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President Joe Biden on Wednesday sought to assure Americans that the U.S. would not default on its debts as the White House and top congressional leaders conducted tense, protracted budget negotiations in which Republicans were seeking substantial spending cuts in exchange for raising the debt limit.

“I’m confident that we’ll get the agreement on the budget and America will not default,” Biden said as he prepared to leave Washington for a Group of Seven summit in Japan with the leaders of some of the world’s biggest economies. “And every leader in the room understands the consequences if we fail to pay our bills. And it would be catastrophic for the American economy and the American people if we didn’t pay our bills.”

The White House argues that the two events — setting a budget and raising the debt ceiling to pay for expenses the U.S. has already incurred — should not be linked, as they are in the budget presented by Republican House Speaker Kevin McCarthy. Biden insists that Congress raise the current $31.4 trillion debt ceiling without conditions on future spending.

McCarthy’s budget seeks future spending caps, new work requirements for able-bodied public assistance beneficiaries and changes to approve domestic energy projects at a faster pace.

Biden said he had appointed senior members of his administration to negotiate with McCarthy’s team in his absence. An administration official told VOA that the team includes one of Biden’s closest, longtime advisers, Steve Ricchetti; the head of his budget office, Shalanda Young; and the head of his legislative affairs team, Louisa Terrell.

Biden added that the negotiators met Tuesday night — just hours after Biden ended his meeting with McCarthy and congressional leaders — and that they would also meet Wednesday.

“To be clear, this negotiation is about the outlines of what the budget will look like, not about whether or not we’re going to, in fact, pay our debts,” the president said. “Leaders all agreed we will not default.”

McCarthy said default was never his plan.

“We already had taken default off the table because the House Republicans passed a bill that raised the debt ceiling, limited our future spending, saved taxpayers money by being able to pull back unspent money and waste and actually grow our economy by making our economy stronger and helping lifting people out of poverty into work,” the House speaker told reporters outside the West Wing of the White House on Tuesday.

Biden has indicated he is willing to talk about future spending limits to pare chronic overspending by the government, where annual trillion-dollar deficits have been common for years. But it’s not clear what parts of McCarthy’s plan he is willing to swallow.

“I’m not going to accept any work requirements that go much beyond what is already — what I voted for years ago — for the work requirements that exist,” Biden said Wednesday when asked by reporters. “But it’s possible there could be a few others, but not anything of any consequence.”

Yellen’s warning

The negotiations come under a tight deadline, with Treasury Secretary Janet Yellen warning that the U.S. could run out of cash to meet all its obligations by June 1 and then could default on some of them.

“A default would crack open the foundations upon which our financial system is built. And it’s very conceivable that we’d see a number of financial markets break, with worldwide panic triggering margin calls, runs and fire sales,” she said Tuesday before the leaders met.

Although the current debt limit was reached in January, Yellen and U.S. financial officials have taken what they describe as “extraordinary measures” to juggle U.S. spending accounts to keep paying the government’s bills.

The United States has never defaulted on its debt. Top government officials have warned that doing so would have immediate and widespread consequences inside the U.S., including massive U.S. worker layoffs and delayed payments to U.S. pensioners, government contractors and health care providers treating older Americans.

Congress has raised the debt ceiling 78 times under both Democratic and Republican presidents, including three times during the four-year term of former President Donald Trump.

If an agreement is reached in Washington’s politically charged atmosphere, it might be a matter of semantics whether a debt ceiling increase and a tandem cut in future spending are linked. Both Biden and congressional Republicans want to be able to claim victory.

The two sides are debating to what extent the debt ceiling would be raised and for how long, as well as specific spending cuts House Republicans recently approved in a narrow vote over united Democratic opposition.
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U.S. President Joe Biden, House Speaker Kevin McCarthy and other top congressional leaders appeared no closer Tuesday to a deal aimed at reaching agreement on raising the country’s debt ceiling so the government can borrow more to pay its existing obligations.     

The impasse comes amid dire warnings from the U.S. Treasury that a default could cause “worldwide panic” and “catastrophe,” and as Biden prepares to leave Wednesday for a summit in Japan with the world’s top seven economies.     

The looming crisis also scotched Biden’s plans to visit Papua New Guinea and Australia after the summit, the White House said in a statement.      

“It’s unfortunate we are where we are,” McCarthy said after the hourlong Oval Office meeting ended. “But the good thing about it is Republicans always look to find a solution.”    

Senate Majority Leader Charles Schumer, a Democrat, said the group did agree on some key issues.     

“We all agreed that the only path forward is to reach a bipartisan agreement anchored in common ground,” he said. “We all agree that default is not an acceptable option and must be avoided.”    

And Biden said his staff would continue to work toward a deal in his absence.   

“There’s still work to do, but I made it clear to the speaker and others that we’ll speak regularly over the next several days, and the staff’s going to continue meeting daily to make sure we do not default,” he said.     

Also Tuesday, Treasury Secretary Janet Yellen warned that “a default would crack open the foundations upon which our financial system is built. And it’s very conceivable that we’d see a number of financial markets break, with worldwide panic triggering margin calls, runs and fire sales.”    

Yellen said, “If Congress does not address the debt limit, there are no good options the Treasury or the government can use to save us from catastrophe.”  

Biden has insisted that Congress raise the current $31.4 trillion debt ceiling without conditions on future spending. McCarthy and congressional Republicans have called for substantial cuts in future government spending in exchange for raising the debt limit for a year.    

That scenario would require a new round of debt ceiling negotiations amid the early phase of the 2024 presidential primary elections.

Although the current debt limit was reached in January, Yellen and U.S. financial officials have taken what they describe as “extraordinary measures” to juggle U.S. spending accounts to keep paying the government’s bills. She said the U.S. could run out of cash to meet all its obligations by June 1 and then could default on some of them.     

The United States has never defaulted on its debt. Yellen and other top government officials have warned that doing so would have immediate and widespread consequences inside the U.S., including massive U.S. worker layoffs and delayed payments to U.S. pensioners, government contractors and health care providers treating older Americans.      

The U.S. Congress has raised the debt ceiling 78 times under both Democratic and Republican presidents, including three times during the four-year term of former President Donald Trump. 

While Biden has said he would not link an increase in the debt ceiling to future government spending cuts, he has said that separately, he is willing to talk about future spending limits to pare the chronic overspending by the government, where annual trillion-dollar deficits have been common for years.     

If an agreement is reached in Washington’s politically charged atmosphere, it might be a matter of semantics whether a debt ceiling increase and a tandem cut in future spending are linked. Both Biden and congressional Republicans want to be able to claim victory.     

The two sides are debating to what extent the debt ceiling would be raised and for how long, as well as specific spending cuts Republicans in the House of Representatives recently approved in a narrow vote over united Democratic opposition.      

The Republicans have called for future spending caps, new work requirements for able-bodied poor people receiving government financial assistance and implementing changes to approve domestic energy projects at a faster pace.    

Some information in this story came from The Associated Press. Margaret Besheer contributed to this report.
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Zimbabwe’s central bank on May 8 launched a gold-backed digital currency it hopes will reduce the demand for US dollars and the devaluation of the Zimbabwe dollar.  But analysts say the government-controlled foreign-exchange market is fueling the problem.  Columbus Mavhunga reports from Harare, Zimbabwe.

Camera: Blessing Chigwenhembe
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U.S. President Joe Biden, House Speaker Kevin McCarthy and other top congressional leaders are meeting Tuesday at the White House in a new effort to reach agreement on raising the country’s debt ceiling so the government can borrow more to pay its existing obligations. 

Biden has insisted that Congress raise the current $31.4 trillion debt ceiling without conditions on future spending. McCarthy and congressional Republicans have called for substantial cuts in future government spending in exchange for raising the debt limit for a year.  

That scenario would require a new round of debt ceiling negotiations amid the early phase of the 2024 presidential primary elections. 

Although the current debt limit was reached in January, Treasury Secretary Janet Yellen and U.S. financial officials have taken what they describe as “extraordinary measures” to juggle U.S. spending accounts to keep paying the government’s bills. She says the U.S. could run out of cash to meet all its obligations by June 1 and then could default on some of them. 

The U.S. has never defaulted on its debt. Yellen and other top government officials have warned that doing so would have immediate and widespread consequences, including calamity on U.S. and global stock markets, massive U.S. worker layoffs and delayed payments to U.S. pensioners, government contractors and health care providers treating older Americans. 

The U.S. Congress has raised the debt ceiling 78 times under both Democratic and Republican presidents, including three times during the four-year term of former President Donald Trump. Biden has adamantly called for an increase, but Trump, the leading 2024 Republican presidential contender after losing his 2020 reelection bid to Biden, expressed indifference to a possible default last week at a political town hall in New Hampshire. 

“I say to the Republicans out there, congressmen and senators, if [Biden and Democrats] don’t give you massive cuts you are going to have to do a default,” Trump said. “But it’s better than what we are doing right now because we are spending money like drunken sailors.” 

“You might as well do it now because you’ll have to do it later,” he said.  

Last week, Biden and the congressional leaders of both political parties met without reaching a debt ceiling agreement but directed their staffs to continue discussions in the last few days.  

While Biden has said he would not link an increase in the debt ceiling to future government spending cuts, he has said that separately, he is willing to talk about future spending limits to pare the chronic overspending by the government, where annual trillion-dollar deficits have been common for years. 

If an agreement is reached, in Washington’s politically charged atmosphere, it might be a matter of semantics whether a debt ceiling increase and a tandem cut in future spending are linked. Both Biden and congressional Republicans want to be able to claim victory. 

In recent days, the White House has voiced cautious optimism on a potential agreement, but on Monday, McCarthy expressed doubts. 

“I don’t think we’re in a good place,” McCarthy said. “I know we’re not.” 

Chuck Schumer, the Senate Democratic Majority Leader, said, “We welcome a bipartisan debate about our nation’s fiscal future. But we’ve made it plain to our Republican colleagues that default is not an option. Its consequences are too damaging, too severe. It must be taken off the table.” 

The two sides are debating to what extent the debt ceiling would be raised and for how long, as well as specific spending cuts Republicans in the House of Representatives recently approved in a narrow vote over united Democratic opposition.  

The Republicans have called for future spending caps, new work requirements for able-bodied poor people receiving government financial assistance and implementing changes to approve domestic energy projects at a faster pace.

The urgency of the talks is complicated because of Biden’s plans to leave Washington on Wednesday for a trip to Japan for a meeting of the leaders of the Group of 7 allied countries, with stops also planned in Australia and Papua New Guinea. 
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The world’s biggest chocolate producers are enjoying record profits – but are failing to pass on the benefits to cocoa farmers, many of whom are suffering falling incomes and worsening poverty, according to a report from the charity Oxfam. Henry Ridgwell reports.
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The world’s biggest chocolate producers are enjoying large profits while failing to pass on the benefits to cocoa farmers, many of whom are suffering falling incomes and worsening poverty, according to a report from the charity Oxfam.

The report was published ahead of World Fair Trade Day on May 13.

Falling incomes

The analysis focuses on Ghana, the world’s second-largest producer of cocoa. The charity says farmer’s incomes in the country have fallen since the start of the coronavirus pandemic in 2020.

“An Oxfam survey of more than 400 cocoa farmers supplying chocolate corporations across Ghana found that their net incomes have fallen on average by 16 percent since 2020, with women’s incomes falling by nearly 22 percent. Nine out of ten farmers said they are worse off since the pandemic,” the report says.

The authors add that up to “90 percent of Ghanaian cocoa farmers do not earn a living income, meaning they cannot afford enough food or other basics such as clothing, housing and medical care. Many of the 800,000 farmers in the country survive on just $2 a day.”

Several local and global factors have driven down farmers’ wages, said Uwe Gneiting, a co-author of the Oxfam report.

“COVID, of course, was a big disruption. But then also the war in Ukraine and the resulting economic crisis, coupled with some more longer-term challenges, like the impacts of climate change and aging farms, which is a big issue in Ghana,” Gneiting told VOA, adding that there are widespread social and environmental consequences.

“Lower incomes really have shown to facilitate the use of children on farms, so child labor, which is a big problem of course in Ghana and other cocoa producing countries. But also deforestation – that farmers are more likely to go out and cut down more trees and or to expand their farms and to make a living.”

Bumper profits

At the same time, Oxfam says profits for the world’s biggest chocolate firms have increased.

“The world’s four largest public chocolate corporations, Hershey, Lindt & Sprüngli, Mondelēz and Nestlé, have together made nearly $15 billion in profits from their confectionary divisions alone since the onset of the pandemic, up by an average 16 percent since 2020. They paid out on average more than their total net profits (113 percent) to shareholders between 2020 and 2022,” the report said.

Oxfam also analyzed the wealth of the two biggest private chocolate corporations, Mars and Ferrero, which has risen by $39 billion since 2020, giving them a combined net worth of around $157 billion.

Ghana and Ivory Coast – the world’s two biggest cocoa producers – signed a deal in 2021 to try to get a bigger share of the chocolate industry’s profit. The two governments set a minimum market price or living income differential for cocoa and also insist on a premium payment – an extra sum of money paid directly to farmers per ton of cocoa.

But Oxfam says the payments have failed to meaningfully increase farmers’ incomes.

Declining yields

“Oxfam analyzed the sustainability programs of ten of the top chocolate manufacturers and traders operating in Ghana… None of the programs achieved their stated goal of increasing cocoa production and, consequently, boosting farmer income. In fact, the crop yields of farmers in the corporations’ supply chains declined by 25 percent between 2020 and 2022,” the report said.

“Cocoa farmers surveyed by Oxfam said they are being paid a premium of $35 to $40 per ton of cocoa. The average cocoa farmer in Ghana produces about one ton of cocoa annually. They need to earn $2,600 more per year to get a living income,” according to the Oxfam report.

The entire supply chain is unbalanced, argues author Uwe Gneiting.

“If you as a company are profitable, at the same time as the producers of your most critical raw material are falling deeper into poverty and there’s something wrong with your business model,” he told VOA.

Response

In an email, Lindt & Sprüngli told VOA it pays Ghanaian farmers a $60 per ton premium and has invested over $20 million in cocoa sustainability programs in 2021.

“The Lindt & Sprüngli Farming Program aims to contribute to building resilient livelihoods for farmers, their families, and farming communities by taking a holistic approach to increasing farming household incomes. We are addressing this through a combination of measures,” the email said.

Hershey told VOA in an email that the company “has had a long-term commitment to supporting increased incomes for cocoa farming households. We are investing in proven approaches such as cash transfers and village savings and loan associations, implementation of sustainable and regenerative farm management practices and creating greater access to education in cocoa growing communities.”

Mondelēz and Nestlé did not respond to VOA requests for comment.
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Bank runs, cybersecurity and supply chain reliability were among items on the agenda of closed-door financial talks Friday in Japan by the Group of Seven advanced economies. 

Tensions with China, and with Russia over its war on Ukraine, loomed large on the wide horizon of issues the G-7 is tackling this year in Japan, its only Asian member. 

But while G-7 finance ministers and central bank chiefs discussed ways to protect the international rules-based order and prevent what they are calling “economic coercion” by China, Beijing lashed back, accusing the club of wealthy nations of hypocrisy. 

China is a victim of economic coercion, Chinese Foreign Ministry spokesperson Wang Wenbin said Friday. 

“If any country should be criticized for economic coercion, it should be the United States. The U.S. has been overstretching the concept of national security, abusing export controls and taking discriminatory and unfair measures against foreign companies,” Wang said in a routine news briefing. 

China accuses Washington of hindering its rise as an increasingly affluent, modern nation through trade and investment restrictions that the United States says are needed to protect American economic security. 

Speaking before the talks began, U.S. Treasury Secretary Janet Yellen said such measures are “narrowly targeted” and focused on national security. 

“It’s not focused on undermining China’s economic competitiveness or preventing them to advance economically,” Yellen said. 

Asked what G-7 countries mean by trying to prevent “economic coercion,” namely by China, Yellen cited trade actions by Beijing against Australia as one example. 

“There have been examples of China using economic coercion on countries that take actions that China’s not happy with from the geopolitical perspective,” she said. “We in the G-7 share a common concern with this kind of activity and are looking to see what we can try to do to try to counter this kind of behavior.” 

China’s relations with the 27-nation European Union, which is also a member of the G-7, have also been frayed by friction over trade and over its tacit support for Russia. 

Leaders attending the talks in Niigata said they would be considering ways to prevent countries from skirting sanctions against Moscow meant to hinder its ability to continue the war. 

Both the U.S. and European Union maintain they are not advocating “decoupling,” or dismantling extensive economic ties with China, but support “de-risking” relations to avoid becoming too dependent on China. 

For its G-7 presidency, Japan has prioritized launching a partnership with low- and middle-income countries to build “robust supply chains” to help cut carbon emissions. One key area of concern for all G-7 countries is the heavy concentration in China of suppliers of rare earth materials needed in many high-tech products. 

Meanwhile, recent failures of banks in the U.S. and Europe have added to the complexity of steering the world economy toward a sustained recovery from the pandemic while cooling inflation that surged to multidecade highs in the past year. 

“It’s become clear that financial worries can spread in an instant via social networking sites, and online banking, allowing money withdrawals outside business hours, can cause bank runs,” Japanese Finance Minister Shunichi Suzuki said Thursday. 

The collapses of Silicon Valley Bank and other lenders stemmed largely from the pressure of interest rate hikes that, by making borrowing more expensive, are designed to slow business activity and cool inflation. 

The meetings in Niigata are a good chance to “compare notes and to see how we can make the world a little bit more stable and reach the price stability that we very much want to arrive at in short order,” Christine Lagarde, head of the European Central Bank, said in videotaped comments posted online. 

Overhanging the financial experts’ talks is the question of whether U.S. President Joe Biden and Congress will agree to raise the ceiling on the national debt before the U.S. government runs out of money to pay its bills. Yellen said a default on the national debt would be catastrophic and was “unthinkable.” 

A meeting between Biden and lawmakers on the issue was pushed back to May 18 to allow staff talks to continue over the weekend. Administration officials portrayed it as a positive step, and it did not appear to indicate a breakdown in talks. 

The three days of talks in Niigata, a port city on the Sea of Japan, are the last in a series of ministerial meetings to prepare for a summit of G-7 leaders next week in Hiroshima.
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Apple will launch its first online store in Vietnam next week, the company said Friday, hoping to cash in on the country’s young and tech-savvy population.

The iPhone maker is among a host of global tech giants including Intel, Samsung and LG, that have chosen Vietnam for assembly of their products.

But up to now, the Silicon Valley giant has sold its products in Vietnam’s market of 100 million people via authorized resellers.

“We’re honored to be expanding in Vietnam,” said Deirdre O’Brien, Apple’s senior vice president of retail in an online statement in Vietnamese.

The country’s communist government says it wants 85 percent of its adult population to have access to a smartphone by 2025, up from the current 73 percent.

Less than a third of the country’s mobile users have an iPhone, according to market research platform Statista.

Through online stores, “clients in Vietnam can discover products and connect with our experienced experts,” O’Brien said in the statement.

The production of accessories and assembly of mobile phones account for up to 70 percent of electronics manufacturing in Vietnam. Products are mainly for export.

Official figures said Vietnam’s mobile phone production industry reported an import-export turnover of U.S. $114 billion last year, a third of the country’s total import-export revenue.
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A renewed political dispute between the federal government of Somalia and the Puntland federal member state, and a failure of the fragile reforms to boost revenue collection and fiscal transparency, could endanger Somalia’s hope for full debt relief from the International Monetary Fund and other multilateral lenders by the end of the year, officials and experts warn.

“Strengthening fiscal transparency is a requirement for Somalia to secure not only debt forgiveness but also more loans from the International Monetary Fund,” said Hussein Abdikarim, Somalia’s former presidential adviser.

“If Somalia fails to continue the steady progress it has made so far on its financial reforms, it could lose hope of paring its debt to around $550 million from $5.2 billion by 2023,” he added.

In February 2020, the executive boards of the IMF and the World Bank announced that Somalia was eligible for debt relief following economic and institutional reforms.

In October 2022, the IMF said its staff reached a staff-level agreement with Somalia that would allow the release of $10 million to the East African country, once reviewed and approved by the board.

Economic and financial experts are concerned about challenges that could reverse the hard-earned gains of the poor and heavily indebted tiny horn of Africa Nation.

“Lack of competitive procurement, lack of agreement(s) between the levels of government and its federal member states on fiscal federalism, and lack of transparency in several oil and gas deals are the main current challenges that could jeopardize and hinder Somalia’s progress towards winning reliable financial credibility,” Hussein Siad, an independent economic consultant and Somalia’s former vice minister of finance, told VOA in a phone interview.

“A government cannot work without the necessary mechanisms to operate, including laws, regulations, manuals and trained or skilled staff members that can implement government policies,” Siad said.

The debt owed by Somalia to external creditors is estimated to be more than $5 billion. Somalia owes the single biggest debt — $1 billion — to the United States.

Countries that become eligible for the Heavily Indebted Poor Countries (HIPC) Initiative of the IMF and World Bank have to commit to economic and financial reforms, as well as poverty reduction and political stability.

Corruption

In response to the concerns, Somali President Hassan Sheikh Mohamud on Thursday signed a set of anti-corruption directives aimed at boosting the legitimacy and credibility of the country’s financial institutions, a government statement said.

In the early morning Cabinet meeting, Somalia’s Council of Ministers approved the anti-corruption directives before the president endorsed them.

Reading a statement, government spokesman Farhan Jimale said, “The key directives, eight in number, included combating corruption, fostering accountability, strengthening public financial management systems and meritocracy, as well as improving the efficiency and effectiveness of government institutions.”

The statement also said, “The announced steps seek to increase transparency and accountability through financial disclosures by public officials, enhanced enforcement capacity, and expanded merit-based recruitment.”

The IMF’s board is expected to review the staff-level agreement reached with Somalia in early December.

Mohamud has urged an immediate implementation of the directives.

In 2019, his predecessor, Mohamed Abdullahi Mohamed, signed the country’s anti-corruption bill into law, but critics say the implementation of the law has been a challenge.

The nonprofit Transparency International ranks Somalia as one of the most corrupt countries in the world.

In its 2022 Corruptions Perceptions Index, Transparency International put Somalia at the bottom, saying, “Along with constant violence, Somalia’s President Hassan Sheikh Mohamud dissolved two very important anti-corruption bodies with a ‘wave of the hand’ decree.”

According to Somalia’s Criminal Code, active and passive bribery, attempted corruption, extortion, bribing a foreign official and money laundering are crimes.

“The debt relief is a big hope for Somalia to reclaim its financial position within the international community and allows our country to rejoin global economy after a 30-year exile,” a senior government economist told VOA on the condition of anonymity because he was not authorized to speak.

The official said if corruption and unnecessary political disputes remain, Somalia will miss a golden opportunity to clear its debts.

Somalia’s outlook remained clouded, with GDP growth for 2022 projected at 1.9%, down from 2.9% in 2021, and inflation projected to reach 9% from 4.6% in 2021, the IMF said.

Political dispute

The concerns grew following tension over a long-simmering dispute between the leaders of the federal government of Somalia and the northeastern semi-autonomous region of Puntland.

For months, Puntland has been reluctant to collaborate with the federal government on national issues, including debt relief programs, accusing Mogadishu of refusing to share power and foreign aid with the regions in line with the country’s federal system.

The political dispute took a turn for the worse this week when the leaders exchanged strong verbal accusations.

Puntland President Said Abdullahi Deni on Tuesday accused Mohamud and Somali Prime Minister Hamza Abdi Barre of “attempting to destabilize the relatively stable region.”

“The president and his prime minister have agreed to refuse the Puntland democracy and its willingness to hold one man, one vote elections,” Deni told his supporters.

Deni’s accusations came a day after Barre accused Puntland of jeopardizing the country’s debt relief efforts.

“Somalia’s debt relief program is in danger because Puntland has been refusing to participate in national meetings on the issue,” Barre warned. “If this fails because of Puntland, it will be a black scar on Puntland’s history, and its leaders will be responsible.”
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U.S. President Joe Biden and the top Republican and Democrats in Congress are set to meet Tuesday at the White House amid an impasse about raising the country’s debt limit. 

Republicans House Speaker Kevin McCarthy and Senate Minority Leader Mitch McConnell will be joined by Democrats House Democratic leader Hakeem Jeffries and Senate Majority Leader Chuck Schumer as the group discusses the impending deadline to make sure the government can pay for spending it has already incurred. 

Republicans are insisting on spending cuts before they will agree to raise the debt ceiling, while Biden has said Congress has a duty to pay its bills and that the two issues should be addressed separately. 

SEE ALSO: A related video by VOA’s Patsy Widakuswara

U.S. Treasury Secretary Janet Yellen told lawmakers last week that the Treasury’s ability to pay all of the government’s bills could run short as early as June 1. 

She told CNBC on Monday there was a “very big gap” between the Democratic and Republican positions and warned that not raising the debt limit would bring “economic catastrophe.” 

Some information for this report came from The Associated Press, Agence France-Presse and Reuters 
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As prices for food and goods remain high in many countries, some economists say the persistent inflation is partly due to corporate profit-seeking. VOA’s Veronica Balderas Iglesias has the details.
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A picturesque tourist destination will host crisis-weary Southeast Asian leaders with sun-splashed tropical islands, turquoise waters brimming with corals and manta rays, seafood feasts, and a hillside savannah crawling with Komodo dragons.

The sunshiny setting is a stark contrast to the seriousness of their agenda.

Indonesian President Joko Widodo picked the far-flung, rustic harbor town of Labuan Bajo as a laidback venue to discuss an agenda rife with contentious issues. These include the continuing bloody civil strife in Myanmar and the escalating territorial conflicts in the South China Sea between fellow leaders of the Association of Southeast Asian Nations.

The 10-nation regional bloc and its member states will meet for three days starting Tuesday, with the growing rivalry between the United States and China as a backdrop.

U.S. President Joe Biden has been reinforcing an arc of alliances in the Indo-Pacific region to better counter China over Taiwan and the long-seething territorial conflicts in the strategic South China Sea which involve four ASEAN members: Brunei, Malaysia, the Philippines and Vietnam. Indonesia, this year’s ASEAN chair, has also confronted Chinese fishing fleets and coast guard that have strayed into what Jakarta says was its internationally recognized exclusive economic zone in the gas-rich Natuna Sea.

Widodo, who’s in his final year on the world stage as he reaches the end of his two-term limit, said ASEAN aims to collaborate with any country to solve problems through dialogue.

That includes Myanmar where, two years after the military power grab that forced out Aung San Suu Kyi’s administration and sparked a bloody civil strife, ASEAN has failed to rein in the violence in its member state. A five-point peace plan by ASEAN leaders and the top Myanmar general, which calls for an immediate stop to killings and other violence and the start of a national dialogue, has been disregarded by Myanmar’s ruling military.

ASEAN stopped inviting Myanmar’s military leaders to its semiannual summits and would only allow non-political representatives to attend. Myanmar has protested the move.

In an additional concern involving Myanmar, Indonesian officials said Sunday that 20 of their nationals, who were trafficked into Myanmar and forced to perform cyber scams, had been freed from Myanmar’s Myawaddy township and brought to the Thai border over the weekend. During the summit, ASEAN leaders planned to express their concern over such human trafficking schemes in a joint statement, a draft copy of which was obtained by The Associated Press.

Indonesian Foreign Minister Retno Marsudi said her country, as ASEAN chair, has tackled the Myanmar crisis in a non-adversarial way.

“Colleagues certainly know that in the early stages of its leadership, Indonesia decided to take a non-megaphone diplomacy approach,” Marsudi said. “The aim is to provide space for the parties to build trust and for the parties to be more open in communicating.”

Widodo’s choice of a seaside venue with stunning sunrises and sunsets and the sound of birds chirping all day complements that approach.

The Indonesian leader also hoped the high-profile ASEAN summit would put Labuan Bajo and outlying islands, dotted with white-sand beaches and even a rare pink-sand beach, under the global tourism spotlight.

“This is a very good moment for us to host the ASEAN summit and showcase Labuan Bajo to the world,” said Indonesian President Joko Widodo, who flew in Sunday with his wife to a red-carpet welcome flanked by military honor guards and dancing villagers with flower-filled headwear.

But there are a few hitches.

The far-flung fishing town with only three traffic lights and about 6,000 residents is acutely short of hotels for ASEAN’s swarm of diplomats, delegates and journalists. Many had to arrange to share rooms.

Unlike the more popular Bali resort island or the bustling concrete jungle of a capital Jakarta, which has hosted international conclaves in upscale hotels and convention centers, Labuan Bajo is a far smaller town that a visitor could cross from end to end with a brisk two-hour walk. There are no public buses, and villagers mostly move around by walking, riding scooters or driving private cars.

A small team of local technicians with hard hats were flown in to lay cables and expand internet connections at the venues on short notice.

On Sunday, Labuan Bajo’s small airport was jampacked with visitors. Teams of diplomats and journalists arrived to welcome streamers announcing the upbeat summit motto, “ASEAN Matters: Epicentrum of Growth.”

Outside the airport named after the Komodo dragons, traffic quickly built up under the brutal noontime sun.

When the sun rose Monday morning, workers were still cementing some roadsides around the venues — a day before the summit opening.

Andre Kurniawan, who works at a dive center in Labuan Bajo, said the infrastructure developments would be a boon for Labuan Bajo villagers. “We were isolated from some areas before and now they are open and the areas are getting better. I hope that Labuan Bajo can be a better tourist town in the future,” he said.

Azril Azahari, chair of an association of Indonesian academic experts on tourism, told the AP that Labuan Bajo was not ready and apparently was chosen to host the summit on short notice. “The hotel facilities and the lodging have become a problem. There is a ship being used for accommodation and it’s not a lodging ship,” he said.

Welcoming visitors to her coffee shop ahead of the summit, Suti Ana said even though it wasn’t the best time for Labuan Bajo to host, ASEAN would boost local businesses. “But we cannot wait, so this is the time,” she said.

Choosing the small port town was not a bad idea, Azril said, if it came with adequate planning and government investments in infrastructure.

Located on the western tip of Flores island in southern Indonesia, Labuan Bajo, aside from its beaches and diving and snorkeling spots, has been better known as the gateway to the Komodo National Park — a UNESCO World Heritage site and the only place in the world where Komodo dragons, the world’s largest lizards, are found in the wild.

Environmentalists and tourism analysts fear that a wider public interest could put further stress on the already endangered Komodo dragons. Only about 3,300 were known to exist as of 2022.

“If more people come, sooner or later the Komodo dragons cannot breed in peace, this can be a problem,” Azahari said, citing longstanding fears that the Komodos could face extinction without full protection.

Despite the odds, Indonesian officials said they would do everything to successfully and safely host the ASEAN summit in Labuan Bajo.

“If there’s any commotion along the way, that will be a big stain on the nation’s dignity,” Edistasius Endi, the regent of Labuan Najo’s West Manggarai district, said in a statement.
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U.S. Treasury chief Janet Yellen warned Sunday of an “economic and financial catastrophe” for the United States and the world economy if President Joe Biden and Congress cannot agree on raising the country’s debt ceiling so the government can continue to pay its bills.

“Early June is when we run out of cash” to pay ongoing bills, Yellen told ABC’s “This Week” show, although she allowed that there is “a lot of uncertainty” on exactly what day that might be.

The U.S. Treasury has already taken “extraordinary measures” to continue to pay debts since reaching the country’s $31.4 trillion borrowing limit in January, but Yellen said, “Our ability to do that is running out and we will start to run down our cash.”

“The day will come when we are unable to pay our bills,” she said.

Watch related video by Veronica Balderas Iglesias:

Biden has invited top congressional leaders to the White House on Tuesday to discuss how to avert the looming crisis.

The Democratic president has for months called on Congress, including the House of Representatives narrowly controlled by Republicans, to hike the debt ceiling without other conditions.

But instead, House Republicans, by a two-vote margin, last month approved a debt ceiling increase for a year while attaching broad government spending cuts for social programs and climate control measures that Biden and congressional Democrats oppose.

The U.S. has never defaulted on its debt — payments for programs Congress has already approved — but Yellen warned that if the government runs out of cash, interest payments on U.S. government bonds held by Americans and overseas governments could be curtailed, monthly Social Security payments to older people and health care payments to their doctors could be delayed, and businesses could furlough thousands of workers.

“There could be a steep decline in the stock market,” she said, and the country’s creditworthiness questioned.

The U.S. has raised its debt ceiling 78 times, under both Democratic and Republican presidents. Amid the current uncertainty, some Washington analysts are predicting that Biden and Republican opponents could in the coming weeks reach an agreement that both could claim as a victory of sorts, with the debt ceiling raised and Biden agreeing separately to curb spending in the fiscal year that starts October 1.

White House advisers have also been considering whether, for the first time, to invoke the U.S. Constitution’s 14th Amendment, which says that the full faith and credit of the United States shall not be questioned. Use of the provision would almost certainly draw a legal challenge from those opposed to unilaterally increasing the debt ceiling.

Yellen did not rule out invoking use of the constitutional provision but characterized it as among a list of bad options.

“I don’t want to consider emergency options,” she said.
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Treasury Secretary Janet Yellen reiterated that the United States could run out of cash as early as June 1. Her warning comes days before President Joe Biden is expected to hold meetings with Democrats and Republicans about the need to raise the debt ceiling. VOA’s Veronica Balderas Iglesias explains what’s at stake. Video editor: Marcus Harton.
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Billionaire Warren Buffett said artificial intelligence may change the world in all sorts of ways, but new technology won’t take away opportunities for investors, and he’s confident America will continue to prosper over time.

Buffett and his partner Charlie Munger are spending all day Saturday answering questions at Berkshire Hathaway’s annual meeting inside a packed Omaha arena.

“New things coming along doesn’t take away the opportunities. What gives you the opportunities is other people doing dumb things,” said Buffett, who had a chance to try out ChatGPT when his friend Bill Gates showed it to him a few months back.

Buffett reiterated his long-term optimism about the prospects for America even with the bitter political divisions today.

“The problem now is that partisanship has moved more towards tribalism, and in tribalism you don’t even hear the other side,” he said.

Both Buffett and Munger said the United States will benefit from having an open trading relationship with China, so both countries should be careful not to exacerbate the tensions between them because the stakes are too high for the world.

“Everything that increases the tension between these two countries is stupid, stupid, stupid,” Munger said. And whenever either country does something stupid, he said the other country should respond with incredible kindness.

The chance to listen to the two men answer all sorts of questions about business and life attracts people from all over the world to Omaha, Nebraska. Some of the shareholders feel a particular urgency to attend now because Buffett and Munger are both in their 90s.

“Charlie Munger is 99. I just wanted to see him in person. It’s on my bucket list,” said 40-year-old Sheraton Wu from Vancouver. “I have to attend while I can.”

“It’s a once in a lifetime opportunity,” said Chloe Lin, who traveled from Singapore to attend the meeting for the first time and learn from the two legendary investors.

One of the few concessions Buffett makes to his age is that he no longer tours the exhibit hall before the meeting. In years past, he would be mobbed by shareholders trying to snap a picture with him while a team of security officers worked to manage the crowd. Munger has used a wheelchair for several years, but both men are still sharp mentally.

But in a nod to the concerns about their age, Berkshire showed a series of clips of questions about succession from past meetings dating back to the first one they filmed in 1994. Two years ago, Buffett finally said that Greg Abel will eventually replace him as CEO although he has no plans to retire. Abel already oversees all of Berkshire’s noninsurance businesses.

Buffett assured shareholders that he has total confidence in Abel to lead Berkshire in the future, and he doesn’t have a second choice for the job because Abel is remarkable in his own right. But he said much of what Abel will have to do is just maintain Berkshire’s culture and keep making similar decisions.

“Greg understands capital allocation as well as I do. He will make these decisions on the same framework that I use,” Buffett said.

Abel followed that up by assuring the crowd that he knows how Buffett and Munger have handled things for nearly six decades and “I don’t really see that framework changing.”

Although not everyone at the meeting is a fan. Outside the arena, pilots from Berkshire’s NetJets protested over the lack of a new contract and pro-life groups carried signs declaring “Buffett’s billions kill millions” to object to his many charitable donations to abortion rights groups.

Berkshire Hathaway said Saturday morning that it made $35.5 billion, or $24,377 per Class A share, in the first quarter. That’s more than 6 times last year’s $5.58 billion, or $3,784 per share.

But Buffett has long cautioned that those bottom line figures can be misleading for Berkshire because the wide swings in the value of its investments — most of which it rarely sells — distort the profits. In this quarter, Berkshire sold only $1.7 billion of stocks while recording a $27.4 billion paper investment gain. Part of this year’s investment gains included a $2.4 billion boost related to Berkshire’s planned acquisition of the majority of the Pilot Travel Centers truck stop company’s shares in January.

Buffett says Berkshire’s operating earnings that exclude investments are a better measure of the company’s performance. By that measure, Berkshire’s operating earnings grew nearly 13% to $8.065 billion, up from $7.16 billion a year ago.

The three analysts surveyed by FactSet expected Berkshire to report operating earnings of $5,370.91 per Class A share.

Buffett came close to giving a formal outlook Saturday when he told shareholders that he expects Berkshire’s operating profits to grow this year even though the economy is slowing down and many of its businesses will sell less in 2023. He said Berkshire will profit from rising interest rates on its holdings, and the insurance market looks good this year.

This year’s first quarter was relatively quiet compared to a year ago when Buffett revealed that he had gone on a $51 billion spending spree at the start of last year, snapping up stocks like Occidental Petroleum, Chevron and HP. Buffett’s buying slowed through the rest of last year with the exception of a number of additional Occidental purchases.

At the end of this year’s first quarter, Berkshire held $130.6 billion cash, up from about $128.59 billion at the end of last year. But Berkshire did spend $4.4 billion during the quarter to repurchase its own shares.

Berkshire’s insurance unit, which includes Geico and a number of large reinsurers, recorded a $911 million operating profit, up from $167 million last year, driven by a rebound in Geico’s results. Geico benefitted from charging higher premiums and a reduction in advertising spending and claims.

But Berkshire’s BNSF railroad and its large utility unit did report lower profits. BNSF earned $1.25 billion, down from $1.37 billion, as the number of shipments it handled dropped 10% after it lost a big customer and imports slowed at the West Coast ports. The utility division added $416 million, down from last year’s $775 million.

Besides those major businesses, Berkshire owns an eclectic assortment of dozens of other businesses, including a number of retail and manufacturing firms such as See’s Candy and Precision Castparts.

Berkshire again faces pressure from activist investors urging the company to do more to catalog its climate change risks in a companywide report. Shareholders were expected to brush that measure and all the other shareholder proposals aside Saturday afternoon because Buffett and the board oppose them, and Buffett controls more than 30% of the vote.

But even as they resist detailing climate risks, a number of Berkshire’s subsidiaries are working to reduce their carbon emissions, including its railroad and utilities. The company’s Clayton Homes unit is showing off a new home design this year that will meet strict energy efficiency standards from the Department of Energy and come pre-equipped for solar power to be added later.
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In the wake of three of the biggest bank failures in U.S. history over the past two months, Americans are increasingly jittery about the safety of their money, worried about instability in the banking sector and concerned that fear, whether justified or not, could result in additional collapses. 

Over the past week, multiple midsize U.S. banks have watched their share prices fluctuate wildly — some losing nearly 90% of their value — as investors and depositors struggled to ascertain whether the same problems that affected First Republic Bank, shuttered on Monday, and Silicon Valley Bank and Signature Bank, both shut down in March, were widespread. 

On Friday, investors seemed to regain some of their confidence in the sector, sending the share prices of many midsize banks back up. However, the broader environment of concern persists. 

So far, investors’ unease does not seem to have prompted significant deposit flight — when customers transfer funds from a bank they fear might be unsafe to an institution considered less risky. However, the rush to the exits that preceded the collapse of Silicon Valley Bank transpired in under 48 hours, leaving some experts nervous about a repeat. 

A broad market 

The United States, unlike many countries, has an extremely diverse banking system, with thousands of companies holding bank charters.  

In 2022, the Federal Deposit Insurance Corp., which insures individual bank accounts, covered deposits at 4,135 individual banks. The U.S. also is home to a significant number of credit unions, which are tax-exempt not-for-profit organizations that, like banks, accept deposits, provide transaction services and make loans. 

The vast majority of U.S. banks are relatively small “community” banks that serve a limited geographic area and have at most a few branches. 

However, sitting atop the U.S. banking industry are the four institutions — JPMorgan Chase, Bank of America, Citigroup and Wells Fargo — all of which have assets of more than $1 trillion. 

Those four banks are widely assumed to be “too big to fail,” meaning that the federal government would intervene to prevent them from collapsing to prevent widespread damage to the banking system and the U.S. and global economies.  

Who is ‘too big to fail’? 

While there is general agreement that the four largest banks are too big to fail, there has long been debate about whether that label should apply to the banks in the next tier, about 20 institutions with $100 billion to $600 billion in assets. 

Regulators muddied the water significantly with the failures of Silicon Valley, Signature, and First Republic banks, all of which had fallen into that second tier. 

In the case of Silicon Valley and Signature banks, the FDIC announced that deposit insurance would be extended to 100% of deposits. Technically, the agency is obligated to cover only the first $250,000 in any individual’s or company’s accounts. However, FDIC leadership invoked an exception that allowed it to expand coverage when failing to do so might cause a systemic crisis. 

When First Republic failed on Monday, the agency negotiated a deal with JPMorgan Chase, under which the larger bank assumed all deposits of First Republic at face value, completely protecting depositors from losses, at an estimated cost of $13 million to the FDIC’s deposit insurance fund. 

The agency faced considerable criticism for its actions, with some speculating that a precedent had been set under which depositors at any failed bank could expect to be fully insured. The agency pushed back, saying that was not the case.  

In the aftermath, many depositors at midsize banks began to wonder whether the problems that had brought down Silicon Valley, Signature and First Republic were present at their banks. They also worried whether the institutions holding their money were considered big enough to rate a federal rescue. 

Regional banks in focus 

Most of the concern has been focused on banks considered “regional” — second-tier institutions that are neither community banks nor trillion-dollar banks. 

PacWest Bancorp, another California-based lender, was among the banks hit hardest by the stock market sell-off. The bank has a large concentration of customers in the venture capital space, many of whom keep deposits that are orders of magnitude larger than the deposit insurance cap. A similar customer base led the flight from Silicon Valley Bank. 

PacWest, however, said that it did not experience heavier-than-usual deposit loss in the wake of the First Republic failure, though it did admit that it was in talks with potential acquirers. 

Other banks whose share prices have been hammered include Western Alliance Bancorp, Zions Bancorp, and Comerica. 

‘Disturbing trend’ 

If bank customers lose faith in the safety and soundness of small and midsize banks, experts said, it will be bad for the banking system and the broader U.S. economy. 

“It’s a very disturbing trend, because of its impact on smaller banks — not just community banks, but even some of the smaller regionals,” said Bert Ely, principal of the banking consultancy Ely & Co. “Once people make that shift, not everybody’s going to come back to smaller banks.” 

Ely told VOA that in his view, the investor concern is overblown.  

“All this nervousness, I think, is really misplaced, given the state of the economy,” he said, pointing out that U.S. markets remain strong and are not suffering from significant problems such as the collapse of the subprime mortgage market, which presaged the last major banking crisis. 
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CAPE TOWN, SOUTH AFRICA — With 12 storeys, a breathtaking view of Cape Town’s imposing Table Mountain and a minimal ecological footprint, the world’s tallest building made with industrial hemp is soon to open its doors in South Africa.

Workers in central Cape Town are putting the finishing touches on the 54-room Hemp Hotel, which is due to be completed in June.

“Hempcrete” blocks derived from the cannabis plant have been used to fill the building’s walls, supported by a concrete and cement structure.

Hemp bricks are becoming increasingly popular in the construction world thanks to their insulating, fire-resistant and climate-friendly properties.

Used notably in Europe for thermal renovation of existing buildings, the blocks are carbon negative — meaning their production sucks more planet-warming gases out of the atmosphere than it puts in.

“The plant absorbs the carbon, it gets put into a block and is then stored into a building for 50 years or longer,” explains Boshoff Muller, director of Afrimat Hemp, a subsidiary of South African construction group Afrimat, which produced the bricks for the hotel.

“What you see here is a whole bag full of carbon, quite literally,” Muller says as he pats a bag of mulch at a brick factory on the outskirts of Cape Town, where hemp hurds, water and lime are mixed together to make the blocks.

The industrial hemp used for the Hemp Hotel had to be imported from Britain as South Africa banned local production up to last year, when the government started issuing cultivation permits.

President Cyril Ramaphosa has made developing the country’s hemp and cannabis sector an economic priority, saying it could create more than 130,000 jobs.

Carbon credits

Afrimat Hemp is now preparing to produce its first blocks made only with South African hemp.

Hemp Hotel architect Wolf Wolf, 52, sees this as a game changer to make hemp buildings more widespread in this corner of the world.

“It shouldn’t be just a high-end product,” says Wolf, whose firm is involved in several social housing projects in South Africa and neighboring Mozambique.

Yet cost remains an issue.

“Hemp is 20 percent more expensive to build with” compared to conventional materials, says Afrimat Hemp’s carbon consultant Wihan Bekker.

But as the world races to lower carbon emissions, the firm sees “huge opportunities” for its green bricks, says Bekker.

Carbon credits — permits normally related to the planting of trees to safeguard tropical rainforests that companies buy to offset their emissions — could help make hempcrete blocks more financially palatable, he says.

“We can fund forests, or we can fund someone to live in a hemp house. It’s the same principle,” Bekker says.

The carbon footprint of a 40 square meter (430 square foot) house built with hemp is three tons of CO2 lower than that of a conventional building, according to Afrimat Hemp.

“We see this as a bit of a lighthouse project,” Muller says of the Hemp Hotel.

“It shows hemp has its place in the construction sector.” Hemp Hotel has been ranked the “tallest building to incorporate hemp-based materials in the world” by Steve Allin, director of the Ireland-based International Hemp Building Association.
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