research Foundation. However, the original Power of Siberia project, which went onstream in December 2019, has increased supplies since. The foundation noted that China has kept its natural gas supplies well diversified, unlike many European nations before Putin’s invasion.

After meeting Xi on Tuesday, Putin said Power of Siberia 2, which would carry gas to China through Mongolia, is a “good project” and extolled Russia’s “reliable, stable” supply. In fact, analysts say, Moscow has often used its gas supplies to exert damaging political pressure on its neighbors, including Ukraine, Georgia and recently Moldova.

In a blatant example, Russia indefinitely cut the supply to Germany via the Nord Stream 1 pipeline in September, citing maintenance issues, while the Kremlin denied manipulating supplies.

“I think that China was watching very closely what happened there, and they will try to stick to their strategy of diversification and not allowing a single supplier to have a significant chunk of the Chinese market,” Kluge said.

Weeks later, a pipeline attack by unknown saboteurs severed supplies via Russia’s Nord Stream 1 and the new Nord Stream 2 pipeline, which had yet to receive regulatory approval to begin operations.

…”As Xi visits Russia, Putin sees his anti-U.S. world order taking shape

Mongolian Prime Minister Luvsannamsrain Oyun-Erdene recently told Reuters that his country was waiting for China and Russia to agree on the details of the Power of Siberia 2 pipeline before going through the trouble of deciding on the route through his country. Gazprom needs agreement that China will purchase a certain volume of gas to make the project viable.

The biggest question mark is Chinese gas demand in the 2030s. The International Energy Agency’s World Energy Outlook last year reported that China’s LNG contracts, existing pipelines and new domestic gas projects would exceed its requirements up to 2035, as the growth in demand for gas slows.

“There are no easy options for Russia in its search for new markets for the gas it was exporting to Europe,” the agency reported. “Sanctions undercut the prospects for large new Russian LNG projects, and long distances to alternative markets make new pipeline links difficult.”

It predicted that Russia’s share of internationally traded gas would fall to less than 15 percent in 2030 from 30 percent in 2021, and that its net income from exports would plummet to less than $30 billion from $75 billion over that tim

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Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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Image: Emmanuel Macron, during an interview with TF1 and France 2 televisions, Elysée Palace, March 23, 2023. LUDOVIC MARIN / AFP

Corporate profits: Macron favors 'exceptional contribution' over tax

The government wants to require companies that employ more than 5,000 people and that are buying back shares to better share profits with employees.

Le Monde by Elsa Conesa and Audrey Tonnelier, published on March 23, 2023

Since the Covid-19 pandemic, share buybacks have reached record levels in France: Nearly €29 billion in 2021, over €27 billion in 2022, three times more than before the pandemic. Such figures are politically touchy, at a time when many are struggling with the cost of living.

On Wednesday, March 22, during a televised interview on TF1 and France 2, French President Emmanuel Macron singled out the "cynicism" of "these large companies that we helped" during the pandemic, adding he wanted to "work on an exceptional contribution so that when there are exceptional profits by companies that are ready to buy back their own shares, workers will be able to benefit from it."

But Macron ruled out the possibility of taxing these exceptionally high profits. The objective remains to encourage companies to better compensate their employees through existing profit-sharing mechanisms. He reaffirmed on Wednesday his desire to pursue a pro-business, supply-side policy, his economic common thread since 2017. This, he said, "implies assuming the tax choices we have made for companies: If we want to keep reindustrializing, we need more work and more capital."

Bruno Le Maire, the French finance minister, later said that this contribution would only apply to companies with a staff of more than 5,000. "We want to require them to engage in more profit-sharing, more participation, more tax-free bonuses when they buy back shares. We could consider, for example, a doubling of the amounts paid."

According to the French national statistics office INSEE, there were 273 companies with more than 5,000 employees in France in 2020, amounting to a total of 3.9 million employees.

'Feeling of injustice'

The government intends to let unions and employer organizations decide what this incentive should look like. It will come as a "third layer" in the process of improving the distribution of value, according to Le Maire, after a first set of measures introduced in 2017 with a simplification of profit-sharing and participation agreements, the elimination of the lump-sum tax on social security contributions and the tripling of a "Macron bonus" and a second set of measures, which included a levy on energy companies introduced in the fall of 2022 to finance aid given to consumers to compensate for rising energy prices.

"If it can go into effect in 2023, all the better," a source at the Finance Ministry said. The ministry, however, was not able to list the number of companies affected and the sums involved or say whether the measure would be included in a "labor law" or hypothetical legislation on value sharing. The 2024 budget could also be used to contain the measure.

This "exceptional contribution" was in the pipeline for several weeks. The unions and employer federations reached an agreement on profit sharing in February which Prime Minister Elisabeth Borne has since pledged to transcribe into legislation.

The settlement requires companies with 11 to 49 employees to set up a profit-sharing mechanism if they meet certain financial criteria. But within the majority, some elected representatives wanted to go further. They had worked on a system of "super participation" similar to Wednesday's announcement.

Presented by Macron as a response to the "feeling of injustice" regarding the pension reform, is this new contribution, which essentially targets employees of large listed companies, a response to the anger shown in the streets?

"Surely, this measure is not aimed at the worst-off employees," said Louis Margueritte, a member of Parliament with Macron's Renaissance party in charge of an information mission on the fiscal and social tools for sharing value. "But no one believes this measure will be enough to ease the tensions and anger in the country for a second. It's just a signal showing that we haven't exhausted the subject [of profits] with the energy companies."

During the 2022 presidential campaign, Macron had promised the introduction of an "employee dividend", before the idea, which looked politically attractive but vague from an economic point of view, was postponed. It emerged again during the budget debates in the fall as a response to purchasing power issues and to the grumbling of the opposition in the face of profits made by certain companies in a context of high inflation, in vain.

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Cooperate with objective and ethical thinking…

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News round-up, March 22, 2023

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Quote of the day…

“Humanity is on thin ice, and that ice is melting fast,” the United Nations Secretary-General, António Guterres, said.

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'Disgusting LNG'

…”For the time being, the protagonists in this dispute are focusing on a renewable energy directive. Two camps, one led by Germany and the other by France, are fighting it out, each with a blocking minority on a specific point: Should low-carbon hydrogen be taken into account when measuring the efforts of member states to reach the target of 45% of renewables in their energy mix by 2030?

For Berlin and its Spanish, Luxembourgish and Austrian allies, only green hydrogen, produced with wind or photovoltaic electricity, is eligible. This is unacceptable for Paris and its partners, mostly from Eastern and Central Europe. They are banking on nuclear energy to help them comply with the Paris Agreement.

Most read…

Rally in Bank Shares Lifts U.S. Stocks

Treasury yields surge ahead of Wednesday’s interest-rate decision, with traders expecting 0.25-percentage-point increase

WSJ By Sam GoldfarbFollow and Caitlin McCabeFollow

‘Rocking Chair Rebellion’: Seniors Call On Banks to Dump Big Oil

Older climate activists gathered in cities around the country for a day of action targeting banks that finance fossil fuel projects.

NYT by Cara Buckley, Published March 21, 2023

POLITICAL MEMO

Head of the Eurogroup"We Have to Recognize How Quickly Things Can Change"

It has been a bad couple of weeks for banks in the U.S. and Europe. In an interview, Eurogroup head Paschal Donohoe discusses the possible dangers facing the euro area and why he remains confident.

Spiegel Interview Conducted by David Böcking, 20.03.2023

France and Germany square off in Brussels over nuclear power

Nuclear energy and its potential use for producing low-carbon hydrogen are at the heart of fierce battle between Paris and Berlin over European policy.

LE MONDE BY VIRGINIE MALINGRE (BRUSSELS, EUROPE BUREAU)

The U.N. Issues a Final Warning on the Climate—and a Plan

The I.P.C.C. report contains no new data; nevertheless, it manages to alarm in new ways.

The New Yorket by Elizabeth Kolbert

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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Image: Germán & Co

Rally in Bank Shares Lifts U.S. Stocks

Treasury yields surge ahead of Wednesday’s interest-rate decision, with traders expecting 0.25-percentage-point increase

WSJ By Sam GoldfarbFollow and Caitlin McCabeFollow

Increased investor optimism about the banking system helped lift U.S. stocks Tuesday, with shares of regional banks including First Republic Bank FRC 29.47% at the forefront of a broad market rally.

Buoyed in part by reassuring comments by global financial authorities, both the S&P 500 and the Dow Jones Industrial Average posted their second consecutive day of gains for the first time since Silicon Valley Bank and Signature Bank collapsed less than two weeks ago.

Yields on U.S. government bonds also climbed sharply—with the two-year Treasury yield notching its largest single-day gain since 2009—as investors scaled back recent bets that an economic downturn could force the Federal Reserve to start cutting interest rates in the near future.

The S&P 500 gained 51.30 points, or 1.3% to 4002.87. The Dow Jones Industrial Average rose 316.02 points, or 1%, to 32560.60 and the technology-focused Nasdaq Composite climbed 184.57 points, or 1.6%, to 11860.11.

The KBW Bank index rose 5%. Shares in big U.S. banks such as JPMorgan Chase posted strong gains, while some smaller lenders surged. Shares in big U.S. banks such as JPMorgan Chase posted strong gains, while some smaller lenders surged. First Republic stock jumped $3.59, or 29%, to $15.77 after shedding nearly half of its value Monday. Western Alliance and PacWest, two other midsize banks that have come under pressure, each climbed more than 14%.

Stocks advanced ahead of Wednesday’s interest-rate decision from the Fed. Having once thought that the central bank could raise rates by 0.5 percentage point this month, investors have recently been debating whether officials will keep up their fight against inflation with a more modest 0.25 percentage increase or refrain from raising rates altogether until financial conditions stabilize.

Aiding Tuesday’s rally, Treasury Secretary Janet Yellen suggested the government could, if necessary, take further steps to shore up the banking system. Earlier this month, Ms. Yellen and other federal regulators used emergency powers to guarantee uninsured deposits at Silicon Valley Bank and Signature, while also setting up a new Federal Reserve lending program to help banks to meet withdrawal requests. 

“Our intervention was necessary to protect the broader U.S. banking system. And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion,” Ms. Yellen said.

Meanwhile, some banking-industry representatives and lawmakers have called for an expansion of deposit insurance, although it isn’t clear whether such a move would be politically viable in Congress.

JPMorgan Chief Executive Jamie Dimon is leading discussions about new efforts to stabilize the troubled First Republic, The Wall Street Journal reported Monday. The bank has become a focus of investors worried that a flight of deposits from midsize banks triggered by the run on Silicon Valley Bank could lead to a pullback in lending and drag on economic growth.

“The equity market is not pricing in a full banking crisis,” said Seema Shah, chief global strategist at Principal Asset Management. “There’s not panic setting into that investor space, which is certainly a very important thing.”

In Europe, bank stocks and bonds also recovered, following choppy trading Monday sparked by UBS’s emergency takeover of Credit Suisse. UBS’s stock climbed 12% to 19.43 Swiss francs.

Regulators made attempts Monday to calm bond investors after a risky type of bank debt, known as additional tier 1 bonds, tumbled. The selloff came after Credit Suisse’s AT1 bonds were wiped out as part of the troubled Swiss bank’s hastily arranged sale to rival UBS.

Additional tier 1 bonds ticked higher Tuesday, with a roughly $1 billion AT1 exchange-traded fund from Invesco gaining 16 cents, or 0.8%, to $20.86.

Wall Street and investors have deliberated over whether the Fed will raise interest rates again this week.

The Fed, meanwhile, was looming larger in investors’ minds after days spent intensely focused on the banking sector.

Some analysts have argued in recent days turmoil in the banking sector would keep the Fed from raising rates on Wednesday. Nevertheless, a growing consensus has emerged that the Fed will still lift rates by 0.25 percentage point.

Fed-funds futures showed Tuesday afternoon that investors were pricing in a roughly 86% chance that the central bank lifts interest rates by 0.25 percentage point for a second consecutive time, according to data from CME Group.

“I probably agree with consensus that they are likely going to hike 25 basis points tomorrow,” said Blake Gwinn, head of U.S. rates strategy at RBC Capital Markets. “I don’t necessarily think it’s the right option, but I just think…they really want to separate out the financial stability tool kit from the inflation fighting tool kit.”

Along with its decision on interest rates, Fed officials could have a significant impact on markets by signaling what their plans are for the future.

Some analysts have warned that Fed officials, including Fed Chair Jerome Powell, may be less concerned than investors that rate increases pose a serious threat to financial stability. If that becomes apparent on Wednesday, stocks could decline, these analysts say.

In a sign that investors were already recalibrating their interest-rate bets, prices of U.S. Treasurys posted major declines Tuesday, pushing their yields higher.

The yield on the two-year U.S. Treasury note, which is especially sensitive to changes in the near-term interest-rate outlook, settled at 4.175%, according to Tradeweb, up from 3.922% Monday.

The yield on the 10-year note also climbed, to 3.603% from 3.477% Monday. Yields on both bonds, however, remain well below their levels from two weeks ago.

Wednesday’s interest-rate decision, along with accompanying economic projections and Mr. Powell’s post-meeting press conference, could have a complicated impact on the bond market, some investors said.

Typically, bond prices would fall in response to Fed guidance suggesting that higher interest rates are ahead. Yet, in the current climate, some believe that longer-term bonds could actually rally in such a scenario if investors were worried enough that higher rates would drive the economy quickly in a recession.

If it looks like Fed officials are “just going to put blinders on and hike their way through this thing, I think markets are going to look at that and just say ‘Man, this is going to break,” said Mr. Gwinn.

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Image: “I think anybody is complicit that is not trying to do anything,” one protester said.Credit...Craig Hudson for The New York Times

‘Rocking Chair Rebellion’: Seniors Call On Banks to Dump Big Oil

Older climate activists gathered in cities around the country for a day of action targeting banks that finance fossil fuel projects.

NYT by Cara Buckley, Published March 21, 2023

They were parents, grandparents, great-aunts and great-uncles, ranging in age from their 50s to their 80s and beyond, and together they braved frigid temperatures to protest all through the night, and to rock.

Bundled in long johns, puffer coats, layered knit hats and sleeping bags, and fortified by cookies sent by courier from a sympathetic supporter, dozens of graying protesters sat in rocking chairs outside of four banks in downtown Washington for 24 hours, in a nationwide protest billed as the largest climate action ever undertaken by older folks.

Calling themselves the Rocking Chair Rebellion, they were part of more than 100 climate actions staged across the country Tuesday by Third Act, a protest group for people aged 60 and older, co-founded by Bill McKibben, the author and climate campaigner.

Their targets were Chase, the subsidiary of JP Morgan Chase, Wells Fargo, Citibank and Bank of America, the biggest investors in fossil fuel projects, according to a 2022 report by the Rainforest Action Network and other environmental groups. Collectively, the four banks have poured more than $1 trillion between 2016 and 2021 into oil and gas.

“This is the world we helped create,” said Katie Ries, 66, who is retired from the National Oceanic and Atmospheric Administration, as she sat in a rocking chair outside the Chase branch in downtown Washington shortly after an unseasonably cold dawn on Tuesday. “When you put this temporary discomfort in perspective, against what we are out here for, what we are facing, it just pales, it disappears.”

Formed in 2021, Third Act has some 50,000 members on its mailing list, according to Mr. McKibben, including a few centenarians. While the group has staged protests before, sometimes bearing signs that read “fossils against fossil fuels,” they said that Tuesday’s actions were the biggest yet, with participants driven in part by the conviction that it was unfair to lay responsibility for fixing the climate crisis at the feet of younger generations who will bear its brunt.

“I think anybody is complicit that is not trying to do anything,” one protester said.Credit...Craig Hudson for The New York Times

“For all their energy and intelligence and idealism, young people lack the structural power to make change on the scale we need in the time that we have,” said Mr. McKibben, who is 62, chatting early Tuesday before an anti-big bank climate rally in Washington’s Franklin Park. “We all vote, we ended up with most of the resources in our society. If we’re going to make Washington and Wall Street change, it’ll take a few people with hairlines like mine.”

The protests came on the heels of the latest dire report from the Intergovernmental Panel on Climate Change, which forecast that within the next decade, average global temperatures are likely to increase by 1.5 degrees Celsius, or 2.7 degrees Fahrenheit, compared to preindustrial levels and making catastrophic weather events harder for human and other life-forms to bear. To ward off the worst, nations must cut greenhouse gasses by half by 2030, the report said, and stop adding carbon dioxide to the atmosphere by the early 2050s.

Understand the Latest News on Climate Change

Running out of time. A new report by the Intergovernmental Panel on Climate Change, a body of experts convened by the United Nations, said that Earth is likely to cross a critical threshold for global warming within the next decade, and nations will need to make an immediate and drastic shift away from fossil fuels to prevent the planet from overheating dangerously beyond that level.

A species in danger. Federal officials said that sunflower sea stars, huge starfish that until recently thrived in waters along the west coast of North America and that play a key role in keeping marine ecosystems balanced, are threatened with extinction and should be protected under the Endangered Species Act.

PFAS chemicals. The E.P.A. announced that the U.S. government intends to require utilities to remove from drinking water perfluoroalkyl and polyfluoroalkyl substances, part of a class of chemicals known as PFAS. Exposure to the chemicals, which are found in countless household items, has been linked to cancer, liver damage and other health effects.

Measuring droughts and deluges. Scientists have long cautioned that warming temperatures would lead to wetter and drier global extremes such as severe rainfall and intense droughts. A new study that used satellites that can detect changes in gravity to measure fluctuations in water shows where that may already be happening.

Yet in 2022, carbon emissions hit record highs and the top oil producers reaped a record-breaking $220 billion in profits.

And though major oil-funding banks are also investing in renewable energy sources, several protesters dismissed such efforts as greenwashing. “They’re running ads on TV, a lot of the big oil companies, about how they’re doing all these environmentally friendly things, but they’re doing record oil exploration,” said Fred Solowey, 71. “And then these phony offsets that they use a lot, to pretend that they’re going to be carbon neutral. It’s hogwash.”

For the rockers, the goal was to urge people to pull their money out of the oil-funding banks, and to goose the consciences of bank executives.

“I think anybody is complicit that is not trying to do anything,” said Pam Murphy, 64, as she sat outside the Chase branch early Tuesday, in front of a sign that read “This bank funds climate chaos.” One rocking chair over sat Susan Flashman, 68, a retired electrician who lives in Mount Rainier, Md. “We’re the activists, we’re the boomers,” Ms. Flashman said. “People our age, we’re just incensed that no nobody’s doing anything. So here we are.”

The protests came on the heels of the latest dire report from the Intergovernmental Panel on Climate Change.Credit...Craig Hudson for The New York Times

Organizers hosted a rocking chair painting party before driving the chairs to Washington.Credit...Craig Hudson for The New York Times

Most of the rocking chair activists were from the Washington metropolitan area, and sat in three-hour blocks throughout Monday night, though Ellen Barfield, 66, opted to sit multiple shifts from Monday evening until 5 a.m. Tuesday. She was a night owl anyhow, she said, and still up for the occasional all-nighter. “It’s better than a camp chair,” she said, of the seating arrangement, “And it’s poetic.”

“I mean, our climate is getting worse and worse,” Ms. Barfield continued. “We are far from doing what we need to do about it. And these banks are a big part of why, because they keep pouring money into this horrendous industry. And that has got to change, right?”

Most of the rocking chairs (there were about 50 in all) had been gathered by Lisa Finn, 57, and her husband, who live outside of Alexandria, Va., and hosted a rocking chair painting party before driving the chairs up in a U-Haul.

Along with the rally at Franklin Park (speakers included Ebony Twilley Martin, the co-executive director of Greenpeace USA; and Ben Jealous, executive director of the Sierra Club) there were marches featuring banners, outsize puppets and at least one shofar, and the blockading, with even more rocking chairs, of Wells Fargo and Chase. One protester was arrested after using paint on the street, organizers said.

Before addressing the rally, Mr. Jealous said pressure from older activists ought to make the banks take notice.

“For the banks, this is a very worrisome signal,” he said. “They can write off young people, they don’t see them as having a whole lot of money right now. They know these folks do.”

For his part, Mr. McKibben conceded that closing personal accounts in oil-funding banks was not likely to impose enough financial harm to force change, but said that merely underscored the urgent need to do more.

“We can put serious pressure on their reputations, their images, their brands, and their sense of themselves,” he said. “Right now, the most powerful people in the world are deeply complicit in the gravest crisis that the world has ever experienced. So part of today is an attempt to rouse these guys to some kind of sense of their place in history.”

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Image: Germán & Co

Head of the Eurogroup"We Have to Recognize How Quickly Things Can Change"

It has been a bad couple of weeks for banks in the U.S. and Europe. In an interview, Eurogroup head Paschal Donohoe discusses the possible dangers facing the euro area and why he remains confident.

Spiegel Interview Conducted by David Böcking, 20.03.2023

The banking quarter of Frankfurt: Eurogroup head Paschal Donohoe has "great confidence" in the euro area.

Foto: Jürgen Ritter / IMAGO

DER SPIEGEL: Mr. Donohoe, during the European debt crisis several years ago, the Eurogroup put together bailout packages worth hundreds of billions of euros. Are we currently heading for a repeat?

Donohoe: I have great confidence in the euro area and in the euro. The frequency of economic shocks has accelerated in recent years. But the recovery from these shocks is stronger than is currently being acknowledged. Last year the question I faced everywhere was whether the euro area was going into recession. Now, we’re revising those forecasts upwards. I can’t be certain about what lies ahead. But I’m confident that we can navigate our way through a more volatile world.

Paschal Donohoe, 48, has been president of the Eurogroup - made up of finance ministers and economy ministers from the euro zone - since July 2020. Prior to entering politics, he worked for Procter & Gamble. Even though Donohoe is no longer his country's finance minister, having taken over the budget portfolio, he was re-elected as president of the Eurogroup until 2025.

DER SPIEGEL: It seems quite volatile indeed. In the U.S., Silicon Valley Bank has collapsed and a regional bank, First Republic, had to be propped up by other banks to the tune of almost $30 billion. Over the weekend, UBS took over Credit Suisse after a 50-billion-franc loan from the Swiss National Bank apparently wasn’t enough to calm the markets. Larry Fink of Blackrock is predicting that more "dominoes” might fall. Do you agree?

Donohoe: There are always risks when an economy is as deeply interconnected as the European one. But I believe that we are monitoring risks very closely and have regulated our banks much better to keep our banking system secure. Our European banks now hold far more liquidity and are much more regulated than a couple of years ago.

DER SPIEGEL: Still, we are seeing banks bailed out with public money, as in the case of Credit Suisse. What became of the promise made following the last financial crisis that banks would never again become too big to fail?

"We need to be humble and recognize how quickly things can change."

Donohoe on the situation of the banks

Donohoe: The key thing for me are banks in the euro area. And I am confident that we can manage any exposure we have to developments elsewhere in the world. We need to be humble and recognize how quickly things can change. But I believe that what we have in place will work and will make a difference this time around.

DER SPIEGEL: Nevertheless, the projects of forming banking union and unifying capital markets are far from complete.

Donohoe: Yes, but the banking union in particular is deeper and better than a decade ago. And I believe that developments over the last year will provide further momentum for the capital markets union. We have a duty to invest, especially to fight climate change. But the economic consequences of the war on Ukraine, the return of inflation and the increase in borrowing costs have made it harder to find money. That’s where a capital markets union can help.

DER SPIEGEL: The EU is currently discussing new fiscal rules. German Finance Minister Christian Lindner is unhappy with the European Commission’s plan to already apply new rules in 2024, even though they haven’t even been agreed on yet. Does the rest of the Eurogroup share that criticism?

Donohoe: There are different views, and Minister Lindner made his view very clear during the last Eurogroup meeting. Now we need to find an agreement. But what’s even more important in the short term: We have to change budgetary and fiscal policy in the aftermath of the COVID crisis.

DER SPIEGEL: You must be referring to programs like Italy’s "Superbonus 110%,” which was recently suspended. It promised up to 110 percent of renovation costs in tax credits. Have subsidies gone off the rails in recent years?

Donohoe: I make the general point that the economic policies that were put into place during COVID reflected the economic context of the time. That context has now changed, because both inflation and borrowing costs have gone up dramatically. Budget policy needs to reflect that. There is much common ground on this in the Eurogroup.

DER SPIEGEL: Is there? Countries like Germany and Italy certainly don’t seem to be on the same page.

Donohoe: There is enough agreement. But 2023 has to be the year where we turn that agreement into policy change. And there are signs of change: Italy, Spain and France have now phased out the very big tax reductions for energy that they put in place in 2022.

DER SPIEGEL: How about Germany? The German government has been heavily criticized for unilaterally announcing a 200-billion-euro package to combat the energy crisis.

Donohoe: Minister Lindner is one of the champions within the Eurogroup of sustainable public spending. Each government must decide what is the appropriate journey for them to change their energy support. And I know Minister Lindner and the German government will do the same.

DER SPIEGEL: In the past, there have been numerous violations of EU fiscal rules, but not a single country has ever actually been sanctioned. Will that ever change?

Donohoe: Yes. Credible sanctions will be an essential element of our future rules. But financial markets also evaluate whether they find national finance plans credible – and they respond if they don’t.

"Even though we will lose a lot of tax revenue, I believe it was the right thing to do."

Donohoe on Ireland's approval of a minimum tax

DER SPIEGEL: Another reform on the way is the global minimum tax. Your home country of Ireland has profited from a statutory corporate tax of only 12.5 percent in the past, and you expect to lose around a fifth of your corporate tax revenue as a result of the reform. Why did you still agree to it?

Donohoe: Because the absence of an agreement would have generated very significant risks with regards to tax policy and trade. And it would not have fit our world view to stop a process that matters to citizens all over the world. Even though we will lose a lot of tax revenue, I believe it was the right thing to do.

DER SPIEGEL: What feedback are you receiving from companies?

Donohoe: They understand why we did it. Ultimately, they want to be based in a country that is part of a global policy framework, has a good reputation and is willing to be collaborative. And we are still going to have a very competitive tax rate.

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Image: A nuclear power complex in Civaux, central France. ALAIN LE BOT / PHOTONONSTOP / ALAIN LE BOT / PHOTONONSTOP

France and Germany square off in Brussels over nuclear power

Nuclear energy and its potential use for producing low-carbon hydrogen are at the heart of fierce battle between Paris and Berlin over European policy.

Le Monde by Virginie Malingre (Brussels, Europe bureau)

Since Germany decided to pull out of nuclear power after the Fukushima disaster in Japan in 2011, Paris and Berlin have been fighting each other over nuclear power.

In recent months, this diplomatic, political and economic dispute has become unusually intense as the battle against global warming and the war in Ukraine leads Europe to move away from fossil fuels.

It is in Brussels that the match is being played. Blackmail, haggling, a struggle for influence and high-dose communication make up the ingredients of this confrontation which has kept specialists on their toes. At least five EU legislative projects are already affected, struggling to deliver progress: Renewable energies, a gas package, air and maritime fuels as well as the hydrogen bank.

France and Germany are also readying their arguments for two other strategic pieces of legislation that the European Commission will soon be presenting. The first relates to the reform of the European electricity market and the second to ways to develop a competitive green industry in the European Union in the face of Chinese and American offensives.

Some of these regulations under development concern the fate of low-carbon hydrogen, i.e. produced with nuclear power to decarbonize industry and long-distance transport alongside renewable hydrogen. Others will be highly significant for the economic viability of the French nuclear sector and the competitiveness of the country.

'Disgusting LNG'

For the time being, the protagonists in this dispute are focusing on a renewable energy directive. Two camps, one led by Germany and the other by France, are fighting it out, each with a blocking minority on a specific point: Should low-carbon hydrogen be taken into account when measuring the efforts of member states to reach the target of 45% of renewables in their energy mix by 2030?

For Berlin and its Spanish, Luxembourgish and Austrian allies, only green hydrogen, produced with wind or photovoltaic electricity, is eligible. This is unacceptable for Paris and its partners, mostly from Eastern and Central Europe. They are banking on nuclear energy to help them comply with the Paris Agreement.

"Banning the use of nuclear power, which is an energy that emits less carbon than photovoltaic or wind power, is absurd," Agnès Pannier-Runacher, the French minister of energy transition, has said on multiple occasions.

"If France relies on its nuclear power, it will not do what is necessary in terms of renewables," the Germans say. "When it comes to importing disgusting LNG from shale gas or running its coal-fired power plants, Germany is less critical," French officials argue.

Paris believes that, with more than 90% of its electricity already decarbonized, it is impossible to focus on renewable energy only without eventually reducing nuclear power production. Germany, on the other hand, whose electricity is almost half fossil fuel-based, has more leeway.

The standoff could take on the same magnitude as the debate on the inclusion of nuclear power in the taxonomy, the labeling of green activities that allows private investment to be directed and which has divided Europeans for many months. Today, "two blocking minorities are facing each other. I have the feeling of being in an arena with two bulls facing each other. For the moment, everything is calm," a source told Le Monde.

On February 28, on the sidelines of a European Council of Ministers in Stockholm, Pannier-Runacher attempted a show of force. She brought together 10 countries – Slovakia, Slovenia, Bulgaria, Croatia, Poland, the Czech Republic, Hungary, Finland, Romania and the Netherlands – with the intention of laying the first foundations of a "nuclear alliance."

They signed a joint statement recognizing the role of nuclear power in securing energy supplies and meeting climate objectives. But Paris did not obtain recognition of the role of nuclear power in European legislation. This was noticed by Germany, which is convinced "that the pro-nuclear coalition around France is fragile. It is playing for time," a European diplomat said.

Empty words

"Both France and Germany are sticking to ideological positions. We have to get out of this, otherwise, it will undermine the Green Deal and the energy transition," said Pascal Canfin, chairman of the European Parliament's Environment Committee and an MEP with the pro-European party Renew Europe.

In Paris, the matter was thought to be settled after a French-German Council of Ministers on January 22. Admittedly, the negotiations had been tough and it was only the day before the meeting at the Elysée Palace between French President Emmanuel Macron and German Chancellor Olaf Scholz that the passage devoted to hydrogen in their joint declaration had been finalized.

But in the end, Macron and Scholz committed to "ensure that renewable and low-carbon hydrogen can be taken into account in the decarbonization objectives set at the European level."

This, it was thought at the Elysée, was the equivalent of German approval for any text dealing with the question of hydrogen. Even if, as a diplomat said, "it is not certain that the Chancellor had informed the Greens, who are very hostile to nuclear power. Robert Habeck, the German minister of economic affairs (Greens), immediately nuanced what was said in the joint declaration."

A few days earlier, in Barcelona on January 19, Macron and Spanish Prime Minister Pedro Sanchez had signed a treaty of friendship that also lifted – Paris believed – the Spanish obstacle on this issue. In truth, the issue of hydrogen was still open when the two leaders met face-to-face at the National Art Museum of Catalonia.

"Sanchez eventually agreed but it is not certain that he understood everything. He got a hard time from his teams and from Berlin," a source said. In return, France agreed to extend to Germany a future hydrogen pipeline that will link Barcelona and Marseille (H2Med), thus responding to a pressing request from Madrid and Berlin.

Very soon, however, France realized its partners did not feel committed in Brussels by the agreements they had signed in Paris and Barcelona. "Perhaps Germany and Spain see no reason to make concessions to France, whose nuclear power guarantees relatively low electricity prices," a source close to Macron said.

Many boundaries have moved in Germany since the start of the war in Ukraine [end of February 2022], especially on defense. Scholz cannot do everything at the same time, especially since his coalition is difficult to govern," a European diplomat added.

In any case, France's response was not long in coming. It rallied its allies and is now threatening to block the H2Med project. On the other side, the blackmail is not well received and positions have become even tenser. As a result, a February 7 negotiation meeting on the renewable energy directive was canceled. Pannier-Runacher's cries of victory on February 13, when the Commission, in a delegated act on green hydrogen, gave France a point, did not help.

Time is running out

EU leadership, which is as divided on nuclear power as the 27 member states are, is not at ease in this matter. "The Commission is tetanized, it has waited a long time for the member states to come to an agreement," Canfin said.

European Commission President Ursula von der Leyen, who has had several exchanges with Macron and Scholz on the subject, is more pragmatic but she is no less German. Above all, she has a political agenda: With the European elections of 2024 looming, Angela Merkel's former minister may want to remain in office. She cannot risk angering Paris, let alone Berlin.

"Von der Leyen is trying to balance the two," a diplomat said. In January, she gave Berlin the upper hand when she signed a memorandum of understanding with Kyiv, intended to increase cooperation between the two parties. The agreement provided for the import of only green Ukrainian hydrogen, even though Ukraine has nuclear power plants. Paris eventually obtained a correction to the text in favor of low-carbon hydrogen.

As this case shows, such memorandums between the EU and third countries also reflect the Franco-German row. "We do not want the EU to engage in an anti-nuclear crusade abroad," stressed a senior French official. On the German side, the government is counting on these agreements to secure supplies of renewable hydrogen.

"After Russian gas, Berlin is creating new dependencies," a pro-nuclear European diplomat said. "Besides, importing hydrogen by boat from Chile or New Zealand [with whom memorandums of understanding are being negotiated] is not necessarily very green."

"Every time the word hydrogen is mentioned somewhere, Paris and Berlin clash," an EU official said. Even when the issue is minor. The latest example came on February 20, when the European foreign ministers were to adopt conclusions on climate diplomacy, a classic exercise that is repeated every year after the United Nations Conference of the Parties. But this year, because it was also about hydrogen, it was not possible.

"Germany must let France develop its low-carbon hydrogen while France must let Germany develop its imported renewable hydrogen model," Canfin said. "To achieve climate neutrality in 2050, we will need nuclear and renewable energy, we must add up the solutions."

"It will take time for de-escalation to take place," a European diplomat said. For the time being, Scholz and Macron have been avoiding frontal exchanges on the subject while, behind the scenes, experts from both sides are looking for an agreement.

But time is running out. The Commission is to present its proposals for reforming the European electricity market and helping the member states develop a competitive green industry, the implications of which for nuclear power will be decisive.

If a French-German compromise on the subject has not emerged by then, discussions between European leaders, who are due to meet in Brussels on March 23-24, are likely to be much heated.

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Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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Image: Media

The U.N. Issues a Final Warning on the Climate—and a Plan

The I.P.C.C. report contains no new data; nevertheless, it manages to alarm in new ways.

The New Yorket by Elizabeth Kolbert

The “window of opportunity to secure a liveable and sustainable future” is “rapidly closing.” So warns the United Nations’ Intergovernmental Panel on Climate Change in its latest report, released on Monday. The findings in the document, officially known as the AR6 Synthesis Report, might be summed up as “Wake up! This is your last chance, humanity.”

According to the I.P.C.C., average global temperatures have already increased 1.1 degrees Celsius—two degrees Fahrenheit—from the late nineteenth century, and this is causing “widespread adverse impacts” for people and for other living things. “Impacts on some ecosystems are approaching irreversibility,” the report states. For every additional increment of warming, the chances of catastrophe will only increase, and the options for adaptation will contract. Climate-related and climate-unrelated disasters will begin to interact, resulting in risks that cascade “across sectors and regions.” And those who are likely to suffer the most are those who have done the least to cause the problem.

“Humanity is on thin ice, and that ice is melting fast,” the United Nations Secretary-General, António Guterres, said in a video message released for the occasion.

As the name of the synthesis report suggests, the latest from the I.P.C.C. contains no new data; it simply pulls together information that has already been published. Nevertheless, the synthesis manages to alarm in new ways. So much damage is already occurring with 1.1 degrees of warming, it observes, that probably the harms of further climate change are even greater than had been predicted. Meanwhile, the odds of avoiding a temperature increase of 1.5 degrees C—considered by many scientists to be a key threshold—are approaching zero. Even under a best-case scenario, with global greenhouse-gas emissions declining both quickly and dramatically, “warming is more likely than not to reach 1.5° C,” the report states.

The I.P.C.C. operates under extraordinary political constraints. Although its work is largely scientific, its reports are subject to approval by a global cast of diplomats. To hash out the final language for the synthesis report, delegates from all around the world gathered last week in Interlaken, Switzerland. Tellingly, the deadline for the final document kept being pushed back. According to news reports, one of the major sticking points was how to decide which nations will be eligible for aid from a new “loss and damage” fund agreed on last year, during the cop27 conference, in Egypt. (The fund is supposed to funnel money from wealthy nations that have emitted the most to poorer countries that are bearing the brunt of climate change.)

When the agreed-upon report was released, U.N. officials tried to characterize it as terrifying but also as inspirational. Guterres described it as a “how-to guide to defuse the climate time bomb.” The chair of the I.P.C.C., Hoesung Lee, an economist from South Korea, told reporters that “this report offers hope.”

The synthesis report does, indeed, show how humanity could still avoid the worst effects of climate change. Were global carbon-dioxide emissions to be cut in half by 2030 and effectively eliminated by 2050, there would, according to the I.P.C.C., still be a chance of limiting warming to 1.5° C.

“The systemic change required to achieve rapid and deep emissions reductions and transformative adaptation to climate change is unprecedented in terms of scale, but not necessarily in terms of speed,” the report notes. “Feasible, effective, and low-cost options for mitigation and adaptation are already available.”

But to imagine at this point that the latest warning from the I.P.C.C. will spur action, when so many previous ones have failed to, requires not just hope but, it would seem, something close to delusion. (The latest report is known as the AR6 Synthesis because it is part of the I.P.C.C.’s sixth assessment; this assessment and the five earlier ones each produced hundreds of pages of documentation.)

Just last week, the Biden Administration approved an enormous new oil-drilling venture, the Willow project, in Alaska. ConocoPhillips, the company in charge, plans to pump oil out of the project for thirty years, which is to say well beyond mid-century. According to a recent report by the Finland-based Centre for Research on Energy and Clean Air and the California-based Global Energy Monitor, last year China approved a hundred and six gigawatts’ worth of new coal-fired power plants, “the equivalent of two large coal power plants per week.”

Can actions like this be squared with halving emissions by 2030 and eliminating them by 2050? The simple answer is no. The I.P.C.C. is already gearing up for a seventh assessment cycle, set to begin this summer. Even before this next cycle begins, a summary of the results can be composed with, in I.P.C.C.-speak, “high confidence.” The world will continue to warm, the damage will increase, and the global response will be inadequate.

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Cooperate with objective and ethical thinking…

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News round-up, March 21, 2023

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Most read…

Global energy use and emissions hubs set to shift by 2050

Over the past century, China, the United States, and Europe have accounted for the bulk of historic carbon dioxide (CO2) emissions and energy use, as well as the majority of spending on renewable energy and emissions reduction.

Reuters by Gavin Maguire, editing by Germán & Co

Switzerland's secretive Credit Suisse rescue rocks global finance

Behind closed doors, the struggle to save the country's second-largest bank was underway even though Credit Suisse was publicly considered sound by the country's central bank and financial regulator.

Reuters by John O'Donnell and Andres Gonzalez, editing by Germán & Co

“UBS agrees to buy Credit Suisse in shotgun merger…

POLITICAL MEMO

‘The Circus Continues’: For Trump, Legal Woes Resurrect Old Habits

The former president strengthened his political position in recent weeks, but an impetuous response to his potential indictment could alienate voters he will need to win back the White House.

NYT by Michael C. Bender, March 21, 2023

The Marvellous Boys of Palo Alto

From Silicon Valley Bank to Sam Bankman-Fried, the recent scandals upending the tech industry are rooted in a longer tradition of innovation and impunity.

The New Yorker By David Leavitt

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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Image: A general view of power plants of Adani Power is seen at Mundra town in the western Indian state of Gujarat April 1, 2014. REUTERS/Amit Dave

Global energy use and emissions hubs set to shift by 2050

Over the past century, China, the United States, and Europe have accounted for the bulk of historic carbon dioxide (CO2) emissions and energy use, as well as the majority of spending on renewable energy and emissions reduction.

Reuters by Gavin Maguire, editing by Germán & Co

LITTLETON, Colorado, March 20 (Reuters) - The Indian subcontinent, Southeast Asia and Sub-Saharan Africa will overtake China, North America and Europe as the key drivers of world energy use through 2050, with implications for global emissions potential and accountability.

China, the United States and Europe have been the main sources of economic growth and pollution for the past century, accounting for over half of all historic carbon dioxide (CO2) emissions and energy use, but also the majority of spending on renewable energy and emissions abatement.

In contrast, the emerging markets within South Asia, Southeast Asia and Sub-Saharan Africa currently account for less than 20% of worldwide energy use and emissions, data from Norway-based risk assurance firm DNV shows, and have less funding available for energy transition efforts than larger peers.

Global primary energy use will remain fairly flat through 2050 despite steep cuts from China, North America & Europe

Even so, thanks to strong investment and demographic trends within several key countries including India, Indonesia, and Nigeria, these regions will boost their collective consumption of primary energy supplies - which includes transport fuels - by nearly 60% through 2050, according to DNV data.

This collective rise in energy use across emerging Asia and lower Africa will more than offset the expected contraction in energy consumption in China, Europe and North America through 2050, DNV data shows.

Combined primary energy use in the Indian subcontinent, Southeast Asia and Sub-Saharan Africa will grow from roughly 115,000 petajoules in 2023 to nearly 194,000 petajoules by 2050, an expansion of more than 78,000 petajoules.

Over the same period, China, Europe and North America are expected to trim their collective energy use from around 326,000 petajoules to 250,000 petajoules, or by around 76,000 petajoules.

South Asia, Southeast Asia & Sub-Saharan Africa to be main drivers of global energy use by 2050

This means that global energy consumption will continue to grow from current levels by 2050, despite the efforts of current energy transition leaders to reduce energy use by mid-century, DNV data shows.

FOSSIL FUELLED

In addition to growing overall energy use, most Asian and African countries will remain overwhelmingly reliant on fossil fuels for at least the next decade, due to the slow roll out of green energy and underdeveloped electricity grids that will struggle to accommodate intermittent renewable energy supplies.

This will likely result in a widening in the number of heavy emissions hubs from mainly in China and South Asia currently to parts of Southeast Asia and lower Africa, undermining efforts to cap pollution totals in all areas.

South Asia's largest economy, India, is expected to rely on coal, natural gas and oil for more than 70% of primary energy needs through 2040, after which solar, wind and other clean energy supplies will emerge as the dominant sources of power.

Indian subcontinent source of primary energy 2020-2050

In Southeast Asia, more than 70% of primary energy is set to come from coal, natural gas and oil through 2035, while in Sub-Saharan Africa the share of fossil fuels in primary energy supplies is set to continue expanding until the mid-2040's, despite steep simultaneous advances in renewable energy supplies.

MANUFACTURING MOMENTUM

Adjustments in manufacturing capacity are set to be a key driver of energy demand growth across Asia and Africa over the coming years.

Downsizing of outdated or uncompetitive capacity is set to reduce Greater China's energy demand from manufacturing by 23% between 2025 and 2050, DNV data shows.

Over the same period, Sub-Saharan Africa is set to experience a nearly 200% climb in energy demand for manufacturing as more factories and industrial plants emerge in the region in response to favourable labour market and capital investment trends.

Strong growth rates in manufacturing energy demand are also expected in the Indian subcontinent (up 93% from 2025 to 2050), Southeast Asia (up 42.5% from 2025 to 2050) as well in as the Middle East, North Africa and Latin America.

Manufacturing energy use is seen growing sharply in Indian subcontinent, Southeast Asia & Sub-Saharan Africa from 2025 to 2050

Currently, coal, natural gas and biomass are the primary sources of power for manufacturing in Africa and Asia, where abundant and affordable energy supplies are often more important to a manufacturers' bottom line than the emissions toll linked to its fuel source.

However, given the widespread global support for rapid renewable energy deployment in all regions, it is likely that increased volumes of cheap green energy may displace some fossil fuels in certain markets over time.

If so, the global energy landscape of 2050 will not just have drastically different geographic concentrations of energy use, but also a cleaner emissions profile that may support energy transition efforts.

The opinions expressed here are those of the author, a columnist for Reuters.

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Image: Germán & Co by Shutterstock

Switzerland's secretive Credit Suisse rescue rocks global finance

Behind closed doors, the struggle to save the country's second-largest bank was underway even though Credit Suisse was publicly considered sound by the country's central bank and financial regulator.

Reuters by John O'Donnell and Andres Gonzalez, editing by Germán & Co

“UBS agrees to buy Credit Suisse in shotgun merger…

ZURICH, March 21 (Reuters) - Days before a hastily convened press conference late on Sunday that would make the world's front pages, Switzerland's political elite were secretly preparing a move that would jolt the globe.

While the nation's central bank and financial regulator publicly declared that Credit Suisse was sound, behind closed doors the race was on to rescue the nation's second-biggest bank.

The chain of events, led to the erasure of one of Switzerland's flagships, a merger backed by 260 billion Swiss francs ($280 billion) of state funds and a move that would upend global finance: favoring the bank's shareholders to the detriment of bond investors.

The events that unfolded in the landlocked nation -- long a bastion of political neutrality that has secured its standing as a safe-haven favourite for wealthy elites -- go against one of the key lessons of the 2008 financial crisis. The rescue concentrates even greater risks into one banking behemoth, UBS Group AG.

What is more, making bondholders cushion the blow to stock investors from the UBS-Credit Suisse tie-up rattled lenders, pushing up their borrowing costs in a threat to world economic growth.

The Swiss National Bank declined to comment while the finance ministry did not respond to a request for comment.

Reuters Graphics Reuters Graphics

Battered by years of scandals and losses, Credit Suisse for months had been battling a crisis of confidence of its own making. In a matter of days its demise was sealed.

Soon after news broke on March 12 that the United States would step in to guarantee all the deposits of two mid-sized lenders struggling to keep up with demands for cash, the spotlight was on Credit Suisse and how it would maintain depositor confidence.

Customers had already pulled $110 billion from the Zurich-based bank in the last three months of 2022, outflows that it was fighting to reverse.

A rainmaker who brokered a number of European bank rescues during the financial crisis, speaking on condition of anonymity, told Reuters that after seeing the U.S. banking collapses there was little doubt UBS would be called upon to shore up Credit Suisse.

The banker on March 13 rang up UBS warning the world's biggest wealth manager that it should prepare to receive a call from Swiss authorities.

By Wednesday, two days later, Credit Suisse was swept up in a full-blown crisis. Comments by the chair of Saudi National Bank, Ammar Al Khudairy, who said that he could not invest further in the Swiss bank sent Credit Suisse shares into a tailspin.

It mattered little that Credit Suisse's biggest investor also reiterated confidence in the lender. "They're a globally systemically important bank so ... monitored on a daily basis," he told Reuters. "There's no surprises like you would have in a middle-sized bank in the US. It's a completely different ecosystem."

Significant deposit outflows followed, the source who would go on to advise UBS on the merger told Reuters, declining to put a number on them.

In banking center Zurich and Bern, the Alpine state's capital, pressure was building. Yet as the discussions to salvage Credit Suisse got underway, Swiss regulators FINMA and the Swiss National Bank said that "the problems of certain banks in the USA do not pose a direct risk of contagion for the Swiss financial markets", conceding, however, that they would fund the bank with unlimited access to funding.

Credit Suisse too was conveying stability. The bank told Reuters on Thursday that its average liquidity coverage ratio, a key measure of how much cash-like assets the bank has, did not change between March 8 and March 14, despite the global banking crisis.

Swiss Finance Minister Karin Keller-Sutter, a former translator and teacher just months on the job, told the Sunday media conference that additional support for Credit Suisse had been agreed but held secret for fear of panicking people with a succession of emergency announcements.

She said was in close contact with U.S. Treasury Secretary Janet Yellen and British finance minister Jeremy Hunt. Both countries have large Credit Suisse subsidiaries employing thousands.

Reuters Graphics Reuters Graphics

There was far less communication with the European Central Bank in Frankfurt, said one person familiar with the matter. Credit Suisse's arms in Luxembourg, Spain and Germany were far smaller.

European regulators were, in particular, worried that the Swiss could impose losses on bondholders - a radical step that they did take, as the costs of a rescue spiralled for taxpayers.

"They did this on their own," said the person, asking not to be named, describing the outcome as a "big surprise".

A spokesperson for FINMA said that although it laid emphasis on Britain and the U.S. because of the scale of Credit Suisse's business in those countries, it had also informed European authorities.

Not everyone, however, was kept in the dark.

Saudi investors, with roughly a 10% stake in the bank, put pressure on the Swiss, warning that they could take legal action if they did not recover some of their ill-fated investment, said another person with knowledge of the matter.

Saudi National Bank did not immediately respond to a request for a comment

"The money had to come from somewhere," said one of the officials involved in the negotiations.

The Credit Suisse board, interested in preserving some unity in an increasingly fractious setting, stood behind them, and argued for a payout to shareholders, said the person.

Regulators too wanted to avoid a wipeout for shareholders that would have resulted in the winding up of the bank, potentially a bigger headache for the nation and a loss of face just hours after standing by Credit Suisse.

In the end, the Swiss agreed, choosing to wipe out 16 billion of francs of bonds, compensating shareholders with 3 billion francs and turning a key principle of bank funding on its head - namely, that shareholders rather than bondholders take the first hit from a bank failure.

It marks an ignominious end for an institution founded by Alfred Escher, a Swiss magnate affectionately dubbed King Alfred I, who helped build the country's railways. Credit Suisse banks many Swiss companies and citizens - including finance minister Keller-Sutter.

On Sunday, as a panel of Swiss officials and executives announced the deal, they were unrepentant.

"This is no bailout," Keller-Sutter told journalists. Thomas Jordan, the central bank chief, defended the package, as necessary to counter any wider shock.

"The taxpayer in this scenario has less risk," said Keller-Sutter. "The bankruptcy would have been the highest risk because the cost to the Swiss economy would have been huge."

Still, markets are reeling from the extraordinary turn of events.

"When you are a bank for billionaires, deposits can fly away very quickly," said one of the people involved. "You can die in three days."

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Image: Media

POLITICAL MEMO

‘The Circus Continues’: For Trump, Legal Woes Resurrect Old Habits

The former president strengthened his political position in recent weeks, but an impetuous response to his potential indictment could alienate voters he will need to win back the White House.

NYT by Michael C. Bender, March 21, 2023

Donald J. Trump, the former prime-time reality TV star known for his love of big stages and vast crowds, has embraced a more humbling and traditional style on the campaign trail in recent months.

He held intimate events in New Hampshire and South Carolina. He fielded questions from voters in Iowa. And in multiple cities, he surprised diners with unannounced visits to restaurants where, with his more familiar Trumpian flair, he made a dramatic show of sliding a wad of cash from his pocket to buy everyone a bite to eat.

This strategy has highlighted the billionaire’s counterintuitive political strength at connecting with voters on a personal level — while also underscoring the chief weakness of his main potential Republican rival, Gov. Ron DeSantis of Florida, who can often come across as snappish or uncomfortable.

But now Mr. Trump faces a likely indictment in New York in the coming days, and how he responds to this moment could determine whether he continues to stabilize his standing as the Republican presidential front-runner or whether he further alienates the voters he will need to return to the White House.

The result will help answer a pressing question about his candidacy for many Republican primary voters: Can Mr. Trump show enough restraint to persuade moderate Republicans and independent swing voters to choose him over President Biden in 2024?

The Looming Indictment of Donald Trump

So far, he has returned to old habits.

Since Saturday, Mr. Trump has unleashed a series of personal, unproven and provocative attacks against investigators, Democrats and fellow Republicans. He accused Alvin L. Bragg, the Manhattan district attorney bringing the case against Mr. Trump, of being a “woke tyrant” who was “destroying Manhattan.” He called his Democratic opponents “animals and thugs.” He insinuated baselessly that Mr. DeSantis might be gay.

It was the kind of behavior that swing voters and moderate Republicans tend to dislike most about Mr. Trump: the long tail of chaos that often drags behind him; an inclination to focus on personal attacks instead of policy solutions; and his inability, particularly in 2020, to settle on a forward-looking message to explain his candidacy.

For three consecutive elections, these voters have largely abandoned Mr. Trump, as well as the candidates and causes he has endorsed. In 2020, he bled twice as much support among Republican voters as Mr. Biden did among Democratic ones, an outcome the former president will have to address in order to win in 2024.

“The circus continues,” former Gov. Chris Christie of New Jersey, a Republican and a former federal prosecutor, said on Sunday on ABC. “He only profits and does well in chaos and turmoil, and so he wants to create the chaos and turmoil on his terms — he doesn’t want it on anybody else’s terms.”

“But, look, at the end, being indicted never helps anybody,” Mr. Christie continued. “It’s not a help.”

How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.

Taylor Budowich, a Trump adviser who now runs the main super PAC supporting the former president’s White House bid, defended Mr. Trump’s approach, saying he was “campaigning harder than every other candidate combined, while staying focused on the issues voters care about.”

“This is allowing the contrast to be made,” said Mr. Budowich, whose group filed a complaint last week accusing Mr. DeSantis of breaking state ethics law. “Donald Trump is the true fighter for the people, while every other candidate is different versions of the same.”

Some Trump allies believe that becoming the first former president to face criminal charges would carry a political upside for Mr. Trump, at least in a Republican primary. The former president has skillfully persuaded many supporters to metabolize critiques from opponents, investigations by law enforcement and impeachments by Congress as deeply personal attacks on them.

Mr. Trump has started to amplify the anger and the energy of his most ardent followers as he tries to fight his legal battle on a political playing field.

His muscular online fund-raising machine has started leveraging the potential indictment in appeals for campaign contributions, returning to a well-worn page in his campaign playbook. Mr. Trump and his team turned his first impeachment into tens of millions of dollars, and collected similar amounts as he made false claims of a stolen 2020 election. Last year, his two single biggest fund-raising days came after the F.B.I. searched his South Florida home for missing government documents.

But whether Mr. Trump’s attempt to galvanize his base is worth the political cost that he may pay in a general election is far from certain.

The first signs of regression appeared early Saturday, when Mr. Trump surprised his campaign aides with a social media post that declared he would be arrested on Tuesday. (A spokesman later clarified that Mr. Trump did not have direct knowledge of the timing of any arrest.)

On Sunday, he resurfaced his lies about the 2020 election, which had recently started to fade from his public speeches. But as a reminder that Mr. Trump still hasn’t turned the page, he injected false claims of election fraud into a social media post complaining about the Manhattan district attorney’s office.

On Monday, he hurled a crude joke at Mr. DeSantis after the Florida governor broke his silence about the potential indictment, criticizing it as politically motivated but drawing attention to Mr. Trump’s sordid behavior at the center of the case, which revolves around hush-money payments to a porn star who said she had an affair with the former president.

Whether three consecutive days of escalation was a temporary or lasting step away from the relative discipline that defined his last few months of campaigning remained to be seen.

But at the very least, it signaled a long week ahead. On Saturday in Waco, Texas, Mr. Trump is set to host the first large event of his 2024 campaign, returning to his cherished rally stage — where he is often at his most reckless.

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Image: Germán & Co

The Marvellous Boys of Palo Alto

From Silicon Valley Bank to Sam Bankman-Fried, the recent scandals upending the tech industry are rooted in a longer tradition of innovation and impunity.

The New Yorker By David Leavitt

Not long before his death in 2007, my father told me that he “thought he might have” coined the term information technology. It turns out he was right. In an article titled “Management in the 1980’s,” published in the November, 1958, issue of the Harvard Business Review, Harold J. Leavitt and his co-author, Thomas L. Whisler, identify a “new technology” that “has begun to take hold in American business, one so new that its significance is still difficult to evaluate.” Since this technology “does not yet have a single established name,” the article notes, “we shall call it information technology. It is composed of several related parts”: “techniques for processing large amounts of information rapidly”; “the application of statistical and mathematical methods to decision-making problems”; and “in the offing, though its applications have not yet emerged very clearly . . . the simulation of higher-order thinking through computer programs.” By the end of his life, my father had adopted a far more skeptical attitude toward the organizations he earned his living trying to understand and improve. I am convinced that, if he soft-pedalled his immense if unwitting contribution to twenty-first-century English, it was because, in the deep pessimism of his old age, the last thing he wanted was to be remembered as the progenitor of the I.T. guy.

When my father co-wrote “Management in the 1980’s,” he was thirty-six and a professor at the Carnegie Institute of Technology (now Carnegie Mellon), in Pittsburgh. He was married and had two children. I was born in 1961, and in 1966 he accepted a position at the Stanford Graduate School of Business—an upheaval for my mother, who was forced to give up the dream house in Pittsburgh that they had just built, and a trauma for my brother and sister, who had to face the unhappy prospect of changing schools as teen-agers.

For me, on the other hand, the timing couldn’t have been better. At five, I hadn’t had enough of a life in Pittsburgh to register the loss. Instead, from the morning I started kindergarten at Stanford Elementary School (now defunct) to the afternoon I graduated from Henry M. Gunn Senior High School, Palo Alto was my home, its streets my streets, its parks my parks. When I wasn’t at school, I could usually be found biking around the some eighty-thousand-acre Stanford campus, which I regarded as my own personal back yard. The campus opened out directly from our house, a 1917 exemplar of the “California Cottage Style,” situated amid redwoods and sloping lawns in a neighborhood known colloquially as the faculty ghetto. Because Stanford’s charter forbade the sale of any of its some eighty-thousand acres in perpetuity, only professors and administrators could buy houses in the faculty ghetto—and only houses. To the land on which the houses were built—Stanford land—they were given a fifty-one-year lease, a policy that has led to what Theresa Johnston aptly termed the Stanford inheritance quandary, since it effectively bars homeowners from leaving their houses to their children, and that provided the jumping-off point for my novel “The Body of Jonah Boyd.”

My parents were the house’s third owners. We owed to their predecessors the fire pit that had been dug as a swimming pool but repurposed during the Depression, and the koi pond in which the koi kept dying, and the orchard of guava and persimmon trees where, as a small child, I played barefoot, sometimes stepping on bees. All told, it was an idyllic place to grow up, adults kept assuring me, the very threshold of a future that promised to be progressively governed, spiritually fulfilling, and technologically mind-blowing—which may be why, as I hit puberty, my intellectual and emotional compass began to point ever more intently East, or “back East,” as Californians say, since, for us, the East signified regression, retrogression, withdrawal into a stodgy and mildewed past. Yet this was precisely what I wanted. I wanted the stodgy and mildewed past. “Haunted” is the word that Malcolm Harris uses to describe Palo Alto, in “Palo Alto: A History of California, Capitalism, and the World,” his welcome and necessary new book—and it’s exactly right. To grow up in Palo Alto is to grow up amid obsolete visions of the future (“Management in the 1980’s”), unsettling relics of the past, marvellous dead boys. It is to grow up haunted.

Of course, if you keep travelling west to east, you end up back where you started. In 1992, in the wake of my mother’s death and my father’s remarriage, he called to tell me that he had decided to sell the house in which I’d grown up. By then, I was living in Italy, the third stop in an eastward journey that had already taken me to New Haven and New York. My brother was in Montreal. Only my sister remained close enough to home to suffer any real pangs of loss when our father, forbidden by Stanford to leave his own house to his own daughter, sold it instead to Joe Bankman and Barbara Fried, married law professors. That same year, the elder of the Bankman-Frieds’ two sons was born. His name was Sam.

I met the Bankman-Frieds once, in 2015. “Houses have no loyalty,” Geoff Dyer writes, in “Out of Sheer Rage,” a sentiment that echoed in my mind as Joe and Barbara, in shorts and T-shirts, took me on a tour of the rooms in which I had grown up and that, after nearly forty years, I barely recognized. Both of them struck me as intellectually restless and professionally ambitious in a way that reminded me of the adults I had known as a child—my parents’ friends and my friends’ parents. In addition to teaching at the law school, Joe was getting a doctoral degree in psychology, and Barbara had started a second career as a fiction writer. (The previous year, I had published one of her stories in the literary journal that I edit. A few years on, she would help to found the Democratic fund-raising organization Mind the Gap.) My memory of the hour or so that I spent with the Bankman-Frieds is tinged with an unease of which even now I have trouble locating the source. Possibly, it was an intimation of Palo Alto’s hauntedness, but one that seemed to emanate more from the future than the past—as if the multibillion-dollar failure of FTX, which Sam Bankman-Fried would not co-found for another four years, and as a result of which he would be placed under house arrest in his family home (my family home), were already exerting a proleptic influence, as if his fall were foreordained. Probably it was just the disquiet you experience when your childhood quarters take on the patina of new inhabitants and reveal the truth that they were never really yours.

The legend of Stanford is the legend of a marvellous boy. On March 13, 1884, Leland Stanford, Jr., Leland and Jane Elizabeth Lathrop Stanford’s only son, died of typhoid in Florence, two months shy of his sixteenth birthday. Demolished, his parents decided to memorialize him with a university, and in so doing unleashed upon the land they owned south of San Francisco the ghost of the tall, handsome, white boy genius who wanders its porticoes to this very day. True, Leland, Jr., himself died before his potential could be tapped, but that didn’t mean there weren’t plenty of other tall, handsome, white boy geniuses for Stanford to foster—an ethos that led Lewis Terman, who introduced the Stanford-Binet I.Q. test, to undertake the famous “genius study.” Using his own test as a measure, he winnowed out from California’s population of schoolchildren those who scored higher than 135—they were known colloquially as the Termites—and set about monitoring their intellectual progress. As Harris observes in his book, Terman’s belief “that the adult’s potential was always already observable in the child” effectively defined “potential” as a marketable commodity in its own right, and initiated a Stanford version of the drama of the gifted child.

“The children of California shall be our children,” Leland Stanford told his wife when they decided to found the university. The next question—a contentious one, as it turned out—was what the university was supposed to do with these children. For her part, Jane Stanford hoped to cultivate what she called the “soul germ” in her students. She also wanted to make psychical research part of the Stanford curriculum, much to the chagrin of the university’s first president, David Starr Jordan, whose vision of Future Stanford was as a training ground for the cadre of (tall, handsome, white, male) geniuses into whose hands its legacy—and money—could be safely passed. The conflict came to a head in 1905, when Jane, at a moment when Jordan was trying to scrape together the funds needed to pay his faculty what he felt they deserved, allocated five thousand dollars to bring no less a star of psychical research than William James to Palo Alto. But then Jane died of strychnine poisoning. At last unfettered, he diverted the psychical research money to psychology studies and went full steam ahead with his plan for a technocratic Stanford, leaving its appendix, Palo Alto, to absorb the soul germ, which flourished in its soil.

The Palo Alto of my youth was a far stranger and more remarkable place than I gave it credit for being. On California Avenue, there were head shops and herbal-medicine shops and an old-fashioned pharmacy with Clairol boxes and comic-book racks. There was the Fine Arts Theatre with its Art Deco façade. There was Sheik’s, the Indian restaurant where you sat on metal chairs exactly like the ones at my elementary school and ate off paper plates. Other streets offered other wonders: Plowshare Books, on University Avenue; East West Books and the legendary Kepler’s, on El Camino Real; both World’s Indoor Records and Chimera Books and Music were situated in the grid of streets that made up downtown Palo Alto. (With the exception of East West and Kepler’s, all these places are long gone.) At the Stanford Coffee House, my guitar teacher, Linda Waterfall (her real name), performed on Friday nights. Transcendental meditation, Gestalt therapy, and E.S.T. (Erhard Seminars Training) were at the apex of their popularity in the Bay Area, as was IAMathon, a sort of junior version of E.S.T. that my chemistry teacher suggested I join in order to alleviate my test anxiety. (Test anxiety! The middle school I’d attended was named after Terman. In such an atmosphere, how could one not have test anxiety?)

At the Printers Inc. bookstore, where I worked in the summer of 1979, the biggest sections were Computer Science and New Age, with Poetry coming in a close third. This coupling of hard science and soft theology wasn’t anything new. On the contrary, it dated back at least to the early years of the twentieth century, when the Irish poet John Varian moved to Palo Alto with his wife, Agnes. Ardent theosophists, and part of the Dublin literary circle in whose center W. B. Yeats stood, the Varians belonged to the Temple of the People, a theosophist community with headquarters in Halcyon, near Pismo Beach, and a thriving Palo Alto base. They had three sons, two of whom, Russell and Sigurd, would go on to develop the klystron tube and subsequently found Varian Associates, one of Palo Alto’s first tech firms. (As Harris notes, it was in Halcyon, just inland from the Oceano dunes, that the Varians did their initial work on the klystron—further evidence of the extent to which technological and New Age endeavors, which Jordan regarded as inimical, were becoming elsewhere in California ever more entwined.) Every weekday, I biked past the Varian headquarters on my way to school. A good friend of my sister’s lived in Ladera, a neighborhood that had begun life in the mid-nineteen-forties as a housing coöperative organized along Halcyonic lines. Sigurd Varian and the novelist Wallace Stegner were among its early members. The coöperative failed, and today a house in Ladera costs upward of three million dollars.

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Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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Cooperate with objective and ethical thinking…

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News round-up, March 20, 2023

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Most read…

Global stocks sink after Credit Suisse takeover

Investors worry banks are cracking under the strain of unexpectedly fast, large rate hikes over the past year to cool economic activity and inflation.

Le Monde with AP and AFP, March 20, 2023

Putin praises China's willingness to play 'constructive role' in ending War in Ukraine

Xi Jinping heads to Russia on Monday hoping to deliver a breakthrough on Ukraine as Beijing seeks to position itself as a peacemaker.

Le Monde with AFP, March 19, 2023   

Solar energy is being harnessed everywhere (except France)

Thanks to falling costs, easy construction, and flexibility, solar power installations are being built everywhere from China to the United States.

Le Monde by Luc Bronner, March 19, 2023 

US and EU begin negotiations on critical minerals access for EV batteries

European leaders are worried that EU-based energy and auto companies will be shut out or move to the US. They hope the talks will result in one significant exemption for the EU.

Le Monde with AFP, March 10, 2023 

In Rio de Janeiro, rooftop tanning is all the rage

The practice is mostly reserved for women, and is especially popular in suburban outskirts, far from the beach. But it is criticized by dermatologists, who consider it harmful to the skin.

Le Monde by Bruno Meyerfeld (Rio de Janeiro, March 19, 2023

SVB's European ShockwavesSilicon Valley Brings Disruption to Global Finance

Rising interest rates have plunged the financial markets into turbulence. Regional banks in the U.S. are facing bank runs while in Europe, Credit Suisse is on the brink. Is a new global financial crisis coming?

Spiegel by Tim Bartz and Michael Brächer, 17.03.2023

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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UBS Group and Credit Suisse logos are seen in this illustration taken March 18, 2023. DADO RUVIC / REUTERS

Global stocks sink after Credit Suisse takeover

Investors worry banks are cracking under the strain of unexpectedly fast, large rate hikes over the past year to cool economic activity and inflation.

Le Monde with AP and AFP, March 20, 2023

Global stock markets sank on Monday, March 20, after Swiss authorities arranged the takeover of troubled Credit Suisse amid fears of a global banking crisis ahead of a Federal Reserve meeting to decide on more possible interest rate hikes.

Hong Kong's main index slid more than 3%. Market benchmarks in Frankfurt and Paris opened down more than 1%. Shanghai, Tokyo and Sydney also declined. Wall Street futures were off 1%. Oil prices plunged more than $2 per barrel.

Swiss authorities on Sunday announced UBS would acquire its smaller rival as regulators try to ease fears about banks following the collapse of two U.S. lenders. Central banks announced coordinated efforts to stabilize lenders, including a facility to borrow US dollars if necessary.

The collapse earlier this month of regional lenders Silicon Valley Bank, Signature Bank and Silvergate has sparked fears of contagion across the industry as worried customers withdraw their cash.

The crisis led US authorities last week to promise support for other lenders and depositors, in a move aimed at preventing a run on banks. Also, Wall Street titans including JP Morgan, Bank of America and Citigroup pledged to inject $30 billion into under-pressure lender First Republic Bank.

Every morning, a selection of articles from Le Monde In English straight to your inbox

However, fears of another financial crisis flared again when the biggest shareholder in Credit Suisse, Switzerland's second-biggest bank, said it would "absolutely not" up its stake a day after its annual report cited "material weaknesses" in internal controls at the firm.

The lender later announced it would borrow nearly $54 billion from the nation's central bank to provide "support."

But that was not enough to lift confidence and on Sunday UBS – Switzerland's biggest bank – said it would buy the firm for $3.25 billion following crunch talks in hopes of stopping a wider international banking crisis. The deal was vital to prevent economic turmoil from spreading throughout the country and beyond, the government said. The move was welcomed in Washington, Frankfurt and London.

Meanwhile, the Fed and the central banks of Canada, Britain, Japan, the European Union and Switzerland said they would launch a coordinated effort Monday to improve banks' access to liquidity, hoping to calm worries.

Focus on Fed decision

But Asian traders tracked Friday's losses in New York and Europe.

Hong Kong fell 3.5%, with heavyweight HSBC off more than six percent on worries about its exposure to risky bonds related to Credit Suisse. Standard Chartered was down a similar amount and Hang Seng Bank lost more than two percent.

The losses came even as the city's de facto central bank said its banking sector had "insignificant" exposure to Credit Suisse. Japan's government also said the country's "financial organizations on the whole have ample liquidity and capital, and the financial market is stable overall."

France's central bank chief said Credit Suisse woes "don't concern" European banks.

Other regional bank shares also hit, with Japan's Mitsubishi UFJ Financial, National Australia Bank and India's ICICI down more than one percent each. Tokyo, Sydney, Seoul, Singapore, Taipei, Wellington, Manila, Mumbai and Jakarta were well in the red.

Shanghai rose after the Chinese central bank cut the amount of cash banks must keep in reserve, hoping to boost the country's economy. Futures in the United States and Europe reversed earlier gains.

"Investors are likely keeping a look over their shoulder for the next disaster in a high-interest rate (and inflationary) environment, so at best we might see markets recover some of last week's losses," said Matt Simpson at City Index.

Traders are now nervously awaiting the Fed's next policy meeting, which ends Wednesday. They were already in a downbeat mood before the latest crisis erupted as they contemplated more rate hikes to rein in stubbornly high inflation.

There is a debate about whether it will continue lifting as the collapse of SVB has been widely linked to the sharp rise in borrowing costs over the past year. Some observers expect at least one more increase but possibly a hold afterward, while there is a growing belief that cuts could be announced before the end of the year, despite prices still rising faster than the Fed would like.

Data showing that bank borrowing from the Fed's discount window hit a record high of more than $150 billion for the week ending March 15 indicated stress in the sector, analysts said.

Oil prices extended the big losses suffered last week on worries about demand as traders fret over a possible recession.

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Image: In this file photo taken on June 6, 2019, Russia's President Vladimir Putin (L) and China's President Xi Jinping attend a ceremony presenting Xi with a degree from the Saint Petersburg State University on the sidelines of the St. Petersburg International Economic Forum in Saint Petersburg. DMITRY LOVETSKY / AFP

Putin praises China's willingness to play 'constructive role' in ending War in Ukraine

Xi Jinping heads to Russia on Monday hoping to deliver a breakthrough on Ukraine as Beijing seeks to position itself as a peacemaker.

Le Monde with AFP, March 19, 2023   

President Vladimir Putin on Sunday, March 19, welcomed China's willingness to play a "constructive role" in ending the conflict in Ukraine, saying Sino-Russian relations were "at the highest point". His Chinese counterpart Xi Jinping heads to Russia on Monday hoping to deliver a breakthrough on Ukraine as Beijing seeks to position itself as a peacemaker.

The quality of ties between Moscow and Beijing is "higher than the political and military unions of the Cold War era", Putin said in an article written for a Chinese newspaper and published by the Kremlin on the eve of Xi's visit. Putin said he had "high expectations" of his talks with the Chinese leader. "We have no doubt that they will give a new powerful impetus to the whole bilateral cooperation," he added.

Putin hailed "China's willingness to play a constructive role in resolving" the year-long conflict in Ukraine. He said he was grateful to Beijing for its "balanced" stance on events in Ukraine and its understanding of the conflict's backstory and the "real reasons" behind it.

"Russia is open to a settlement of the Ukrainian crisis by political-diplomatic means," Putin assured in the article. However, he insisted on Kyiv's recognition of "new geopolitical realities", namely Russia's annexation last year of four Ukrainian regions, as well as Crimea back in 2014. "Unfortunately, ultimatums to Russia show that (their authors) are far from these realities and have no interest in seeking a solution," he added.

Announcing the trip Friday, Chinese foreign ministry spokesman Wang Wenbin said Beijing would "play a constructive role in promoting peace talks". Freshly reappointed for a third term in power, Xi is pushing a greater role for China on the global stage, and was crucial in mediating a surprise rapprochement between Middle Eastern rivals Iran and Saudi Arabia this month.

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Image: Le Monde

Solar energy is being harnessed everywhere (except France)

Thanks to falling costs, easy construction, and flexibility, solar power installations are being built everywhere from China to the United States.

Le Monde by Luc Bronner, March 19, 2023 

Workers have been installing a solar panel on average every two minutes at the massive Al Dhafra solar power plant, south of Abu Dhabi. Launched in 2020 by a consortium of the French EDF Renewables, the Chinese Jinko Power and Emirati public operators, the construction site is nearing completion. With 4 million solar panels and an installed capacity of 2 gigawatts (GW), it is one of the largest in the world. The electricity that it will generate for the next 30 years – enough to power 160,000 homes – has already been bought up.

Solar panels can be seen everywhere: in the middle of desert areas, on private roofs, in parking lots, above warehouses and factories, on lakes, at the edge of highways and on agricultural land as well as in cleared forests. They are now being installed at an unprecedented rate across the globe due to the breathtaking speed at which photovoltaic technology is expanding its reach. According to the International Energy Agency (IEA), solar power is expected to account for 2,350 GW worth of potential power worldwide within four years, surpassing hydroelectricity in 2024, natural gas in 2026 and coal in 2027 in terms of electricity production.

In 2021, the sun – which by its nature can only provide energy during the day – accounted for 1,000 terawatt-hours (TWh) of electricity worldwide out of 27,000 TWh consumed (from nuclear, hydroelectric, wind, etc.). Solar power's share for 2022 is on track to exceed 25%, spurred by the fight against climate change and the rise in energy prices, in a trend that is only expected to continue rising. In its annual Renewable Energy Report, the IAE concludes that despite currently higher capital costs due to raw material prices, large-scale solar photovoltaics is the cheapest option for new electricity generation in a large majority of countries around the world. "The cost of solar has dropped," said Bruno Bensasson, CEO of EDF Renewables. "What had appeared to be an expensive product just for rich countries has become competitive for all the world's economies."

Accelerating the transition

Most major industrialized countries have broken their own records in 2022 or will break them in 2023: in new power plants installed, in energy produced or in projects scheduled for the next few years. "The energy crisis we are experiencing has accelerated the transition to renewables that we were having difficulty making for reasons of climate alone," said Richard Loyen, one of France's leading experts and the president of Enerplan, an organization of professionals in the field.

Take China: 87.4 GW of solar capacity was installed in 2022, per the National Energy Administration, far exceeding the previous record of 54.9 GW in 2021. The figure could have been even higher if supply difficulties had not slowed production. For 2023 and the ensuing seven years, Chinese manufacturers expect between 95 to 120 GW of capacity to be installed annually around the country. Chinese companies have also been investing abroad, as demonstrated by an agreement with Uzbekistan, announced in mid-February, for the development of 2 gigawatts of panels within a few months. Nonetheless, this progress only marginally offsets the impact of carbon-based energy (gas and coal) in this country with enormous energy demands.

The trend has also been stunning in the United States, particularly in states like California and Texas. The Inflation Reduction Act (IRA), championed by President Joe Biden as accelerating the energy transition and promoting the country's reindustrialization, will further intensify efforts. For 2023, the US Energy Information Agency has announced projects representing 29 GW, nearly triple the figures from 2020. A study by Princeton University has suggested that growth will continue, equating to 75 and 105 GW from panels to be installed in 2026 and 2027 thanks to IRA funding, with thousands of potential new jobs.

Nuclear lobby

The same applies to Brazil and India and also across Europe (an additional 41 GW installed). Germany (7.9 GW), Spain (7.5), Poland (4.9) and the Netherlands (4) have experienced particularly significant increases. In the Netherlands, solar accounted for 14% of electricity consumption over the year, a record in Europe, even though the country experiences less sunlight than the continent's southern nations do. "The Netherlands has shown that simple and effective policies can promote the growth of solar," according to the think tank Ember Climate, calling attention to an increase in the number of rooftop installations.

France appears to be moving in the opposite direction. In 2022, 2.6 GW worth of solar panels were installed, a figure lower than that for 2021 (2.8 GW). "In the context of inflation, where many projects seemed to have become stymied, we've finally had a rather good year, even if it is not entirely satisfactory," said associates of Minister for Energy Transition Agnès Pannier-Runacher, in an attempt to put things into perspective. There are several reasons for the lag in France. First, there is the role played by nuclear power, a decarbonized form of energy that has supplied energy companies with a reason for not advancing in solar as quickly as they do in other countries. Then there were the mishaps that France experienced in the 2000s, when the development of photovoltaic panels was subsidized at a considerable cost. This put the Ministry of Finance in a difficult situation and gave the nuclear lobby additional arguments not to make solar energy a priority. It is true that photovoltaic energy accounted for 4.2% of national electricity consumption in 2022, or 4 TWh more than in 2021. At the same time, in order to cope with a shortfall of nuclear power, gas production increased by 11 TWh and imports by 30 TWh, according to RTE, which manages high-voltage lines in France.

The French Renewable Energy Acceleration Bill, adopted in January, marks an important but inadequate step in the view of industry players. To meet France's commitments, 4.4 GW of solar power must be in place by 2023. "To keep up with the pace of the PPE [multi-year energy plan] and terms outlined by the president [Emmanuel Macron] in his speech on energy in Belfort [in February 2022], we must therefore aim for more than 3 GW per year by 2028. It's a challenge, but we can do it," said the office of the minister for energy transition. According to RTE, 16 GW from solar projects were pending installation as of early 2023, a figure that has never before been reached. Consequently, when making its projections, RTE will explore a scenario in which the growth of solar could even exceed 7 GW per year. For its part, the government intends to promote individual usage by households or small businesses, just as the Spanish have done on a major scale. "Rather than having a tariff shield, in the face of the energy crisis, they have promoted home consumption from rooftop solar installations," said Loyen.

A tall order

The other issue is the manufacturing of panels. With solar's emergence as a strategic energy source, the ability to produce its components has become a matter of sovereignty. Yet, according to the IEA, more than 80% of the various components come from China, whether it be silicon, cells, panels or other parts. "China’s investment in clean energy supply chains has been instrumental in bringing down costs worldwide for key technologies, with multiple benefits for clean energy transitions. At the same time, the level of geographical concentration in global supply chains also creates potential challenges that governments need to address," said the IEA. The challenge is a global one. Biden, through the IRA, is seeking to attract investors and relocate some industrial production. India has ambitions to build giant factories. In Europe, the European Commission has launched a solar industry alliance to increase panel production from 4 to 30 GW by 2025.

The hurdle is especially high for the European continent. One of China's leading manufacturers, Longi Green Energy Technology, announced in early February that it was planning a $6.7 billion investment to double its manufacturing capacity. Within a rather short time frame, the new plant could produce an additional 50 GW of solar cells per year. In comparison, Europeans welcomed the announcement by Enel (an Italian energy company at the forefront of renewable energy) of a €600 million investment to support a 15-fold increase in production at a plant in Sicily. By 2025, this plant will be the largest in Europe... with an expected 3 GW.

The challenge of connecting to the grid

EDF Renewables holds Photowatt, a pioneering panel production company in its portfolio, but is looking to sell it. The company is losing €30 million a year, EDF Renewables CEO Bensasson said at his hearing before the parliamentary commission of inquiry into France's energy sovereignty. Projects are being developed, such as the one backed by Carbon, a company that announced on March 3 that it wanted to set up a multi-gigawatt cell and panel factory by 2025 on an industrial site in Fos-sur-Mer, in southern France. Pierre-Emmanuel Martin, one of the company's founders, said, "The Germans and the Chinese are leading the way today. We're starting from a long way back in terms of industry. But solar energy is booming around the world and we want to position ourselves on the international market."

The issue goes far beyond the energy crisis and the consequences of the war in Ukraine. All projections have pointed to a huge increase in global electricity consumption due to the development of battery-powered vehicles and the gradual decarbonization of industry. "The progress underway could increase demand faster this decade than most experts had envisioned," the think tank Ember noted in its latest report. Most of this increase is expected to be absorbed by renewables, especially solar, which is easier to install.

That is, provided that the millions of new panels are able to be connected to electrical transmission networks. Bill Gates, whose first student job was writing software for one of the power grids in the US, sees this as a critical issue for the energy transition. "Right now, over 1,000 gigawatts worth of potential clean energy projects are waiting for approval − about the current size of the entire US grid − and the primary reason for the bottleneck is the lack of transmission," he wrote in late January on his public blog.

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Image: European Commission President Ursula von der Leyen speaks as she meets with President Joe Biden in the Oval Office of the White House on March 10, 2023. ANDREW HARNIK / AP

US and EU begin negotiations on critical minerals access for EV batteries

European leaders are worried that EU-based energy and auto companies will be shut out or move to the US. They hope the talks will result in one significant exemption for the EU.

Le Monde with AFP, March 10, 2023 

European Commission President Ursula von der Leyen speaks as she meets with President Joe Biden in the Oval Office of the White House on March 10, 2023. ANDREW HARNIK / AP

President Joe Biden and top EU official Ursula von der Leyen announced Friday, March 10, the start of negotiations on granting access to European producers seeking to export critical minerals for EV batteries under a new US program to stimulate the green economy.

"We intend to immediately begin negotiations on a targeted critical minerals agreement for the purpose of enabling relevant critical minerals extracted or processed in the European Union" to qualify for the US government subsidies under Biden's signature Inflation Reduction Act [IRA[ stimulus plan," they said in a joint statement.

Batteries are a vital part of the US plan for a massive expansion of electric vehicle production. The IRA sets aside some $370 billion for tax credits and clean energy subsidies but contains a "made-in-America" requirement for qualification.

European leaders have grown worried that EU-based energy and auto companies will be shut out or move to the United States. The aim of the critical mineral talks will be to provide one significant exemption for the EU.

"Today we agreed that we will work on critical raw materials that have been sourced or processed in the European Union and to give them access to the American market as if they were sourced in the American market. We will work on an agreement," von der Leyen told reporters after meeting with Biden.

In their joint statement, the two leaders stressed that the IRA and new European initiatives meant to mirror the program, such as the Green Deal Industrial Plan, should work in tandem. "Both sides will take steps to avoid any disruptions in transatlantic trade and investment flows that could arise from their respective incentives. We are working against zero-sum competition so that our incentives maximize clean energy deployment and jobs – and do not lead to windfalls for private interests," the statement said.

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Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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On Elaine Figueiredo dos Santos' rooftop tanning salon, one of the most famous in Rio. BRUNO MEYERFELD / LE MONDE

In Rio de Janeiro, rooftop tanning is all the rage

The practice is mostly reserved for women, and is especially popular in suburban outskirts, far from the beach. But it is criticized by dermatologists, who consider it harmful to the skin.

Le Monde by Bruno Meyerfeld (Rio de Janeiro, March 19, 2023

On Elaine Figueiredo dos Santos' rooftop tanning salon, one of the most famous in Rio. BRUNO MEYERFELD / LE MONDE

"Hey, girls, is anyone naked? No one has their little boobs out?!" Amused, Elaine Figueiredo dos Santos asked us to wait a few moments before going up to the roof of her little house. Long enough to make sure that her rooftop, on the skirt of a mountain dotted with tropical bushes, was ready to welcome a male journalist. Usually, men remain strictly prohibited.

It was almost 11 o'clock in the morning, on a Sunday in March, and Rio de Janeiro was baking under a sweltering summer sun. But Elaine's rooftop terrace was crowded: about 20 women in bikinis, lying on deck chairs, were offering their skin to the burning rays. Some were on their stomachs, others on their backs. Young employees passed by to spray them with cold water, under the watchful eye of the proprietress.

In Realengo, a working-class district in western Rio de Janeiro, lajes de bronzeamento ("tanning slabs") have become popular venues for Cariocas (women from Rio) to bask in the sun. At 47 years old, Elaine runs one of the city's most famous lajes, painted and decorated in green, her favorite color. Around here, the "boss" is known by her nickname, Nani Chicleteira (meaning "Nani Gum-Chewer").

A grail called 'marquinha'

"I've always loved to sunbathe. My friends would ask me if I could help them get a good tan. That's how I decided to open this place five years ago," said this cheerful woman, born and raised in Realengo. Success came quickly: Nani (who charges 50 reais, equivalent to €9, per session) employs six assistants and has to turn people away on sunny days. "When there's a line, we hand out entry tickets in order of arrival!"

"Nani Gum-Chewer" does not just provide deck chairs. What her Carioca clients want first and foremost is to get a marquinha ("little mark"), the thin pale tan line left by a bikini. A kind of natural tattoo, the marquinha is all the rage at Rio's parties and beaches, as well as in many other parts of Brazil.

It requires strategy. To obtain the perfect marquinha, Nani has her technique. She makes bikinis out of adhesive tape (called a fitinha), to be stuck directly on the clients' skin, and rubs them with a homemade cream containing paraffin, a petroleum derivative that accelerates tanning. "In just one hour, we get the result of a whole day in the sun!" Nani proclaimed proudly.

'It has become a social institution'

In Rio alone, there are said to be several hundred of these tanning rooftops. "Walk around Realengo, you'll see that 80% of women have a marquinha," said Tatiana, 41 years of age, who came to enhance her "little mark" at Nani's place. "It's super sexy, men love it! Today, everyone wants one: black, white, old, young, fat, skinny... For me, it's impossible to go out without my marquinha!"

It is difficult to ascertain the origin of this trend. According to some, the first lajes appeared 20 years ago in the rural state of Goias, in central western Brazil, before spreading to the coasts. In any case, it has exploded since 2017 and the release of the famous music video "Vai Malandra" by Anitta. The superstar of Brazilian funk appears in the video dancing at a rooftop tanning parlor, her body covered with a tiny bikini made of tape.

In six years, the phenomenon has become increasingly professional. Some laje owners have become famous businesswomen, such as Erika Romero Martins, known as "Erika Bronze." Also from Realengo, this 40-year-old has become a key player in the industry, with 10,000 reported clients, 344,000 followers on Instagram, and her own line of bikinis and tanning products. She was the person Anitta contacted for a place to shoot "Vai Malandra."

"The —laje— has become a social institution," said Euler David de Siqueira, a sociologist at the Rural University of Rio, one of the few researchers who have studied the phenomenon. "The rooftop tanning parlor is a key place for women from the outskirts of the city who don't have access to the beach, which is too far away." Indeed, Realengo is over 50 kilometers from Copacabana, a distance that takes two hours to travel.

'The elite prefers to repress the culture of the peripheries'

The marquinha is both an aesthetic and a social marker. "In addition to the 'sexy' aspect, the women of the favelas can show that they also sunbathe, that they have time to take care of their bodies and have access to leisure activities. We can read it as an affirmation that the privilege of tanning is not the exclusive domain of the rich and the Whites," said Siqueira.

In spite of its popularity, the practice of marquinha is still frowned upon. Dermatologists are up in arms against this trend, which they consider harmful to the skin. They warn of the risks of paraffin, sun exposure, and especially ultraviolet radiation lamps – available at many rooftop parlors – which are used when the weather is cloudy. This is prohibited by Brazilian law, which forbids the use of UV equipment for artificial tanning.

'Most of these women are working in a totally illegal manner. The police can come at any time to end their business and throw them in jail.' José Dimas Marcondes, lawyer.

"The result of this unfair law is that most of these women are working in a totally illegal manner. The police can come at any time to end their business and throw them in jail," said José Dimas Marcondes, a lawyer for many rooftop owners in Rio. "Instead of integrating and helping the phenomenon, the elite prefers once again to repress the culture of the Black and poor peripheries, as was the case with samba, capoeira or funk."

Nani Chicleteira makes sure to take the greatest precautions, with the sun as well as with UV. Her protocols include careful examination of the skin, timed and limited tanning time, and mandatory use of sunscreen. "I am very careful with the sun and with UV. I don't let the girls tan for more than an hour. I prefer to send them home all white rather than all burned!" she said. Her wall is covered with about twenty framed diplomas and certificates in dermatology, cosmetology and first aid.

"We are described in the media as agents of cancer, while we are just entrepreneurs who create jobs and beauty," said Nani Chicleteira, who also offers training for women who want to open their own rooftops. The battle for the marquinha has just begun, "and we will win it!" said Nani. In Rio, the summer is almost over.

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Cooperate with objective and ethical thinking…

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Image: Germán & Co by Shutterstock

SVB's European ShockwavesSilicon Valley Brings Disruption to Global Finance

Rising interest rates have plunged the financial markets into turbulence. Regional banks in the U.S. are facing bank runs while in Europe, Credit Suisse is on the brink. Is a new global financial crisis coming?

Spiegel by Tim Bartz and Michael Brächer, 17.03.2023

It’s not often that central bank executives directly inform the public at large about what they discuss behind closed doors. But Thursday saw one of those rare moments. Christine Lagarde, president of the European Central Bank (ECB), went before the press in Frankfurt to announce that it was bumping up interest rates by half a percentage point, just as it had in February.

Unusually, though, Lagarde made clear that the decision had not been unanimous. She said that of the 26 members of the bank’s Governing Council, there were "three or four that did not support the decision" to raise rates and would have preferred to wait and see how the situation in the banking sector would develop. As she made clear: "It’s not business as usual."

Lagarde’s noteworthy comments came on the heels of several days of turbulence on global capital markets that awakened ominous memories of autumn 2008 and the ensuing financial crisis. A number of pressing questions have suddenly arisen, and the press conference held by the ECB president did little to change that: Whether the markets can be restabilized; whether more banks will start wobbling; whether we are facing a new crisis.

It all began a week ago with the collapse of the Silicon Valley Bank (SVB) in California, a financial institution known in the startup scene, but which most average investors had never heard of before. The bank experienced rapid growth in recent years, but completely misjudged the consequences of the recent interest rate increases and was facing collapse as its panicked clients rushed to empty their accounts.

Following a series of emergency meetings, American financial authorities were forced to do something a number of regulatory and liquidation provisions had been designed to prevent: rescue a bank with government help.

Shortly afterward, U.S. President Joe Biden spoke to the country: "Americans can have confidence that the banking system is safe," he said on Monday. "Your deposits will be there when you need them."

They were statements reminiscent of pledges made by other leaders during the last crisis. Then-German Chancellor Angela Merkel told her compatriots: "Your savings are secure." Mario Draghi, Lagarde’s predecessor at the ECB, was even more dramatic: "Whatever it takes," were his words.

“Americans can have confidence that the banking system is safe. Your deposits will be there when you need them."

U.S. President Joe Biden

Despite Biden’s efforts, though, stock markets around the world plunged this week, with bank shares bearing the brunt of the slaughter. Investor trust eroded by the minute, and even German financial institutions, like Deutsche Bank and Commerzbank, saw their stock prices temporarily plummet into the abyss.

The situation at Credit Suisse then provided the cherry on top of this troublesome week. For years, the Swiss bank has been stumbling from one homemade scandal to the next. Once a beacon of the Alpine banking industry, the institution burned through billions with bad investments in addition to providing financial services to corrupt politicians, war criminals, human traffickers and drug dealers. In the fourth quarter of 2022 alone, wealthy and concerned clients withdrew 107 billion francs from the financial institution. The exodus has continued this year.

Founded in 1856, Credit Suisse is intricately linked internationally and considered "too big to fail" – and is now seen as the greatest threat currently facing the global financial system. In an effort to plug the gap, Credit Suisse last October turned to the Saudi National Bank for fresh capital, an ignominy for a country that sees itself as a bastion of stability and political independence. The Swiss still haven’t gotten over the trauma of Swissair’s collapse in 2001 and the 2008 bailout of its largest bank, UBS, the headquarters of which lie across Zurich’s Paradeplatz square from Credit Suisse.

With its 10-percent holding, Saudi Arabia is now Credit Suisse’s largest investor, but the Gulf country’s financial elite is clearly not entirely pleased about that fact. In a televised interview on Wednesday, Saudi National Bank President Ammar Al Khudairy ruled out sending additional cash to Switzerland, saying it was "a regulatory issue" – only to then add: "I can cite five or six other reasons."

He had hardly finished speaking before Credit Suisse stocks fell off a cliff – to the point that the Swiss National Bank had to step in. Credit Suisse "meets the capital and liquidity requirements imposed on systemically important banks," the SNB said in a public statement. Such statements are only made when the financial system faces a systemic danger.

And Credit Suisse is, in fact, well endowed with capital and securities that can quickly be sold off if necessary. But once customers lose trust and begin to abandon a bank en masse, survival can quickly be at stake – as happened in faraway California.

Overnight Bailout

Just how acute worries have become about Credit Suisse could be seen overnight from Wednesday to Thursday. The SNB quickly put together a package of 50 billion francs (the equivalent of 51 billion euros) to boost Credit Suisse’s liquidity in case customers continued to withdraw their assets. No details were provided regarding the conditions attached to the liquidity injection, but they were likely generous. As a sign of strength, the beleaguered bank also announced it was buying back up to 3 billion francs worth of debt.

"Without SNB intervention, Europe would have had its own Lehman moment," says Volker Brühl, the managing director of the Center for Financial Studies who was active as an investment banker during the 2008 financial crisis. And the move produced the desired results for now: Credit Suisse share prices stabilized on Thursday, as did those of most other European financial institutions. In Frankfurt, Lagarde assured that "the euro area banking sector is resilient, with strong capital and liquidity positions" – only to then add: "In any case, our policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed."

It remains unclear, though, whether a Lehman moment may ultimately materialize anyway, and what the consequences of the sudden panic on the markets might have for the real economy. "These events could very well lead to a recession," says economist Tiffany Wilding from Allianz subsidiary Pimco, one of the largest investors in the world.

A man walking out of the Lehman Brothers building in September 2008 after losing his job: "Without SNB intervention, Europe would have had its own Lehman moment."

The latest signs of instability come just as it seemed the global economy had finally managed to get past the coronavirus pandemic and learned to live with Russia’s invasion of Ukraine. Furthermore, the banks – which were responsible for triggering the financial earthquake of 2008 – seemed solid, aside from Credit Suisse. Even longtime laggards like Deutsche Bank and Commerzbank have been earning billions in profits of late, thanks to a favorable climate.

They have profited from state aid to industry, a program that prevented large bankruptcies. And banks have also been able to borrow money from the ECB for the last several years without having to pay it back completely. And since the recent reversal in interest rate policy, they have been able to rake in billions without risk by parking their customers’ savings at the ECB.

Lagarde’s Thursday announcement that the ECB was raising its key rate by half a percentage point is yet another windfall for the banks. Deposits with the ECB now earn 3.5 percent, translating to additional earnings in the three-figure billions.

That is the positive side of the interest rate hikes that Lagarde, her U.S. counterpart Jerome Powell and others have introduced. Initially, they had underestimated the inflationary pressures that began accumulating in the real economy in 2021. But ever since Russia’s invasion of Ukraine and the resulting explosion in energy prices, they have been combating rising prices with a rapid series of interest rate increases.

The strategy pursued by Lagarde and Powell has yet to bear fruit when it comes to getting inflation under control. But the downsides of their monetary policy are becoming increasingly clear: Rapidly climbing interest rates weigh on stocks and bonds, threaten the investment plans of industrial corporations, hamstring real-estate markets and drastically limit the financial flexibility available to governments. The capitalist system, which is built on a foundation of debt, is under permanent duress.

"This is one price we’re already paying for years of easy money," wrote Blackrock CEO Larry Fink, founder of the world’s largest asset management company, in his annual letter to investors this week. The interest rate increases, he wrote, "was the first domino to drop." The question, he continued, is whether other dominoes are now to come.

The shift toward rising interest rates marks a radical departure from paradisiacal conditions, when the world was awash in cheap money and barriers to taking on debt were low. It was a time when business models such as the one pursued by Silicon Valley Bank found great success – until they didn’t any longer.

The San Francisco-based bank – the 16th largest in the U.S. when ranked by asset value – was at the center of an elite group of tech entrepreneurs and venture capitalists. A number of well-known startups held company and payroll accounts at SVB, flooding it with cash. The bank also accepted stakes in growth-stage startups as loan collateral. It was the financial industry groupie in digital La La Land.

It was a risky strategy, and it worked as long as new money was being injected into startups. But since the advent of inflation and rising interest rates, investors are no longer quite as free with their money. Californian tech firms have laid off tens of thousands of workers as liquidity has dried up.

Many young companies shift their money between accounts in the search for the best interest. Banks, by extension, must invest their customers’ money smartly so they can offer the best conditions.

SVB proved unable to do so. The startup stakes on the banks’ books lost significant amounts of money. And even worse were the investment mistakes made by CEO Greg Becker – in part because there was no one at the bank to look over his shoulder. For several months, the bank did without a chief risk officer, a situation which opened the door for poor investment decisions.

Becker invested his clients’ money almost exclusively in long-term U.S. government bonds. Such bonds are extremely safe, but they don’t produce much interest. And the longer the periods of such bonds are, the more difficult the situation becomes for banks when their customers begin demanding higher interest rates on their savings.

SVB could no longer navigate its way out of this corner. In order to quickly obtain cash, the bank had to sell its bonds – at a loss of $1.8 billion relative to purchase price.

That, too, is a bit of collateral damage that comes from rising interest rates: As the rates rise, bonds lose value. In the U.S. alone, banks are sitting on potential bond losses worth $620 billion. That’s not really a problem as long as they don’t have to sell those bonds and cement the losses – as SVB was forced to do.

"I understood that we had 72 hours to come up with a plan to address this catastrophe."

Anna Eshoo, Democratic Congresswoman for Silicon Valley

In Germany, the country’s Sparkassen savings banks were forced to write off 7.8 billion euros in 2022. But because their customers are frugal and stable, the institutions can simply hold onto their bonds for a couple of years until they mature and they can recoup the purchase price. They have the luxury of simply waiting out the potential losses.

SVB, however, didn’t have that luxury. Its attempt to balance out the loss by raising capital failed, triggering a chain reaction. SVB shares tanked and customers began pulling out their money – an unfathomable $42 billion just on Thursday of last week. A good, old-fashioned bank run right in the heart of Silicon Valley.

The panic was fueled by the fact that the Federal Deposit Insurance Corporation (FDIC) only guarantees up to $250,000 in the event of a bank failure. But 97 percent of SVB’s customers, most of them startup entrepreneurs, had far more than that in their accounts. Fears quickly spread to other financial institutions and the U.S. government was forced to intervene.

"I understood that we had 72 hours to come up with a plan to address this catastrophe," said Anna Eshoo, the Democratic Congresswoman who represents much of Silicon Valley in the House of Representatives, in comments to the Financial Times. She compared the collapse of SVB with a magnitude 7.9 earthquake.

A Blank Check for the Startup Elite

And the government delivered. Holders of SVB stocks and bonds lost their investments, but the FDIC guaranteed the deposits of all SVB customers, including accounts larger than $250,000. And the same guarantee was extended to other troubled institutions like First Republic and Signature Bank, the latter of which has now closed its doors.

In addition, all U.S. banks are allowed to deposit their bonds with the Federal Reserve as collateral for one year at cost, and not at their significantly lower market value, in order to obtain fresh cash – a concession reminiscent of 2008.

The blank check issued to the West Coast startup elite, though, is now fueling political conflict, angering Republicans who have already become radicalized. According to James Comer, the Kentucky Republican who chairs the Oversight Committee in the U.S. House of Representatives, the problem wasn’t the lack of regulation, poor financial decision making or panicky customers, it was the bank’s "wokeness," leading it to put too much emphasis on environmentally friendly investments.

Even Donald Trump Jr. made a desperate grab for the beloved spotlight he once bathed in, tweeting "SVB is what happens when you push a leftist/woke ideology and have that take precedent over common sense business practices." He ran out of characters before he could mention that it was his own father who loosened tighter regulations for smaller banks.

In fact, though, stakeholders like SVB CEO Becker were long ago able to convince politicians and regulatory authorities that their bank was too inconsequential to undergo the regular stress tests undertaken by the Federal Reserve. Those tests now apply only to institutions with balance sheets of $250 billion or larger – a volume that is met only by a handful of Wall Street giants like JP Morgan Chase and Citigroup.

That, European financial overseers have told their U.S. counterparts, was a mistake. As has become clear, even regional banks like SVB and First Republic are "too big to fail."

It is a dilemma for Biden. With just a year and a half to go before presidential elections, he is faced with the need to protect a key industry in the U.S. economy. And representatives of that industry are fully aware of the predicament in which Biden currently finds himself, an awareness that manifested in intense lobbying efforts for the president to fully guarantee SVB deposits. "This is the U.S. versus China. You can’t kill these innovative companies," one of those lobbyists is quoted anonymously as saying to the Financial Times.

It is a rather grotesque sight to watch Silicon Valley bigwigs – who otherwise have a distinctly anti-state, libertarian bent – plea for help from the government. It is also rather ironic that the speed with which SVB and the other banks collapsed is a product of digital advancements made in Silicon Valley. Whereas it used to be that weeks might pass before headlines about financial problems would trigger a bank run, rumors and concerns now spread at the speed of the enter button on a social media post. It was, said Patrick McHenry, chair of the House Financial Services Committee, "the first Twitter-fueled bank run."

The power that social media can have on the financial markets was on full display back in 2021. That year, social media influencers called on followers to buy stocks in companies like Gamestop, driving up their share prices. This time, it was the reverse phenomenon. "The speed of the world has changed,” tweeted Sam Altman, head of the San Francisco-based company OpenAI. "Things can unwind fast. People talk fast. People move money fast."

The SVB failure was also stoked by influencers. "If you are not advising your companies to get the cash out, then you are not doing your job as a Board Member or as a Shareholder," tweeted Mark Tluszcz, CEO of the investment company Mangrove in reference to SVB. The tweet may, however, have been fueled by a bit of self-interest: Mangrove is reportedly interested in a British SVB subsidiary.

The herd instinct phenomenon isn’t limited to Silicon Valley. After the SVB bankruptcy, the social media crowd identified New York’s Signature Bank as the next shaky candidate. The bank had been betting on the cryptocurrency business, which came under considerable pressure after the bankruptcy of the scandalous FTX exchange. Less than 72 hours passed before a problem turned into an existential crisis. The bank’s financial cushion shrank by $10 billion within hours. To get the panic under control, New York’s financial regulator closed the bank so quickly that even its senior management was taken by surprise.

The fact that Signature, of all banks, has become the second victim of the new banking crisis, holds a double irony: Barney Frank, the longtime former Congressman with the Democratic Party who helped shape the new financial regulations after the 2008 crisis, is a member of Signature’s board of directors. And he, too, was caught off guard by the run on the bank, as he was forced to contritely admit.

In light of the events, central bank heads like Lagarde and her U.S. counterpart Jerome Powell, in particular, now find themselves in an almost unresolvable dilemma. They are determined to continue fighting the stubborn inflation they have tolerated for too long by raising interest rates. For years, they had given the economy breathing room by keeping key interest rates low and buying up bonds on the capital market. Now, though, if they continue to raise interest rates, the already critical situation could escalate.

Events in London this past autumn underscored how quickly things can spiral out of control. The British government caused the prices of its government bonds to plummet with half-baked tax-cut plans and nearly drove British pension funds into bankruptcy. The Bank of England had no choice but to switch to emergency mode – and return to loose monetary policy despite high inflation. The concerns about the financial system were too great.

In the U.S., Powell could soon shift down a gear in the fight against inflation and not raise interest rates for the time being. Many on the capital markets are now expecting interest rates to be cut in the late summer if the economy weakens.

Lagarde isn’t that far yet. But the ECB president was also more cautious on Thursday than recently about further interest rate hikes. It was true, she said, that the fight against inflation, which had long been neglected, remained a priority. In the future, however, prices and other data would determine the central bank’s policies more than ever.

"I was around in 2008, so I have clear recollection of what happened and what we had to do," she said. But her mien also seemed a lot more serious than usual.

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News round-up, March 17, 2023

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Words by the editor…

The beauty of that African princess called Andromeda, transformed into a galaxy (or vice versa), did not wait, as the legend says, for four thousand years to devour our tiny planet Earth. Andromeda is the daughter of the king of Ethiopia, Cepheus, and his wife, Cassiopeia. This time, Poseidon sent the sea monster Cetus on a mysterious mission to ravage the strange and controversial beauty of the Nord Stream in the depths of the Baltic Sea in September last year.

This time, Poseidon sent the sea monster Cetus on a mysterious mission to ravage the strange and controversial beauty of the Nord Stream in the depths of the Baltic Sea in September last year.

The article published today (March 17, 2023) by The Wall Street Journal on the Mystery of Andromeda discusses the possible perpetrators of the NORD STREAM gas pipeline explosion last year. In this complex tenor, on November 3, 2022, the TASS news agency published an article in which the president of Serbia, Mr. Aleksandar Vucic, expressed the following position:

"No politician in the world is unaware of who committed the sabotage in the Baltic, but we all play dumb and keep silent so as not to harm the interests of our countries." Hypocrisy is everywhere.

For its part, in a Reuters article posted September 27, 2022, the European Commission President Ursula von der Leyen asserts:

"Spoke to (Danish Prime Minister Mette) Frederiksen on the sabotage action against Nordstream," von der Leyen said on Twitter, adding it was paramount now to investigate the incidents to get full clarity on the "events and why." "Any deliberate disruption of active European energy infrastructure is unacceptable and will lead to the strongest possible response,”.

In addition, all this is happening in an adverse economic situation initially caused by the SARC-COV-2 virus; Russia's invasion of Ukraine has exacerbated this financial setback since February 2022, which has hurt the fossil fuel market, specifically causing a drought on the stable and safe purchase of natural gas from the Tsarist domain. 

Now, the bitter question is:

"Whoever blew up this crucial European energy infrastructure (undoubtedly polemic in its conception), it may be important to know who did it." But we will never know whether this attack has deepened the battered economy of Europeans struggling to pay for their essential needs.

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Most read…

Morning Bid: Shock and awe - or mayday?

A look at the day ahead in U.S. and global markets from Mike Dolan

Reuters

"Every politician knows who blew up Nord Stream, but hypocritically keeps quiet," says Vucic. "The Andromeda Mystery".

Earlier, Nord Stream AG reported unprecedented damage that occurred on September 26 on three strings of the Nord Stream and Nord Stream 2 offshore gas pipelines.

TASS, BELGRADE 

Who Blew Up Nord Stream? Investigators Focus on Six Mysterious Passengers on a Yacht

A boat rented in Germany sailed close to the spots in the Baltic Sea where explosions sabotaged the gas pipeline from Russia

The Wall Street Journal

'The US attacks Chinese balloons and electronics, but its archenemy is still TikTok'

Washington has given American teenagers' favorite app an ultimatum: Either its Chinese owner, ByteDance, relinquishes control or it is banned from the United States.

Le Monde by Philippe Escande,  published on March 17, 2023

Banking rout fuels U.S. oil hedging, as investors seek to limit losses

Investors in the oil market, including oil producers, have rushed to purchase put options to predict and hedge against downward price movement. According to two market sources, several hedge funds have short positions on options to predict further price declines.

Reuters By Stephanie Kelly and Arathy Somasekhar

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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REUTERS GRAPHIC

Morning Bid: Shock and awe - or mayday?

A look at the day ahead in U.S. and global markets from Mike Dolan

Reuters

Markets are struggling with whether to be relieved by the sheer scale of Thursday's U.S. bank rescue or be terrified by it.

Slightly punch drunk from a week of withering bank runs, stock price plunges, emergency bank bailouts and then a hefty European Central Bank interest rate rise into the mix, an eerie calm descended over world markets first thing Friday.

But there was little confidence the rising financial stress would dissipate quickly from here.

Large U.S. banks injected $30 billion in deposits into failing First Republic Bank (FRC.N) on Thursday, swooping in to rescue the lender caught up in a widening crisis triggered by the collapse of two other mid-size U.S. lenders this week.

Marshalled by U.S. Treasury Secretary Janet Yellen, Federal Reserve chief Jerome Powell and JPMorgan boss Jamie Dimon, the rescue involved the largest U.S. banks - JPMorgan (JPM.N), Citigroup (C.N), Bank of America (BAC.N), Wells Fargo (WFC.N), Goldman Sachs (GS.N) and Morgan Stanley (MS.N).

But worryingly, First Republic's shares - which have lost more than 70% in 10 days - continue to fall and were down another 15% again in pre-market trading.

The move came the same day as Switzerland's central bank was forced to shore up the country's second biggest lender Credit Suisse (CSGN.S) by offering it $54 billion of emergency liquidity as the battered bank has been ensnared by the anxiety surrounding the U.S. bank shock.

But Credit Suisse shares resumed their decline again on Friday too, dropping over 3% first thing even as European bank stocks (.SX7E) clawed back about 1% as Wall St futures hovered little changed following Thursday's relief rally. The VIX (.VIX) volatility index remained off the week's highs but stuck at 23.

Fed data showed the extent of the panic over the past week and how it potentially compromises its monetary policy tightening and balance sheet reduction as it prepares to deliver what futures markets now assume will be another quarter-point rate hike next week - even if the last of the cycle.

REUTERS GRAPHIC

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REUTERS GRAPHIC

Banks took an all-time high $152.9 billion from the Fed's traditional lender-of-last resort facility known as the discount window as of Wednesday, while also taking $11.9 billion in loans from the Fed's newly created Bank Term Lending Program. The discount window jump crashed through a prior record of $112 billion during the banking collapse of 2008.

Not unlike the Bank of England's government bond market intervention last Autumn, the move bamboozles the Fed's quantitative tightening program of balance sheet reduction.

After peaking at just shy of $9 trillion last summer, overall bond holdings had fallen to $8.39 trillion on March 8, before moving up to nearly $8.7 trillion on Wednesday - the highest since November.

Markets are caught in the uncertainty of what happens next.

Having pushed higher amid all the rescue attempts on Thursday, 2-year U.S. Treasury yields clung to 4% on Friday -- still down almost a percentage point from where they were little over a week ago. What's more, 75 basis points of Fed rate cuts are still priced between a peak of 5% in May to yearend.

The dollar was slightly lower.

On top of all the policy head fakes and emergency moves, China's central bank said on Friday it would cut the amount of cash that banks must hold as reserves for the first time this year to release liquidity and support the economy.

Key developments that may provide direction to U.S. markets later on Friday:

Reuters Graphic

Reuters Graphic

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Image: Germán & Co

"Every politician knows who blew up Nord Stream, but hypocritically keeps quiet," says Vucic. "The Andromeda Mystery".

Earlier, Nord Stream AG reported unprecedented damage that occurred on September 26 on three strings of the Nord Stream and Nord Stream 2 offshore gas pipelines.

BELGRADE, November 3. /TASS/. Every politician in the world knows who committed sabotage in the Baltic Sea against the Nord Stream and Nord Stream 2 gas pipelines, but everyone hypocritically stays silent, Serbian President Aleksandar Vucic told the media on Thursday.

The Serbian leader recalled that his country had accumulated 667 million cubic meters of gas in gas storage facilities.

"No politician in the world is ignorant of who committed sabotage in the Baltic, but we all pretend to be imbeciles and keep silent so as not to harm the interests of our countries. Hypocrisy is everywhere. Even if this happens to the Balkan Stream (Turk Stream - TASS), we would somehow survive. The people can stay calm," Vucic said.

Earlier, Nord Stream AG reported unprecedented damage that occurred on September 26 on three strings of the Nord Stream and Nord Stream 2 offshore gas pipelines. One leak was detected at Nord Stream 2 near the Danish island of Bornholm. Two more were spotted on Nord Stream. Later, Swedish seismologists said that they had registered two explosions on the gas pipelines’ routes. The head of the European Commission, Ursula von der Leyen, classified those incidents as sabotage, saying that any deliberate violation of European energy infrastructure was unacceptable and would entail the most decisive response.

Russian President Vladimir Putin said that the results of the survey indicated the gas pipelines incident was an obvious terrorist attack. The Russian leader blamed the situation on the West, which, he said, "actually set about destroying the pan-European energy infrastructure.".

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Who Blew Up Nord Stream? Investigators Focus on Six Mysterious Passengers on a Yacht

A boat rented in Germany sailed close to the spots in the Baltic Sea where explosions sabotaged the gas pipeline from Russia

The Wall Street Journal

ROSTOCK, Germany—The small marina on the edge of this north German city is a popular summertime spot for recreational sailors. German intelligence believes it was also the jumping-off point for the sabotage of the Nord Stream gas pipelines, an assault on Europe’s civilian energy infrastructure unprecedented since World War II.

On Sept. 6, a small group set out from Rostock aboard a rented yacht, the Andromeda, a slender 50-foot-long, single-masted sloop, ostensibly on a pleasure cruise around Baltic Sea ports. Within two weeks, the group returned the boat and disappeared.

Not long after, on Sept. 26, a series of underwater explosions, powerful enough to register with seismologic measuring stations, tore apart three of the four main Nord Stream pipes, built to carry natural gas from Russia to Germany.

Hundreds of investigators from Germany, Sweden and Denmark, with the help of the U.S.and other Western allies, mobilized to figure out who was behind the attack. Submarines surveyed the crime scene. Intelligence agencies scoured communications intercepts. Police sought witnesses.

Six months on, the mystery persists as investigators and analysts puzzle over who had the means, motive and opportunity to commit the crime.

Initial suspicions in many European capitals focused on Russia, which denied any involvement. Analysts speculated that only a state with a sophisticated military would have been able to carry out such a complicated, underwater attack.

Investigators now, however, are focused on the Andromeda and the six people it carried. German officials who have been briefed on the probe said they were told some of the people who rented the yacht were Ukrainian. Others had Bulgarian passports since determined to be forgeries, they said.

On Friday, German legislators who oversee the country’s intelligence agencies were briefed on the latest findings and admonished to keep them secret.

“The thesis that this must have been a state-sponsored action has seemingly collapsed,” said Ralf Stegner, one of the lawmakers. “It seems that we now know that it could have been a group of people who were not acting on behalf of a state.”

The focus on the boat crystallized in December. After combing through boat-rental records all along the Baltic Sea coast, investigators zeroed in on the Andromeda, according to officials familiar with the probe.”

Last week, Germany’s general prosecutor said investigators in late January searched a boat they believed was connected to the blasts. Government officials said traces of explosives were found inside, leading them to believe the vessel could have carried at least some of the explosives used.

A representative of Mola Yachting GmbH, the yacht’s owner, said the boat searched was the Andromeda. The man declined to be named or to comment further. Prosecutors have said the company’s employees aren’t suspected of wrongdoing.

Investigators have established that the rental fee for the Andromeda was paid by a Polish-registered company, according to German officials. The officials said investigators believe the company is controlled by Ukrainian owners.

At least some of the six people on the suspected sabotage team boarded the Andromeda in Rostock’s Hohe Düne harbor, which caters to upscale tourists and hosts international yachting events. The Yachthafenresidenz Hohe Düne hotel there boasts luxurious rooms and bars with picture windows overlooking the waterfront.

From there, the Andromeda traveled to the Yachthafen Hafendorf in Wiek on the island of Rügen, a far more discreet harbor off the beaten track, with no camera surveillance at night, according to René Redmann, the harbor master.

Mr. Redmann said his staff had checked in the boat and he had handed over the harbor logs to investigators. He said that his staff hadn’t registered the crew’s nationalities and that it wasn’t unusual for Eastern European tourists to pass through Wiek.

“We really have a lot of coming and going of charter guests with bigger ships,” he said, adding that he became suspicious about the visitors only when investigators reached out to him in January.

German investigators believe that it was in quiet, out-of-the-way Wiek that the suspected saboteurs loaded explosives—ferried to the port in a white van—and additional operatives onto the Andromeda, according to a German official briefed on the investigation.

After Wiek, the Andromeda sailed to the busier Danish port of Christiansø, farther north. The island is Denmark’s easternmost settlement, located an hour by boat from the larger island of Bornholm. Christiansø is home to a 17th-century fortress, one production facility—a tiny herring pickling company—and 98 residents, most of whom live along the pier, where throngs of boats dock every summer.

Søren Thiim Andersen, the administrator of Christiansø, said he received a request from Danish police in December asking for any records of boats that had entered the main harbor between Sept. 16 and Sept. 18, a little over a week before the pipelines blew up. The police returned in January to look at data from a machine on the harbor on which visitors register their boats, and to interview a few local residents.

At the request of the police, Mr. Andersen said, he wrote a post on a Facebook page for the island’s residents, asking for photographs or video footage of the port from those three days. Three residents sent photos they had taken of the port area during those days.

The port master on the isolated island, John Anker Nielsen, said he was working on the days the Andromeda docked there, but he hadn’t noticed anything or anyone suspicious.

Among the questions facing investigators is whether six people and a boat the size of the Andromeda would be able to carry out such a major act of sabotage, which would have meant moving large amounts of explosives and diving gear and required the expertise of underwater demolition experts. And whether they might have been just one part of a broader operation.

Achim Schlöffel, a German extreme diver who runs a diving school and helps companies protect vessels and underwater installations from sabotage, said explosives could have been planted by a group of well-trained technical divers accustomed to working at such depths—around 80 meters—assuming they had several days to do so.

Six divers, he said, could have lowered the explosives in several dives using commercially available equipment such as underwater scooters or propulsion vehicles, airlifting bags and buoys, and a portable sonar.

“I know dozens of professional divers who would be up to the task,” Mr. Schlöffel said.

Cmdr. Jens Wenzel Kristoffersen of the Danish navy disagreed, and dismissed the idea of a small team working from a sailboat as “a James Bond scenario.”

He said that while it’s possible for divers to reach the pipeline with good training, staying down for a prolonged period while maneuvering explosives is more challenging. He said the operation would most likely have required a professional military unit skilled in underwater demolition.

The question of how the operation was conducted feeds directly into the bigger, and far more politically sensitive, question of who ordered it. A smaller operation using commercially available equipment would considerably expand the circle of potential culprits.

Authorities haven’t publicly disclosed any information about the identities of the six suspects aboard the Andromeda; their identities are the focus of the ongoing investigation.

Between June and July 2022, months before the Nord Stream attack, the Central Intelligence Agency sent a warning to its German counterpart, the BND, and other European services that a group might be preparing an attack on the pipeline, according to intelligence officials familiar with the notification. The warning included information about three Ukrainian nationals who were trying to rent ships in countries bordering the Baltic Sea, including Sweden, these officials said.

In October, shortly after the blasts, senior U.S. security officials visiting Berlin mentioned the possibility that Ukraine might have been behind the attack, according to a German official who spoke with them at the time. U.S. officials now say private Ukrainian actors could have organized and financed the bombings without the knowledge of the Ukrainian government.

Ukraine officials, including President Volodomyr Zelensky, have denied any involvement in the Nord Stream sabotage, saying the accusation played into Russia’s hands.

Any direct involvement by Kyiv would be damaging for the unity of the Western alliance that is backing Ukraine’s war effort. Such a revelation would have a particularly negative impact on the government of German Chancellor Olaf Scholz, who discarded his nation’s pacifist stance to become the world’s third-largest supplier of weapons to Ukraine and one of its biggest financial backers, despite misgivings among German voters.

Germany’s defense minister, Boris Pistorius, warned last week that there is no clarity as to who was behind the attack, and that there is a possibility of a false-flag operation designed to blame Ukraine even if it had no involvement in the sabotage.

On Tuesday, Russian President Vladimir Putin dismissed any suggestion that Ukraine, or any pro-Ukrainian group, could have blown up the pipelines, and blamed the U.S., which has denied involvement.

He also said a Russian investigation found that there could be unexploded devices that remain attached to the pipelines.

“Apparently, several explosive devices were planted; some exploded, but some didn’t. It’s not clear why,” Mr. Putin told state television.

—Kim Mackrael and Georgi Kantchev contributed to this article.

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Image: Germán & Co by Shutterstock

'The US attacks Chinese balloons and electronics, but its archenemy is still TikTok'

Washington has given American teenagers' favorite app an ultimatum: Either its Chinese owner, ByteDance, relinquishes control or it is banned from the United States.

Le Monde by Philippe Escande, published on March 17, 2023

The United States may vigorously claim that its main concern is the war in Ukraine, but its obsession remains China. It attacks its balloons and its electronics, but its archenemy is still TikTok. Naturally so, as the most popular social media app in the world today among young people already has American teenagers in its grip. They now spend more time on the Chinese app than on YouTube, Instagram or Facebook.

Hostilities escalated on Wednesday, March 15, when the company confirmed that the US government had given it an ultimatum: Either its Chinese owner, ByteDance, relinquishes control or it is banned from the US.

Tick tock, tick tock, the time bomb is ticking. The firm is reliving the nightmare of the Donald Trump years, when the former American president tried to bring the social network to heel, as he had done with the telecommunications specialist Huawei. It was a waste of time, as TikTok's popularity has only grown. Even more paradoxical is the fact that Chinese consumer companies have never enjoyed so much success on American soil.

During the last Super Bowl, the country's most important television audience moment of the year, it was the ad for the Temu app that attracted the most attention. In a few months, this Boston-based online shopping platform has become the most downloaded app on American smartphones. It is a subsidiary of Shanghai-based PDD Holdings, which already owns Pinduoduo, a popular online marketplace in China. Not to mention, of course, Shein, the "Chinese Zara," known for its cut-price fashion that is a hit all over the world and is considering an IPO on Wall Street.

Huge amounts of data

What this new generation of sellers has in common is that they target the general public without any intermediaries, have their products made in China on demand and ship directly from the factory. This strategy contrasts with that of Amazon and its giant warehouses around the world, but it works perfectly.

And to make US politicians' nightmares worse, it is worth mentioning that the prosperity of all these companies is based on a highly sophisticated analysis of consumer needs: huge amounts of data that potentially end up in computers in China. TikTok has offered to host its users' data only on American soil, but that's not enough. The US intends to curtail the appetites of Chinese sellers.

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Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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A 3D printed oil pump jack is seen in front of displayed stock graph and "Oil Stocks" words in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/Illustration/File Photo

Banking rout fuels U.S. oil hedging, as investors seek to limit losses

Investors in the oil market, including oil producers, have rushed to purchase put options to predict and hedge against downward price movement. According to two market sources, several hedge funds have short positions on options to predict further price declines.

Reuters By Stephanie Kelly and Arathy Somasekhar

NEW YORK, March 16 (Reuters) - Oil producers, banks and hedge funds have increased purchases of put options to protect themselves from further losses, market sources said this week, as crude futures hit their lowest level since December 2021 on concern that the rout in the banking industry could trigger a global recession and cut fuel demand.

Oil futures have fallen over 8% since last Friday as the collapse of SVB Financial (SIVB.O) and peer Signature Bank (SBNY.O) prompted concerns of a wider banking crisis.

Credit Suisse (CSGN.S) on Thursday sought to shore up its liquidity and restore investor confidence by borrowing up to $54 billion from Switzerland's central bank. The Swiss lender is the first major global bank to be thrown an emergency lifeline since the 2008 financial crisis.

Investors in the oil market, including oil producers, have rushed to buy put options, used to either bet on or protect against downside movement. Some hedge funds had short positions on options, two market sources said, in a bet that prices will fall farther.

"There is a fear that if the global economy comes down we could be talking about oil going lower," Price Futures Group analyst Phil Flynn said. "Because (investors) don't know how this banking crisis is going to play out, they're trying to put a floor on risk."

Volume in puts for the U.S. crude futures contract for April delivery gained on Friday over 30% from the previous session to 30,594, CME Group data showed.

From Friday to Wednesday, volumes rose even further, climbing over 60% to 50,255 puts. There were about 36,394 call options, or bets on a higher price, bought on Wednesday in comparison.

For U.S. crude futures options open interest, the ratio of puts to calls is the highest since August 2022.

"Given the price action we are looking at, I would say you could see further increases in volatility just because the sentiment is so sour," said Rebecca Babin, senior energy trader at CIBC Private Wealth US.

A U.S. based trader said investors were reluctant to buy and hold due to the high volatility and was therefore focused on short term positions in the market.

"Shorting these levels could turn quickly on you," the trader added.

However, if oil prices fall further, buying put options to protect against the downside would become more expensive as demand goes up, though puts costs vary.

The discount of later-dated oil futures contracts to the front-month contract tightened on Wednesday, indicating that market participants were less confident in short-term demand.

That short-term uncertainty should buoy put buying, Price Futures Group's Flynn said.

The premium of U.S. crude's front-month contract to U.S. crude's price in half a year tightened to as little as 29 cents a barrel, the lowest since Feb. 7, Refinitiv Eikon data showed.

For international benchmark Brent crude futures, the front-month contract's premium to the contract in half a year tightened to $1.31 a barrel, the lowest since Jan. 31.

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Cooperate with objective and ethical thinking…

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News round-up, March 16, 2023

Quote of the day…

"The next important step needs to come out from their CEO and display their new strategy to the public sooner than later to reassure the markets," Tareck Horchani, head of prime brokerage dealing at Maybank Securities in Singapore.

"There is still the possibility they recover but the road will be very bumpy.”

REUTERS

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Most read…

Credit Suisse secures $54 bln lifeline as authorities rush to avert global bank crisis

Due to the 167-year-old bank's issues, investors and regulators have shifted their attention from the United States to Europe. Credit Suisse spearheaded a selloff of bank shares after the bank's largest shareholder stated that it was unable to provide additional financial support due to regulatory restrictions.

REUTERS By Tom Westbrook

For Goldman Sachs, SVB's botched stock sale had a silver lining

Goldman carried out only the first portion of that strategy. The illustrious investment bank needed more time after the bond portfolio purchase to persuade investors to lock in capital and dispel worries about depositors withdrawing money from SVB.

REUTER By Echo Wang, Lananh Nguyen and David French

What does SVB’s collapse mean for other banks? Here’s what else might go wrong — and what to expect next.

Our finance and economics reporters teamed up with a banking regulation expert to answer reader questions on Reddit.

BY POLITICO STAFF, 03/15/2023 

Oil regains a bit of ground as Credit Suisse handed a lifeline

"As the U.S. banking crisis spread to Europe, market mood declined. Even though fundamentals may not necessarily be pointing in a bearish direction, the future movement will be determined by the level of market anxiety "In a client note, analysts from Haitong Futures stated.

Reuters by Laura Sanicola and Muyu Xu, editing Germán & Co

Nord Stream owners discuss pipeline repairs, says E.ON

The operating company's main focus is the subject of how the two damaged pipelines can be first drained and sealed so that the strands do not further corrode.

Reuters, editing by Germán & Co

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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Credit Suisse secures $54 bln lifeline as authorities rush to avert global bank crisis

Due to the 167-year-old bank's issues, investors and regulators have shifted their attention from the United States to Europe. Credit Suisse spearheaded a selloff of bank shares after the bank's largest shareholder stated that it was unable to provide additional financial support due to regulatory restrictions.

REUTERS By Tom Westbrook

March 16 (Reuters) - Credit Suisse (CSGN.S) on Thursday said it would borrow up to $54 billion from the Swiss central bank to shore up liquidity and investor confidence after a slump in its shares intensified fears about a global banking crisis.

The Zurich-based bank's announcement helped reverse some of the heavy share market losses and restored confidence in wider financial markets, which were battered on Wednesday and into Asia trade on Thursday as investors fretted about potential runs on global bank deposits.

In its statement, Credit Suisse said it would exercise an option to borrow from the central bank up to 50 billion Swiss francs ($54 billion). That followed assurances from Swiss authorities on Wednesday that Credit Suisse met "the capital and liquidity requirements imposed on systemically important banks" and that it could access central bank liquidity if needed.

Credit Suisse is the first major global bank to be given an emergency lifeline since the 2008 financial crisis and its problems have raised serious doubts over whether central banks will be able to sustain their fight against inflation with aggressive interest rate hikes.

The bank's shares surged 21% in pre-open trade in early European hours. Throughout most of the Asian day, stocks wallowed in the red as investors rushed to gold, bonds and the dollar. While Credit Suisse's announcement helped trim some early losses, trade was volatile and sentiment fragile.

"It removes an immediate risk. But it confronts us with another choice. The more we do this, the more we blunt monetary policy, the more we have to live with higher inflation -- and what is it going to be?" said Damien Boey, chief equity strategist at Barrenjoey in Sydney.

"Do bailouts make things better? On the one hand, you are removing a source of risk to the markets which is a clear and present danger. On the other hand we are feeding into this paradigm of monetary policy bucking within itself."

Credit Suisse's borrowing will be made under the covered loan facility and a short-term liquidity facility, fully collateralised by high quality assets. It also announced offers for senior debt securities for cash of up to 3 billion francs.

"This additional liquidity would support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs," the bank said.

Credit Suisse Chief Executive Ulrich Koerner had earlier on Wednesday sought to reassure investors about the lender's strong liquidity.

"Our capital, our liquidity basis is very, very strong," Koerner told media. "We fulfil and overshoot basically all regulatory requirements."

Meanwhile, Credit Suisse bankers in Asia reached out to clients to reassure them after the latest inflow of funds.

"We've been telling them to read the statements and look at the fact that we are buying 3 billion francs worth of bonds because they are so cheap," said a Hong Kong-based senior banker. "That's all we can say and try and plough on with work."

The banker declined to be named as they were not authorised to speak to the media.

EUROPEAN EPICENTRE

The 167-year-old bank's problems have shifted the focus for investors and regulators from the United States to Europe, where Credit Suisse led a selloff in bank shares after its largest investor said it could not provide more financial assistance because of regulatory constraints.

The concerns about Credit Suisse added to broader banking sector fears sparked by last week's collapse of Silicon Valley Bank (SVB) (SIVB.O) and Signature Bank, two U.S. mid-size firms.

Investor focus is also on any action by central banks and other regulators elsewhere to restore confidence in the banking system.

Policymakers in Australia and South Korea sought to reassure markets on Thursday that banks in their jurisdictions were well-capitalised.

SVB's demise last week, followed by that of Signature Bank two days later, sent global bank stocks on a roller-coaster ride as investors feared another Lehman Brothers moment, the Wall Street giant whose failure had triggered the global financial crisis more than a decade ago.

On Wednesday, Credit Suisse shares led a 7% fall in the European banking index (.SX7P), while five-year credit default swaps for the flagship Swiss bank hit a new record high.

The investor exit for the doors raised fears of a broader threat to the financial system, and two supervisory sources told Reuters that the European Central Bank had contacted banks on its watch to quiz them about their exposures to Credit Suisse.

The U.S. Treasury also said it is monitoring the situation around Credit Suisse and is in touch with global counterparts, a Treasury spokesperson said.

NEXT STEPS

Rapid rises in interest rates have made it harder for some businesses to pay back or service loans, increasing the chances of losses for lenders who are also worried about a recession.

Traders are now betting that the Federal Reserve, which just last week was expected to accelerate its interest-rate-hike campaign in the face of persistent inflation, may be forced to hit pause and even reverse course.

Bets on a large European Central Bank interest-rate hike at Thursday's meeting also evaporated quickly on growing fears about the health of Europe's banking sector. Money market pricing suggested traders now saw less than a 20% chance of a 50 basis point rate hike at the ECB meeting.

For now, investors are focussed on what will happen at Credit Suisse next.

"The next important step needs to come out from their CEO and display their new strategy to the public sooner than later to reassure the markets," Tareck Horchani, head of prime brokerage dealing at Maybank Securities in Singapore.

"There is still the possibility they recover but the road will be very bumpy."

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The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange (NYSE) in New York City, New York, U.S., November 17, 2021. REUTERS/Andrew Kelly/File Photo

For Goldman Sachs, SVB's botched stock sale had a silver lining

Goldman carried out only the first portion of that strategy. The illustrious investment bank needed more time after the bond portfolio purchase to persuade investors to lock in capital and dispel worries about depositors withdrawing money from SVB.

REUTER By Echo Wang, Lananh Nguyen and David French

NEW YORK, March 16 (Reuters) - As SVB Financial Group (SIVB.O) wrestled with a capital shortfall and the prospect of a downgrade to its credit rating last week, it went to Goldman Sachs Group Inc (GS.N) and worked out an unusual two-part plan, according to people familiar with the discussions.

The investment bank would buy a $21.5 billion bond portfolio from SVB to boost its coffers, after startups began pulling their deposits from the technology-focused lender, which does business as Silicon Valley Bank.

But there was a hitch. Goldman's offer for the portfolio was worth $1.8 billion less than the book value SVB had assigned to it, because a rise in interest rates had made it less valuable. SVB would have to book a loss on the portfolio, which comprised U.S. Treasuries and related bonds.

The next step was for Goldman to put together a solution. It would help organize a $2.25 billion stock sale for SVB to fill the funding gap caused by the bond portfolio sale, two of the sources said.

Goldman delivered on only the first step of that plan. Once the bond portfolio deal was completed, the storied investment bank didn't have time to convince investors to lock in capital and overcome concerns about depositors pulling money out of SVB.

The tight turnaround left insufficient time to prepare materials for investors by early last week, one of the sources said. The stock sale collapsed and SVB became the largest U.S. bank to fail since the 2008 financial crisis, fueling concern about other lenders and prompting regulatory interventions to backstop customer deposits.

Yet for Goldman, the botched deal had a silver lining. The bond portfolio it acquired from SVB is now worth more, based on the drop in Treasury yields since the transaction happened. Traders not affiliated with the deal that were interviewed by Reuters estimated the gain in value to be in the hundreds of millions of dollars. A source familiar with details of a hedge that Goldman's trading desk put on the deal said the gain would be less than $100 million.

It is unclear whether Goldman has held onto all or part of the bond portfolio or sold it. Goldman declined to comment. SVB did not respond to a request for comment. In a regulatory filing on Tuesday, SVB said its bond portfolio sales to Goldman were done at "negotiated prices".

Goldman was not paid the underwriting fee it had agreed for the stock sale because that deal fell through, two of the sources said. SVB has not disclosed how much that fee would have been.

Details provided by six people familiar with the attempted capital raise show that Goldman and SVB underestimated the challenges of pulling off the capital raise in terms of timing and investor interest. Only two private equity firms were ultimately invited to participate in the capital raise last week - General Atlantic and Warburg Pincus. SVB and Goldman hoped stock market investors would chip in for the remainder, four of the sources said.

Warburg Pincus turned down the deal, however, because it needed more time to carry out due diligence after it became concerned that SVB could still face long-term funding issues, two of the sources said. General Atlantic pledged $500 million, but walked away when the capital raise fell through.

Warburg Pincus and General Atlantic declined to comment.

The banks also miscalculated how investors would react to the stock sale. One of the sources said the company believed that investors would welcome the plan as a boon to SVB's financial health, but it backfired and instead sent a worrying signal that triggered a 60% plunge in the bank's shares. The mood of investors was already tense after another bank advised by Goldman, cryptocurrency-focused bank Silvergate Capital Corp (SI.N), collapsed the day before.

The handling of the SVB deal by Goldman, the most prolific dealmaker based on league table data, has attracted Wall Street's fascination and invited scrutiny.

Michael Ohlrogge, associate professor at the New York University School of Law, said that while Goldman may not have handled everything "exactly right", it had taken on a difficult assignment to begin with. "(SVB) had gotten themselves into such a risky position," Ohlrogge said.

UNDISCLOSED ROLE

SVB did not disclose in its stock sale prospectus to investors that Goldman was the acquirer of the bond portfolio it sold at a loss. But in the prospectus, SVB did mention other relationships and potential conflicts of interest, such as SVB's investment banking arm underwriting the deal.

SVB disclosed Goldman's role as acquirer of the bond portfolio only on Tuesday, the last day of a four-business day window that the U.S. Securities and Exchange Commission (SEC) affords companies to make such disclosures. Five securities lawyers interviewed by Reuters said that SVB's handling of the disclosure appeared to comply with the rules.

An SEC spokesperson did not respond to a request for comment.

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Image: Germán & Co

What does SVB’s collapse mean for other banks? Here’s what else might go wrong — and what to expect next.

Our finance and economics reporters teamed up with a banking regulation expert to answer reader questions on Reddit.

By POLITICO STAFF, 03/15/2023 

The sweeping results of Biden’s actions last weekend prevented multimillion-dollar losses for thousands of companies that relied on Silicon Valley Bank. But the fallout from the largest bank failure since the 2008 financial crisis is still reverberating.

As regulators race to find a buyer willing to take on the bank’s domestic lending portfolio, some major companies are left scrambling to secure new lines of credit. Lobbyists are drawing battle lines as progressives in Congress push for tighter regulations. And Washington is still racing to calm investor fears of instability at other financial institutions.

Is it necessary that regional banks continue to exist? Why or why not?

This is a fantastic question. The U.S. has nearly 5,000 banks (and another 5,000 or so credit unions). That’s a lot of competition. Part of what’s strange though is a lot of that is a vestige of when we used to have restrictions on banking across state lines. So consolidation is perhaps understandable.

You don’t want too much concentration in the megabanks (think JPMorgan Chase or Bank of America, which each have more than $3 trillion in assets, compared to SVB, which had roughly $200 billion). And regional banks like SVB are probably better able to compete with those banks than the little guys. But there’s certainly room to debate whether we don’t need as many banks as we have now.

— Victoria Guida, POLITICO economics reporter covering the Federal Reserve, the Treasury Department and the broader economy

What regulations are being discussed, and what is the probability that any of these regulations will see the light of day? At this point, what is the likelihood that the SVB collapse is a contagion?

At this stage it’s extremely unlikely lawmakers would agree on a bill that would lead to any substantial changes — like Warren and Porter’s rollback of the Dodd-Frank rollback — that would make it across the finish line. Not enough Dems support it and it’s a divided Congress.

On the other hand, there are definitely signs that bank regulators are looking at things like capital requirements and better supervision. On the latter, one of the issues that’s been raised is that regulators didn’t spot the problems with SVB’s investment portfolio/depositor concentration. Fed Vice Chair Michael Barr is overseeing a review of that as we speak.

— Sam Sutton, POLITICO financial services reporter covering fintech and digital currencies

Do you think the decision to protect depositors, but not investors, is indicative of a new policy direction, or is this just a one-off due to the nature of SVB’s customer composition (an overwhelming number of large-ish employers)?

The legal answer to this is that there’s not a new policy. What actually happened is that the Fed, FDIC and Treasury invoked a “systemic risk exception” to the requirement that the FDIC try to minimize losses to its deposit insurance fund. That requires there to be some sort of threat to the financial system or the broader economy. (As an aside, the agencies haven’t really laid out their full justification for that, but the central reason seems to have been staving off financial panic.)

It might be hard to keep suggesting that every bank poses that kind of risk! And of course, that’s not what Congress has said — the deposit insurance limit is set at $250,000. That said, this could spur a change in deposit insurance law sometime in the future.

But the answer is actually more complicated than that. The Fed also unveiled an emergency lending program that, for the time being, will allow banks to put up the type of collateral that SVB dumped for cash loans that will help them meet withdrawal requests. So for now, the government has basically facilitated banks being able to handle more panicky behavior by depositors (although it depends on whether they have enough of the right type of assets). And that’s sort of an indirect backing of depositors for now!

— Victoria

Why was $1.8 billion in bond losses enough to make the bank insolvent? Where had all the deposits from clients gone that they couldn’t handle the bank run?

It had less to do with the losses than it did the depositors’ reaction to those losses. Remember this bank was pretty concentrated: Venture’s a big deal but it’s also a little bit of a small world. So when word got out that SVB was taking steps to repair its investment portfolio, depositors — startup founders, VCs, etc. — fled en masse. $42 billion gone in a day, which likely would’ve been more if CA regulators and FDIC didn’t step in. Hard to survive that kind of run.

— Sam

Are we expecting a chain reaction of more banks collapsing due to the global nature of panic these days?

The Fed has intervened to insulate open banks against liquidity concerns related to the open banks. Preventing a contagion likely played a role in invoking these systemic risk authorities for banks that are otherwise not central to the financial system. Crisis-fighters largely lost their authorities after the 2008 financial crisis to protect individual banks from contagion without first closing them. So, responding forcefully to these relatively insignificant banks’ failures hopefully limits contagion to any banks that may actually be more prone to spreading financial wildfire.

‘Your deposits are safe’: Biden assures public after Silicon Valley Bank collapse

The other thing worth noting is that this has primarily been a run on one kind of business model — banking tech/VC/Silicon Valley — which itself is facing belt-tightening as the Fed has raised interest rates steeply. We have not seen signs of contagion to large, diversified banks, which are actually experiencing deposit inflows.

— Steven Kelly, Senior Research Associate at the Program on Financial Stability at Yale University

How do you think this alters the FOMC’s plans for tightening? Do you think they have moved too fast? What else might break that they didn’t anticipate?

It will definitely be a major factor in how the Fed is thinking about what to do next on interest rates. Inflation is still high

— 6 percent over the past year — but it’s steadily dropped since the middle of last year. That said, it’s shown signs the last couple of months of mostly moving sideways rather than moving convincingly down.

All of that to say, this is a tricky place for the Fed. What we saw with the banks was an example of how rate moves can suddenly hit, with a delay, in unpredictable ways. And so they have to be worried about going too fast and breaking something else. But they might still do a small increase later this month because they’re still worried about inflation. It’s about risk management at this point.

— Victoria

Does this mark the beginning of the end for bank deregulation legislation that is framed as “right sized or tailored regulation”?

Unlikely. Tailoring as a broad and general concept is something that seems pretty logical: A community bank with less than $1 billion in assets that mostly does just basic lending shouldn’t face the same type of regulations as a megabank with $3 trillion in assets. How exactly that all shakes out is very complicated (and, as you implicitly suggest, offers a lot of room for mischief). But certainly, this has likely made both lawmakers and regulators much less sympathetic to arguments from banks — say, between $100 billion and $250 billion in size — that they don’t pose risks to the economy.

— Victoria

Was it really all that “shocking”? Seemed pretty expected something would happen with all the interest rate hikes, no?

Indeed, financial distress was definitely an expected outcome of the Fed’s interest rate hikes. They very explicitly wanted to tighten financial conditions — and banks are a huge part of the financial sector. The Fed is (awkwardly?) also in charge of bank supervision — i.e. making sure banks are resilient. And it has a financial stability mandate. It seems the Fed wants tighter financial conditions, but only outside the core banking system.

— Steven

What are SVB’s assets? Does the depositor’s refund come from bank reserves or the FDIC?

SVB’s assets are largely longer-term Treasuries and government-backed mortgage securities. These securities have little risk of loss if they’re held to maturity, but they lost paper value as interest rates increased. So when SVB lost deposits and had to sell assets, they had to bear those losses.

While depositors have immediate access to their funds — which may need to be funded in the short-term by the FDIC — the FDIC will only lose money if its sale of the assets (and/or liabilities) of SVB is less than enough to cover all the depositors. And, if the FDIC’s insurance fund dips below what it determines to be sufficient coverage for the system, it will levy the banking system for the shortcoming.

— Steven

What is the reason that Pacwest Bancorp has been hit hard during this? Their financials seem to suggest little doubts about liquidity.

Liquidity and capital regulations are helpful against general downside banking risks. They can do little if the market bails on your business model. PacWest’s business looks very similar to SVB’s even if their balance sheet looks stronger. Being a bank to tech/Silicon Valley doesn’t look like a viable business model in this interest rate environment - hence the counterparty run. When your counterparties run as a bank, you’re out of business. No amount of capital or liquidity can save you.

— Steven

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Image: Germán & Co

Oil regains a bit of ground as Credit Suisse handed a lifeline

"As the U.S. banking crisis spread to Europe, market mood declined. Even though fundamentals may not necessarily be pointing in a bearish direction, the future movement will be determined by the level of market anxiety "In a client note, analysts from Haitong Futures stated.

Reuters by Laura Sanicola and Muyu Xu, editing Germán & Co

March 16 - Oil prices clawed back some ground on Thursday after sliding to 15-month lows in the previous session as markets calmed somewhat after Credit Suisse (CSGN.S) was thrown a financial lifeline by Swiss regulators.

But battered by fears of a deepening crisis for banks worldwide, market sentiment remained fragile with both benchmarks giving up some early Thursday gains that saw Brent climb by more than $1.

As of 0639 GMT, Brent crude futures were up 59 cents or 0.8% to $74.28 per barrel. West Texas Intermediate crude futures (WTI) rose 49 cents or 0.7% to $68.10 a barrel.

On Wednesday, the third straight day of declines, U.S. crude fell below $70 a barrel for the first time since December 20, 2021.

Brent has lost nearly 10% since Friday's close, while U.S. crude is down about 11%.

"Considering (this) is really macro-driven rather than oil fundamentals-driven, WTI could flirt with the idea of bottoming out at $60. But I don't really see a full-blown collapse," said Viktor Katona, lead crude analyst at data analytics firm Kpler.

Credit Suisse on Thursday said it would borrow up to $54 billion from the Swiss central bank to shore up its liquidity and investor confidence after a slump in its shares intensified fears about a global financial crisis.

"Market sentiment deteriorated as the banking crisis expanded to Europe from the U.S...The future trend will depend on the level of market angst even if fundamentals are not necessarily showing much in the way of bearish signs," analysts from Haitong Futures said in a note to clients.

OPEC's rosier outlook for China oil demand also supported oil prices, said Lim Tai An, analyst at Phillip Nova Pte.

OPEC increased its Chinese demand forecast for 2023 earlier this week and a monthly report from the International Energy Agency (IEA) on Wednesday flagged an expected boost to oil demand from resumed air travel and China's economic reopening after abandoning its zero-COVID policy.

But oversupply concerns remain.

The IEA said in the report that commercial oil stocks in developed OECD countries have hit an 18-month high, while Russian oil output stayed near pre-war levels in February despite sanctions on its seaborne exports.

U.S. crude oil stockpiles also rose last week by 1.6 million barrels, exceeding analysts' expectation of a 1.2 million barrels rise, the Energy Information Administration said on Wednesday.

Later on Thursday, European Central Bank policymakers are seen leaning towards a half-percentage-point rate hike as the euro zone economy is picking up strength and inflation is set to remain high for years.

Higher interest rates can lead to depressed demand for oil as economic growth slows, but concerns about a widening financial crisis for the banking sector could also weigh on oil demand.

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Image: Germán & Co by Shutterstock

Nord Stream owners discuss pipeline repairs, says E.ON

The operating company's main focus is the subject of how the two damaged pipelines can be first drained and sealed so that the strands do not further corrode.

Reuters, editing by Germán & Co

ESSEN, Germany, March 15 (Reuters) - Shareholders of the Nord Stream 1 pipeline operator are discussing how to seal and empty the damaged gas pipeline to halt corrosion from sea water, said the chief financial officer of E.ON (EONGn.DE), one of the owners.

The chief financial officer of E.ON (EONGn.DE), one of the stakeholders, told reporters at the group's results news conference that it was unclear whether the pipeline would be repaired but that any forthcoming decisions are likely to be made with the support of all shareholders.

"We continue to exercise our rights as a minority shareholder in the Nord Stream 1 operating company. And we still see no point in simply leaving the field to Gazprom at this point," E.ON's Marc Spieker said.

Nord Stream is majority owned by Russia's Gazprom (GAZP.MM), with other stakeholders including Wintershall DEA (WINT.UL) (BASFn.DE), Engie (ENGIE.PA) and Gasunie (GSUNI.UL).

E.ON on Wednesday said it had written off the value of its 15.5% stake in Nord Stream 1, the two strands of which were damaged by suspected sabotage in September.

The stake had initially been worth 1.2 billion euros ($1.3 billion), but its value was cut to zero in several steps.

"At the moment, the operating company is concentrating on the question of how the two destroyed pipelines can first be sealed and drained so that the strands do not corrode further," Spieker said.

Two sources familiar with the matter told Reuters this month that, while there was no plan to repair the ruptured pipeline, it would at least be conserved for possible reactivation in the future.

"Whether a repair will be attempted at some point in the future ... is completely speculative from today's point of view," Spieker said. "It depends on many factors - political, social, economic. Only time will tell."

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Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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Cooperate with objective and ethical thinking…

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News round-up, March 15, 2023

Editor's thoughts…

In the world of Silicon Valley geniuses, anything is possible, ...finding God, Cleopatra's tomb... making the planet Mars habitable, and now it can also happen... SVB creditors form group ahead of possible bankruptcy - WSJ

Now, the question really begs asking: Where is the global economy heading?

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Quote of the day…

Putin says Germany remains "occupied"

REUTERS

Most read…

SVB creditors form group ahead of possible bankruptcy - WSJ

Creditors of Silicon Valley Bank's (SIVB.O) parent company have formed a group in anticipation of a potential bankruptcy filing, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.

Reuters

The 72-hour scramble to save the United States from a banking crisis

The White House was aware of the potential for contagion between large banks.

SIVB▼‎-60.41%‎

The Washinton Post Story by Jeff Stein, Tony Romm, Gerrit De Vynck, NOW

EU power rejig may only solve tomorrow’s problem

Von der Leyen’s promised reform luckily shies away from the most radical calls for change. Under the current system, wholesale electricity prices are set by the most expensive energy source, which last year was ballooning gas.

Reuters By Lisa Jucca, Editing by Germán & Co

Putin says Germany remains "occupied"

Western countries, particularly Germany, have reacted cautiously to probes into the blasts which hit Russia's Nord Stream gas pipelines last year, stating they believe they were a purposeful act, but failing to specify who they suspect was responsible.

REUTERS, Editing by Germán & Co

Silicon Valley Bank’s Fall Is a Passing Cloud Over Clean Energy

Japanese and European banks have traditionally been big clean-energy lenders, too

SVB made about $1.2 billion of project finance loans to U.S. renewable energy projects in 2022.

The Wall Street Journal By Jinjoo Lee, March 14, 2023

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“We’re living in a volatile world…

it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp

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Image: Germán & Co

SVB creditors form group ahead of possible bankruptcy - WSJ

Creditors of Silicon Valley Bank's (SIVB.O) parent company have formed a group in anticipation of a potential bankruptcy filing, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.

Reuters

March 14 (Reuters) - Creditors of Silicon Valley Bank's (SIVB.O) parent company have formed a group in anticipation of a potential bankruptcy filing, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.

Embattled lender SVB, which was shut down last week, on Monday said it was exploring strategic alternatives and had hired a restructuring veteran, but has not said it was planning to file for bankruptcy.

The creditor group includes Centerbridge Partners, Davidson Kempner Capital Management and Pacific Investment Management Co, the report said, adding that they were being advised by PJT Partners Inc.

The companies did not immediately respond to Reuters requests for comment.

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Image: The New York Time

The 72-hour scramble to save the United States from a banking crisis

The White House was aware of the potential for contagion between large banks.

SIVB▼‎-60.41%‎

The Washinton Post Story by Jeff Stein, Tony Romm, Gerrit De Vynck, NOW

t seemed like a simple question: Did the treasury secretary have any concerns about the economic risks posed by Silicon Valley Bank?

It was Friday morning, and a wave of public panic had started to spread about one of the tech industry’s leading financial institutions. Seated for a roughly three-hour grilling on Capitol Hill, Janet L. Yellen replied with a calm nod and a glance at her notes: “There are recent developments that concern a few banks that I’m monitoring very carefully,” she said.

“When banks experience financial losses,” she added, “it is and should be a matter of concern.”

Yellen’s comments foreshadowed the start of a scramble behind the scenes at the White House. New fears began to surface about a potential run on Silicon Valley Bank, threatening widespread devastation not just for California, its companies and workers, but perhaps the U.S. economy writ large.

In a meeting, Jeff Zients, the chief of staff; Lael Brainard, the national economic director; and Cecilia Rouse, one of Biden’s top economic advisers, alerted the president to a type of danger not seen since the financial crisis nearly 15 years ago: The failure of Silicon Valley Bank, a little-known entity to most Americans, could trigger a broader crisis in the nation’s banking system.

“We were already very focused on that when we spoke to the president Friday morning,” according to one White House official. “We were already alert to the potential this could lead to contagion and could implicate a series of what are pretty large banks.”

A frenetic, roughly 72-hour race soon unfolded in Washington to confront the threat of a full-blown financial meltdown. A bank was failing. Billions of dollars — in workers’ paychecks, and tech companies’ balance sheets — were about to be lost. And the government faced fears of an economy in free fall, rekindling nightmares of the Great Recession in 2008.

Ultimately, the Biden administration decided to complete a major intervention with extraordinary speed, acting to preserve deposits at Silicon Valley Bank while safeguarding the finances of other firms on the precipice of ruin. Their efforts showed the extent to which the president was willing to risk being accused of providing emergency help to bail out the financial sector — a charge the White House adamantly denies — in a bid to keep the system stable and stave off a worsening crisis.

This account is based on interviews with 20 people familiar with the decision-making process, including top White House officials, leading congressional lawmakers and tech industry executives. Many of them spoke on the condition of anonymity to describe private conversations that carried market-moving stakes.

The administration had until Asian markets opened on Sunday to ensure that SVB customers could withdraw funds and businesses could pay their workers — all without sparking similar runs on other U.S. banks. Top aides at banking regulators over the weekend spotted surges in requests for cash withdrawals at banks that didn’t appear to be connected to SVB, three of the sources said.

In the back of their minds, government officials recalled all too well the fallout from the 2008 financial crisis, and the immense political blowback that followed over the government’s use of taxpayer funds for what was widely seen as an unfair bailout. Over the weekend, they began to see banks outside of tech-heavy New York and California showing signs of volatility. Bank executives told federal officials that major customers had warned they would withdraw their money and move it to a Wall Street giant for safety first thing on Monday morning.

The Biden administration faced further pressure from Silicon Valley executives, including the co-founder of LinkedIn, as well as a wide array of influential California Democrats such as former House speaker Nancy Pelosi. They amplified the urgent need for action when many financial analysts outside Washington remained unaware of how bad things could get.

“We had to protect the depositors, we had to protect small businesses … [and] make sure this doesn’t become systemic,” said Pelosi, noting she had heard from another unnamed bank executive who said customers were withdrawing cash at higher rates. “We don’t want contagion.”

Instead, the administration managed to calm markets, after a day of turbulence that cut deeply into banks’ stocks Monday. And it prevented the sort of panic that might have resulted in countless Americans withdrawing money from their banks, which could have created damaging instability in the financial system.

“Within Treasury, there had been some initial concern about going too far in their response. By Saturday, the dynamic had shifted overwhelmingly in favor of doing something big,” said one person in direct communication with several senior Treasury officials, speaking on the condition of anonymity to describe private conversations. “They were becoming increasingly concerned about a bloodbath on Monday.”

Worry starts in California

In the tech and venture capitalist circles that Silicon Valley Bank served, the anxiety had been mounting for days.

It began with a public notice March 8 that the firm had offloaded $21 billion worth of securities and was moving to sell another $1.25 billion in its own stock to shore up its balance sheet. The news came as a surprise to many of SVB’s investors and customers. Moody’s Investor Services, an independent credit rating firm, downgraded SVB after reviewing the bank’s business.

By the evening, texts, calls and emails began bouncing between tech investors and start-up founders. The news traveled especially fast in the tightknit Valley, where new companies often share the same stable of investors, said Isa Watson, the CEO of New York-based social media start-up Squad, which banked with Silicon Valley Bank.

Soon, federal policymakers and SVB’s customers alike were starting to worry about whether the bank would make it through the weekend. Around 9 a.m. Eastern on Thursday, Union Square Ventures emailed its portfolio companies to warn them about the situation, according to a person who received the email. USV is one of the most influential early-stage venture capital firms and was an early investor in Twitter, Etsy and Duolingo. Its portfolio includes dozens of start-ups, many of which banked with SVB.

Watson spoke to several investors, some of whom said to pull her company’s money out, while others cautioned not to make a rash decision, she said. She decided to wait. But many of Silicon Valley Bank’s customers did not. On Thursday alone, roughly $42 billion fled SVB accounts, according to California’s financial protection authority — a full-blown run on the bank.

Wall Street halted trading in SVB shares Friday as its stock price plummeted. State and federal regulators moved to close the bank around noon Eastern — 9 a.m. at most of its branches — in a surprising development because it happened during normal business hours.

In the hours to follow, the extent of the problem became clear: Silicon Valley Bank held an unusually high percentage of its assets in Treasury bonds. When the Federal Reserve raised interest rates, the value of existing bonds — a normally safe asset — went down. So the bank could not sell those bonds easily to make good on customers’ deposits as panic set in, and many flooded the bank seeking to withdraw their funds.

Many of the bank’s customers, meanwhile, were not the usual fare — they were investors, companies and other large institutions. It had more than $170 billion in deposits by the end of December, but 90 percent of them exceeded $250,000, the amount up to which the federal government insures in the event of a collapse.

By Saturday, Yellen, Federal Reserve Chair Jerome H. Powell, and Federal Deposit Insurance Corp. Chairman Martin J. Gruenberg convened for the first of several emergency meetings that would lead to extraordinary action. They agreed to move forward to ensure bank depositors were protected — at no taxpayer expense — in a way that would ensure the payrolls of companies that had banked at SVB could operate normally by Monday. Otherwise, they feared a cascading set of consequences would leave many Americans out of work. They also determined to announce the plan before Asian markets opened Sunday night.

Compounding the deadline, the Biden administration faced calls for urgent action from some of the biggest names in Silicon Valley, who wanted to see all depositors — regardless of their size — made whole.

Sounding alarms were the likes of Reid Hoffman, the founder of LinkedIn and a partner at Greylock, a major venture capital firm. A prolific donor to Democrats, including Biden, he took his concerns to Democratic lawmakers and administration officials. Ron Conway — another of the area’s leading investors, with original stakes in Airbnb, Facebook and Google — worked with Pelosi and Gov. Gavin Newsom to put pressure on the White House, Treasury Department and elected officials.

More than 600 tech executives, engineers and investors piled onto a hastily arranged, late Friday call with Rep. Ro Khanna (D), whose Bay-area district includes the headquarters for Silicon Valley Bank. Publicly, Khanna soon emerged as a forceful voice calling for the Biden administration to rescue the bank’s depositors, warning about broader financial shocks to come.

Eric Barnes with FDIC stands outside Silicon Valley Bank in Menlo Park, Calif.© John Brecher for The Washington Post

The lobbying blitz reflected a broader sea change in the normally libertarian tech industry — one that typically tries to ward off federal intervention. Now, many of those same voices were calling on the Biden administration to act and protect an ecosystem in which they had a large stake.

California lawmakers, meanwhile, mounted their own pressure campaign in Zoom calls and other contacts with Biden administration officials. They immediately began to hear from voters, business owners and political donors, who feared the economic blow that the bank’s collapse could bring.

“When I went to do a little grocery shopping, I couldn’t help but notice a lot of people at the banks,” said Rep. Anna G. Eshoo, whose Golden State district includes a portion of the tech industry, recalling her concerns over the weekend.

Rep. Maxine Waters (Calif.), the top Democrat on the financial services committee, started raising the issue with the FDIC late Friday. Rep. Zoe Lofgren (D), who leads the California delegation, by Saturday evening organized the first of several meetings between a wider array of state lawmakers and federal banking regulators.

Initially, Democrats expressed their broad belief that the government, first and foremost, should try to secure the sale of Silicon Valley Bank. But as the potential dangers became more apparent of letting uninsured bank deposits evaporate, party lawmakers shifted toward trying to persuade the administration to take any action necessary to stave off crisis.

California members told administration officials stories of local businesses that stood to suffer in the event of a financial catastrophe, even beyond tech. In one example, they pointed to a payroll processor that parked its money at SVB and served nearly 1 million workers — people who could miss paychecks if large depositors weren’t rescued. Khanna, meanwhile, pointed to a local food bank that had relied on the now-failed firm.

Warnings informed Biden’s decision

The administration still faced obstacles to sweeping action. Biden had reservations about approving a plan that could be spun as a bailout for bank shareholders. Sen. Bernie Sanders (I-Vt.) was publicly warning against a bailout as well.

The White House needed a plan that would not further alarm financial markets. SVB’s collapse was public, but few outside the government knew yet that Signature Bank — with more than $100 billion in assets — was heading toward failure too. Officials feared that Signature’s collapse on the heels of SVB’s could have a much greater ripple effect, and they wanted to make sure the news surfaced at the same time as the administration’s sweeping rescue plan.

Federal Reserve officials had access to the overnight filings of all the banks and their cash needs, giving them the ability to estimate their liquidity. The information was passed to the Treasury Department, with Yellen — a former Fed chair — serving as the key conduit between the central bank and political leadership at the White House.

Inside the White House, responsibility for managing the crisis fell primarily to Zients, Brainard and White House Deputy National Economic Council Director Bharat Ramamurti. Brainard had only been on the job for weeks but was almost perfectly situated to respond to a banking crisis, having recently left the Fed after more than eight years.

Deputy Director of the National Economic Council Bharat Ramamurti during a briefing Aug. 26.© Demetrius Freeman/The Washington Post

Although administration officials had largely decided by Saturday night that all depositors must be protected, they also worried about how to ward off the perception that they were acting primarily to bail out the rich and well connected who had been pressing for help. The plan does not protect the SVB’s shareholders or executives.

“There was a lot of concern about: What is the messaging here?” said one person, who spoke on the condition of anonymity to describe private deliberations. “Are we just saving these rich people, or are we doing something to save the economy? How do we present that, and what do we demand in terms of accountability to make clear this is not favorable treatment for a select few?”

Biden has emphasized that the plan is focused on protecting workers and small businesses.

On Sunday afternoon, after Biden signed off on the plan, members of the FDIC and Federal Reserve boards voted unanimously to declare that the failures of SVB and Signature posed a systemic risk to the entire financial system. The Fed also announced a new mechanism to provide loans at favorable terms to banks under duress.

By Tuesday afternoon, the storm appeared to have calmed, and stock prices in the banking sector had stabilized. And yet other risks may lie just around the corner. The Fed is expected to continue raising interest rates this year in its campaign to thwart inflation, which could subject other banks to the same challenges.

“The weekend intervention dampened the immediate crisis,” said Bob Hockett, a Cornell University economist. “But continued rate hikes will simply bring more distress to industries — and thus to their banks — in the weeks and months to come.”

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Image: Reuters Graphics

EU power rejig may only solve tomorrow’s problem

Von der Leyen’s promised reform luckily shies away from the most radical calls for change. Under the current system, wholesale electricity prices are set by the most expensive energy source, which last year was ballooning gas.

Reuters By Lisa Jucca, Editing by Germán & Co

MILAN, March 14 (Reuters Breakingviews) - Spooked by skyrocketing electricity prices, European Commission President Ursula von der Leyen in August declared the bloc’s power market was “no longer fit for purpose,” and promised an overhaul. Her pledge came after the collapse of Russian supply boosted prices of gas for delivery in the next month to a record level above 300 euros per megawatt hour, lifting electricity tariffs in tandem and hurting European consumers and companies. The proposed fix, to be unveiled on Tuesday, is however unlikely to address further short-term jitters.

Von der Leyen’s promised reform luckily shies away from the most radical calls for change. Under the current system, wholesale electricity prices are set by the most expensive energy source, which last year was ballooning gas. That prompted countries like Greece and Spain to propose to separate cheaper solar and wind generation from fossil fuels. That would have risked stifling green electricity production, which is cheaper, by culling the profit margin producers by design enjoy in the EU structure. The Commission wisely refrained from such a step.

To make Europe less dependent on volatile fossil fuel prices requires installing more green energy power. To this end, Brussels is proposing that the 27 member states foster the development of all future renewable energy projects through two-way contracts for difference (CFDs), according to a draft seen by Reuters Breakingviews. These price-support schemes, already popular in Britain to encourage low-carbon generation, are long-term agreements that provide for government compensation if electricity prices fall below a strike price. But they allow the government to keep the difference if prices rise above that set level.

The approach is not as market-friendly as fixed-price, subsidy-free power purchase agreements, which last year only made up 1% of total power generation. But by providing a fixed price below which suppliers will be reimbursed, it protects green power developers against a future scenario where electricity prices are way too low rather than way too high. That reduces their financial risks and cost of capital. When electricity prices are above the strike price governments can redistribute the additional revenue to vulnerable consumers.

The main drawback is the new CFDs will only apply to new projects. Hence it would likely take 5 to 10 years to spread across the EU. By then, greater availability of green power may have reduced demand for gas, and therefore its price. The risk of a resurgence of the European energy crisis, however, is all skewed to the near term.

Europe’s less radical reform of its power market is welcome. But it may only help solve tomorrow’s problem.

CONTEXT NEWS

The European Commission is expected to unveil on March 14 proposed reforms to the European Union power market aimed at shielding consumers from the wild price swings experienced in 2022.

Under the proposed reform, public support for all new green energy projects, including nuclear power ones, should be structured around two-way contracts for difference, according to a draft proposal seen by Reuters Breakingviews.

These contracts, usually signed between a government entity and a power generator, set a strike price below which compensation is offered by the government. If prices rise above the agreed level, the government is allowed to keep the difference. The proposal suggests governments should channel the extra revenue to consumers in time of high electricity prices.

The draft proposal also envisages trying to increase the number of Power Purchase Agreements, subsidy-free bilateral contracts that fixed the energy price at a set time for an agreed period of time, for example by offering state guarantee to protect producers from buyers’ failure. PPAs currently only cover 1% of total European Union electricity generation, according to data provider Independent Commodity Intelligence Services.

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Image: design by Germán & Co

Putin says Germany remains "occupied"

Western countries, particularly Germany, have reacted cautiously to probes into the blasts which hit Russia's Nord Stream gas pipelines last year, stating they believe they were a purposeful act, but failing to specify who they suspect was responsible.

REUTERS, Editing by Germán & Co

March 14 (Reuters) - Russian President Vladimir Putin said Germany's response to the explosion on North Sea pipelines showed that the country remained "occupied" and unable to act independently decades after its surrender at the end of World War Two.

Putin, interviewed on Russian television, also said European leaders had been browbeaten into losing their sense of sovereignty and independence.

Western countries, including Germany, have reacted cautiously to investigations into the blasts which hit Russia's Nord Stream gas pipelines last year, saying they believe they were a deliberate act, but declining to say who they think was responsible.

"The matter is that European politicians have said themselves publicly that after World War Two, Germany was never a fully sovereign state," Russian news agencies quoted Putin as telling state Rossiya-1 TV channel.

"The Soviet Union at one point withdrew its forces and ended what amounted to an occupation of the country. But that, as is well known, was not the case with the Americans. They continue to occupy Germany."

Putin told the interviewer that the blasts were carried out on a "state level" and dismissed as "complete nonsense" suggestions that an autonomous pro-Ukraine group was responsible.

The pipelines were intended to bring Russian gas to Germany, though since Moscow's invasion of Ukraine a year ago Berlin has taken steps to reduce its reliance on Russian hydrocarbons.

Leaders in Berlin have been careful about apportioning blame for the explosions, with Defence Minister Boris Pistorius saying last week the blasts could have been a "false-flag operation to blame Ukraine".

Seaboard: pioneers in power generation in the country

…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.

More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.

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Image: Germán & Co

Silicon Valley Bank’s Fall Is a Passing Cloud Over Clean Energy

Japanese and European banks have traditionally been big clean-energy lenders, too

SVB made about $1.2 billion of project finance loans to U.S. renewable energy projects in 2022.

The Wall Street Journal By Jinjoo Lee, March 14, 2023

Silicon Valley Bank’s fallout has clearly spooked some investors in clean energy stocks. How worried should they really be?

Even after a rebound Tuesday, residential solar company Sunrun, RUN -4.28% battery-storage company Stem STEM -0.69% and fuel-cell manufacturer Bloom Energy BE 1.05% are all down around 7% to 10% since SVB Financial SIVB -60.41% proposed a capital raise on March 8. All three companies are previous or current clients of the bank. 

This is despite some of those companies’ assurances that their exposure to SVB is manageable. Sunrun, which disclosed Friday that it had $40 million of undrawn loan commitments from SVB, said in an emailed statement that the company is confident in its ability to replace those. Meanwhile, Stem said less than 5% of its cash and short-term investments could be affected. Both Sunrun and Stem stressed that they have relationships with a large group of banks.

Top 10 U.S. renewable project finance loan​providers in 2022: MUFG, KeyBank, SMBC, CoBank, National​ Bank of​ Canada, Silicon Valley ​Bank, CIBC, Societe​Generale, Credit​Agricole, HSBC.

While the initial stock-price reactions may have been overdone, they do underscore SVB’s importance as a lender in the clean-energy space. It made about $1.2 billion of project finance loans to U.S. renewable-energy projects in 2022, according to data provider Infralogic. That made SVB the sixth-largest lender in the space. Earlier this year, SVB announced that it has committed to provide at least $5 billion by 2027 in financing to support sustainability investments, including renewable energy.

Industry advisers say there is more than enough appetite from banks to fill the gap. Japanese and European banks have traditionally been big lenders in the space; they like the steady—albeit low—returns and the green profile of renewable energy projects using mature technologies. “I think there’s more money out there than good deals that can be done,” said Ted Brandt, chief executive officer of boutique investment bank Marathon Capital. 

Still, access to lending could get slower for smaller clean-energy spaces where SVB carved out a niche, such as fuel cells and community solar projects, at least as other lenders get comfortable with those risk profiles. SVB estimated that it participated in about 62% of all community solar financings as of March 31, 2022. Credit assessment for community solar projects, which allow multiple households or small businesses to buy power from a local solar facility, can be more complex than those with a single utility or investment-grade corporate buyer. 

Of course, many SVB bankers will likely land jobs at other lenders and could continue those relationships. SVB’s collapse is likely to leave a more noticeable gap for the types of early stage, small clean-energy technologies that are in the domain of venture capital. 

Another thing worth monitoring is how much the fallout from SVB affects other regional banks, such as by prompting deposit withdrawals and limiting their ability to lend. Some regional banks are active lenders and advisers to clean energy projects. KeyBank, for example, was the second-largest provider of U.S. renewable project finance loans last year, according to Infralogic. Zions Bancorp and East West Bank are active lenders in the space, and U.S. Bancorp has been a regular tax equity provider. For now, that risk seems to be at bay: After a rout on Monday, regional bank stocks rebounded sharply Tuesday morning.

SVB’s collapse could cast a slight shadow on clean energy, but one that should pass fairly quickly.

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Cooperate with objective and ethical thinking…

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