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Kazakhstan President Kassym-Jomart Tokayev bewildered Vladimir Putin and his entourage when, during a November 9 briefing in the Kazakh capital, he addressed the visiting Russian president in his native tongue.

While Tokayev spoke in Kazakh for less than 30 seconds, the gesture made a point: Kazakhstan is not Russia. Moscow is a strategic ally and neighbor with a shared past, but Kazakhstan is a sovereign nation.

“It takes courage,” Azamat Junisbai, professor at Pitzer College, remarked in a posting on X. “That President Tokayev made a point of delivering even a small part of his message in Qazaq is meaningful and appreciated by those who know the context.”

Junisbai’s posting, using the native rather than the more familiar Russian spelling for the language, itself reflected the former Soviet republic’s determination to establish its own identity apart from Moscow.

Changes in perception slow in coming

Tokayev and other Central Asian leaders, especially Uzbekistan’s Shavkat Mirziyoyev, have been traveling the world, signing major investment deals and hosting international summits at home, promoting their development agendas and visions for the region.

Yet many in the West have been slow to acknowledge the trend, including major news publications such as Reuters, Deutsche Welle, The Wall Street Journal and Time, all of which have recently referred to Central Asia as “Russia’s backyard.”

Bloomberg, for example, covered the French president’s visit to Central Asia this month with an attention-grabbing “Macron Lands in Putin’s Backyard Seeking New Friends and Uranium.”

Central Asian and some Western researchers take offense at the phrase, which they increasingly see as evidence of a colonial and condescending way of understanding a region that has its own history, culture and trajectory.

“Bloomberg reducing Kazakhstan/Central Asia to ‘Putin’s backyard’ is just a new level of ignorant, insulting, and unethical journalism,” wrote Akbota Karibayeva, a doctoral student from Kazakhstan at George Washington University, on X.

Asel Doolotkeldieva with the OSCE Academy in Bishkek, Kyrgyzstan, also reacted on X: “Bloomberg didn’t even bother to write the country’s name. Kazakhstan is just a ‘backyard.’ So tell me, how this Western imperial discourse is different from the Russian imperial discourse on Central Asia? How better you are?”

Eric Rudenshiold said in a recent Washington roundtable, “Central Asia is not a flyover zone. It is a destination.” The former National Security Council director for Central Asia under the Biden and Trump administrations is now a senior fellow at the Caspian Policy Center in Washington.

Central Asia wants “strong commitment”

Speaking remotely from Tashkent on the same panel discussion, Uzbek scholar Akram Umarov argued that countries seeking to boost relations with Central Asia need to appreciate that emerging identity.

“Central Asia is focused on its own development,” he said. “It wants a strong commitment and longstanding interest from its partners, including the United States.”

Part of that identity is forged by Central Asia’s location in a “tough neighborhood” — landlocked and surrounded by Russia, China, Iran and Afghanistan — while standing at the crossroads between eastern and western Asia.

“We cannot change our geography, which always matters. You deal with what you have, so we need to be pragmatic,” Umarov said.

His Kazakh colleague Iskander Akylbayev added that Central Asia is more than simply an area connecting larger, more powerful states, but one that aims to transform itself into a commercial hub.

Kazakhstan, one of the world’s top 12 oil producers, “does not just want an energy-oriented cooperation. It wants to become a knowledge-based economy,” Akylbayev said, stressing the importance of regional connectivity, which could lure more investment to Central Asia and boost its image.

But the reality is more complicated, according to Uzbek and Kazakh officials, who acknowledge that the region’s leaders are deeply affected by a fear of Russian aggression and a lingering distrust of the U.S. and the EU. Central Asian governments find themselves hedging, seeking an elusive balance.

Speaking on background with VOA about Central Asia’s predicament, a Biden administration official echoed this concern: “How do you move your goods and push for your interests when you are surrounded by Russia, China, Iran and Afghanistan?”

Openings for the U.S.

Rudenshiold sees the five Central Asian states “working together and breaking free from their former isolation to connect to a more global future — a process that has created significant new openings for the United States.”

China, the Gulf states and the EU are promising to invest billions that Central Asians hope will free them from “Russia’s stranglehold.” America’s pledge pales by comparison, Rudenshiold noted in his recent article for the Caspian Policy Center.

Kazakhstan is eager to develop a “Middle Corridor” through which East Asian goods can be transported to the West via its territory, the Caspian Sea and the Caucasus. Double-landlocked Uzbekistan is desperate to access seaports. Turkmenistan wants a trans-Caspian gas pipeline to facilitate the sale of its main resource.

“Washington is missing out on a critical opportunity to assist the region,” Rudenshiold said. “U.S. diplomats and development experts are sending the right messages to Central Asian capitals, but they don’t have sufficient resources to follow up.”

But how to convince the U.S. Congress that the region is worth investing in? It seems to some like a mission impossible, especially when many lawmakers — at least partly informed by reports describing the region as a backyard — still view Central Asian republics as vassals of Russia and China.

U.S. lawmakers could start by scrapping the Jackson-Vanik Amendment, Rudenshiold suggested. The law, adopted nearly 50 years ago originally to restrict trade with the Soviet Union, still blocks some countries from achieving most-favored nation trading status with the United States.

While the U.S. cannot replace Central Asia’s neighbors as trade partners, it can enable Central Asians “to do business on their own terms, not dictated by Moscow and Beijing,” Rudenshiold said.

Rights advocates counter that repealing Jackson-Vanik and awarding more trade benefits would be unwarranted before the region shows more progress on establishing the rule of law. They note that several Central Asian states still pursue authoritarian practices, jail journalists, restrict nongovernmental organizations and religious freedom, and maintain harsh anti-LGBTQ legislation.

Rising regionalism

According to Edward Lemon, president of the Oxus Society for Central Asian Affairs and professor at Texas A&M University’s Bush School of Government and Public Service, “the most significant change in foreign relations in Central Asia over the past decade has been rising regionalism.”

“Visa regimes have been relaxed, borders reopened, trade surged and intraregional migration has increased,” Lemon told VOA.

However, he says, Central Asian leaders still do not act as a cohesive group. “Doing so would certainly increase their bargaining power.”

Lemon added that while striving to overcome the label of “Russia’s backyard,” “all have maintained strong ties with Moscow, which have not substantially changed since the full-scale invasion of Ukraine.”
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The U.S. government dealt a massive blow to Binance, the world’s largest cryptocurrency exchange, which agreed to pay a roughly $4 billion settlement Tuesday as its founder and CEO Changpeng Zhao pleaded guilty to a felony related to his failure to prevent money laundering on the platform. 

Zhao stepped down as the company’s chief executive, and Binance admitted to violations of the Bank Secrecy Act and apparent violations of sanctions programs, including its failure to implement reporting programs for suspicious transactions. 

“Using new technology to break the law does not make you a disruptor, it makes you a criminal,” said U.S. Attorney General Merrick Garland, who called the settlement one of the largest corporate penalties in the nation’s history. 

As part of the settlement agreement, the U.S. Treasury said Binance will be subject to five years of monitoring and “significant compliance undertakings, including to ensure Binance’s complete exit from the United States.” Binance is a Cayman Islands limited liability company. 

The cryptocurrency industry has been marred by scandals and market meltdowns. 

Rival of FTX founder

Zhao was perhaps best known as the chief rival to Sam Bankman-Fried, the 31-year-old founder of FTX, which was the second-largest crypto exchange before it collapsed last November. Bankman-Fried was convicted earlier this month of fraud for stealing at least $10 billion from customers and investors. 

Zhao, meanwhile, pleaded guilty in a federal court in Seattle on Tuesday to one count of failure to maintain an effective anti-money-laundering program. 

Magistrate Judge Brian A. Tsuchida questioned Zhao to make sure he understood the plea agreement, saying at one point: “You knew you didn’t have controls in place.” 

“Yes, your honor,” he replied. 

Binance wrote in a statement that it made “misguided decisions” as it quickly grew to become the world’s biggest crypto exchange, and said the settlement acknowledges its “responsibility for historical, criminal compliance violations.” 

U.S. Treasury Secretary Janet Yellen said Binance processed transitions by illicit actors, “supporting activities from child sexual abuse to illegal narcotics, to terrorism, across more than 100,000 transactions.” 

Binance did not file a single suspicious activity report on those transactions, Yellen said, and the company allowed more than 1.5 million virtual currency trades that violated U.S. sanctions, including ones involving Hamas’ al-Qassam Brigades, al-Qaida and other criminals. 

The judge set Zhao’s sentencing for February 23, however it’s likely to be delayed. He faces a possible guideline sentence range of up to 18 months. 

One of his attorneys, Mark Bartlett, noted that Zhao had been aware of the investigation since December 2020, and surrendered willingly even though the United Arab Emirates — where Zhao lives — has no extradition treaty with the U.S. 

“He decided to come here and face the consequences,” Bartlett said. “He’s sitting here. He pled guilty.” 

Zhao, who is married and has young children in the UAE, promised he would return to the U.S. for sentencing if allowed to stay there in the meantime. 

“I want to take responsibility and close this chapter in my life,” Zhao said. “I want to come back. Otherwise I wouldn’t be here today.” 

Company sent investor assets to third party

Zhao previously faced allegations of diverting customer funds, concealing the fact that the company was commingling billions of dollars in investor assets and sending them to a third party that Zhao also owned. 

Over the summer, Binance was accused of operating as an unregistered securities exchange and violating a slew of U.S. securities laws in a lawsuit from regulators. That case was similar to practices uncovered after the collapse of FTX. 

Zhao and Bankman-Fried were originally friendly competitors in the industry, with Binance investing in FTX when Bankman-Fried launched the exchange in 2019. However, the relationship between the two deteriorated, culminating in Zhao announcing he was selling all of his cryptocurrency investments in FTX in early November 2022. FTX filed for bankruptcy a week later. 

At this trial and in later public statements, Bankman-Fried tried cast blame on Binance and Zhao for allegedly orchestrating a run on the bank at FTX. 

A jury found Bankman-Fried guilty of wire fraud and several other charges. He is expected to be sentenced in March, where he could face decades in prison. 
…

Argentina’s stock market reacted with optimism Tuesday to the resounding election win by libertarian Javier Milei, despite the country being gripped by uncertainty over what changes the self-described “anarcho-capitalist” will bring.

Milei, a 53-year-old economist who has vowed to scrap multiple government departments and sometimes campaigned by waving a chainsaw from the stage, trounced Argentina’s long-dominant Peronist coalition as voters punished the government for decades of economic decline.

Latin America’s third-biggest economy is creaking under annual inflation of 143%.

Monday, the day after the election, was a public holiday in Argentina, delaying the market reaction. But immediately Tuesday, the stock market opened 20%, before easing off to gains of about 14%.

Argentina’s peso is strictly controlled, and the informal “blue dollar” exchange rate — seen as a barometer of panic in the country — reacted with moderation, rising slightly to 1,050 pesos to the dollar.

Milei has vowed to ditch the peso for the US dollar and shut down the central bank — which he accused of rampant money printing to finance government overspending — in a bid to halt inflation.

During his campaign he said he would slash state spending and ditch about 10 government ministries, among other controversial proposals.

However, he later toned down some of his rhetoric, leaving great uncertainty over his actual plans.

In his first interviews on Monday after the election, Milei warned it would take up to two years to tame inflation and laid out his plans to reform the state.

Milei said, “Everything that can be in the hands of the private sector is going to be in the hands of the private sector,” including the state oil company YPF and state media.

The rise on Argentina’s stock market was led by state oil company YPF, whose shares rose 34% after Milei’s remarks.

On Monday, YPF shares listed on Wall Street were up 40% at closing.

Milei on Monday held his first meeting with outgoing President Alberto Fernandez to coordinate the transition ahead of his inauguration on December 10.
…

Iranian lawmakers have approved legislation raising the retirement age for men to 62 and increasing the years of employment required to qualify for a full pension, state media reported.

The bill, which requires approval by the Guardian Council, a conservative-dominated vetting body, aims “to reduce pension fund shortfalls,” according to the official IRNA news agency.

In Sunday’s vote in the 290-seat parliament, 127 lawmakers voted in favor, 78 against and eight abstained, with the remainder absent.

The speaker of parliament, Mohammad Baqer Qalibaf, said on Monday that male employees would have to work 35 years, instead of 30, before they can retire with a full pension, according to IRNA.

He said the retirement age for men would be raised from 60 to 62, but for women it would remain at 55.

Labor Minister Solat Mortazavi said the move was necessary to ensure that pension funds could continue to meet their obligations to beneficiaries.

In recent months, several officials have spoken out about severe shortfalls in pension funds, with then Labor Ministry official Sajjad Padam saying in May that Iran “might be forced to sell” territory to pay pensioners.

Padam was sacked shortly after his controversial remark.

Iran has been reeling from a crippling economic crisis marked by inflation of around 50% and a sharp depreciation of the rial against the dollar.

The crisis has been aggravated by U.S. sanctions reimposed in 2018 following Washington’s withdrawal from a landmark nuclear deal between Tehran and major powers.
…

Kenya is struggling to repay a massive debt owed to China for the construction of the Standard Gauge Railroad that links the Kenyan cities of Mombasa and the capital, Nairobi. But President William Ruto is asking for an additional billion-dollar loan from China to complete some other stalled development projects in the country. Kennedy Wandera has more from Nairobi. Camera: Jimmy Makhulo
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Until recently, the space was the one-car garage of a private home in Cuba’s capital, Havana. Today, it is a well-stocked, if small, grocery store whose big board at the gate entices shoppers with such offerings as cooking oil, tomato sauce, Hershey’s cocoa powder, Nutella, shampoo, cookies and jam — a treasure trove in a country that is short of supplies.

The nameless shop in the residential neighborhood of El Vedado is one of dozens of tiny grocery stores that have sprung up around Cuba in recent months. Locals refer to them as “mipymes” — pronounced MEE-PEE-MEHS. The name derives from the Spanish words for the small- and medium-size enterprises that were first allowed to open in 2021.

By allowing the new businesses, the Cuban government hoped to help an economy in crisis and strengthen local production. The almost 9,000 enterprises approved so far include the likes of sewing workshops, fisheries and construction firms, but it is small retail shops like the one in Vedado that seem to be setting up the fastest.

They also have greater visibility among the population because they offer many products not available elsewhere and usually operate out of private homes or garages.

Yet despite their modest setup, their prices are far from affordable, even for a doctor or a teacher, who make about 7,000 Cuban pesos a month (about $28 in the parallel market).

For example, one kilo (2.2 pounds) of powdered milk from the Czech Republic costs 2,000 Cuban pesos (about $8). A jar of Spanish mayonnaise goes for $4. Two and a half kilos (about 5 pounds) of chicken imported from the United States cost $8. There are also less essential goods: a jar of Nutella for $5, a bottle of bubbly Spanish wine for $6.

The customers able to use these small shops include Cuban families who receive remittances from abroad, tourism workers, diplomats, employees of other small- and medium-size businesses, artists and high-performance athletes.

“This is a luxury,” Ania Espinosa, a state employee, said as she left one store in Havana, where she paid $1.50 (350 Cuban pesos) for a packet of potato chips for her daughter. “There are people who don’t earn enough money to shop at a mipyme, because everything is very expensive.”

In addition to her monthly state salary, Espinosa makes some additional income and receives remittances from her husband, who has lived in the U.S. for a year and a half and previously lived in Uruguay.

A few meters away, Ingracia Virgen Cruzata, a retiree, lamented the high prices at the shop. “I retired with 2,200 (Cuban pesos a month or $8.80) last year, and I can’t even buy a package of chicken,” she said.

Most of the products found in these stores are imported directly by the entrepreneurs through state-run import agencies, a system that has also opened the door to the emergence of bigger, better-stocked stores.

In recent weeks, a private store, accessible only to those who own a car, opened on the outskirts of Havana, featuring giant shelves full of imported products such as Tide detergent, M&M’s candy and Goya brand black beans. Because of its size (it’s at least 10 times larger than the store in Vedado) — and diverse offerings — it has come to be known as the “Cuban Costco.”

Cuba’s retail market has been very limited, and for decades the communist state held a monopoly on most forms of retail sales, import and export, under the argument that it is necessary to distribute products equitably.

The ration books that allow Cubans to buy small quantities of basic goods like rice, beans, eggs and sugar each month for payment equivalent to a few U.S. cents continue to be the basis of the model, allowing families to subsist for about 15 days. The rest of their diet must be acquired through other outlets, including state-owned stores and now the mipymes.

There are also state-run businesses offering a little more variety to complete domestic needs, but they charge in local debit or international credit cards. The novelty is that the small shops like the one in Vedado and bigger bodegas like the “Cuban Costco” are entirely private and accept payments in Cuban pesos.

“For the first time in 60 years, small- and medium-sized private corporations are now authorized by law. Now the challenge is for them to prosper in a very arid landscape for private initiative,” said Pedro Freyre, an analyst with the Florida-based Akerman Consulting and professor at Miami Law School.

“Cuba is a socialist country,” Freyre said. “The fundamental ideology has not changed. That’s still there. But I think that Cuba is in a very difficult economic moment and that has opened a door.”
…

Skyrocketing sugar prices left Ishaq Abdulraheem with few choices. Increasing the cost of bread would mean declining sales, so the Nigerian baker decided to cut his production by half.

For scores of other bakers struggling to stay afloat while enduring higher costs for fuel and flour, the stratospheric sugar prices proved to be the last straw, and they closed for good.

Sugar is needed to make bread, which is a staple for Nigeria’s 210 million people, and for many who are struggling to put food on the table, it offers a cheap source of calories. Surging sugar prices — an increase of 55% in two months — means fewer bakers and less bread.

“It is a very serious situation,” Abdulraheem said.

Sugar worldwide is trading at the highest prices since 2011, mainly due to lower global supplies after unusually dry weather damaged harvests in India and Thailand, the world’s second- and third-largest exporters.

This is just the latest hit for developing nations already coping with shortages in staples like rice and bans on food trade that have added to food inflation. All of it contributes to food insecurity because of the combined effects of the naturally occurring climate phenomenon El Nino, the war in Ukraine and weaker currencies. Wealthier Western nations can absorb the higher costs, but poorer nations are struggling.

The United Nations Food and Agriculture Organization is predicting a 2% decline in global sugar production in the 2023-24 season, compared with the previous year, translating to a loss of about 3.5 million metric tons, said Fabio Palmeri, an FAO global commodities market researcher. Increasingly, sugar is being used for biofuels like ethanol, so global reserves of sugar are at their lowest since 2009.

Brazil is the biggest sugar exporter, but its harvest will only help plug gaps later in 2024. Until then, import-dependent countries — like most of those in sub-Saharan Africa — remain vulnerable.

Nigeria, for instance, buys 98% of its raw sugar from other countries. In 2021, it banned imports of refined sugar that ran counter to a plan to build up domestic sugar processing and announced a $73 million project to expand sugar infrastructure. But those are longer-term strategies. Abuja traders like Abba Usman are facing problems now.

The same 50-kilogram bag of sugar that Usman bought a week ago for $66 now costs $81. As prices rise, his customers are dwindling.

“The price keeps increasing every day, and we don’t know why,” Usman said.

It’s partly due to the El Nino, a natural phenomenon that shifts global weather patterns and can cause extreme weather conditions ranging from drought to flooding. Scientists believe climate change is making El Nino stronger.

India endured its driest August in over a century, and crops in the western state of Maharashtra, which accounts for over a third of its sugarcane production, were stunted during the crucial growing phase.

India’s sugar production is likely to decline by 8% this year, according to the Indian Sugar Mills Association. The world’s most populated nation is also the biggest consumer of sugar and is now restricting sugar exports.

In Thailand, El Nino effects early in the growing season altered not just the quantity but also the quality of the harvest, said Naradhip Anantasuk, leader of the Thailand Sugar Planters Association. He expects only 76 million metric tons of sugarcane to be milled in the 2024 harvest season, compared with 93 million metric tons this year.

A report by U.S. Department of Agriculture predicted a 15% dip in output in Thailand in October.

Thailand reversed a hike in sugar prices within days, imposing price controls for the first time since 2018. Anantasuk said this would discourage farmers from growing sugar by capping their income.

“It’s like preventing the industry from growing, preventing an open competition,” he said.

Wholesale prices had been allowed to rise to help farmers cope with higher costs — partly due to government demands that they not burn their fields, which makes harvesting cheaper but envelops much of Thailand in heavy smog.

Looking ahead, Brazil’s harvest is forecast to be 20% bigger than last year’s, said Kelly Goughary, a senior research analyst at the agriculture data and analytics firm Gro Intelligence. But since the country is in the Southern Hemisphere, the boost to global supplies won’t come until March.

This is because of favorable weather earlier this year in Brazil along with an increase in areas where sugarcane was planted, according to the USDA.

The next few months are the greatest concern, said the FAO’s Palmeri. Population growth and rising sugar consumption will further strain sugar reserves, he said.

The world now has less than 68 days of sugar in stockpiles to meet its needs, compared with 106 days when they began declining in 2020, according to data from the USDA.

“It’s at the lowest levels since 2010,” said Joseph Glauber, senior research fellow at the International Food Policy Research Institute.

Indonesia — the biggest sugar importer last year, according to the USDA — has cut back on imports and China, the No. 2 importer, was forced to release sugar from its stocks to offset high prices domestically for the first time in six years, Palmeri said.

For some countries, importing more expensive sugar eats up reserves of foreign currency like dollars and euros that also are needed to pay for oil and other crucial commodities, said El Mamoun Amrouk, an FAO economist.

That includes Kenya. Once self-sufficient in sugar, it now imports 200,000 metric tons a year from a regional trade bloc. In 2021, the government limited imports to protect local farmers from foreign competition, but it reversed that decision as harvests shrank due to insufficient rain and mismanagement.

The amount of sugar milled in Kenya fell steadily from June to August. To compensate, monthly imports doubled from September to October. Meanwhile, a 50-kilogram bag of local sugar doubled in price to $60, shopkeeper Joseph Kuraru said.

Back in Africa’s largest economy, the struggle of Nigerian bakers is a microcosm of the effects of rising food and fuel costs and the outsized impact of high sugar prices because it’s so ubiquitous. Abuja’s many bakeries use sugar both to sweeten cakes and to feed the yeast that makes bread rise.

Bread is often the only food poor households can afford. When bakers raise bread prices, as they did by 15% earlier this year, some people go hungry.

Not passing along higher costs is not an option, said Mansur Umar, president of the Nigerian Bakers’ Association.

“There is no way you can buy high and you sell low,” he said.
…

The United Auto Workers union overwhelmingly ratified a new contract with Ford, a pact that, along with similar deals with General Motors and Stellantis, will raise pay across the industry, force automakers to absorb higher costs and help reshape the auto business as it shifts away from gasoline-fueled vehicles. 

Workers at Ford voted 69.3% in favor of the pact, which passed with nearly a 15,000-vote margin in balloting that ended early Saturday. Earlier this week, GM workers narrowly approved a similar contract. At Stellantis, 68.7% of workers favored ratification, an insurmountable lead with votes at only two small facilities left to be counted. 

The agreements, which run through April 2028, will end contentious talks that began last summer and led to six-week-long strikes at all three automakers. Shawn Fain, the pugnacious new UAW leader, had branded the companies enemies of the UAW who were led by overpaid CEOs, declaring the days of union cooperation with the automakers were over. 

After summerlong negotiations failed to produce a deal, Fain kicked off strikes on September 15 at one assembly plant at each company. The union later extended the strike to parts warehouses and other factories to try to intensify pressure on the automakers until tentative agreements were reached late in October. 

The new contract agreements were widely seen as a victory for the UAW. The companies agreed to dramatically raise pay for top-scale assembly plant workers, with increases and cost-of-living adjustments that would translate into 33% wage gains. Top assembly plant workers are to receive immediate 11% raises and will earn roughly $42 an hour when the contracts expire in April 2028. 

Under the agreements, the automakers also ended many of the multiple tiers of wages they had used to pay different workers. They also agreed in principle to bring new electric-vehicle battery plants into the national union contract. This provision will give the UAW an opportunity to unionize the EV battery plants, which will represent a rising share of industry jobs in the years ahead. 

“I think this is a huge win for the UAW that they got all three contracts ratified,” said Art Wheaton, director of labor studies at Cornell University. “It’s lifting the boats of all or many autoworkers.” 

Three nonunion, foreign automakers in the United States — Honda, Toyota and Hyundai — quickly responded to the UAW contract by raising wages for their factory workers. They did so after Fain said the UAW would mount an aggressive effort to unionize their plants. He also said the union would try to recruit workers at Tesla. 

Foreign automakers have argued in the past that their workers earn about the same as UAW members, thereby negating the need for a union. They also have accused the UAW of forcing GM and the former Chrysler into bankruptcy in 2009 and of engaging in corruption after federal prosecutors broke up a wide-ranging bribery and embezzlement scandal starting in 2017. 

But with Fain’s election and the new contracts, the union has “cured or readjusted all of that rhetoric,” Wheaton said. 

While wages at nonunion factories may be nearly equal, he said, UAW workers receive far better health care and retirement benefits, which is likely to be attractive to workers at nonunion plants as they age. 

Contracts with the auto companies should also lead to higher wages at auto-parts supply companies and in other industries, Wheaton said. 

“The union’s got way more power” because of the deals, said Mark McGill, a 67-year-old worker at Ford’s assembly plant in Wayne, Michigan, where employees went on strike for the entire six weeks. “Look at everybody now. People want to unionize.” 
…

Two years after Taiwan opened a representative office in Lithuania, officials from both sides stress progress in bilateral relations while analysts cite risks that the deepened engagement could be affected by domestic political shift in Lithuania.

“After two years of engagement with Taiwan, we have some specific agreements with Taiwanese companies and organizations, especially in the field of semiconductors, but we shouldn’t neglect the risk of some changes in Lithuania’s current relationship with Taiwan and China caused by domestic political shifts,” Tomas Janeliunas, an international relations professor at Vilnius University, told VOA by phone.

He said that while the progress in bilateral relations has largely concentrated on deepening economic and trade exchanges, the overall trend is backed by the current Lithuanian government’s desire to expand cooperation with democracies.

“Before the parliamentary elections in 2020, the current government declared that they would like to foster relationships with democracies around the world, including expanding the relationship with Taiwan,” he said. “It included some economic prospects and cooperation in the field of technology, too.”

Over the last two years, Taiwan and Lithuania have opened trade offices in both capitals, Taipei and Vilnius, and trade between the two countries grew 50% from 2021 to 2022. One of Lithuania’s leading tech companies, Teltonika, signed an agreement with Taiwan’s Industrial Technology Research Institute, a government-funded institute, that would help it launch domestic semiconductor production in 2027 using Taiwanese technology.

In addition, Lithuanian companies involved in specialized laser technology agreed to work with the research institute to set up the Ultrafast Laser Technology Research and Innovation Center in Southern Taiwan, focusing on medical and industrial applications.

“So far, the cooperation has been fruitful and brought both sides some economic successes and benefits,” Karolis Zemaitis, Lithuania’s deputy economic minister, told VOA in an interview in Vilnius. “We are focusing on high-value-added sectors so high-tech is our main focus. This is a very equal bilateral exchange and cooperation where both sides can see some fruits and results.”

Apart from deepening economic ties, Taiwan and Lithuania have also increased bilateral exchanges through delegation visits and agreements to expand cooperation in such areas as scientific research and agriculture.

“The cooperation is based on values,” Eric Huang, Taiwan’s representative to Lithuania, told VOA in an interview in Vilnius. “For example, since [semiconductors are] such a sensitive area, I don’t think we will be able to implement cooperation without political trust. It is a multilayered cooperation based on values.”

At the European level, one positive development that extends from Lithuania’s efforts to deepen ties with Taiwan is the European Union’s plan to adopt an anti-coercion instrument, a mechanism that could help the EU deal with countries that try to force changes in EU policies by restricting trade. The European Parliament approved the plan in October after China launched economic retaliation against Lithuania over the opening of the Taiwanese representative office.

With Estonia expressing an interest in allowing Taiwan to open a representative office in Tallinn earlier this month, some analysts say how China responds to Estonia’s decision will test the effectiveness of the EU’s anti-coercion instruments, which allow Brussels to respond to external coercion forcefully.

“We should monitor whether China will respond to the case of Estonia in a belligerent manner,” Marcin Jerzewski, an analyst of EU-Taiwan relations at the European Values Center for Security Policy, told VOA by phone. “The EU’s reaction will be the perfect test of the sustainability of the developments that we have seen in the case of Lithuania.”

Despite some Lithuanian and Taiwanese officials’ positive views on the state of bilateral relations, there is still some skepticism about the prospect and benefits of deepening ties with Taiwan within the Lithuanian government.

In September, Asta Skaisgirytė, the chief foreign policy adviser to President Gitanas Nausėda, told Lithuanian National Television and Radio that the large amount of investment that Taiwan promised when it opened the representative office in Vilnius has not materialized at the scale that Lithuania may have anticipated.

Some analysts think Taiwan has not “done a very good job” of delivering the investment promises. “The appetite for investment in Lithuania is much bigger, but so far the only big deal that has been realized is the one with Teltonika,” Jerzewski told VOA. “Taiwan has to do proper expectation management.”

Apart from domestic skepticism about the economic benefit of the relationship with Taiwan, some analysts highlight the risk of progress in the bilateral relationship between Taiwan and Lithuania being stalled by potential regime changes in Lithuania.

“If we look at opinion polls, the current government is not performing really well, and the Social Democrats and Lithuanian Farmers and Greens Association are becoming the parties of choice in the presidential election scheduled for May 2024,” Jerzewski told VOA. “These are the two parties that have shown the greatest hesitation toward deepening ties with Taiwan.”

Janeliūnas said while some members of opposition parties have declared that they would consider changing the current direction of Lithuania’s relationship with China and Taiwan, he thinks it is unlikely they would make drastic changes to Vilnius’ ties with Taipei if they won the presidential election next year.

“I don’t believe they would go for a radical move like changing the name of Taiwan’s representative office, because the political costs of such a move would be quite high,” he told VOA. “When you are in opposition, you can be bold in your expressions. But when you are in office, you have to calculate all kinds of consequences.”

Foreign Minister Gabrielius Landsbergis said last week officials from Lithuania and China had been talking about potentially normalizing diplomatic relations after Beijing downgraded diplomatic relations with Vilnius in 2021 following the opening of the Taiwanese Representative Office in Lithuania.

While some observers view Lithuania’s move as the government’s response to domestic political pressure, Jerzewski said China could make recalibration of Lithuania’s relationship with Taiwan as a condition for both sides to normalize diplomatic ties. “China might say they would only be willing to restore full diplomatic relations with Lithuania if the name of the Taiwanese representative office is amended,” he told VOA. 
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U.S. President Joe Biden Thursday hailed a new economic agreement among 14 Asia Pacific countries aimed at countering China’s regional economic dominance, saying the deal leaders signed at a summit of regional economies – which is not a formal trade agreement – will address key issues such as future semiconductor shortages by improving supply chain resilience.

The goal of the new pact, said the 14 leaders in a joint statement, is to “promote workers’ rights, increase our capacity to prevent and respond to supply chain disruptions, strengthen our collaboration on the transition to clean economies, and combat corruption and improve the efficiency of tax administration.”

Biden, speaking Thursday at the Asia-Pacific Economic Cooperation summit in San Francisco, acknowledged that negotiators failed to reach consensus on a key pillar of last year’s Indo-Pacific Economic Framework.

“We still have more work to do, but we’ve made substantial progress,” he said. “In record time we’ve reached consensus on three of the pillars of the IPEF.” The IPEF has four pillars, summarized as trade, supply chains, clean energy and infrastructure, and tax and anti-corruption.

Biden also announced a program to work with startup businesses to raise capital. That effort is based on the U.S. Partnership for Global Infrastructure and Investment, which is seen as the U.S. answer to China’s Belt and Road Initiative.

In highlighting the plan, Biden also emphasized the importance of the U.S. private sector.

“You’ve heard every one of my colleagues say one time or another that this can’t be done without trillions of dollars of private sector investment to get hold of this and get hold of it quickly to give them confidence to make those investments,” Biden said. “That’s going to create a pipeline of projects in partner countries and then match private sector financing with these projects, and it’s going to give those private sector investors confidence that their investment will be made according to the highest standards. Government investment is not enough. We need to mobilize private investment.”

Critics say the new economic agreement lacks market access provisions.

“For a country like us, we have to have at least market access,” Indonesian CEO Anindya Bakrie told VOA on the sidelines of the summit.

Joshua Kurlantzick, a senior fellow for Southeast Asia at the Council on Foreign Relations, said most Southeast Asian states are “tepid” about the deal.

The bottom line, he said, is, “It’s not a trade deal, and the U.S. is not offering any market access in IPEF. And the Southeast Asian states can contrast that with actual trade deals that have been passed in Asia over the last seven years, including major, major trade deals that involve China, South Korea, Japan, and other big economies, as well as ASEAN being in the middle of that.”

However, he said, “they’re not going to say to the United States coming in with IPEF over the last couple of years, we reject this. They’re cordial and they do want a greater U.S. security presence.”

Siobhan Das, executive director of the American Malaysian Chamber of Commerce, took a rosier view.

“I actually believe it’s been successful already,” she said. “You’ve had 14 nations talking to each other for the last 18 months – how can that not be a success?”

Zack Cooper, a specialist in U.S. strategy in Asia at the American Enterprise Institute, told VOA on Thursday, as the 14 leaders smiled and posed for a photo, that “everyone agrees that the Indo Pacific economic framework is probably the best the Biden administration is going to do for now.”

“But it certainly doesn’t mean that they’re happy with IPEF or that they’re going to be satisfied with the version of IPEF they’re getting at APEC, which does not include trade,” he said. “And so it’s probably better than nothing.”
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US President Joe Biden on Thursday stressed the strength of America’s economic growth in a bid to sway 19 Asia-Pacific economies to partner with the U.S. — as China’s leader did the same at this week’s gathering of Asian leaders and powerful CEOs. The business world is asking: Why not both? VOA’s Anita Powell reports from San Francisco.
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Nigerian experts are hopeful that deals reached last week with Saudi Arabia will boost local oil production and help grow the economy. The deals included a pledge by Saudi officials to fix Nigeria’s four broken oil refineries, which haven’t worked in years, forcing Africa’s second-largest oil producer to import all of its fuel. 

The agreements between Nigerian authorities and their Saudi Arabian counterparts were made on the sidelines of the first ever Saudi-Africa summit held in Riyadh last week.

President Bola Tinubu met with Saudi Crown Prince Mohammed Bin Salman as part of his government’s efforts to attract investors, in a bid to reverse Nigeria’s economic slide.

Saudi officials pledged to fix Nigeria’s four refineries, located in Rivers, Delta and Kaduna states. None of the refineries have worked in years, forcing the country to rely on imports for fuel despite producing more than a million barrels of crude oil per day.

Fixing the refineries is expected to take about two years, according to a government official who spoke to journalists after last week’s agreement. 

Saudi Arabia also pledged to deposit huge sums of foreign exchange to boost Nigeria’s dwindling reserves worsened by the government’s floating of the national currency in June in a bid to unify the exchange rate system.

Faith Nwadishi, the executive director of the Center for Transparency Advocacy in Abuja, welcomes the Saudi deal.

“Considering the success that Saudi Arabia has made with their refineries and the natural resource that they have, one thing this will be able to achieve is to help Nigeria meet its production quota, help Nigeria resolve some of the conflicts around this issue of subsidy and non-operationalization of the four refineries that we have,” said Nwadishi.

Upon taking office in May, President Tinubu embarked on bold economic reforms including scrapping of the popular but expensive fuel subsidy, in a bid to decrease debt and attract more investments.

Fuel prices since then have soared, lending urgency to the need for domestic fuel production.

Nwadishi said the government first needs to be careful and subject the Saudi agreement to public scrutiny.

“What are the terms? Will government be willing to make these terms available to Nigerians so that we can really look and be able to assess them very objectively? What is it that we’re giving away? Are we giving over the entire management of our refineries to Saudi Arabia or they’re coming to give us technical assistance? Right now, it’s not very clear what the terms are,” she said.

Emmanuel Afimia, founder of Enermics, a Lagos based oil and gas consulting firm, is skeptical about the success of the deal.

“This administration is showing a reasonable level of political will to make things happen. I’ll most definitely like to wait until the technical details of this deal comes out but from where I’m looking at it, I don’t think it’s gonna be possible,” he said.

If the refineries functioned, Nigeria could process around 450,000 barrels of crude oil into fuel every day.

Nigerian officials say they will finalize the details of the deal with Saudi Arabia within six months. Many will be watching to see if the terms are favorable to Nigeria. 
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Malawi President Lazarus Chakwera has suspended his foreign trips and those of government officials as part of austerity measures to cushion the impact of the recent 44% devaluation of local currency on the country’s economy.

In his televised address to the nation Wednesday night, Chakwera ordered a cut by half on fuel allowances allocated to top government officials, including cabinet ministers.

The Reserve Bank of Malawi this month announced the devaluation of local currency to align it with the U.S. dollar on the black market. The move resulted in instant price increases for almost all commodities, including fuel and electricity, which increased by over 40%.

“I know that this decision has caused a lot of pain,” Chakwera said, “and I know that all of us now have to make big adjustments in spending so that we can prioritize those areas that are most productive.”

Chakwera said that he would be the first to make those adjustments, and that all of his international trips through the end of the fiscal year were canceled.

Chakwera also said he was freezing all public-funded international trips for public officers at all levels, including those in parastatals, or state-owned enterprises, until the end of the financial year in March.

“In fact, all Cabinet members currently abroad on public-funded trips must return to Malawi with immediate effect,” he said.

Analyst Victor Chipofya told local radio that Chakwera could have announced measures that would help generate more foreign exchange for the country rather than those that failed in the past.

“The country needs to build industries that would be able to export commodities to be able to have foreign currency,” he said. “Nothing like that came out from the president.”

Another political analyst, George Phiri, said Chakwera’s address failed to outline how the government will address challenges facing people in rural areas, where over 80% of Malawians live.

“The impact of devaluation has affected everyone across the board, whether he is the president or he is an ordinary Malawian in the rural and is not considered for the beneficiary of the [farm input] subsidy,” Phiri said. “What happened with those?”

However, the Malawi Human Rights Defenders Coalition said in a statement that if well implemented, the measures that Chakwera introduced would likely address the impact of devaluation on the country’s economy. 
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The U.S. House of Representatives voted 336-95 on Tuesday to approve a plan to avert a partial government shutdown on Saturday but at the same time push off contentious debates over spending priorities until early 2024.

Current funding for all government agencies expires at midnight on Friday, forcing Congress and the White House to reach a short-term deal to keep the government running.

The House approved a proposal by new Speaker Mike Johnson, leader of the narrow Republican majority in the chamber, that extends funding for some government agencies through mid-January and others until early February. 

By those two dates, Congress will have to debate and decide on spending levels throughout the government through next September, or again approve another short-term deal.

In passing his plan, Johnson received more votes from Democrats — 209 — than Republicans — 127. Opposing it were 93 Republicans and two Democrats.

The Senate is likely to also approve the proposal and send it to President Joe Biden for his signature.

Johnson has drawn the ire of a right-wing faction of his Republican colleagues because his budget plan does not include the spending cuts or policy changes they seek. Several of the archconservatives made clear they would vote against Johnson’s plan, forcing him to look for opposition Democratic votes to assure its passage.

It was just such a scenario in late September when then-Speaker Kevin McCarthy angered the right-wing bloc by winning Democratic votes to push through the seven-week spending plan that expires Friday at midnight. Days after that political fight, eight right-wing Republicans joined the unanimous Democratic caucus in ousting McCarthy from his speakership, a first in U.S. history.

There is no sign that Johnson faces a similar fate, since he is a stalwart conservative himself, and his like-minded colleagues appear, for the moment, to be giving him leeway in reaching a deal to keep the government open. 

Johnson said his “laddered” funding expiration dates in early 2024 are intended to avoid a Washington tradition: passage of a massive spending measure just before the Christmas and New Year’s holidays, appropriations bills that are so lengthy that few lawmakers have had time to read and digest them as Congress rushes to adjourn for its end-of-year recess. 

In the latest dispute, the hard-right Republican faction in the House has demanded spending cuts that more moderate Republican lawmakers and the virtually unanimous caucus of House Democrats, along with the Democratic-controlled Senate and Biden, have rejected.

Instead, Johnson’s plan would keep spending levels at the same level as in the fiscal year that ended September 30. Johnson also rejected attempts to include divisive cultural issues favored by some hard-right conservatives but also did not include billions of dollars in new financial assistance Biden sought for Ukraine and Israel as they fight their respective wars against Russia and Hamas militants.

Congress is expected to consider more funding for Ukraine and Israel in separate legislation in the coming weeks.

Without broad new funding for government agencies by midnight Friday, governmental operations that are deemed nonessential would be halted, such as camping at national parks, advice to taxpayers and some scientific research.

In recent days, credit rating agencies have downgraded the government’s credit rating because of the continuing budget uncertainty, a move that could lead to higher borrowing costs for the United States, where the national debt is now approaching $34 trillion. 
…

With a government shutdown looming and a federal deficit that continues to climb, the bond rating firm Moody’s on Friday lowered its outlook for U.S. Treasury debt to “negative” from “stable.”  

The change is a signal that Moody’s, the only one of the three major credit ratings agencies that still considers U.S. debt worthy of its top rating, may soon apply a downgrade.  

The ratings firm confirmed that for now, its current top rating of Aaa still applies, and that the U.S. economy retains many advantages and strengths. However, in a gloomy assessment of the federal government’s capacity to address looming fiscal problems, the company warned of troubles to come.  

“In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expects that the U.S.’s fiscal deficits will remain very large, significantly weakening debt affordability,” the company said in a statement accompanying the announcement. “Continued political polarization within [the] U.S. Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability.”  

The news is likely to increase the volume of calls for the federal government to establish a “fiscal commission” of experts who would have the task of assembling a plan to adjust federal spending and the tax code to meet the country’s current needs.  

Interest rate changes  

The change by Moody’s reflects, in part, the reality that the era of near-zero interest rates, which allowed the government to borrow relatively painlessly, is now over, and that the relative cost of continued deficit spending — in which the U.S. borrows to pay for annual spending that exceeds revenues — is rising sharply.  

Under its current projections, the company said, by 2033 the interest payments alone on U.S. debt will be equal to 26% of federal revenues, up from 9.7% in 2022.  

Moody’s growing pessimism about the future sustainability of the United States’ nearly $34 trillion in outstanding debt echoes that of other ratings firms.  

Until recently, Standard & Poor’s had been the outlier among ratings firms. S&P downgraded the U.S. from AAA to AA+ during a fiscal crisis in 2011 and has maintained that level since. In August, the Fitch Ratings agency joined S&P, downgrading U.S. debt from its top rating of AAA to AA+.   

“Moody’s downgrade was entirely predictable considering the nation’s fiscal condition and budgetary mismanagement,” Stephen Ellis, president of the watchdog group Taxpayers for Common Sense, told VOA in an email exchange. “When you’re paying nearly $660 billion a year to service $33.7 trillion in debt, lurching from budgetary crisis to budgetary crisis is policymaker malpractice. Once again, the country is veering toward another government shutdown that is entirely preventable.”  

Inflection point  

While the rate of growth of the government’s debt has not changed dramatically, some observers wonder if Moody’s announcement, combined with the increased likelihood that interest rates are likely to remain elevated above recent levels for an extended period of time, could mark a turning point for the country.  

“There’s a chance that a couple of years from now, we’ll look back on this period as when the debt and the deficit again became a political concern, which it hasn’t been for some time,” said David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution.  

“There seems to be a lot more angst about it, in part because long-term yields have gone up so much,” Wessel told VOA. “And in that environment, every warning from a rating agency or surprising poll finding or some unexpected comment by a dovish economist, tends to get more attention — and for good reason.”  

Fiscal commission pondered  

The Moody’s announcement has some deficit watchdogs renewing calls for the creation of a “fiscal commission” empowered to come up with a plan to address the nation’s revenues and spending.  

In September, a bipartisan group of lawmakers in Washington introduced legislation that would create such a body. It would be made up of 16 members, including six members each from the House of Representatives and the Senate, divided evenly between the parties. The remaining four members would be outside experts, two appointed by Democrats and two by Republicans.  

The commission’s mandate would be to develop a plan to stabilize the country’s debt-to-GDP ratio at or below 100% within 10 years, to recommend changes to keep federal programs like Medicare and Social Security solvent, and to consider changes to federal spending and revenue collections necessary to reach those goals.  

Under the proposal, if a bipartisan majority of the committee’s members approve a set of final recommendations, the plan would be guaranteed an up-or-down vote in both houses of Congress, with no possibility of amendment.  

Best chance  

“A fiscal commission is absolutely the best chance we have of getting anything done right now,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “Because it gives politicians a chance to build relationships and trust with each other and really study the issue, and understand how difficult it is instead of the kind of free lunch storylines they tell themselves.”  

There is some precedent for the creation of such a commission.  

In 2010, then-President Barack Obama created the National Commission on Fiscal Responsibility and Reform to undertake a similar task. More popularly known as the Simpson-Bowles Commission for its co-chairs Alan Simpson and Erskine Bowles, the group formulated a comprehensive overhaul of U.S. spending, including entitlement programs, as well as the tax code.    

However, the commission was unable to achieve a two-thirds supermajority among its members, and the plan was therefore never officially endorsed. A bill largely based on the plan was introduced in the House of Representatives, where it was soundly defeated.  

MacGuineas told VOA that a commission “has a good shot” at success, even though it would face an even tougher task than Simpson-Bowles did.  

“Today, the fiscal situation is worse, and the political situation is worse,” MacGuineas said. 
…

China’s annual “Singles Day” sales bonanza wraps up at midnight Saturday, but consumers this year appear largely unswayed by its flashy deals and discounts as the world’s second-largest economy slows.

Conceived by tech giant Alibaba, “Singles Day” — which this year spanned well over a week — was launched in 2009 and has since ballooned into a yearly blockbuster retail period.

Sales for last year’s Singles Day reached $153 billion, according to a recent report by consultancy firm Bain.

But among consumers surveyed by Bain this year, 77% said that they did not plan to spend more than usual during the sales event.

“These days people are consuming less, people don’t really have much of a desire to buy lots of things,” recent graduate Zhang Chuwen, 23, told AFP.

She said her friends were instead using the sales to buy “everyday necessity products.”

Others say that this year’s Singles Day deals aren’t as good as in the past, and that some websites had raised prices beforehand, only to cut them for the holiday.

“The prices are not that different compared to other days,” Guan Yonghao, 21, told AFP.

“So I didn’t buy anything,” he added. “We will save a little because we are making less money.”

Jacob Cooke, co-founder and CEO of Beijing-based e-commerce consulting firm WPIC Marketing + Technologies, told AFP that Singles Day had “lost its luster” thanks to a combination of trends.

“The proliferation of livestreaming and secondary shopping festivals… means that the relative attraction of Singles Day as a time to load up on discounted goods has been reduced,” he said.

Slowing demand

Livestreamers — who draw in millions for e-commerce giants in China with marathon online sales pitches — also say they are noticing a downturn compared to previous iterations of the shopping event.

“This year’s Singles Day online sales are not as good as last year or two years ago,” Liu Kai, an e-commerce livestreamer, told AFP.

The name of the event riffs on a tongue-in-cheek celebration of singlehood inspired by the four ones in its date – Nov. 11, or 11/11.

But this year’s sales began on some platforms as early as late October.

Alibaba, like its main rival JD.com, withheld full sales figures for the shopping bonanza for the first time ever last year, saying instead that sales were flat from the year before.

The slowing sales follow an announcement this week that China slipped back into deflation in October, underscoring the work remaining for officials seeking to jumpstart demand.

Beijing has moved to shore up its ailing economy in recent months, unveiling a series of measures — particularly aimed at the ailing property sector — and announcing a huge infrastructure spending plan.
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Moody’s on Friday lowered its outlook on the U.S. credit rating to “negative” from “stable” citing large fiscal deficits and a decline in debt affordability, a move that drew immediate criticism from U.S. President Joe Biden’s administration.

The action follows a rating downgrade by another ratings agency, Fitch, earlier this year, which came after months of political brinksmanship around the U.S. debt ceiling.

Federal spending and political polarization have been a rising concern for investors, contributing to a selloff that took U.S. government bond prices to their lowest levels in 16 years.

“It is hard to disagree with the rationale, with no reasonable expectation for fiscal consolidation any time soon,” said Christopher Hodge, chief economist for the U.S. at Natixis. “Deficits will remain large … and as interest costs take up a larger share of the budget, the debt burden will continue to grow.”

The ratings agency said in a statement that “continued political polarization” in Congress raises the risk that lawmakers will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability.”

“Any type of significant policy response that we might be able to see to this declining fiscal strength probably wouldn’t happen until 2025 because of the reality of the political calendar next year,” William Foster, a senior vice president at Moody’s, told Reuters in an interview.

Republicans, who control the U.S. House of Representatives, expect to release a stopgap spending measure on Saturday aimed at averting a partial government shutdown by keeping federal agencies open when current funding expires next Friday.

Moody’s is the last of the three major rating agencies to maintain a top rating for the U.S. government. Fitch changed its rating from triple-A to AA+ in August, joining S&P which has had an AA+ rating since 2011.

While it changed its outlook, indicating a downgrade is possible over the medium term, Moody’s affirmed its long-term issuer and senior unsecured ratings at Aaa, citing U.S. credit and economic strengths.

Immediately after the Moody’s release, White House spokesperson Karine Jean-Pierre said the change was “yet another consequence of congressional Republican extremism and dysfunction.”

“While the statement by Moody’s maintains the United States’ Aaa rating, we disagree with the shift to a negative outlook. The American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset,” Deputy Treasury Secretary Wally Adeyemo said in a statement.

Adeyemo said the Biden administration had demonstrated its commitment to fiscal sustainability, including through over $1 trillion in deficit reduction measures included in a June agreement struck with Congress on raising the U.S. debt limit, and Biden’s proposal to reduce the deficit by nearly $2.5 trillion over the next decade.

Treasury yields have soared this year on expectations the Federal Reserve will keep monetary policy tight, as well as on U.S.-focused fiscal concerns.

The sharp rise in Treasury yields “has increased pre-existing pressure on U.S. debt affordability,” Moody’s said.

A Moody’s downgrade could exacerbate fiscal concerns, but investors have said they are skeptical it would have a material impact on the U.S. bond market, seen as a safe haven because of its depth and liquidity.

However, “it is a reminder that the clock is ticking and the markets are moving closer and closer to understanding that we could go into another period of drama that could lead ultimately to the government shutting down,” said Quincy Krosby, chief global strategist at LPL Financial.

Moody’s decision also comes as Biden, who is seeking reelection in 2024, has seen his support fall sharply in the polls. A New York Times/Siena poll released on Sunday showed him trailing former president Donald Trump, the leading Republican candidate, in five of six battleground states: Nevada, Georgia, Arizona, Michigan and Pennsylvania. Biden was ahead of Trump in Wisconsin. The outcome in those six states will help determine who wins the presidential election.

The Moody’s move will also heap pressure on congressional Republicans to advance funding legislation to avert a partial government shutdown.

U.S. House Speaker Mike Johnson has spent days in talks with members of his slim 221-212 Republican majority about several stopgap measures. The House and the Democratic-led Senate must agree on a vehicle that Biden can sign into law before current funding expires on Nov. 17.

“We cannot, in good conscience, continue writing blank checks to our federal government knowing that our children and grandchildren will be responsible for the largest debt in American history,” hardline Republican Representative Andy Harris said on X, formerly known as Twitter.

Infighting among House Republicans has led to flirtations with government shutdowns yet both parties have contributed to budget deficits.

Biden’s Democrats have backed a wide range of spending plans, while Republicans pushed through sharp tax cuts early in Donald Trump’s presidency that also fed the deficit. Neither party has seriously addressed rising costs of the Social Security and Medicare programs that represent a significant slice of federal spending.
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