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High inflation and soaring interest rates are taking a financial toll on many Americans, especially low-income minorities, compelling a growing number to borrow money to make ends meet, according to debt monitoring organizations. At the same time, people of color are increasingly turning away from traditional lending institutions, opting instead to ask family and friends for a personal loan.

“I asked my sister to lend me money,” said Monica Welborn, an African American mother of two from Maryland. Welborn reluctantly made the request after being denied a bank loan for $4,000.

“They [the bank] said my credit score was too low to receive a [standard] loan,” she told VOA. “They offered to lend me half of what I wanted but at a very high interest rate.”

Welborn is among millions who face roadblocks to borrowing from traditional lending institutions. Minorities are especially likely to seek loans from other sources, usually people they know. A survey released by the U.S. Census Bureau earlier this year found that 17% of Black Americans and 15% of Hispanics had borrowed money from family and friends, compared to 7% of whites.

But informal loans can present challenges as well, including something as basic as nailing down the terms of repayment. A Florida-based financial technology firm is part of a growing industry dedicated to facilitating non-traditional lending, sometimes referred to as peer-to-peer.

“There’s got to be a better way from a software perspective we can make these loans a little less cumbersome, and a little less of a burden,” said Kaben Clauson, co-founder of Pigeon Loans. His company is hoping to capitalize on providing services for the tens of millions of Americans who rely on borrowing from friends and family.

Clauson, 34, launched the free online platform last year to make it easier for people to lend and borrow money outside the banking system. “You create a payment plan, and say I want to pay you back over the next 15 months and this is how much I’m going to pay you,” he said.

The service sends out text message reminders to borrowers to help ensure money is paid back on time and with minimal drama. The lender can also add an agreed upon interest rate, which Clauson maintains is typically much lower than those offered by banks.

Pigeon Loans said its service has increased 200% in the past two months, with 70% of its users either Black, Latino or Asian. “These are traditionally disadvantaged communities. So many of them are living paycheck to paycheck, but those communities have a legacy of helping one another,” Clauson told VOA.

Small business lending

Such lending isn’t limited to individuals for their own needs. Pigeon Loans has seen an uptick in the number of loans given to minority business owners. There are an estimated 8 million minority-owned businesses across the country, and most are sole proprietorships, according to the U.S. Chamber of Commerce.

Clauson’s company recently helped an African American entrepreneur in the nation’s capital open a bakery with a $10,000 loan from a friend. “People in other communities that are more advantaged have a rich uncle or parents that can help them get them going,” he said. “That’s not the case for many in minority communities, particularly for entrepreneurs.”

Some observers see peer-to-peer lending as a crutch, not a solution. “Personal loans can help with startup opportunities for Black-owned businesses but it’s not a long-term solution,” said Rick Wade, senior vice president of strategic alliances at the U.S. Chamber of Commerce. “We want small minority companies across America to have a solid relationship with traditional lending institutions to help grow their business and we’ve got a lot of work to do in that regard.”

Taking on debt

Clauson predicts a wave of lending and borrowing on his platform next year if the U.S. economy slows and people take on more debt. He argues that borrowing from family, a neighbor or a colleague at work makes sense, especially when times are tough. “They’re likely going to give you the most favorable interest rate and payment terms,” he said.

Traditional lending institutions go to great lengths to vet borrowers and make sure they can repay loans. Does bypassing such procedures lead to greater loan delinquency? Not according to Pigeon Loans.

The company says its platform has attracted more than 50,000 users who, according to Clauson, have a 97% on-time repayment rate. The loan default rate, in which the money is never repaid, is said to be less than 1%.

Clauson acknowledges the loan platform may not be for everyone and warns against lending money that would otherwise be used to pay for one’s own core expenses.

“If you happen to be lucky enough to have some discretionary cash you can lend, go for it. But make sure that you have your own financial house in order first,” he said.
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Australia has followed other countries with more increases in interest rates to mitigate inflationary pressures. Economists are predicting more pain for mortgage holders after Australia’s Reserve Bank (RBA) raised interest rates Tuesday for the fifth consecutive month to a seven-year high. 

Slower world economic growth is the backdrop to the most aggressive series of interest rate increases in Australia since 1994. China’s economy is slowing, and the U.S. central bank has raised interest rates to subdue soaring prices.

Cost of living pressures were a key concern of voters in May’s federal election and many household budgets remain stretched.

The Reserve Bank of Australia, or RBA, has increased its official rate by 0.5 percentage points to 2.35% to try to tame high inflation, the general increase in the prices of goods and services. In Australia, it is at a 21-year high of 6.1% and experts believe it could reach 7% by Christmas.

Interest rates dictate the cost of borrowing money. The official levels set by central banks, including the RBA, influence rates charged by banks and other financial institutions for home loans and other financing. They also help determine returns for savers, who should benefit from rising interest rates.

But Ivan Colhoun, the chief economist for markets at the National Australia Bank, says mortgage holders will be worse off.

“If we get another half-a-percent, say, before Christmas that will nearly be two-and-three-quarter-percent of an increase in rates in (a) seven- or eight-month period. If you are on a $500,000 mortgage that is about $15,000 extra in interest payments, which is over $1,000 a month. So, that is not a small amount of extra money that households with mortgages have to come up with,” he said.

Central banks manipulate interest rates to, for example, subdue spending by consumers to reduce demand for goods and services to try to curb runaway prices.

In Australia, there is evidence the economy is growing too quickly for the Reserve Bank.

Government figures released Wednesday have shown the Australian economy grew 0.9% in the June quarter and 3.6% in the past year. The growth was fueled mainly by household spending and exports, but does not fully reflect recent interest rate rises.

The RBA said it expects further rate increases later this year, possibly in October.

Unemployment in Australia — another key indicator of the health of an economy — is at its lowest since 1974 at 3.4%.

Exports are booming as demand for energy in Europe and Asia drives up prices for Australia’s coal and liquefied natural gas.

The impact of successive interest rate rises on the Australian economy will become apparent in the months ahead.
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Liz Truss, who is widely expected to become Britain’s new prime minister this week, has pledged to act within a week to tackle a cost-of-living crisis fueled by soaring energy bills linked to the war in Ukraine.

But Truss, speaking to the BBC Sunday, refused to provide any details on the actions she would take, suggesting it would be wrong to discuss specific policies until she takes the top post. She stressed, however, that she understands the magnitude of the problems facing Britain.

The government has been unable to address soaring inflation, labor strife and strains on the nation’s creaking health care system since early July, when Johnson announced his intention to resign and triggered a contest to choose his successor. The ruling Conservative Party will announce the winner Monday.

“I want to reassure people that I am absolutely determined to sort out this issue as well as, within a month, present a full plan for how we are going to reduce taxes, how we’re going to get the British economy going, and how we are going to find our way out of these difficult times,’’ said Truss, who has been foreign secretary for the past year.

Truss is facing Rishi Sunak, the government’s former Treasury chief, in the contest to become Conservative Party leader and so prime minister. Only dues-paying party members were allowed to vote in the election, putting the choice of Britain’s next leader in the hands of about 180,000 party activists.

During the campaign, Truss promised to increase defense spending, cut taxes and boost energy supplies, but she refused to provide specifics on how she would respond to the cost-of-living crisis.

With household energy bills set to increase by 80% next month, charities warn that as many as one in three households will face fuel poverty this winter, leaving millions fearful of how they will pay to heat their homes.

The Bank of England has forecast that inflation will reach a 42-year high of 13.3% in October, threatening to push Britain into a prolonged recession. Goldman Sachs has estimated that inflation could soar to 22% by next year unless something is done to mitigate high energy prices.
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The finance ministers of the Group of Seven leading industrial nations agreed Friday to move forward with an unprecedented plan to cap the price of oil that Russia sells on global markets in order to limit the funds that Moscow uses to pay for the war in Ukraine.

The price cap proposal comes as the European Union prepares to implement a complete embargo on Russian oil in December. The EU plan would also ban companies in the bloc from insuring or financing Russian oil shipments.

U.S. officials have expressed concern that a complete ban on Russian oil sales to the EU, along with the further disruption caused by the insurance and financing restrictions, could tip the global economy into recession.

The price cap, being pushed by U.S. Treasury Secretary Janet Yellen, would create an exception to the ban for oil that is sold at or below the cap.

Energy market experts pointed out that the statement released by the G-7 finance ministers Friday was short on details, however, and that the plan would be extremely difficult to enact. Many large oil consumers, including China and India, are unlikely to participate, and even in countries that promise to honor the cap, compliance would be extremely difficult to monitor.

Triggered by Ukraine war

The finance ministers made it clear Friday that Russian President Vladimir Putin’s decision to invade Ukraine is the reason they are seeking to choke off Moscow’s supply of oil revenues.

“Russia’s war of aggression is causing global economic disruptions and is threatening the security of the global supply of energy and food,” they said in a statement. “The economic costs of the war and consequent price increases are felt disproportionately by vulnerable groups across all economies and particularly by those countries already facing food insecurities and fiscal challenges.”

They added, “The price cap is specifically designed to reduce Russian revenues and Russia’s ability to fund its war of aggression whilst limiting the impact of Russia’s war on global energy prices, particularly for low- and middle-income countries, by only permitting service providers to continue to do business related to Russian seaborne oil and petroleum products sold at or below the price cap.”

‘Critical step forward’

In a statement released Friday morning, Yellen praised the G-7 for taking a “critical step forward in achieving our dual goals of putting downward pressure on global energy prices while denying Putin revenue to fund his brutal war in Ukraine.”

“Today’s action will help deliver a major blow for Russian finances and will both hinder Russia’s ability to fight its unprovoked war in Ukraine and hasten the deterioration of the Russian economy,” she said. “We have already begun to see the impact of the price cap through Russia’s hurried attempts to negotiate bilateral oil trades at massive discounts.”

Yellen said that she looked forward to working with allies to finalize the proposal in the coming weeks, a tacit admission that the arrangement will require far more than just the assent of the G-7.

To be successful, the 27 EU members would have to unanimously approve the price cap plan. With some members, particularly Hungary, chafing at the restrictions already placed on dealing with Russia, that agreement may be difficult to attain.

Experts dubious

Energy market experts said that there are a number of other practical obstacles to a price cap.

In an email exchange with VOA, Edward C. Chow, a nonresident senior associate with the Center for Strategic and International Studies’ energy security and climate change program, said that many of the key details of the plan were absent and would be difficult to come to agreement on in the time frame being considered.

“There are no specific action steps in the statement,” said Chow, who has worked for 45 years in the international oil and gas business, including 20 years with oil giant Chevron. “It is even missing what price level the cap will be set at or what mechanism will be used for setting the appropriate cap. Indeed, the statement mentioned further consultations with other countries, which have shown little interest [in participating]. This will only slow down the process of formulating a real policy.”

“The problem is that the Western governments have conflicting objectives,” Chow wrote. “They want to greatly reduce Russia’s oil income but without greatly reducing global supply, given the resulting impact on price and their own economies. Oil sanctions were never the silver bullet if the objective is to stop Russia’s all-out assault on Ukraine as soon as possible.”

Monitoring difficulty

“I am skeptical that they can make this work effectively,” James W. Coleman, a professor at Southern Methodist University Dedman School of Law in Dallas, told VOA. “It would take a very high level of monitoring that I don’t think we have any reason to be confident would be successful.”

For example, it would be difficult to track the origin of all the oil purchased by individual countries, especially given the increasingly common ship-to-ship oil transfers in international waters.

Coleman pointed out that Venezuela, which is subject to heavy U.S. sanctions, was found in 2020 to be selling its oil to China by diverting it through Malaysia.

“China is now importing more oil from Malaysia than Malaysia produces,” he said.

He said it would also be difficult to ensure countries weren’t compensating Russia for discounted oil by other means, such as price reductions on goods that Russia imports.

“Obviously, nations have all sorts of interactions, and it’s not that hard to pay Russia back in those other interactions that are kind of ‘off the books,’ ” Coleman said.
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Fuel prices increased by about 30% across Indonesia Saturday after the government reduced some of the costly subsidies that have kept inflation in Southeast Asia’s largest economy among the world’s lowest.

Indonesians have been fretting for weeks about a looming increase in the price of subsidized Pertalite RON-90 gasoline sold by Pertamina, the state-owned oil and gas company. Long lines of motorbikes and cars snaked around gas stations as motorists waited for hours to fill up their tanks with cheaper gas before the increase took effect on Saturday.

The hike — the first in eight years — raised the price of gasoline from about 51 cents to 67 cents per liter and diesel fuel from 35 cents to 46 cents.

President Joko Widodo said the decision to increase the fuel prices was his last option as the country’s energy subsidy had tripled this year to 502 trillion rupiah ($34 billion) from its original budget, triggered by rising global prices of oil and gas.

“The government has tried its best as I really want fuel prices to remain affordable,” Widodo told a televised address announcing the fuel hike. “The government has to make decisions in difficult situations.”

He said that the flow of subsidies to the public was not well targeted — about 70% of subsidies were benefiting middle and upper classes — and the government decided instead to increase social assistance.

Finance Minister Sri Mulyani Indrawati said authorities were monitoring the impact on inflation and economic growth of the rise in fuel price.

Inflation has been relatively modest with the shock being mostly absorbed through a budget bolstered by energy subsidies. Inflation hit 4.6% in August as Bank Indonesia, the central bank, has said it would reassess the inflation outlook in response to the government fuel price policy.

Indrawati said in a separate news conference that the government would provide 150,000 rupiah ($10) cash handouts to cushion the impact of the fuel price increase on 20.6 million poor families until the year-end. The total cost of the handouts will be 12.4 trillion rupiah, which will be reallocated from the budget for energy subsidies.

She said the government will also spend 9.6 trillion rupiah ($644 million) on salary assistance to about 16 million low paid workers and 2.17 trillion rupiah ($145 million) will go to subsidizing transport costs, particularly for motorcycle taxi drivers and fishermen.

“We hope this can reduce pressure of rising prices and help reduce poverty,” Indrawati said.

The government has subsidized fuel for decades in Indonesia, the vast archipelago nation of more than 270 million people.

Fuel prices are a politically sensitive issue that could trigger other price hikes and risk student protests. In 1998, an increase in prices sparked riots that helped topple longtime dictator Suharto.
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The U.N. Food and Agriculture Organization says consumers are not yet feeling the benefits of declining food prices. The FAO says world food commodity prices dipped for the fifth consecutive month in August.

Lower world food prices generally reflect better availability at the global level. However, FAO says, this time, lower wholesale prices have not led to better food access or lower prices for consumers.

FAO Director of the Markets and Trade Division Boubaker Ben-Belhassen said availability has improved, while access to food commodities has not. This, despite declining prices five months in a row.

“This is due to several factors including the persistent high cost of processing and transportation, logistics, and the exchange rate also of currencies of countries as against the U.S. dollar,” he said. “Also, the cost-of-living crisis has affected access. So, that is why we have not seen this decline in prices at the world level translating into lower prices for consumers or at the retail level.”

Ben-Belhassen cautioned that a drop in world prices does not necessarily result in market stability. He said that is subject to the uncertainties and volatility surrounding developments in the energy market and the price of fertilizer.

He said continued high energy and gas prices reduce profitability and increase production costs for farmers. He added that will pose a serious challenge for farmers in the coming year.

He noted the U.N.-brokered Black Sea grain initiative allowing Ukraine to export its grain and other foodstuffs has improved the availability of food on the world market. Prior to the July agreement, Russia had blockaded Ukraine’s three key ports triggering a global food crisis.

Ben-Belhassen said the better availability of food on the global level has not translated into greater access at the consumer level. He said the increased shipment of goods from Ukraine has not alleviated food scarcity in sub-Saharan Africa and other developing countries. He noted that is because most grain exports go to middle-income countries.

“So, it does not really go to those countries that are most affected or are most in need for better domestic supplies,” he said. “We hope the situation will improve with time. We hope that the shipment also will go to these countries.… We are still concerned about access, about the cost-of-living crisis.”

The FAO official says families in low- and middle-income countries tend to spend 50% to 60% of their monthly income on food. He warned the implication for food security could be very serious if consumer food prices do not drop significantly.
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U.S. employers hired slightly more workers than expected in August, keeping the Federal Reserve on track to deliver a third 75 basis points interest rate hike this month, though the unemployment rate increased to 3.7%.

Nonfarm payrolls increased by 315,000 jobs last month, the Labor Department said in its closely watched employment report on Friday. Data for July was revised slightly down to show payrolls surging 526,000 instead of 528,000 as previously reported. That marked the 20th straight month of job growth.

Economists polled by Reuters had forecast payrolls increasing 300,000. Estimates ranged from as low as 75,000 to as high as 450,000. The unemployment rate increased to 3.7% from a a pre-pandemic low of 3.5% in July.

The employment report came a week after Fed Chair Jerome Powell warned Americans of a painful period of slow economic growth and possibly rising unemployment as the U.S. central bank aggressively tightens monetary policy to quell inflation.

Solid job growth last month was further evidence that the economy continues to expand even as gross domestic product contracted in the first half of the year and was another sign the Fed still needs to cool the labor market despite the front loading of rate hikes.

The Fed has twice raised its policy rate by three-quarters of a percentage point in June and July. Since March, it has lifted that rate from near zero to its current range of 2.25% to 2.50%. Financial markets are pricing a roughly 70% probability of a 75 basis points increase at the Fed’s Sept. 20-21 policy meeting, according to CME’s FedWatch Tool.

August consumer price data due mid-month will also be a major factor in determining the size of the next rate increase. Despite rising recession risks, the labor market continues to chart its own path. There were 11.2 million job openings on the last day of July, with two job openings for every unemployed person. First-time applications for unemployment benefits are running very low by historical standards.

Economists attributed the labor market resilience to businesses hoarding workers after experiencing difficulties in the past year as the COVID-19 pandemic forced some people out of the workforce in part because of prolonged illness caused by the disease.

With legal immigration slowing, they say fewer workers are likely to become a permanent reality for employers. There is also pent-up demand for workers in service industries like restaurants and airlines, which are among the sectors hardest hit by the pandemic. The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one remains more than a full percentage point below its pre-pandemic level.

Average hourly earnings rose 0.3% in August after increasing 0.5% in July. That kept the annual increase in wages at 5.2% in August.

Strong wage gains are keeping the income side of the economic growth ledger expanding, though at a moderate pace, and a recession at bay for now.
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Zambia’s President Hakainde Hichilema has pledged to improve the country’s financial situation after it received a $1.3 billion bailout from the International Monetary Fund. Zambia was the first African country to default on its debt in the COVID-19 era.

President Hakainde Hichilema, speaking Thursday at the launch of plans aimed at boosting the country’s socioeconomic development, said the IMF Executive Board had approved a financial assistance program for Zambia.  

“They approved our extended credit facility for this great country whose greatness lies ahead of us and for us to make our country greater we have to do what is necessary in all the spheres and in all the areas,” said Hichilema.

The $1.3 billion bailout is aimed at kickstarting the country’s economy and restructuring its debt. The plan allows Zambia to immediately access $185 million.  

The financial assistance approved on Wednesday will give Zambia room in the budget to increase social spending and strengthen governance. The framework of the bailout will require the country to improve its public financial management.

According to Zambian government debt data, the country accumulated $31.74 billion by the end of 2021, of which $17.27 billion was external debt.  

Nearly one-third of the debt — $5.78 billion – is owed to China.

In November 2020, Zambia was unable to make its payments on a $42.5 million Eurobond, becoming the first African country in the pandemic era to default on its debt.

In July of this year, the southern African nation canceled projects worth $2 billion to prevent its debt from growing further.  

The country plans to increase copper production to 3 million tons a year in the next 10 years and produce foodstuffs for export in an effort to reduce its debt.

Hichilema says his government will have to make tough choices for high economic growth.

“The macroeconomic objectives set out in the eight national development plans are to place our economy on a higher growth trajectory, no question about it,” said Hichilema. “That’s the agenda next to restrain fiscal deficits that we experienced in the last seven or so years to a point where we failed to live within our means and defaulted on our obligations.”

Hichilema said the country must depart from rampant corruption, overvaluing the government projects and failing to finish them on time.

He pledged to reduce domestic debt and inject money into the economy.

Zambia’s next step is to sign a legally non-binding memorandum of understanding with the G-20 bilateral creditors committee, which is intended to assist countries in resolving their debt. The authorities hope to complete discussion on the memorandum by the end of 2022. The G-20 refers to the Group of 20 large economies.
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Arizona Gov. Doug Ducey arrived in Taiwan on Tuesday for a visit focused on semiconductors, the critical chips used in everyday electronics that the island manufactures.

Ducey is on a mission to woo suppliers for the new $12 billion Taiwan Semiconductor Manufacturing Corp. (TSMC) plant being built in the state. He is traveling with the Arizona Chamber of Commerce president and the head of the state’s economic development agency.

Ducey is to meet with Taiwanese President Tsai Ing-wen, business leaders and university representatives in the semiconductor industry, Taiwan’s Ministry of Foreign Affairs said in a statement.

American states are competing to attract a multibillion-dollar wave of investment in chip factories as the U.S. government steps up spending on expanding the U.S. semiconductor industry with a recently passed law. Last week, the Indiana governor visited Taiwan for a similar purpose.

U.S. officials worry that the country relies too heavily on Taiwan and other Asian suppliers for processor chips used in smartphones, medical devices, cars and most other electronic devices.

Those worries have been aggravated by tensions with China over technology and security. The potential for disruption was highlighted by chips shortages due to the coronavirus pandemic that sent shockwaves through the auto and electronics industries.

Taiwan produces more than half the global supply of high-end processor chips.

Beijing, which claims self-ruled Taiwan as its territory, fired missiles into the sea near the island starting on Aug. 4 after U.S. House Speaker Nancy Pelosi visited, disrupting shipping and air traffic, and highlighting the possibility that chip exports might be interrupted.

A law approved by Congress on July 29 promises more than $52 billion in grants and other aid to develop the U.S. semiconductor industry and a 25% tax credit for investors in chip factories in the United States.

State governments are now promising tax breaks and grants to lure chip factories they hope will become centers for high-tech industry.

Intel Corp., the only major U.S. producer, announced plans in March 2021 to build two chip factories in Arizona at a cost of $20 billion. The company has had another facility in Arizona since 1980.

In January, Intel announced plans to invest $20 billion in a chip factory in Ohio.

TSMC., headquartered in Taiwan and which makes chips for Apple Inc. and other customers, announced plans last year to invest $3.5 billion in its second U.S. manufacturing site in North Phoenix, Arizona.

TSMC’s first U.S. semiconductor wafer fabrication facility is in Camas, Washington. It also operates design centers in San Jose, California, and Austin, Texas.

South Korea’s Samsung Electronics says it will break ground in 2024 for a $17 billion chip factory near Austin, Texas. The state says it is the biggest single investment to date in Texas.
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Sri Lanka’s new government plans Tuesday to present an amended budget for the year that slashes expenses and aims to provide relief to people hit hard by the country’s economic meltdown.

President Ranil Wickremesinghe, who is also the finance minister, will present the budget in Parliament, which will voted on it after a debate.

The government is negotiating with a visiting International Monetary Fund team on a program to rescue Sri Lanka from its economic crisis. The government is also preparing to negotiate a restructuring of foreign loans Sri Lanka is unable to repay because of a severe foreign exchange shortage.

Prior to the visit, the IMF said in a statement because Sri Lanka’s public debt is unsustainable, the IMF’s executive board will need assurances by Sri Lanka’s creditors that debt sustainability will be restored before any bailout program begins.

Sri Lanka’s total foreign debt exceeds $51 billion — of which it must repay $28 billion by 2027.

The IMF delegation is expected to conclude its visit Wednesday and the government hopes to reach a preliminary agreement by then.

Sri Lankans have faced acute shortages of essentials like fuel, medicine, and cooking gas for months. Though cooking gas supplies were restored through World Bank support, shortages of fuel, critical medicines and some food items continue.

Long fuel lines are reappearing after a quota system seemed to have brought them under control over the past weeks.

“I thought things are improving,” salesperson Asanka Chandana said. “For several weeks in May and June, we faced severe hardships, but things were getting better over the last two weeks after the introduction of the quota system. Now it looks like the shortage is still there and we are back to the square one.”

Power and Energy Minister Kanchana Wijesekera said lapses in distribution, delays in unloading, and payments for orders by fuel stations have created long lines. He said the issues will be sorted within days.

The new budget comes amid a relative calm following months of public protests that led to the ouster of Wickremesinghe’s predecessor Gotabaya Rajapaksa and his family members from power. Protesters accused the once-powerful Rajapaksa political family of being primarily responsible for the economic crisis through corruption and mismanagement.

Rajapaksa fled the country in July and resigned after protesters stormed his official residence. He is now in Thailand.

Party leaders say Rajapaksa is expected to return from exile early in September and have asked Wickremesinghe to provide him with security and facilities to which a former president is legally entitled.

Wickremesinghe, who was elected president in Parliament mainly through the votes of Rajapaksa’s loyalists, has since cracked down on protesters, arresting leaders and those occupied the president’s official residence and other key state buildings at the height of the demonstrations.

He also had the protest site opposite the president’s office dismantled.

The crackdown and the use of a harsh anti-terror law to detain a protest leader has led to the United States and European Union raising human rights concerns.

Wickremesinghe has also largely silenced those calling for his resignation who believe he is only an extension of Rajapaksas’ administration and protecting the political future of the former ruling family.

At one time besides the president, the prime minister and four other government ministers came from the same family before all of them were forced to resign.

“I don’t see a significant change except there is a new person in the office of the president,” political analyst Jayadeva Uyangoda said.

Rajapaksa’s politics continue because his party still holds the majority in Parliament.

Wickremesinghe has unsuccessfully tried to convince opposition parties to join his government so they could win over international trust.

“No opposition party seems to be willing to join Mr. Wickremesinghe’s proposed all-party government for two reasons; they think Mr. Wickremesinghe lacks legitimacy and they are not happy with the dominance of the Rajapaksa party,” Uyangoda said.
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African heads of state, representatives of international organizations and private business leaders gathered in Tunisia on Saturday for the Tokyo International Conference on African Development, a triennial event launched by Japan to promote growth and security in Africa.

Economic fallout from the COVID-19 pandemic, a food crisis worsened by Russia’s war in Ukraine, and climate change are among the challenges facing many African countries expected to define the two-day conference.

Tensions among African countries also weighed on the meeting: On Friday, Morocco announced a boycott of the event and recalled its ambassador to Tunisia to protest the inclusion of a representative of the Polisario Front movement fighting for independence for Western Sahara.

The conference comes as Russia and China have sought to increase their economic and other influence in Africa.

While 30 African heads of state and government attended the event in Tunis, Tunisia’s capital, many key talks are being held remotely, including those involving Japanese Prime Minister Fumio Kishida, who tested positive for COVID-19 ahead of the summit.

The Japanese government created and hosted the first TICAD summit in 1993. The conferences now are co-organized with the United Nations, the African Union and the World Bank. The summits have generated 26 development projects in 20 African countries.

This year, discussion around an increase of Japanese investments in Africa is anticipated, with particular focus on supporting start-ups and food security initiatives. Japan has said it plans to provide assistance for the production of rice, alongside a promised $130 million in food aid.

The Africa Center for Strategic Studies, an academic institution of the U.S. Defense Department, compared the conference’s format to the annual World Economic Forum in Davos, Switzerland, “where government, business, and civil society leaders participate on an equal basis.”

However, this weekend’s summit has sparked controversy in Tunis, which faces its own acute economic crisis, including a recent spike in food and gasoline shortages.

Critics have spoken about the organizers’ alleged “white-washing” of the city, which has seen cleaner streets and infrastructure improvements in preparation for the conference summit. One local commentator said the North African capital looked like it had applied makeup to impress participants.

Meanwhile, the journalists’ union in Tunisia issued a statement Friday condemning restrictions on reporting and information around the summit.

Morocco’s complaint stemmed from Tunisia inviting the Polisario Front leader to attend. Morocco annexed Western Sahara from Spain in 1975, and the Polisario Front fought to make it an independent state until a 1991 cease-fire. It’s a highly sensitive issue in Morocco, which seeks international recognition for its authority over Western Sahara.

“The welcome given by the Tunisian head of state to the leader of the separatist militia is a serious and unprecedented act, which deeply hurts the feelings of the Moroccan people,” Morocco’s Foreign Ministry said in a statement.

Morocco announced its withdrawal from the conference and the recall of its ambassador for consultations. But the ministry said the decision does not “call into question the commitment of the Kingdom of Morocco to the interests of Africa.”
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Federal Reserve Chair Jerome Powell delivered a stark warning Friday about the Fed’s determination to fight inflation with more sharp interest rate hikes: It will likely cause pain for Americans in the form of a weaker economy and job losses.

The message landed with a thud on Wall Street, sending the Dow Jones Industrial Average down more than 1,000 points for the day.

“These are the unfortunate costs of reducing inflation,” Powell said in a high-profile speech at the Fed’s annual economic symposium in Jackson Hole. “But a failure to restore price stability would mean far greater pain.”

Investors had been hoping for a signal from Powell that the Fed might moderate its rate increases later this year if inflation were to show further signs of easing. But the Fed chair indicated that that time may not be near, and stocks tumbled in response.

Runaway price increases have soured most Americans on the economy, even as the unemployment rate has fallen to a half-century low of 3.5%. It has also created political risks for President Joe Biden and congressional Democrats in this fall’s elections, with Republicans denouncing Biden’s $1.9 trillion financial support package, approved last year, as having fueled inflation.

Dow, Nasdaq sag

The Dow Jones average finished down 3% Friday, its worst day in three months. The tech-heavy Nasdaq composite shed nearly 4%. Shorter-term Treasury yields climbed as traders built up bets for the Fed to stay aggressive with rates.

Some on Wall Street expect the economy to fall into recession later this year or early next year, after which they expect the Fed to reverse itself and reduce rates.

A number of Fed officials, though, have pushed back against that notion. Powell’s remarks suggested that the Fed is aiming to raise its benchmark rate — to about 3.75% to 4% by next year — yet not so high as to tank the economy, in hopes of slowing growth long enough to conquer high inflation.

“The idea they are trying to hammer into the market’s head is that their approach makes a rapid pivot to [rate cuts] unlikely,” said Eric Winograd, an economist at asset manager AllianceBernstein. “They are going to stay tight even when it hurts.”

After raising its key short-term rate by a steep three-quarters of a point at each of its past two meetings — part of the Fed’s fastest series of hikes since the early 1980s — Powell said the Fed might ease up on that pace “at some point,” suggesting that any such slowing isn’t near.

Powell said the size of the Fed’s rate increase at its next meeting in late September — whether one-half or three-quarters of a percentage point — will depend on inflation and jobs data. An increase of either size, though, would exceed the Fed’s traditional quarter-point hike, a reflection of how severe inflation has become.

The Fed chair said that while lower inflation readings that have been reported for July have been “welcome,” he added that “a single month’s improvement falls far short of what [Fed policymakers] will need to see before we are confident that inflation is moving down.”

Drop in inflation

On Friday, an inflation gauge that is closely monitored by the Fed showed that prices actually declined 0.1% from June to July. Though prices did jump 6.3% in July from 12 months earlier, that was down from a 6.8% year-over-year jump in June, which had been the highest since 1982. The drop largely reflected lower gas prices.

In his speech Friday, Powell noted that the history of high inflation in the 1970s, when the central bank sought to counter high prices with only intermittent rate hikes, shows that the Fed must stay focused.

“The historical record cautions strongly against prematurely” lowering interest rates, he said. “We must keep at it until the job is done.”

What particularly worries Powell and other Fed officials is the prospect that inflation would become entrenched, leading consumers and businesses to change their behavior in ways that would perpetuate higher prices. If, for example, workers began demanding higher pay to match higher inflation, many employers would then pass on those higher labor costs to consumers in the form of higher prices.

Many analysts speculate that Fed officials want to see roughly six months or so of lower monthly inflation readings, similar to July’s, before stopping their rate hikes.

Powell’s speech was the marquee event of the Fed’s annual economic symposium at Jackson Hole, the first time the conference of central bankers is being held in person since 2019, after it went virtual for two years during the COVID-19 pandemic.

Rapid hikes

Since March, the Fed has implemented its fastest pace of rate increases in decades to try to curb inflation, which has punished households with soaring costs for food, gas, rent and other necessities. The central bank has lifted its benchmark rate by 2 full percentage points in just four meetings, to a range of 2.25% to 2.5%.

Those hikes have led to higher costs for mortgages, car loans and other consumer and business borrowing. Home sales have been plunging since the Fed first signaled it would raise borrowing costs.

At last year’s Jackson Hole symposium, Powell listed five reasons he thought inflation would be “transitory.” Yet it has persisted, and many economists have noted that those remarks haven’t aged well.

Powell indirectly acknowledged that history at the outset of his remarks Friday, when he said that “at past Jackson Hole conferences, I have discussed broad topics such as the ever-changing structure of the economy and the challenges of conducting monetary policy.”

“Today,” he said, “my remarks will be shorter, my focus narrower and my message more direct.”
…

California set itself on a path Thursday to end the era of gas-powered cars, with air regulators adopting the world’s most stringent rules for transitioning to zero-emission vehicles.

The move by the California Air Resources Board to have all new cars, pickup trucks and SUVs be electric or hydrogen by 2035 is likely to reshape the U.S. auto market, which gets 10% of its sales from the nation’s most populous state.

But such a radical transformation in what people drive will also require at least 15 times more vehicle chargers statewide, a more robust energy grid and vehicles that people of all income levels can afford.

“It’s going to be very hard getting to 100%,” said Daniel Sperling, a board member and founding director of the Institute of Transportation Studies at the University of California-Davis. “You can’t just wave your wand, you can’t just adopt a regulation — people actually have to buy them and use them.”

Democratic Governor Gavin Newsom told state regulators two years ago to adopt a ban on gas-powered cars by 2035, one piece of California’s aggressive suite of policies designed to reduce pollution and fight climate change. If the policy works as designed, California would cut emissions from vehicles in half by 2040.

More to come

Other states are expected to follow, further accelerating the production of zero-emissions vehicles.

Washington state and Massachusetts already have said they will follow California’s lead and many more are likely to — New York and Pennsylvania are among 17 states that have adopted some or all of California’s tailpipe emission standards that are stricter than federal rules. The European Parliament in June backed a plan to effectively prohibit the sale of gas and diesel cars in the 27-nation European Union by 2035, and Canada has mandated the sale of zero-emission cars by the same year.

California’s policy doesn’t ban cars that run on gas — after 2035 people can keep their existing cars or buy used ones, and 20% of sales can be plug-in hybrids that run on batteries and gas. Though hydrogen is a fuel option under the new regulations, cars that run on fuel cells have made up less than 1% of car sales in recent years.

The switch from gas will drastically reduce emissions and air pollutants. Transportation is the single largest source of emissions in the state, accounting for about 40% of the state’s greenhouse gas emissions. The air board is working on different regulations for motorcycles and larger trucks.

California envisions powering most of the economy with electricity, not fossil fuels, by 2045. A plan released by the air board earlier this year predicts electricity demand will shoot up by 68%. Today, the state has about 80,000 public chargers. The California Energy Commission predicted that needs to jump to 1.2 million by 2030.

The commission says car charging will account for about 4% of energy by 2030 when use is highest, typically during hot summer evenings. That’s when California sometimes struggles to provide enough energy because the amount of solar power diminishes as the sun goes down. In August 2020, hundreds of thousands of people briefly lost power because of high demand that outstripped supply.

That hasn’t happened since, and to ensure it doesn’t going forward, Newsom, a Democrat, is pushing to keep open the state’s last-remaining nuclear plant beyond its planned closure in 2025. Also, the state may turn to diesel generators or natural gas plants as a backup when the electrical grid is strained.

More than 1 million people drive electric cars in California today. Their charging habits vary, but most people charge their cars in the evening or overnight, said Ram Rajagopal, an associate professor of civil and environmental engineering at Stanford University who has studied car charging habits and energy grid needs.

If people’s charging habits stay the same, once 30% to 40% of cars are electric, the state would need to add more energy capacity overnight to meet demand, he said. The regulations adopted Thursday require 35% of vehicle sales to be electric by 2026, up from 16% now.

But if more people charged their cars during the day, that problem would be avoided, he said. Changing to daytime charging is “the biggest bang for the buck you’re going to get,” he said.

Both the state and federal government are spending billions to build more chargers along public roadways, at apartment complexes and elsewhere to give people more charging options.

The oil industry believes California is going too far. It’s the seventh-largest oil-producing state and shouldn’t wrap its entire transportation strategy around a vehicle market powered by electricity, said Tanya DeRivi, vice president for climate policy with the Western States Petroleum Association, an industry group.

“Californians should be able to choose a vehicle technology, including electric vehicles, that best fits their needs based on availability, affordability and personal necessity,” she said.

Some difficulties seen

Many car companies, like Kia, Ford and General Motors, are already on the path to making more electric cars available for sale, but some have warned that factors outside their control like supply chain and materials issues make Californians’ goals challenging.

“Automakers could have significant difficulties meeting this target, given elements outside of the control of the industry,” Kia Corp.’s Laurie Holmes told the air board before its vote.

As the requirements ramp up over time, automakers could be fined up to $20,000 per vehicle sold that falls short of the goal, though they’ll have time to comply if they miss the target in a given year.

The new rules approved by the air board say that the vehicles need to be able to travel 150 miles (241 kilometers) on one charge. Federal and state rebates are also available to people who buy electric cars, and the new rules have incentives for car companies to sell electric cars at a discount to low-income buyers.

But some representatives of business groups and rural areas said they fear electric cars will be too expensive or inconvenient.

“These regulations are a big step backwards for working families and small businesses,” said Gema Gonzalez Macias of the California Hispanic Chambers of Commerce.

Air board members said they are committed to keeping a close eye on equity provisions in the rules to make sure all California residents have access.

“We will not set Californians up to fail, we will not set up the other states who want to follow this regulation to fail,” said Tania Pacheco-Warner, a member of the board and co-director of the Central Valley Health Policy Institute at California State University-Fresno.
…

In 1999, fewer than 1 million people graduated from college in China. This year, a record-breaking 10.7 million new college graduates joined the Chinese job market.

And many of them face a tough time finding jobs, according to official data.

Youth unemployment in China reached 19.9% in July, according to the latest data released by the country’s National Bureau of Statistics. That’s the highest rate since Beijing started publishing the index in January 2018, when the rate was as low as 9.6%.

July’s high unemployment rate for youth aged 16-24 — up from a previous record high of 19.3% in June — is largely due to an economic slump that China has been experiencing over the past few years, multiple China analysts told VOA Mandarin. That economic downturn has been exacerbated by the COVID-19 pandemic and Beijing’s strict containment restrictions, including the “Zero COVID” policy, which reduced exports and consumer spending.

“They’re reaping what they’re sowing at the moment, and what they’ve sown for the last two years has not been great for the job market,” said Zak Dychtwald, CEO of the Young China Group, a consulting firm that does market research on youth in China.

The market may be even more discouraging to recent graduates and other jobseekers than the official figures suggest, said Dorothy Solinger, a professor emerita at the University of California, Irvine, who studies unemployment in China.

China’s “unemployment statistics are notoriously wrong,” Solinger told VOA Mandarin. “I’m surprised they’re announcing that it’s this high now, but it makes me think it may be even higher.”

Due to lengthy, pandemic-driven lockdowns in Shanghai and Beijing between March and May, the World Bank projected that China’s economic growth will slow to 4.3% in 2022, which is 0.8% lower than its original December estimate.

The pandemic “has made production and operation difficult, which has reduced the ability to attract jobs,” said Liu Pengyu, the spokesperson of China’s Washington, D.C. embassy, in an email.

“As the economy recovers and policies to stabilize employment, especially policies and measures to help young people find jobs, are strengthened, the employment situation on the whole will gradually improve and remain stable,” he added.

The pandemic isn’t the only culprit, Dychtwald told VOA Mandarin, since the issue of overall unemployment has been on Beijing’s radar for decades.

“For years, one of China’s biggest issues has been creating enough jobs for its educated class of young people,” Dychtwald said in an interview. “It’s just always been hard — and especially these last five or 10 years — to have the job market keep pace with the education rates.”

Even though unemployment is a perennial issue in China, that doesn’t mean the current unemployment rates don’t matter. Far from it, experts told VOA Mandarin, especially with the 20th National Congress of the Chinese Communist Party approaching in the fall, where President Xi Jinping is expected to secure a third term despite economic fallout from the pandemic, banking scandals and business practices that have caused a backlash and led some homeowners to stop paying their mortgages in protest.

The Chinese public will probably demand that Xi does more to address the unemployment crisis, especially ahead of the upcoming congress, according to Li Qiang, founder of the New York-based NGO China Labor Watch.

“This data may give him a wake-up call. This road is very difficult and will also affect the country’s political stability,” Qiang told VOA Mandarin.

Or as Dychtwald said, “If the government doesn’t address [unemployment], then it’s a potential powder keg, politically.”

Beijing has long maintained policies and programs to stimulate the economy and job growth, and much Chinese Communist Party rhetoric and art celebrates labor and workers, according to experts VOA interviewed. As one 2021 article in the state outlet Xinhua put it, “Only hard work brings happiness.”

In January, Xi wrote in the CCP’s journal Qiushi that no matter how much China  develops, the country must “steer clear of the idleness-breeding trap of welfarism.”

Manfred Elfstrom is an assistant professor at the University of British Columbia, Okanagan, whose research focuses on China, social movements, labor, and authoritarianism. To him, Xi’s article suggests the high youth unemployment rate China faces is of great concern to the CCP.

“If you are critical of people being ‘idle’ and relying on the government, then you also presumably feel pressure to deliver on job opportunities,” he told VOA Mandarin.

But it’s not just the CCP feeling the pressure. One of the most important factors impacting China’s younger generations is “the pressure to get ahead,” Dychtwald said, referring to “immense” social and familial expectations to excel in school, snare a well-paying job, marry and own property. “Pressure is the defining word.”

The CCP presents itself as a protector of the country and its people, so it’s more or less expected that the government will create an environment where people can find jobs, experts including Dychtwald said. With the realization that Beijing may not be meeting its end of the bargain comes dissatisfaction and disillusionment, particularly among the country’s youth.

China’s entrenched culture of overwork — which Dychtwald says is common in other countries like Singapore and South Korea — alongside fewer job prospects and relatively lower wages gave way to China’s “lying flat” movement in 2021.

The movement urges young people “to opt out of the struggle for workplace success, and to reject the promise of consumer fulfilment,” according to a 2021 Brookings Institution report.
…

President Joe Biden on Wednesday announced his long-awaited plan to deliver on his campaign promise to provide $10,000 in debt cancellation for millions of Americans — and up to $10,000 more for those with the greatest financial need.

Borrowers who earn less than $125,000 a year, or families earning less than $250,000, would be eligible for the $10,000 loan forgiveness, Biden announced in a tweet. For recipients of Pell Grants, which are reserved for undergraduates with the most significant financial need, the federal government would cancel up to an additional $10,000 in federal loan debt.

Biden is also extending a pause on federal student loan payments for what he called the “final time” through the end of 2022. He was set to deliver remarks Wednesday afternoon at the White House to unveil his proposal to the public.

If his plan survives legal challenges that are almost certain to come, it could offer a windfall to a swath of the nation in the run-up to this fall’s midterm elections. More than 43 million people have federal student debt, with an average balance of $37,667, according to federal data. Nearly a third of borrowers owe less than $10,000, and about half owe less than $20,000. The White House estimates that Biden’s announcement would erase the federal student debt of about 20 million people.

Proponents say cancellation will narrow the racial wealth gap — Black students are more likely to borrow federal student loans and at higher amounts than others. Four years after earning bachelor’s degrees, Black borrowers owe an average of nearly $25,000 more than their white peers, according to a Brookings Institution study.

Still, the action is unlikely to thrill any of the factions that have been jostling for influence as Biden weighs how much to cancel and for whom.

Biden has faced pressure from liberals to provide broader relief to hard-hit borrowers, and from moderates and Republicans questioning the fairness of any widespread forgiveness. The delay in Biden’s decision has only heightened the anticipation for what his own aides acknowledge represents a political no-win situation. The people spoke on the condition of anonymity to discuss Biden’s intended announcement ahead of time.

The continuation of the coronavirus pandemic-era payment freeze comes just days before millions of Americans were set to find out when their next student loan bills will be due. This is the closest the administration has come to hitting the end of the payment freeze extension, with the current pause set to end Aug. 31.

Details of the plan have been kept closely guarded as Biden weighed his options. The administration said Wednesday the Education Department will release information in the coming weeks for eligible borrowers to sign up for debt relief. Cancellation for some would be automatic, if the department has access to to their income information, but others would need to fill out a form.

Current students would only be eligible for relief if their loans were originated before July 1, 2022. Biden is also set to propose capping the amount that borrowers pay monthly on undergraduate loans at 5% of their earnings.

During the 2020 presidential campaign, Biden was initially skeptical of student loan debt cancellation as he faced off against more progressive candidates for the Democratic nomination. Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., had proposed cancellations of $50,000 or more.

As he tried to shore up support among younger voters and prepare for a general election battle against President Donald Trump, Biden unveiled his initial proposal for debt cancellation of $10,000 per borrower, with no mention of an income cap.

Biden narrowed his campaign promise in recent months by embracing the income limit as soaring inflation took a political toll and as he aimed to head off political attacks that the cancellation would benefit those with higher take-home pay. But Democrats, from members of congressional leadership to those facing tough reelection bids this November, have pushed the administration to go as broad as possible on debt relief, seeing it in part as a galvanizing issue, particularly for Black and young voters this fall.

Democrats are betting that Biden, who has seen his public approval tumble over the past year, can help motivate younger voters to the polls with the announcement.

Although Biden’s plan is changed from he initially proposed during the campaign, “he’ll get a lot of credit for following through on something that he was committed to,” said Celinda Lake, a Democratic pollster who worked with Biden during the 2020 election.

A survey of 18- to 29-year-olds conducted by the Harvard Institute of Politics in March found that 59% of those polled favored debt cancellation of some sort — whether for all borrowers or those most in need — although student loans did not rank high among issues that most concerned people in that age group.

Some advocates say Biden’s plan still falls short.

“If the rumors are true, we’ve got a problem,” Derrick Johnson, the president of the NAACP, which has aggressively lobbied Biden to take bolder action, said Tuesday.

“President Biden’s decision on student debt cannot become the latest example of a policy that has left Black people — especially Black women — behind,” he said. “This is not how you treat Black voters who turned out in record numbers and provided 90% of their vote to once again save democracy in 2020.”

John Della Volpe, who worked as a consultant on Biden’s campaign and is the director of polling at the Harvard Kennedy School Institute of Politics, said the particulars of Biden’s announcement were less important than the decision itself.

“It’s about trust in politics, in government, in our system. It’s also about trust in the individual, which in this case is President Biden,” Della Volpe said.

Republicans, meanwhile, see a political upside if Biden pursues a large-scale cancellation of student debt ahead of the November midterms, anticipating backlash for Democrats — particularly in states where there are large numbers of working-class voters without college degrees. Critics of broad student debt forgiveness also believe it will open the White House to lawsuits, on the grounds that Congress has never given the president the explicit authority to cancel debt on his own.

The Republican National Committee on Tuesday blasted Biden’s expected announcement as a “handout to the rich,” claiming it would unfairly burden lower-income taxpayers and those who have already paid off their student loans with covering the costs of higher education for the wealthy.

Biden’s long deliberations have led to grumbling among federal loan servicers, who had been instructed to hold back billing statements while Biden weighed a decision.

Industry groups had complained that the delayed decision left them with just days to notify borrowers, retrain customer service workers and update websites and digital payment systems, said Scott Buchanan, executive director of the Student Loan Servicing Alliance.

It increases the risk that some borrowers will inadvertently be told they need to make payments, he said.

“At this late stage I think that’s the risk we’re running,” he said. “You can’t just turn on a dime with 35 million borrowers who all have different loan types and statuses.”
…

Blueberry bison tamales, harvest salad with mixed greens, creamy carrot and wild rice soup, roasted turkey with squash. This contemporary Native American meal, crafted from the traditional foods of tribes across the United States and prepared with “Ketapanen” – a Menominee expression of love – cost caterer Jessica Pamonicutt $976 to feed a group of 50 people last November.

Today it costs her nearly double.

Pamonicutt is the executive chef of Chicago-based Native American catering business Ketapanen Kitchen. She is a citizen of the Menominee Indian Tribe of Wisconsin but was raised in the Windy City, home to one of the largest urban Native populations in the country, according to the American Indian Center of Chicago.

Her business aims to offer health-conscious meals featuring Indigenous ingredients to the Chicago Native community and educate people about Indigenous contributions to everyday American fare.

One day, she aims to purchase all ingredients from Native suppliers and provide her community with affordable access to healthy Indigenous foods, “but this whole inflation thing has slowed that down,” she said.

U.S. inflation surged to a new four-decade high in June, squeezing household budgets with painfully high prices for gas, food and rent.

Traditional Indigenous foods — like wild rice, bison, fresh vegetables and fruit in the Midwest — are often unavailable or too expensive for Native families in urban areas like Chicago, and the recent inflation spike has propelled these foods even further out of reach.

Risk of disease compounds the problem: healthy eating is key to battling diabetes, which afflicts Native Americans at the highest rate of any ethnic group in the United States.

“There are many benefits to eating traditional Native foods,” said Jessica Thurin, a dietician at Native American Community Clinic in Minneapolis. “The body knows exactly how to process and use that food. These foods are natural to the Earth.”

But many people the clinic serves are low-income and do not have the luxury of choosing where their food comes from. Food deserts – areas with limited access to a variety of healthy and affordable foods – are more likely to exist in places with higher rates of poverty and concentrations of minority populations.

“In these situations, there are limited healthy food options, not to mention limited traditional food options,” Thurin said.

Aside from health benefits, traditional foods hold important cultural and emotional value.

“It’s just comfort,” said Danielle Lucas, a 39-year-old descendant of the Sicangu Lakota people from the Rosebud Sioux Tribe in South Dakota.

Lucas’ mother, Evelyn Red Lodge, said she hasn’t prepared traditional dishes of the Great Plains, like wojapi berry sauce or stew, since May because the prices of key ingredients – berries and meat – have soared.

Pamonicutt, too, is feeling the pinch. Between last winter and this spring, the price of bison jumped from $13.99 to $23.99 per pound.

Shipping costs are so high that the chef said it’s often cheaper to drive hundreds of miles to buy ingredients, even with spiking gas prices. She’s even had to create her own suppliers: the 45-year-old’s parents are now growing crops for her business on their Wisconsin property near the Illinois border.

Gina Roxas, program coordinator at Trickster Cultural Center in Schaumburg, Illinois, a Chicago suburb, has also agreed to grow Native foods to help the chef minimize costs.

When a bag of wild rice costs $20, “you end up going to a fast food place instead to feed your family,” Roxas said.

More than 70% of Native Americans reside in urban areas – the result of decades of federal policies pushing families to leave reservations and assimilate into American society.

Dorene Wiese, executive director of the Chicago-based American Indian Association of Illinois, said members of her community have to prioritize making rent payments over splurging on healthy, traditional foods.

Even though specialty chefs like Pamonicutt aim to feed their own communities, the cost of her premium catering service is out of the price range for many urban Natives. Her meals end up feeding majority non-Native audiences at museums or cultural events that can foot the bill, said Wiese, a citizen of the Minnesota White Earth Band of Ojibwe Indians.

“There really is a shortage of Native foods in the area,” she said, But the problem isn’t unique to Chicago.

Dana Thompson, co-owner of The Sioux Chef company and executive director of a Minneapolis Indigenous food nonprofit, is another Native businesswoman striving to expand her urban community’s access to traditional local foods like lake fish, wild rice and wild greens amid the food price surge.

Thompson, of the Sisseton Wahpeton Oyate and Mdewakanton Dakota people, said inflation is “really impacting the food systems we have here,” which include dozens of Indigenous, local and organic food producers.

At Owamni, an award-winning Indigenous restaurant under The Sioux Chef umbrella, ingredients like Labrador Tea – which grows wild in northern Minnesota – have been especially difficult to get this year, Thompson said.

When an ingredient is not consistently available or affordable, she changes the menu.

“Being fluid and resilient is what we’re used to,” Thompson said. “That’s like the history of indigeneity in North America.”

Inflation is similarly impeding the American Indian Center of Chicago’s efforts to improve food security. Executive Director Melodi Serna, of the Turtle Mountain Band of Chippewa Indians and the Oneida Nation of Wisconsin, said the current prices of food boxes they distribute – with traditional Midwestern foods like fish, bison, venison, dairy products and produce – are “astronomical.”

“Where I could have been able to provide maybe 100 boxes, now we’re only able to provide 50,” Serna said.

For 57-year-old Emmie King, a Chicago resident and citizen of the Navajo Nation, getting the fresh ingredients she grew up with in New Mexico is much more difficult in the city, especially with inflation biting into her budget.

She finds ways to “stretch” the food she buys so it lasts longer, purchasing meat in bulk and freezing small portions to add to stews later on. “I get what I need, rather than what I want,” she said.

But King was able to enjoy a taste of home at an Aug. 3 luncheon at the American Indian Center of Chicago, where twenty elders gathered to enjoy turkey tamales with cranberry-infused masa, Spanish rice with quinoa, elote pasta salad with chickpea noodles and glasses of cold lemonade.

The mastermind behind the meal was Pamonicutt herself, sharing her spin on Southwestern and Northern Indigeneous food traditions. Through volunteering at senior lunches and developing a food education program, the chef is continuing to increase access to healthy Indigenous foods in her community.

“I want kids to learn where these foods come from,” the chef said. “That whole act of caring for your food … thanking it, understanding that it was grown to help us survive.”
…

The International Monetary Fund is facing pressure to reevaluate how it imposes fees on loans it disperses to needy countries like war-torn Ukraine — which is one of the fund’s biggest borrowers.

The move comes as more countries will need to turn to the IMF, as food prices and inflation internationally continue to rise.

Surcharges are added fees on loans imposed on countries that are heavily indebted to the IMF.

Treasury Deputy Secretary Wally Adeyemo said in Aspen last month that finance ministers of several countries realize they have to pay a price for Russia’s war in Ukraine, especially with food prices going up.

“They’re going to have to go to the IMF, they’re going to need to find assistance,” Adeyemo said.

However, the IMF fee system could change through U.S legislation. An amendment to the National Defense Authorization Act, otherwise known as the defense spending bill, would suspend IMF surcharges while their effectiveness and burden on indebted countries is studied.

That was passed by the U.S. House in July. The Senate is expected to vote on its defense bill in September. A representative of the Senate Armed Services Committee said an amendment may be offered in the next few weeks or even on the Senate floor.

As the largest IMF shareholder and member of the Fund’s executive board, the U.S. can push for policy decisions and unilaterally veto some board decisions.

Citing worsening financial crises in Sri Lanka and Pakistan as examples, some accuse China of engaging in debt trap diplomacy — or having countries fall so deeply in debt that they are beholden to it on international issues.

Advocates and civil rights organizations lodge the same complaint against the Fund, who claim the organization undercuts its core lender-of-last-resort role with countries in vulnerable positions to pay back debt.

With an ever-worsening risk of a global debt crisis and rising interest rates, the issue has become more pressing for countries looking to reduce their deficits.

However, some economists and representatives of the fund say the surcharges amount to responsible lending behavior, as they provide an incentive for members with large outstanding balances to repay their loans promptly. This applies especially to countries that may otherwise not be able to obtain financing from private lenders.

Maurice Obstfeld, a Berkeley economics professor and former IMF research department director said as a lender of last resort, the Fund’s ability to lend is important — as low and middle income countries face rising interest rates.

“The Fund’s staff is small and, in a crisis, its efforts are better deployed serving member countries’ needs,” he said in an email to The Associated Press. “Surcharges could be relaxed temporarily in the face of intense pressures on borrowing countries, but at the expense of the Fund’s ability to serve its membership in the longer term.”

Illinois Congressman Jesús “Chuy” García, who offered the defense spending amendment, told The Associated Press, “it is unfair for the IMF to require countries like Ukraine that are already deep in debt to pay surcharge fees. These surcharges increase poverty and hold back our global economic recovery.”

Ukraine’s projected real GDP is expected to decline by 35%, due in large part to Russia’s invasion of Ukraine, according to IMF data.

The country, engaged in a war with no projected end, has an outstanding balance of 7.5 billion SDRs — an IMF accounting unit valued at around $9.8 billion according to Ukrainian central bankers. The latest figures estimate that Ukraine will owe the IMF $360 million in surcharges between 2021 and 2023.

Economists Joseph Stiglitz at Columbia University and Kevin P. Gallagher at Boston University wrote earlier this year that “forcing excessive repayments lowers the productive potential of the borrowing country, but also harms creditors” and requires borrowers “to pay more at exactly the moment when they are most squeezed from market access in any other form.”

Serhiy Nikolaychuk, Deputy Chairman of the National Bank of Ukraine, said Ukraine is continuing to pay its debts “despite Russia’s full-scale war against Ukraine.”

“Our country will pay its debt and surcharges under previous programs and fulfill its obligations to the IMF,” Nikolaychuk said. “It will be difficult, but we will pay.”

For years, lawmakers, economists and civil rights organizations have called on the IMF, which has for decades loaned billions to low-income countries, to end its surcharge policy.

In January, 18 left-leaning lawmakers wrote to the Treasury calling for the surcharge policy to be eliminated. And in April, a group of 150 civil society groups and individuals signed an open letter to the IMF, asking for the same, calling surcharges “regressive.”

A spokesperson for the fund says the surcharges are designed to discourage large and prolonged use of IMF resources.

“They only apply to countries with particularly large outstanding loans,” Mayada Ghazala said in an emailed statement, adding that poorest countries are exempt from the surcharges.

The fund’s executive board met in December 2021 and discussed the role of surcharges — it ultimately decided not to make a change to the fees, but said they would review them again in the future.

The IMF was created in 1944 at the United Nations Bretton Woods Conference — one of its missions is lending to maintain the financial stability of countries. Among its 190 countries, it lends around $1 trillion, according to the organization’s website.

An April review of the fund’s financial health for fiscal year 2022 and 2023 states that lending income excluding surcharges “remain strong and are expected to exceed expenses in FY 2023–2024.”

Andrés Arauz, a senior research fellow at the liberal Center for Economic and Policy Research says the IMF’s financial position shows “the surcharges are not necessary for sound finances.”

“There is no excuse for the IMF to be punishing countries under debt stress with surcharges,” he said. “There is also no logic to it, the amount of money that the IMF raises from surcharges is trivial relative to its income and capacity.”

Garcia said, “I’m proud the House passed my amendment to support a pause and review of surcharges at the IMF, and I will keep up the fight until the president signs it into law.”

Separately, the U.S. has sent roughly $7.3 billion in aid to Ukraine since the war began in late February, including a new $775 million defense aid package announced Friday.
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