Erdogan Wants Boycott of US Electronics

Turkish President Recep Tayyip Erdogan threatened Tuesday to boycott U.S. electronic goods in response to what he says is a targeted economic war being waged against Turkey by the United States.

The diplomatic dispute between the two countries has helped spark an economic crisis in Turkey and push its currency, the lira, to record lows.

“If they have the iPhone, there is Samsung elsewhere. In our own country we have Vestel,” Erdogan said.

He has called on people to exchange their U.S. dollars for lira in order to shore up the currency.

The lira has plunged 40 percent this year and saw drops of 16 percent Friday and another seven percent on Monday. It stabilized Tuesday with a rise of about five percent.

In a joint statement Tuesday, Turkish business groups called on the government to institute tighter monetary policy in order to combat the currency crisis. They also said Turkey should work to resolve the situation with the United States diplomatically while also improving relations with another major trading partner, the European Union.

The Turkish central bank has pledged to take “all necessary measures” to stabilize the country’s economy to make sure the banks have all the money they need. But world stock traders were dismayed the bank did not raise interest rates, which is what many economists believe is necessary to ease the crisis.

U.S. President Donald Trump doubled tariffs on Turkish steel and aluminum exports last Friday, in part a response to Turkey refusing to release an American pastor, Andrew Brunson, whom Turkey accuses of espionage and has detained under house arrest pending his trial. Trump has called the preacher’s detention a “total disgrace.”

Brunson’s lawyer filed a new appeal Tuesday asking for the court to release the pastor from his house arrest and lift his travel ban.

If convicted, Brunson faces a prison term of 35 years.

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Survey: Vienna Tops Melbourne as World’s Most Liveable City

Vienna has dislodged Melbourne for the first time at the top of the Economist Intelligence Unit’s Global Liveability Index, strengthening the Austrian capital’s claim to being the world’s most pleasant city to live in.

The two metropolises have been neck and neck in the annual survey of 140 urban centers for years, with Melbourne clinching the title for the past seven editions. This year, a downgraded threat of militant attacks in western Europe as well as the city’s low crime rate helped nudge Vienna into first place.

Vienna regularly tops a larger ranking of cities by quality of life compiled by consulting firm Mercer. It is the first time it has topped the EIU survey, which began in its current form in 2004.

At the other end of the table, Damascus retained last place, followed by the Bangladeshi capital Dhaka, and Lagos in Nigeria.

The survey does not include several of the world’s most dangerous capitals, such as Baghdad and Kabul.

“While in the past couple of years cities in Europe were affected by the spreading perceived threat of terrorism in the region, which caused heightened security measures, the past year has seen a return to normalcy,” the EIU said in a statement about the report published on Tuesday.

“A long-running contender to the title, Vienna has succeeded in displacing Melbourne from the top spot due to increases in the Austrian capital’s stability category ratings,” it said, referring to one of the index’s five headline components.

Vienna and Melbourne scored maximum points in the healthcare, education and infrastructure categories. But while Melbourne extended its lead in the culture and environment component, that was outweighed by Vienna’s improved stability ranking.

Osaka, Calgary and Sydney completed the top five in the survey, which the EIU says tends to favor medium-sized cities in wealthy countries, often with relatively low population densities. Much larger and more crowded cities tend to have higher crime rates and more strained infrastructure, it said.

London for instance ranks 48th.

Vienna, once the capital of a large empire rather than today’s small Alpine republic, has yet to match its pre-World War I population of 2.1 million. Its many green spaces include lakes with popular beaches and vineyards with sweeping views of the capital. Public transport is cheap and efficient.

In addition to the generally improved security outlook for western Europe, Vienna benefited from its low crime rate, the survey’s editor Roxana Slavcheva said.

“One of the sub-categories that Vienna does really well in is the prevalence of petty crime … It’s proven to be one of the safest cities in Europe,” she said.

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Maduro: Venezuela Gasoline Prices Should Rise to International Levels

Venezuela’s heavily subsidized domestic gasoline prices should rise to international levels to avoid billions of dollars in annual losses due to fuel smuggling, President Nicolas Maduro said in a televised address on Monday.

“Gasoline must be sold at an international price to stop smuggling to Colombia and the Caribbean,” Maduro said in a televised address.

Venezuela, like most oil-producing countries, has for decades subsidized fuel as a benefit to consumers. But its fuel prices have remained nearly flat for years despite hyperinflation that the International Monetary Fund has projected would reach 1,000,000 percent this year.

That means that for the price of a cup of coffee, a driver can now fill the tank of a small SUV nearly 9,000 times.

Recently, the average price of a coffee with milk was 2.2 million bolivars, or about 50 cents, local media has reported.

Smugglers do brisk business reselling fuel in neighboring countries.

Maduro said the government would still provide “direct subsidies” to citizens holding the “fatherland card,” a state-issued identification card that the government uses to provide bonuses and track use of social services.

He said the subsidy was only available to those who registered their cars in a vehicle census being conducted by the state.

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Tesla’s Slow Disclosure Raises Governance, Social Media Concerns

Tesla’s handling of Chief Executive Elon Musk’s proposal to take the carmaker private and its failure to promptly file a formal disclosure has raised governance concerns and sparked questions about how companies use social media.

Musk stunned investors last Tuesday by announcing on Twitter that he was considering taking Tesla private in a potential $72 billion transaction and that “funding” had been “secured.”

Tesla’s shares closed up 11 percent before retrenching after the Wall Street Journal reported that the U.S. Securities and Exchange Commission (SEC) had asked Tesla why Musk announced his plans on Twitter and whether his statement was truthful.

Musk provided no details of his funding until Monday, when he said in a blog on Tesla’s website that he was in discussions with Saudi Arabia’s sovereign wealth fund and other potential backers but that financing was not yet nailed down.

Musk said his tweet and blogs were issued in his personal capacity as a private bidder for Tesla’s stock. A Tesla spokesman pointed Reuters to Musk’s blog in response to a request for comment.

Putting aside whether Musk misled anyone, the unorthodox manner in which he announced the news and Tesla’s failure to promptly clarify the situation with a regulatory filing is a corporate governance lapse that raises questions about how companies use social media to release market-moving news, securities lawyers said.

“Management buyouts or other take-private transactions already suffer from serious information asymmetry between management and public shareholders,” said Gabriel Rauterberg, a University of Michigan law professor.

SEC rules typically require companies to file an 8-K form within four business days of a significant corporate event.

While several securities lawyers said Musk’s tweets alone did not trigger this obligation, such a filing would be prudent given the unusual circumstances, David Axelrod, a partner at law firm Ballard Spahr LLP, said.

“An 8-K would provide some more details, it would say what stage negotiations are in, and provide more information than 53 characters in a tweet,” he added.

Full and fair disclosure

SEC guidelines published in 2013 allow companies and their executives to use social media to distribute material information, provided investors have been alerted that this is a possibility. Tesla did this in a 2013 filing.

But such disclosures have to be full and fair, meaning the information is complete and accessible by all investors at the same time, a bar that Musk’s tweets may not have met.

“Twitter is not designed to provide full and fair disclosure. That doesn’t mean that you couldn’t, but in a series of 20 to 30 characters I’m not sure you’re getting full disclosure,” said Zachary Fallon, a former SEC attorney and principal at law firm Blakemore Fallon.

The SEC declined to comment Monday.

Securities lawyers said there was also a question mark over whether Musk selectively disclosed information on the possible terms of the deal when he subsequently replied to followers, two of whom claim in their handles to be investors.

Those tweets were not immediately visible to all followers of Musk’s main feed until he retweeted them.

History of Twitter use

The 47-year-old billionaire’s history of joking about Tesla and using twitter to bait his critics also appears to have undermined trust in Musk’s feed as a reliable source of company information, with many investors initially believing Tuesday’s tweet was a prank.

In his blog, Musk said he made the announcement on Twitter to ensure all investors were aware of his plan before speaking with the company’s largest shareholders.

But his claim to have done so as a private person presents a potential conflict of interest, said Nimish Patel, a lawyer with Mitchell Silberberg & Knupp.

“If you’re speaking on behalf of the company using resources like Twitter and the company website, while at the same time saying you’re a private individual expressing your own personal views, you are being inconsistent and creating confusion for investors. And when there’s confusion, the SEC is likely going to get involved,” he added.

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Kenya Charges Top Officials With Fraud Over New $3B Railway

A Kenyan court on Monday charged the heads of the agency that manages public land and of the state railway with fraud over land allocation for a new $3 billion train line linking the capital with East Africa’s biggest port.

The line between Nairobi and Mombasa, funded by China, is one of the biggest infrastructure projects of President Uhuru Kenyatta, whose government this year embarked on an anti-graft drive.

Mohammed Abdalla Swazuri, chairman of the National Land Commission, Atanas Kariuki Maina, managing director of the Kenya Railways Corporation and 16 other businesspeople and companies pleaded not guilty to the charges. Court documents said fraud had led to loss of public funds amounting to 221.4 million shillings ($2.20 million).

Public prosecutor Noordin Haji ordered the arrests after investigations suggested that officials had siphoned taxpayer money through phony compensation claims for land used for the railway.

The land and rail bosses appeared before Anti-Corruption Court Chief Magistrate Lawrence Mugambi.

Kenya has been hit this year by a series of scandals related to the alleged theft of hundreds of millions of shillings by officials from government bodies.

Kenya launched the more than $3 billion railway last year.

The prosecutor’s office said on Saturday no Chinese companies or individuals were named in the case.

Opposition leaders and Kenyan economists have criticized the railway’s funding for increasing the country’s debt burden, which the International Monetary Fund estimated at between 54-55 percent of economic output (GDP) in the 2017-18 fiscal year.

($1 = 100.6000 Kenyan shillings)

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Study: Illegal Fishing, Harm to Amazon Forest Linked to Tax Havens

Scientists called on Monday for greater transparency over the use of tax havens by companies involved in activities that have harmed the world’s oceans and the Amazon rainforest.

In a study published in the journal Nature Ecology and Evolution, they said many firms involved in illegal fishing worldwide used tax havens to register their vessels, while investments in farming that has damaged the rainforest often flow via offshore accounts.

The study follows the 2015 leak of the Panama Papers, which showed how wealthy individuals and companies use offshore schemes to reduce their tax bills.

Seventy percent of fishing vessels implicated in illegal, unreported and unregulated catches had been registered at some point in a tax haven, led by Belize and Panama, the scientists wrote in the journal.

By contrast, they said, only about four percent of all the fishing vessels registered worldwide are flagged in tax havens.

The scientists also cited documents from Brazil’s central bank which showed that almost 70 percent — or $18.4 billion of a total $26.9 billion — of foreign capital invested by major companies in soy and beef farming in Brazil from 2000-2011 had flowed through tax havens.

Deforestation 

Land clearances for beef and soy farms have been “key drivers of deforestation,” especially in the early years of the period, they said. Most funds for beef and soy went via the Cayman Islands, Bahamas and Netherlands.

“In the fisheries case … there are examples of illegal uses of tax havens. We are talking about tax avoidance,” lead author Victor Galaz of Stockholm University told Reuters.

By contrast, Galaz said there was nothing illegal about using a tax haven to channel money to farms in Brazil, but he added that this could sometimes act as an indirect subsidy for environmentally damaging practices.

The report did not name fishing companies but the scientists wrote to firms listed on the Brazilian central bank documents, which showed Cargill and Bunge had the largest amount of loans or cash flowing via tax havens.

Both companies said they were committed to protecting the environment and supported a 2006 soy moratorium in Brazil, which bans purchases from recently deforested areas.

“We do not ‘hide’ profits or cash in tax havens,” a Cargill official wrote to the authors. “Our company is subject in the U.S. to full disclosure of all our activities and bank accounts associated with non-U.S. holding companies.” Cargill told Reuters it had nothing to add to that statement.

“Our goal is to build sustainable supply chains free of deforestation,” a Bunge spokeswoman wrote in an e-mail to Reuters, echoing remarks the company sent to the authors.

 

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Erdogan Claims Lira Plunge a ‘Political Plot’ Against Turkey

Turkish President Recep Tayyip Erdogan, embroiled in a bitter dispute with the U.S., a NATO ally, contended Sunday the plunging value of his country’s lira currency amounted to a “political plot” against Turkey.

Erdogan, speaking to political supporters in the Black Sea resort of Trabzon, said, “The aim of the operation is to make Turkey surrender in all areas, from finance to politics. We are once again facing a political, underhand plot. With God’s permission we will overcome this.”

U.S. President Donald Trump has feuded with Erdogan over several issues, including the detention of an American pastor in Turkey, whom Turkey has held since 2016 and accused of espionage. Turkey last month released the evangelical preacher from a prison, but is still detaining him under house arrest pending his trial, despite the demands of the U.S.

With the dispute intensifying, Trump on Friday doubled steel and aluminum tariffs on Turkey, sending the beleaguered lira plunging 16 percent, part of a 40 percent plummet for the currency this year. In early Asian trading Monday, the lira fell to a record low of 7.06 against the dollar.

“What is the reason for all this storm in a tea cup?” Erdogan said. “There is no economic reason for this … This is called carrying out an operation against Turkey.”

Erdogan renewed his call for Turks to sell dollars and buy lira to boost the currency, while telling business owners to not stockpile the American currency.

“I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars,” he said. “Do not take a stance saying, ‘We are bankrupt, we are done, we should guarantee ourselves.’ If you do that, that would be wrong. You should know that to keep this nation standing is … also the manufacturers’ duty.”

Erdogan signaled he was not looking to offer concessions to the United States, or financial markets.

“We will give our answer, by shifting to new markets, new partnerships and new alliances,” said Erdogan, who in recent years has built closer ties with countries in Latin America, Africa and Asia. “Some close the doors and some others open new ones.”

He indicated Turkey’s relationship with Washington was imperiled.

“We can only say ‘good-bye’ to anyone who sacrifices its strategic partnership and a half century alliance with a country of 81 million for the sake of relations with terror groups,” he said. “You dare to sacrifice 81-million Turkey for a priest who is linked to terror groups?”

American pastor Andrew Brunson, if convicted, faces a jail term of 35 years. Trump has described his detention as a “total disgrace” and urged Erdogan to free him immediately.

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Iran: French Firm Out of South Pars Gas Project, China’s Is In

Iran’s official IRNA news agency is reporting that China’s state-owned petroleum corporation has taken a majority share of the country’s South Pars gas project after French oil and gas company Total announced it would pull out because renewed U.S. economic sanctions against Iran.

The Saturday report quotes Mohammad Mostafavi, an official in Iran’s state oil company, as saying CNPC now owns 80 percent of the shares in the $5 billion project, having bought shares from Total.

CNPC originally had about 30 percent of shares in the project.

The renewal of U.S. sanctions took effect on Tuesday.

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