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The U.S. Small Business Administration has named Abdirahman Kahin, a Somali American restaurant chain owner in Minneapolis, Minnesota, as the National Small Business Person of the Year for 2023. Mohamud Mascadde in Minneapolis and Abdulaziz Osman Washington have more in this report, narrated by Salem Solomon. Videographers: Abdulaziz Osman and Mohamud Mascadde
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Adidas is set to update investors Friday about the unsold Yeezy shoes that have put the German sportswear giant in a predicament since it cut ties with Kanye West over his antisemitic comments late last year.

Executives are expected to tackle the issue when the company reports first-quarter results Friday which will likely show a 4% decline in net sales to $5.07 billion, according to a company-compiled consensus.

Investors have high hopes new CEO Bjorn Gulden can turn Adidas around: the stock has gained around 65% since Nov. 4 when the former Puma CEO was first floated as a successor to Kasper Rorsted, despite Adidas warning it could make a $700 million loss this year if it writes the Yeezy shoes off entirely.

Adidas has been in discussions over the footwear, including with people who “have been hurt” by West’s antisemitic comments, Gulden said in March, but there are no easy fixes.

The value of Yeezy shoes in the resale market has rocketed since Adidas stopped producing them, with some models more than doubling in price, but the company has yet to decide what to do with its unsold stock.

If Adidas decides to sell the shoes, any proceeds should go towards efforts to fight antisemitism, said Holly Huffnagle, U.S. Director for Combating Antisemitism at the American Jewish Committee, a non-governmental organization.

“The challenge is if these shoes are going to be out there and be worn by people, we must ensure that the antisemitic messaging of the shoes’ creator doesn’t spread,” she said.

Gulden in March said the company could donate the proceeds of the Yeezy sale to charities, but Adidas has given no updates since. “We continue to evaluate options for the use of the existing Yeezy inventory,” an Adidas spokesperson said, declining to comment on the possible timeline for a decision.

The market would welcome a resolution, but it may be too early given the complexities involved, said Geoff Lowery, analyst at Redburn in London, who sees a donation to charities as the most likely outcome.

The Anti-Defamation League, an international Jewish non-governmental organization based in New York, told Reuters it “stands ready and prepared to work with Adidas.”

Adidas in November donated more than $1 million to the organization.

The American Jewish Committee met with Adidas executives in December to discuss their commitment to reject antisemitism.

Adidas said it continues to “stand with the Jewish community in the fight against antisemitism and with all communities around the world facing injustice and discrimination.”

Shareholders want Adidas to draw a line under the Yeezy episode and develop ways to reboot the brand.

“Being successful with Yeezy probably made Adidas lazy on finding other growth drivers,” said Cedric Rossi, nextgen consumer analyst at Bryan Garnier in Paris.
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The Federal Reserve, the U.S. central bank, raised its benchmark interest rate by another quarter percentage point on Wednesday but signaled that it could pause further increases as it watches what effect a string of rate hikes has on controlling months of increasing consumer prices.

The policymakers’ action, its 10th straight decision to push rates higher, moves the benchmark rate to a range of 5% to 5.25%, a 16-year high. The increased rate is again likely to increase borrowing costs for consumers using their credit cards to buy everyday goods and big-ticket items and loan rates for businesses paying for supplies they need.

In announcing the latest rate increase, policymakers said they would now watch to see whether further rate increases are necessary to curb inflation. U.S. consumer prices rose at an annual pace of 5% through March, which is down sharply from the 9.1% pace nearly a year ago but still well above the 2% goal that the Fed policymakers strive for.

The Fed’s wait-and-see stance is a shift in policy. For months, the Federal Reserve had said it assumed further rate increases would be needed.

The policy-setting Federal Open Market Committee said in a statement, “In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”

“A decision on a pause was not made today,” Fed Chair Jerome Powell told reporters.

Despite the rising cost of spending for U.S. consumers, the world’s largest economy has remained resilient in its recovery from the 2020 coronavirus pandemic. Employers have continued to add hundreds of thousands of jobs month after month and the unemployment rate remains at a five-decade low.

Even so, three banks have failed in the last two months after bad decisions on investments by their managers and runs on deposits by their customers.

Some economic analysts continue to predict the American economy will slip into a recession later this year but such ongoing predictions over the last year have so far proven wrong.

The theory behind raising interest rates is it makes it more expensive for families and businesses to borrow and thus will curb economic growth and tame inflation.

Higher borrowing costs slow both consumer spending and hiring by employers. The concern for Fed policymakers, however, is to not slow the economy too much, to push it into a recession. 
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President Joe Biden next week will meet with the Democratic and Republican leaders of the House and Senate in an effort to avoid a catastrophic default on the nation’s debts, which could occur in as little as one month.

The United States government’s ability to borrow money is constrained by a limit on the amount of debt the U.S. Treasury Department can incur, known as the debt ceiling. The debt ceiling is currently set at $31.4 trillion, which the government hit in January, forcing the Treasury to use what it refers to as “extraordinary measures” to continue paying the nation’s bills without going into default.

On Monday, Treasury Secretary Janet Yellen warned that the extraordinary measures will soon be exhausted, possibly as soon as June 1, and that unless Congress authorizes more borrowing, the country will soon be unable to pay all of its obligations on time.

In a letter to lawmakers on Monday, Yellen said it was urgent that Congress acts quickly “to preserve the full faith and credit” of the U.S., reminding them that waiting until the last minute can result in damage to the country, even if technical default is averted.

“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,” Yellen wrote.

Also on Monday, the nonpartisan Congressional Budget Office issued a statement essentially agreeing with Yellen.

“Because tax receipts through April have been less than the Congressional Budget Office anticipated in February, we now estimate that there is a significantly greater risk that the Treasury will run out of funds in early June,” it said.

Same goal, different path

Leaders of both parties have expressed their desire to avoid a federal default, but they advocate different methods of doing so.

House Republicans, led by Speaker Kevin McCarthy, say they intend to raise the debt ceiling, but only after Democrats agree to a slate of broad spending cuts that would eviscerate Biden’s domestic agenda and institute a number of policies popular with conservatives, including new work requirements on individuals receiving public assistance.

Last week on a party-line vote, the House passed the Limit, Save, Grow Act, which would raise the debt ceiling by up to $1.5 trillion through March 31, 2024. The bill would cut government spending by $4.8 trillion over the next decade. Much of the savings would come from unspecified spending cuts spread across much of the government.

Specific programs targeted for major cuts include recent increases to the budget of the Internal Revenue Service, a controversial student debt relief measure taken by the White House, and spending on renewable energy that the president has championed.

‘Hostage-taking’

The threat implicit in the Republican position is that if Democrats fail to accept the cuts, the country will advance closer and closer to default until lawmakers strike a deal, or the government finds itself unable to pay its bills.

Biden and Democratic leaders in the House and Senate argue that Republicans’ strategy, which they criticize as “hostage-taking,” is irresponsible. They have called for Congress to pass a “clean” debt ceiling extension, meaning a bill with no additional provisions attached. They frequently point out that Congress passed three clean debt limit bills during former President Donald Trump’s term, all with Democratic support.

Any debt limit increase would have to pass both the House and the Senate, and with the latter under slim Democratic control, the House bill gutting Biden’s agenda is a non-starter.

House Democrats on Tuesday said they would attempt to force a vote on a clean debt limit increase through an arcane mechanism known as a “discharge petition,” which allows a majority of members of the House to demand a vote on a bill without the cooperation of leadership. Discharge petitions are rarely successful, and because Republicans have the majority in the House, this one would require at least five Republicans to join the Democrats — an unlikely prospect.

Impact of default could be global

Experts warn that if Congress and the White House are unable to strike a deal, and the U.S. finds itself unable to pay its bills on time, the impact on the economy — for the United States and the broader world — could be devastating.

“The result would be a self-inflicted severe recession that is totally unnecessary and obviously counterproductive,” Mark Hamrick, Washington bureau chief for Bankrate, told VOA. “It’s been demonstrated time and time again that the debt ceiling is not a useful tool in restraining federal spending. Therefore, we’re talking about adding potential downside to the U.S. and global economies for no reason, and at a time when there’s already heightened concern about the risk of recession.”

Joseph E. Gagnon, a senior fellow at the Peterson Institute for International Economics, told VOA that the disruption caused by a default by the U.S. Treasury would reverberate far beyond the U.S. itself.

He pointed out that the Great Recession of 2008-2009 was a global financial crisis partially triggered by the collapse of two major U.S. firms — the investment bank Lehman Brothers, which failed, and the insurance and financial services conglomerate American International Group, which was bailed out.

“That really caused a huge panic around the world, not just in the U.S.,” Gagnon said. “And realize that the U.S. Treasury is far, far bigger and has far, far more financial [obligations] being held by other people.”
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The sowing season is in full swing in Ukraine despite a series of significant challenges that farmers face as Russia continues its war on the country. The agricultural industry faces mined fields, instability with the Black Sea Grain Initiative, and a ban on the export of four key products to five European Union countries. Lesia Bakalets has more from Warsaw, Poland. VOA footage by Daniil Batushchak.
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U.S. job openings fell in March to the lowest level in nearly two years, a sign that the American labor market is cooling in the face of higher interest rates.

Employers posted 9.6 million vacancies in March, down from nearly 10 million in February. Layoffs rose to the highest level since December 2020, the Labor Department reported Tuesday.

The American job market is strong but losing momentum. The Federal Reserve has raised its benchmark interest rate nine times in just over a year in a bid to rein in inflation that last year hit a four-decade high. And higher borrowing costs are taking an economic toll.

The job market is strong but losing momentum.

Monthly job openings had never exceeded 10 million until 2021, then reeled off 20 straight months above that threshold. The streak ended in February.

The Labor Department on Friday released the jobs report for last month. Forecasters surveyed by the data firm FactSet expect that employers added fewer than 182,000 jobs last month, the third straight monthly drop since payrolls rose by a robust 472,000 in January.

The unemployment rate is expected to blip up to 3.6% in April, a couple of notches above January’s half-century low 3.4%.

 
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The California Department of Financial Protection and Innovation said Monday it had closed First Republic Bank and agreed a deal to sell its assets to JPMorgan Chase & Co and National Association, in what is the third major U.S. bank to fail in two months. 

JPMorgan bank was one of several interested buyers including PNC Financial Services Group, and Citizens Financial Group Inc, which submitted final bids on Sunday in an auction being run by U.S. regulators, sources familiar with the matter said over the weekend. 

A deal for First Republic, which had total assets of $229.1 billion as of April 13, comes less than two months after Silicon Valley Bank and Signature Bank failed amid a deposit flight from U.S. lenders, forcing the Federal Reserve to step in with emergency measures to stabilize markets. Those failures came after crypto-focused Silvergate voluntarily liquidated. 
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A restaurant on the outskirts of Nairobi skimps on the size of its chapatis — a flaky, chewy Kenyan flatbread — to save on cooking oil. Cash-strapped Pakistanis reluctantly go vegetarian, dropping beef and chicken from their diets because they can no longer afford meat. In Hungary, a cafe pulls burgers and fries off the menu, trying to dodge the high cost of oil and beef.

Around the world, food prices are persistently, painfully high. Puzzlingly, too. On global markets, the prices of grains, vegetable oil, dairy and other agricultural commodities have fallen steadily from record highs. But the relief hasn’t made it to the real world of shopkeepers, street vendors and families trying to make ends meet. 

“We cannot afford to eat lunch and dinner on most days because we still have rent and school fees to pay,” said Linnah Meuni, a Kenyan mother of four. 

She says a 2-kilogram (4.4-pound) packet of corn flour costs twice what she earns a day selling vegetables at a kiosk. 

Food prices were already running high when Russia invaded Ukraine in February last year, disrupting trade in grain and fertilizer and sending prices up even more. But on a global scale, that price shock ended long ago. 

The United Nations says food prices have fallen for 12 straight months, helped by decent harvests in places like Brazil and Russia and a fragile wartime agreement to allow grain shipments out of the Black Sea. 

The U.N. Food and Agriculture Organization’s food price index is lower than it was when Russian troops entered Ukraine. 

Yet somehow exorbitant food prices that people have little choice but to pay are still climbing, contributing disproportionately to painfully high inflation from the United States and Europe to the struggling countries of the developing world. 

Food markets are so interconnected that “wherever you are in the world, you feel the effect if global prices go up,” said Ian Mitchell, an economist and London-based co-director of the Europe program at the Center for Global Development. 

Why is food price inflation so intractable, if not in world commodity markets, then where it counts — in bazaars and grocery stores and kitchen tables around the world? 

Joseph Glauber, former chief economist at the U.S. Department of Agriculture, notes that the price of specific agricultural products — oranges, wheat, livestock — are just the beginning. 

In the United States, where food prices were up 8.5% last month from a year earlier, he says that “75% of the costs are coming after it leaves the farm. It’s energy costs. It’s all the processing costs. All the transportation costs. All the labor costs.”

And many of those costs are embedded in so-called core inflation, which excludes volatile food and energy prices and has proven stubbornly hard to wring out of the world economy. Food prices soared 19.5% in the European Union last month from a year earlier and 19.2% in the U.K., the biggest increase in nearly 46 years. 

Food inflation, Glauber says, “will come down, but it’s going to come down slowly, largely because these other factors are still running pretty high.” 

Others, including U.S. President Joe Biden, see another culprit: a wave of mergers that have, over the years, reduced competition in the food industry. 

The White House last year complained that just four meatpacking companies control 85% of the U.S. beef market. Likewise, just four firms control 70% of the pork market and 54% of the poultry market. Those companies, critics say, can and do use their market power to raise prices. 

Glauber, now a senior research fellow at the International Food Policy Research Institute, isn’t convinced that consolidation in agribusiness is to blame for persistently high food prices. 

Sure, he says, big agribusinesses can rake in profits when prices rise. But things usually even out over time, and their profits diminish in lean times. 

“There’s a lot of market factors right now, fundamentals, that can explain why we have such inflation,” he says. “I couldn’t point my finger at the fact that we just have a handful of meat producers.” 

Outside the United States, he says, a strong dollar is to blame for keeping prices high. In other recent food-price crunches, like in 2007-2008, the dollar wasn’t especially strong. 

“This time around, we’ve had a strong dollar and an appreciating dollar,” Glauber said. “Prices for corn and wheat are quoted in dollars per ton. You put that in local currency terms, and because of the strong dollar, that means they haven’t seen” the price drops that show up in commodity markets and the U.N. food price index. 

In Kenya, drought added to food shortages and high prices arising from the impact of war in Ukraine, and costs have stayed stubbornly high ever since. 

Corn flour, a staple in Kenyan households that is used to make corn meal known as ugali, has doubled in price over the last year. After the 2022 elections, President William Ruto ended subsidies meant to cushion consumers from higher prices. Nonetheless, he has promised to bring down corn flour prices. 

Kenyan millers bought wheat when global prices were high last year; they also have been contending with high production costs arising from bigger fuel bills. 

In response, small Kenyan restaurants like Mark Kioko’s have had to raise prices and sometimes cut back on portions. 

“We had to reduce the size of our chapatis because even after we increased the price, we were suffering because cooking oil prices have also remained high,” Kioko says.

In Hungary, people are increasingly unable to cope with the biggest spike in food prices in the EU, reaching 45% in March. 

To keep up with rising ingredient costs, Cafe Csiga in central Budapest has raised prices by around 30%. 

“Our chef closely follows prices on a daily basis, so the procurement of kitchen ingredients is tightly controlled,” said the restaurant’s general manager, Andras Kelemen. The café even dropped burgers and French fries from the menu. 

Joszef Varga, a fruit and vegetable seller in Budapest’s historic Grand Market Hall, says his wholesale costs have risen by 20% to 30%. All his customers have noticed the price spikes — some more than others. 

“Those with more money in their wallets buy more, and those with less buy less,” he said. “You can feel it significantly in people, they complain that everything is more expensive.” 

In Pakistan, shop owner Mohammad Ali says some customers are going meatless, sticking to vegetables and beans instead. Even the price of vegetables, beans, rice and wheat are up as much as 50%. 

Sitting at her mud-brick home outside the capital of Islamabad, 45-year-old widow Zubaida Bibi says: “Our life was never easy, but now the price of everything has increased so much that it has become difficult to live.” 

This month, she stood in a long line to get free wheat from Prime Minister Shahbaz Sharif’s government during the Islamic holy month of Ramadan. Bibi works as a maid, earning just 8,000 Pakistani rupees ($30) a month. 

“We need many other things, but we don’t have enough money to buy food for our children,” she said.

She gets money from her younger brother Sher Khan to stay afloat. But he’s vulnerable, too: Rising fuel costs may force him to close his roadside tea stall. 

“Increasing inflation has ruined my budget,” he said. “I earn less and spend more.” 
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U.S. regulators are trying to clinch a sale of First Republic Bank over the weekend, with roughly half a dozen banks bidding, sources said on Saturday, in what is likely to be the third major U.S. bank to fail in two months.

Citizens Financial Group Inc., PNC Financial Services Group and JPMorgan Chase & Co. are among bidders vying for First Republic in an auction process being run by the Federal Deposit Insurance Corp, according to sources familiar with the matter. US Bancorp was also among banks the FDIC had asked to submit a bid, according to Bloomberg.

Guggenheim Securities is advising the FDIC, two sources familiar with the matter said.

The FDIC process kicked off this week, three of the sources said. The bidders were asked to give nonbinding offers by Friday and were studying First Republic’s books over the weekend, one of the sources said.

A deal is expected to be announced on Sunday night before Asian markets open, with the regulator likely to say at the same time that it had seized the lender, three of the sources said. Bids are due by Sunday noon, one of the sources said.

Currently, the interested banks are evaluating options to see what they would like to bid for, one of the sources said, adding that it is likely that lenders will bid for all of FRC’s deposits, a sizable chunk of its assets and some of its liabilities.

US Bancorp did not immediately respond to a request for comment. First Republic, the FDIC, Guggenheim and the other banks declined to comment.

Difficult deal

A deal for First Republic would come less than two months after Silicon Valley Bank and Signature Bank failed amid a deposit flight from U.S. lenders, forcing the Federal Reserve to step in with emergency measures to stabilize markets.

While markets have since calmed, a deal for First Republic would be closely watched for the amount of support the government has to provide.

The FDIC officially insures deposits up to $250,000. But fearing further bank runs, regulators took the exceptional step of insuring all deposits at both Silicon Valley Bank and Signature.

It remains to be seen whether regulators would have to do so at First Republic as well. They would need approval by the Treasury secretary, the president and super-majorities of the boards of the Federal Reserve and the FDIC.

In trying to find a buyer before closing the bank, the FDIC is turning to some of the largest U.S. lenders. Large banks had been encouraged to bid for FRC’s assets, one of the sources said.

JPMorgan already holds more than 10% of the nation’s total bank deposits and would need a special government waiver to add more.

“For a large bank to buy all or most of the bank could be healthier for First Republic customers because it could put them on a broader and more stable platform,” said Eugene Flood, president of A Cappella Partners, who serves as an independent director at First Citizens BancShares and Janus Henderson and was speaking in a personal capacity. First Citizens agreed to buy failed Silicon Valley Bank last month.

Stunning fall

First Republic was founded in 1985 by James “Jim” Herbert, son of a community banker in Ohio. Merrill Lynch acquired the bank in 2007, but it was listed in the stock market again in 2010 after being sold by Merrill’s new owner, Bank of America Corp., following the 2008 financial crisis.

For years, First Republic lured high-net-worth customers with preferential rates on mortgages and loans. This strategy made it more vulnerable than regional lenders with less-affluent customers. The bank had a high level of uninsured deposits, amounting to 68% of deposits.

The San Francisco-based lender saw more than $100 billion in deposits fleeing in the first quarter, leaving it scrambling to raise money.

Despite an initial $30 billion lifeline from 11 Wall Street banks in March, the efforts proved futile, in part because buyers balked at the prospect of having to realize large losses on its loan book.

A source familiar with the situation told Reuters on Friday, that the FDIC decided the lender’s position had deteriorated and there was no more time to pursue a rescue through the private sector.

By Friday, First Republic’s market value had hit a low of $557 million, down from its peak of $40 billion in November 2021.

Shares of some other regional banks also fell on Friday, as it became clear that First Republic was headed for an FDIC receivership, with PacWest Bancorp down 2% after the bell and Western Alliance down 0.7%.
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The Federal Reserve blamed last month’s collapse of Silicon Valley Bank on poor management, watered-down regulations and lax oversight by its own staffers, and it said the industry needs stricter policing on multiple fronts to prevent future bank failures. 

The Fed was highly critical of its own role in the bank’s failure in a report released Friday. The report, compiled by Michael Barr, the Fed’s top regulator, said bank supervisors were slow to recognize blossoming problems at Silicon Valley Bank as it quickly grew in size in the years leading up to its collapse. The report also pointed out underlying cultural issues at the Fed, where supervisors were unwilling to be hard on bank management when they saw growing problems. 

Those cultural issues stemmed from legislation passed in 2018 that sought to lighten regulation for banks with less than $250 billion in assets, the report concluded. The Fed also weakened its own rules the following year, which exempted banks below that threshold from stress tests and other regulations. Both Silicon Valley Bank and New York-based Signature Bank, which also failed last month, had assets below that level. 

The changes increased the burden on regulators to justify the need for supervisory action, the report said. “In some cases, the changes also led to slower action by supervisory staff and a reluctance to escalate issues.” 

Separate reports also released Friday by the Federal Deposit Insurance Corp. and the Government Accountability Office, the investigative arm of Congress, also faulted the Fed and other regulators for a lack of urgency regarding Silicon Valley’s deficiencies. About 95% of the bank’s deposits exceeded the FDIC’s insurance cap and the deposits were concentrated in the technology industry, making the bank vulnerable to a panic. 

The Fed also said it planned to reexamine how it regulates larger regional banks such as Silicon Valley Bank, which had more than $200 billion in assets when it failed, although less than the $250 billion threshold for greater regulation. 

“While higher supervisory and regulatory requirements may not have prevented the firm’s failure, they would likely have bolstered the resilience of Silicon Valley Bank,” the report said. 

Tighter regulation seen

Banking policy analysts said the trio of critical reports made it more likely regulation would be tightened, though the Fed acknowledged it could take years for proposals to be implemented. 

The reports “provide a clear path for a tougher and more costly regulatory regime for banks with at least $100 billion of assets,” said Jaret Seiberg, an analyst at TD Cowen. “We would expect the Fed to advance proposals in the coming months.” 

Alexa Philo, a former bank examiner for the Federal Reserve Bank of New York and senior policy analyst at Americans for Financial Reform, said the Fed could adopt stricter rules on its own, without relying on Congress. 

“It is long past time to roll back the dangerous deregulation under the last administration to the greatest extent possible and pay close attention to the largest banks so this crisis does not worsen,” she said. 

The Fed also criticized Silicon Valley Bank for tying executive compensation too closely to short-term profits and the company’s stock price. From 2018 to 2021, profit at SVB Financial, Silicon Valley Bank’s parent, doubled and the stock nearly tripled. 

The report also pointed out that there were no pay incentives at the bank tied to risk management. Silicon Valley Bank notably had no chief risk officer at the firm for roughly a year, during a time when the bank was growing quickly. 

The Fed’s report, which included the release of internal reports and Fed communications, is a rare look into how the central bank supervises individual banks as one of the nation’s bank regulators. Typically, such processes are rarely seen by the public, but the Fed chose to release these reports to show how the bank was managed up to its failure. 

Bartlett Collins Naylor, financial policy advocate at Congress Watch, a division of Public Citizen, was surprised at the degree to which the Fed blamed itself for the bank failure. 

“I don’t know that I expected the Fed to say ‘mea culpa’ — but I find that adds a lot of credibility” to Federal Reserve leadership, Naylor said. 

Silicon Valley Bank was the go-to bank for venture capital firms and technology startups for years, but failed spectacularly in March, setting off a crisis of confidence for the banking industry. Federal regulators seized Silicon Valley Bank on March 10 after customers withdrew tens of billions of dollars in deposits in a matter of hours. 

Two days later, they seized Signature Bank. Although regulators guaranteed all the banks’ deposits, customers at other midsize regional banks rushed to pull out their money — often with a few taps on a mobile device — and move it to the perceived safety of big money center banks such as JPMorgan Chase.

Although the withdrawals have abated at many banks, First Republic Bank in San Francisco appears to be in peril, even after receiving a $30 billion infusion of deposits from 11 major banks in March. The bank’s shares plunged 70% this week after it revealed the extent to which customers pulled their deposits in the days after Silicon Valley Bank failed.
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With the peak tourism season setting in, Greece is bracing for a record number of arrivals and is welcoming back Chinese tourists. The warm feelings follow a period of discontent due to COVID-19 pandemic restrictions placed on travelers from China for the past three years, and other issues.

On the cobblestone streets of Athens, tavern owner Spiros Bairaktaris opens his arms wide open, welcoming news of what is already called the Chinese return.

He says, “We await them with great love, from the bottom of our hearts. We want to host them, to feed them, to offer all our services.”

All restaurants here, he says, are aching for their return.

While groups of Chinese travelers are just starting to trickle in, Greece expects the number to surge through the summer, exceeding the roughly 200,000 who visited the country ahead of the COVID-19 pandemic.

In recent months, a flurry of meetings between Greek and Chinese officials has helped ease visa restrictions. Direct flights have resumed, but also increased in number and locations in a strategy to boost inflows of travelers from China,

Tourism accounts for more than a quarter of Greece’s economic earnings. And with forecasts predicting more than 30 million travelers this summer, business and officials here say that the Chinese return will help stoke the engines of this country’s lackluster economy after a decade-long recession and the pandemic.

“In the past, we have seen that average spending from our friends from China was even double [that of] European travelers to Greece,” said Sofia Zacharaki, the deputy tourism minister.

Such sweeping feelings of welcome and enthusiasm are new.

Just five years ago and ahead of the pandemic, many businesses and locals said they upset with what they called an over-saturation of Chinese travelers. Greeks pointed to what they say was an over-commercialization of mass Chinese weddings against iconic sunsets on popular islands like Santorini.

They also say that on Santorini and other islands, law enforcement, garbage collection and other services were overstretched… due to the influx of mainly Chinese visitors. Concerns were also raised about reckless construction as the host islands sought to accommodate the visitors.

And many locals began fearing that Chinese and other visitors were posing threats to social cohesion.

Whether such deep-rooted concerns will creep up again remains unclear.

For now, though, restaurant menus are being translated into Mandarin, shops are being festooned with Chinese flags and hotel employees, are learning Mandarin.

 
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German government officials and labor unions have reached a pay deal for more than 2.5 million public-sector workers, ending a lengthy dispute and heading off the possibility of disruptive all-out strikes.

The ver.di union had pressed for hefty raises as Germany, like many other countries, grapples with high inflation. Interior Minister Nancy Faeser said as the deal was announced around midnight Sunday that “we accommodated the unions as far as we could responsibly do in a difficult budget situation.”

The deal entails tax-free one-time payments totaling 3,000 euros ($3,300) per employee, with the first 1,240 euros coming in June and monthly payments of 220 euros following until February. In March, regular monthly pay for all will be increased by 200 euros, followed by a salary increase of 5.5% — with a minimum raise of 340 euros per month assured. The deal runs through to the end of 2024.

Ver.di originally sought a one-year deal with a raise of 10.5%. The deal was reached on the basis of a proposal by arbitrators who were called in after talks broke down last month.

Ver.di chair Frank Werneke said that “we went to our pain threshold with the decision to make this compromise.” He said that the raises in regular pay next year will amount to an increase of over 11% for most employees of federal and municipal governments.

The union has staged frequent walkouts over recent months to underline its demands, with local transport, hospitals and other public services hit.

Germany’s annual inflation rate has declined from the levels it reached late last year but is still high. It stood at 7.4% in March.

The past few months have seen plenty of other tense pay negotiations in Europe’s biggest economy, some of which have yet to be concluded. In a joint show of strength, ver.di and the EVG union — which represents many railway workers — staged a one-day strike last month that paralyzed much of the country’s transport network.

EVG, whose members walked off the job again on Friday, is seeking a 12% raise and has rejected the idea of negotiating a deal based on the arbitration proposal that helped resolve the public workers’ dispute. The next round of talks is set for Tuesday.

And ver.di is still in a dispute with Germany’s airport security companies association over pay and conditions for security staff. In the latest of a string of walkouts, it has called on security workers at Berlin Airport to walk out on Monday. The airport says there will no departures all day.
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This time it’s for real. 

Many of Twitter’s high-profile users are losing the blue check marks that helped verify their identities and distinguish them from impostors on the Elon Musk-owned social media platform. 

After several false starts, Twitter began making good on its promise Thursday to remove the blue checks from accounts that don’t each pay a monthly fee to keep them. Twitter had about 300,000 verified users under the original blue-check system—many of them journalists, athletes and public figures. The checks began disappearing from these users’ profiles late morning Pacific time. 

High-profile users who lost their blue checks Thursday included Beyonce, Pope Francis and former President Donald Trump.

The costs of keeping the marks range from $8 a month for individual web users to a starting price of $1,000 monthly to verify an organization, plus $50 monthly for each affiliate or employee account. Twitter does not verify the individual accounts to ensure the users are who they say they are, as was the case with the previous blue check doled out during the platform’s pre-Musk administration. 

Celebrity users, from basketball star LeBron James to “Star Trek’s” William Shatner, have balked at joining — although on Thursday, James’ blue check indicated that the account paid for verification. “Seinfeld” actor Jason Alexander pledged to leave the platform if Musk took his blue check away. 

‘Anyone could be me’

“The way Twitter is going anyone could be me now. The verification system is an absolute mess,” Dionne Warwick tweeted Tuesday. She had earlier vowed not to pay for Twitter Blue, saying the monthly fee “could [and will] be going toward my extra hot lattes.” 

On Thursday, Warwick lost her blue check. 

After buying Twitter for $44 billion in October, Musk has been trying to boost the struggling platform’s revenue by pushing more people to pay for premium subscriptions. But his move also reflects his assertion that the blue verification marks have become undeserved or “corrupt” status symbols for elite personalities, news reporters and others granted verification for free by Twitter’s previous leadership. 

Twitter began tagging profiles with blue check marks about 14 years ago. One main reason for doing so was to provide an extra tool to curb misinformation coming from accounts impersonating people. Most “legacy blue checks,” including the accounts of politicians, activists and people who suddenly find themselves in the news, as well as little-known journalists at small publications around the globe, are not household names. 

One of Musk’s first product moves after taking over Twitter was to launch a service granting a blue check to anyone willing to pay $8 a month. But it was quickly inundated by impostor accounts, including those impersonating Nintendo, pharmaceutical company Eli Lilly and Musk’s businesses Tesla and SpaceX, so Twitter had to suspend the service days after its launch. 

The relaunched service costs $8 a month for web users and $11 a month for users of Twitter’s iPhone or Android apps. Subscribers are supposed to see fewer ads, be able to post longer videos and have their tweets featured more prominently. 
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Washington is not seeking to decouple the American economy from China’s, U.S. Trade Representative Katherine Tai said Thursday while on a visit to Tokyo.

Tai, who is on her fourth visit to Japan after being appointed the top U.S. trade envoy, said all members of President Joe Biden’s administration have been “very clear that it is not the intention to decouple” China’s economy.

U.S. trade sanctions against China are “narrowly targeted,” she said.

Given its huge size and importance, unraveling the ties with China that keep the world economy running is “not a goal or achievable,” Tai said in a news conference at the Foreign Correspondent’s Club of Japan.

Chinese officials have often lashed out at the U.S. over trade sanctions and other restrictions on sharing of advanced technology with China, accusing Washington of trying to “contain” China and hinder its path toward greater affluence.

Tai said that regular trade work between the U.S. and China was continuing and she was “completely open to engaging with my counterparts in Beijing,” though she has no immediate plans to visit China.

At the same time, the United States is seeking to strengthen and expand economic security cooperation with its Asian allies and partners in response to China’s growing assertiveness and its dominance in many manufacturing industries.

Security and stability of supply chains is an issue that has gained urgency after disruptions caused by the pandemic and controls imposed to try to fight outbreaks of COVID-19 resulted in shortages of computer chips and other goods.

A recent agreement on trade in critical minerals will allow electric vehicles using metals sourced or processed in Japan to qualify for tax breaks under the Inflation Reduction Act. That deal is evidence of the U.S. commitment to “building collective resilience and security,” Tai said.

“We have all experienced the fragility of our dispersed supply chains in recent years, especially through the pandemic and Russia’s brutal, unjustified attack on Ukraine,” Tai said. “And we’ve become too reliant, we have discovered, on certain countries for the supply of critical minerals needed to fuel our clean energy future.”

A new approach

The Biden administration has been adopting a new approach to global trade, arguing that America’s traditional reliance on promoting free trade pacts failed to anticipate China’s brand of capitalism and the possibility that a major power like Russia would go to war against one of its trading partners.

Tai recently gave a speech at American University, where she spoke of “friend-shoring” — building up supply chains among allied countries and reducing dependence on geopolitical rivals such as China.

Tai pointed to a new trade partnership with Japan that she said has brought “tangible results for our workers, small businesses, and producers on both sides of the Pacific.” That includes an agreement to lift limits on U.S. exports of beef to Japan and a new biofuels policy to facilitate exports of more ethanol to Japan, she said.

Tai also reviewed the status of negotiations on the Indo-Pacific Economic Framework, or IPEF, a new trade pact proposed by Washington.

She said a third round of negotiations on the accord was planned in two weeks’ time in Singapore.

The framework has 13 members, including the U.S., that account for 40% of global gross domestic product: Australia, Brunei, India, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam.

Efforts to fortify relationships

The U.S. has stepped up diplomacy across the region, with Secretary of State Antony Blinken stopping over the weekend in Vietnam, which Washington sees as a key component of its strategy for the region given the country’s traditional rivalry with its much larger neighbor China.

Tai’s Tokyo visit follows a trip to the Philippine capital, Manila, to help fortify trade relations among the three countries as they build both economic and defense ties.

During her stay in Japan, Tai met with Japanese Foreign Minister Yoshimasa Hayashi and discussed making supply chains more resilient and secure, the Japanese Foreign Ministry said in a statement.

She also met with the Minister of Economy, Trade and Industry Yasutoshi Nishimura. The trade ministry said the two also spoke about strengthening supply chains—an issue that gained urgency amid shortages of computer chips and other goods during the pandemic. They also discussed ways to cooperate in the protection of human rights in business, the ministry said.

Japan and the United States have set up a task force that aims to eliminate human rights violations in international supply chains and to ban use of materials from suppliers that subject their workers to inhumane conditions.

To highlight such efforts, Tai toured an outlet of outdoor equipment and clothing retailer Patagonia in Tokyo’s popular Shibuya shopping and business district.
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People worldwide have long been paying more for a premium cup of coffee. But what about a cost of over $100 for a cup? From Panama City, Panama, Oscar Sulbarán has the story, narrated by Cristina Caicedo Smit.
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Apple Inc. opened its first flagship store in India in a much-anticipated launch Tuesday that highlights the company’s growing aspirations to expand in the country it also hopes to turn into a potential manufacturing hub.

The company’s CEO Tim Cook posed for photos with a few of the 100 or so Apple fans who had lined up outside the sprawling 20,000-square-foot store in India’s financial capital, Mumbai, its design inspired by the iconic black-and-yellow cabs unique to the city. A second store will open Thursday in the national capital, New Delhi.

“India has such a beautiful culture and an incredible energy, and we’re excited to build on our long-standing history,” Cook said in a statement earlier.

The tech giant has been operating in India for more than 25 years, selling its products through authorized retailers and the website it launched a few years ago. But regulatory hurdles and the pandemic delayed its plans to open a flagship store.

The new stores are a clear signal of the company’s commitment to invest in India, the second-largest smartphone market in the world where iPhone sales have been ticking up steadily, said Jayanth Kolla, analyst at Convergence Catalyst, a tech consultancy. The stores show “how much India matters to the present and the future of the company,” he added.

For the Cupertino, California-based company, India’s sheer size makes the market especially encouraging.

About 600 million of India’s 1.4 billion people have smartphones, “which means the market is still under-penetrated and the growth prospect is huge,” said Neil Shah, vice president of research at technology market research firm Counterpoint Research.

Between 2020 and 2022, the Silicon Valley company has gained some ground in the smartphone market in the country, going from just about 2% to capturing 6%, according to Counterpoint data.

Still, the iPhone’s hefty price tag puts it out of reach for the majority of Indians.

Instead, iPhone sales in the country have thrived among the sliver of upper-middle-class and rich Indians with disposable incomes, a segment of buyers that Shah says is rising. According to Counterpoint data, Apple has captured 65% of the “premium” smartphone market, where prices range up from 30,000 rupees ($360).

In September, Apple announced it would start making its iPhone 14 in India. The news was hailed as a win for Prime Minister Narendra Modi’s government, which has pushed for ramping up local manufacturing ever since he came to power in 2014.

Apple first began manufacturing from India in 2017 with its iPhone SE and has since continued to assemble a number of iPhone models from the country.

Most of Apple’s smartphones and tablets are assembled by contractors with factories in China, but the company started looking at potentially moving some production to Southeast Asia or other places after repeated shutdowns to fight COVID-19 disrupted its global flow of products.

“Big companies got a jolt, they realized they needed a backup strategy outside of China — they couldn’t risk another lockdown or any geopolitical rift affecting their business,” said Kolla.

Currently, India makes close to 13 million iPhones every year, up from less than 5 million three years ago, according to Counterpoint Research. This is about 6% of iPhones made globally — and only a small slice in comparison to China, which still produces around 90% of them.

Last week, India’s Commerce Minister Piyush Goyal said the government was in regular touch with Apple to support their business here and that the company had plans to have 25% of their global production come out of India in the next five years.

The challenge for Apple, according to Shah of Counterpoint, is that the raw materials are still coming from outside India so the tech company will need to either find a local supplier or bring their suppliers, based in countries like China, Japan and Taiwan, closer to drive up production.

Still, he’s optimistic this target could be met, especially with labor costs being lower in India and the government wooing companies with attractive subsidies to boost local manufacturing.

“For Apple, everything is about timing. They don’t enter a market with full flow until they feel confident about their prospects. They can see the opportunity here today — it’s a win-win situation,” Shah said.
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Billionaire Elon Musk said on Monday he will launch an artificial intelligence (AI) platform that he calls “TruthGPT” to challenge the offerings from Microsoft and Google.

He criticized Microsoft-backed OpenAI, the firm behind chatbot sensation ChatGPT, of “training the AI to lie” and said OpenAI has now become a “closed source,” “for-profit” organization “closely allied with Microsoft.”

He also accused Larry Page, co-founder of Google, of not taking AI safety seriously.

“I’m going to start something which I call ‘TruthGPT’, or a maximum truth-seeking AI that tries to understand the nature of the universe,” Musk said in an interview with Fox News Channel’s Tucker Carlson aired on Monday.

He said TruthGPT “might be the best path to safety” that would be “unlikely to annihilate humans.”

“It’s simply starting late. But I will try to create a third option,” Musk said.

Musk, OpenAI, Microsoft and Page did not immediately respond to Reuters’ requests for comment.

Musk has been poaching AI researchers from Alphabet Inc’s Google to launch a startup to rival OpenAI, people familiar with the matter told Reuters.

Musk last month registered a firm named X.AI Corp, incorporated in Nevada, according to a state filing. The firm listed Musk as the sole director and Jared Birchall, the managing director of Musk’s family office, as a secretary.

‘Civilizational destruction’

The move came even after Musk and a group of artificial intelligence experts and industry executives called for a six-month pause in developing systems more powerful than OpenAI’s newly launched GPT-4, citing potential risks to society.

Musk also reiterated his warnings about AI during the interview with Carlson, saying “AI is more dangerous than, say, mismanaged aircraft design or production maintenance or bad car production” according to the excerpts.

“It has the potential of civilizational destruction,” he said.

He said, for example, that a super intelligent AI can write incredibly well and potentially manipulate public opinions.

He tweeted over the weekend that he had met with former U.S. President Barack Obama when he was president and told him that Washington needed to “encourage AI regulation.”

Musk co-founded OpenAI in 2015, but he stepped down from the company’s board in 2018. In 2019, he tweeted that he left OpenAI because he had to focus on Tesla and SpaceX.

He also tweeted at that time that other reasons for his departure from OpenAI were, “Tesla was competing for some of the same people as OpenAI & I didn’t agree with some of what OpenAI team wanted to do.”

Musk, CEO of Tesla and SpaceX, has also become CEO of Twitter, a social media platform he bought for $44 billion last year.

In the interview with Fox News, Musk said he recently valued Twitter at “less than half” of the acquisition price.

In January, Microsoft Corp announced a further multi-billion dollar investment in OpenAI, intensifying competition with rival Google and fueling the race to attract AI funding in Silicon Valley.
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