planned to address the nation on Tuesday.

Declan Walsh and Matthew Mpoke Bigg reported from Nairobi, and Abdi Latif Dahir from Eldoret.

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AHF LA Times Ad: ‘City Hall: Save the Clark Hotel’

LOS ANGELES–(BUSINESS WIRE)–AHF will run another full-page, full-color housing advocacy ad targeting Los Angeles elected and city officials, which is set to be published this Sunday, August 14th in the Los Angeles Times. The ad headlined ”Save the Clark Hotel”, highlights the recent history of the Clark (426 S Hill St. between 4th and 5th Streets) near Pershing Square which has been sitting vacant since the Chetrit Group, headed by billionaire and convicted felon Joseph Chetrit, purchased it a decade ago in 2012.

AHF’s ad urges City Hall to try and work to get the Clark’s 550-rooms repurposed as homeless and extremely-low-income housing and to help identify and assist in repurposing what AHF estimates are thousands of other vacant SRO and other hotel rooms across Los Angeles.

The ad is another in AHF’s SOS campaign (‘Save Our Single-room-occupancy’ hotels) urging the city to preserve Los Angeles’ single room occupancy buildings, and to stop allowing developers to demolish and/or convert these properties into luxury units, or, as in the case of the Clark, warehouse it vacant for years on end while the city’s homeless crisis exploded.

The ad notes “All the empty hotel rooms in Downtown LA could house all of the currently homeless people there,” and that “City Hall received more than $1 billion in federal COVID relief and spent zero on housing the homeless.”

Since 2017, AHF through its Healthy Housing Foundation (HHF) has purchased, restored, and re-occupied a total of 13 single-room-occupancy buildings and other hotels and motels, totaling 1,415 rooms at a low cost, conclusively providing everyday Angelinos with the access to desperately needed affordable housing for the city of Los Angeles.

AIDS Healthcare Foundation (AHF), the largest global AIDS organization, currently provides medical care and/or services to over 1.6 million individuals in 45 countries worldwide in the US, Africa, Latin America/Caribbean, the Asia/Pacific Region and Eastern Europe. To learn more about AHF, please visit our website: www.aidshealth.org, find us on Facebook: www.facebook.com/aidshealth, follow us @aidshealthcare or subscribe to our AHF podcast “AHFter Hours.”

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Ukraine Live Updates: Residents Flee Town Near Nuclear Site as Shelling Continues

Credit…David Guttenfelder for The New York Times

ZAPORIZHZHIA, Ukraine — Artillery fire resumed on Sunday from the direction of a nuclear power plant in southern Ukraine, with shells streaking into a town from which the Ukrainian army has been unable to return fire, for fear of causing a meltdown or releasing radiation at the plant.

Hours before the barrages, there were reports that conditions were unraveling in and near the Zaporizhzhia Nuclear Power Plant. The flight of civilians from the area accelerated on Saturday.

The plant is the first active nuclear power plant in a combat zone. The United States and European Union have called for the formation of a demilitarized zone, as the fighting in and around the plant and its active reactors and stored nuclear waste has sparked particular worry.

Ukraine’s president, Volodymyr Zelensky, said in his nightly address on Saturday that Russia had resorted to “nuclear blackmail” at the plant, reiterating a Ukrainian analysis that Moscow was using it to slow a Ukrainian counteroffensive toward the Russian-occupied city of Kherson, where Russian conventional military defenses appear increasingly wobbly.

Contrary to the fears of some analysts when Moscow launched its invasion in February, the more urgent nuclear threat in the Ukraine war now appears to be Russia damaging the civilian plant, rather than deploying its own nuclear weapons. Russia says it’s Ukrainian forces who are shelling the plant.

Engineers say that yard-thick reinforced concrete containment structures protect the reactors from even direct hits. International concern, however, has grown that shelling could spark a fire or cause other damage that would lead to a nuclear accident.

The six pressurized water reactors at the complex retain most sources of radiation, reducing risks. After pressurized water reactors failed at the Fukushima nuclear plant in Japan in 2011, Ukraine upgraded the Zaporizhzhia site to enable a shutdown even after the loss of cooling water from outside the containment structures, Dmytro Gortenko, a former plant engineer, said in an interview.

Ukraine’s military intelligence agency said that on Saturday, Russian artillery fire hit a pump, damaged a fire station and sparked fires near the plant that could not be immediately extinguished because of the damage to the fire station.

In fields near the Russian-controlled town of Enerhodar, close to the plant, long lines of cars carrying fleeing civilians formed on Saturday, according to social media posts and another former engineer at the plant who has remained in touch with local residents.

“Locals are abandoning the town,” said the former engineer, who asked to be identified by only his first name, Oleksiy, because of security concerns. Residents had been leaving for weeks, but the pace picked up after Saturday’s barrages and fires, he said.

Since Russia captured the plant in March, its army has controlled the facility, while Ukrainian engineers have continued to operate it.

Ukrainian employees are not fleeing but sending their families away, said Oleksiy, who left in June. Enerhodar was built for plant employees in the Soviet period and had a prewar population of about 50,000.

Ukraine has accused Russia of staging artillery attacks targeting Ukrainian towns across the Dnipro River from the plant starting in July, as Ukraine’s counteroffensive in the south ramped up.

Overnight into Sunday morning, Russian howitzers fired on the Ukrainian town of Nikopol, which lies across a reservoir from the power plant, Yevheny Yetushenko, the Ukrainian military governor of the town, said in a post on Telegram.

The Ukrainian military has said it has few options for firing back. In July, it used a self-destructing drone to strike a Russian rocket artillery launcher that sat about 150 yards from one of the plant’s reactors.

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Ukraine Grain Ship Passes Russia’s Black Sea Blockade

MYKOLAIV, Ukraine — A ship loaded with corn on Monday became the first cargo vessel to sail from Ukraine in more than five months of war, passing through Russia’s naval blockade of Ukraine’s Black Sea ports and raising hopes that desperately needed food will soon reach nations afflicted by shortages and soaring prices.

The ship’s journey was the culmination of months of negotiations and an international campaign to get grain out of Ukraine, one of the world’s breadbaskets before the war. Russia’s invasion and blockade, along with Western sanctions impeding Russian exports and factors like drought and climate change, have sharply cut global grain supplies, threatening to bring famine to tens of millions of people, particularly in the Middle East and Africa.

Mediators from the United Nations and Turkey, which shares the Black Sea coast with Russia and Ukraine, oversaw months of talks in Istanbul. Though discussions seemed hopelessly mired for weeks, in late July the parties struck a deal to free more than 20 million tons of grain.

the causes of a looming global hunger crisis.

“Ensuring that grain, fertilizers, and other food-related items are available at reasonable prices to developing countries is a humanitarian imperative,” António Guterres, the U.N. secretary general, said Monday. “People on the verge of famine need these agreements to work, in order to survive.”

major supplier of fertilizer, and with Ukraine it supplies more than a quarter of the world’s wheat.

But as the Razoni’s Black Sea crossing raised hopes for some degree of cooperation between the combatants, the fighting intensified on multiple fronts in Ukraine.

a counteroffensive in the southern Kherson region, Ukraine has used long-range precision weapons, recently supplied by the West, to disrupt Russian supply lines and logistics. Ukrainian forces have attacked Russian command and control centers, hit supply routes, tried to isolate Russian forces into pockets and enlisted Ukrainian saboteurs behind enemy lines.

adept at attacking Russian command and control hubs and destroying large amounts of Russian equipment. On Monday, the Biden administration announced another round of support for Ukraine: $550 million in military aid, including more ammunition for 155-millimeter howitzer artillery pieces and High Mobility Artillery Rocket Systems, or HIMARS, that the United States has already provided.

But for all its sluggish or faltering progress in the war, Russia retains vast advantages in the size of its arsenal, and its military has shown a willingness and ability to strike all over the country, even as it focuses on gaining ground in eastern Ukraine. There, Russia has blanketed town after town with overwhelming artillery fire as it tries to reposition ground forces to press forward.

The strategy slowly gave Russia control of the eastern Luhansk Province, leaving many cities and villages in ruins. Russian forces have since moved to reinforce the south and to push into another eastern province, Donetsk.

“Their tactic remains much the same as it was during the hostilities in Luhansk region,” Serhiy Haidai, head of Ukraine’s Luhansk regional government, said on Monday.

He said the Russians were making daily attempts to mount an offensive on the city of Bakhmut, in Donetsk, but so far had failed to break through the main Ukrainian defensive lines.

Russian forces have also continued to shell residential and military areas in and around the city of Kharkiv in the northeast, putting pressure on Ukraine not to shift too many of its defenses from there.

In Chuhuiv, in the Kharkiv region and just 10 miles from Russian lines, residents were still recovering on Monday from missile strikes last week on the House of Culture, a building used since Soviet times for cultural events. In wartime, the building’s kitchens were used to prepare food for the needy, but members of the city government had also used it as a temporary office, possibly a reason for the attack.

The missiles killed three people sheltering in the basement and wounded several more, according to Oleh Synyehubov, the Kharkiv regional administrator. A volunteer cook was among the dead, residents said. His brother and several other people survived.

Two women were also killed, one of whom had been helping the cook, said a resident who gave only his first name, Maksim, wary of possible retribution. They were making an Uzbek rice dish, plov, for people in the neighborhood.

“She was just cleaning vegetables,” Maksim said.

Chuhuiv has come under increasing bombardment in recent days, as have the city of Kharkiv and other villages and towns in the province. Soldiers guarding the approaches to the city on Sunday said that artillery strikes had been steady much of the day, hitting an industrial area around the train station.

The Russians “are hitting lots of places like this, all the schools as well,” said Maksim. “They are doing it to make the people leave.”

People were getting the message, and the town was largely empty, he said. He was preparing to leave too, he said. He and his family had plans to emigrate to Canada.

“There is nothing left here,” he said.

Michael Schwirtz reported from Mykolaiv, Ukraine, Matina Stevis-Gridneff from Brussels and Matthew Mpoke Bigg from London. Reporting was contributed by Carlotta Gall and Kamila Hrabchuk from Chuhuiv, Ukraine, Marc Santora from London and Alan Yuhas from New York.

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Biden fails to secure major security, oil commitments at Arab summit

  • Biden says U.S. will remain committed to allies
  • U.S. hoping to integrate Israel
  • Saudi crown prince pushes back on human rights issue

JEDDAH, Saudi Arabia, July 16 (Reuters) – President Joe Biden told Arab leaders on Saturday that the United States would remain an active partner in the Middle East, but he failed to secure commitments to a regional security axis that would include Israel or an immediate oil output rise.

“The United States is invested in building a positive future of the region, in partnership with all of you—and the United States is not going anywhere,” he said, according to a transcript of his speech.

Biden, who began his first trip to the Middle East as president with a visit to Israel, presented his vision and strategy for America’s engagement in the Middle East at an Arab summit in Jeddah.

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The summit communique was vague, however, and Saudi Arabia, Washington’s most important Arab ally, poured cold water on U.S. hopes the summit could help lay the groundwork for a regional security alliance – including Israel – to combat Iranian threats.

During a meeting with Saudi Crown Prince Mohammed bin Salman, Biden raised the highly sensitive issue of human rights, drawing countercriticism from the crown prince, also known as MbS.

“We believe there’s great value in including as many of the capabilities in this region as possible and certainly Israel has significant air and missile defence capabilities, as they need to. But we’re having these discussions bilaterally with these nations,” a senior administration official told reporters.

A plan to connect air defence systems could be a hard sell for Arab states that have no ties with Israel and balk at being part of an alliance seen as against Iran, which has a strong regional network of proxies including Iraq, Lebanon and Yemen.

Saudi Arabia’s foreign minister, Prince Faisal bin Farhan Al Saud, said he was not aware of any discussions on a Gulf-Israeli defence alliance and that the kingdom was not involved in such talks.

He told reporters after the U.S.-Arab summit that Riyadh’s decision to open its airspace to all air carriers had nothing to do with establishing diplomatic ties with Israel and was not a precursor to further steps. read more

Biden has focused on the summit with six Gulf states and Egypt, Jordan and Iraq, while downplaying the meeting with MbS which drew criticism in the United States over human rights concerns.

Biden had said he would make regional power Saudi Arabia a “pariah” on the global stage over the 2018 murder of journalist Jamal Khashoggi by Saudi agents, but ultimately decided U.S. interests dictated a recalibration, not a rupture, in relations with the world’s top oil exporter.

The crown prince told Biden that Saudi Arabia had acted to prevent a repeat of mistakes like the killing of Khashoggi and that the United States had also made mistakes, including in Iraq, a Saudi minister said.

FIST BUMP

Biden exchanged a fist bump with MbS on Friday but said he told him he held him responsible for Khashoggi’s murder at the Saudi consulate in Istanbul.

“The President raised the issue … And the crown prince responded that this was a painful episode for Saudi Arabia and that it was a terrible mistake,” said Saudi Minister of State for Foreign Affairs Adel al-Jubeir.

The accused were brought to trial were and being punished with prison terms, he said.

U.S. intelligence agencies believe the crown prince ordered Khashoggi’s killing, which he denies.

Jubeir, talking to Reuters about Friday’s conversation, said MbS had made the case that trying to impose values on other countries by force could backfire.

“It has not worked when the U.S. tried to impose values on Afghanistan and Iraq. In fact, it backfired,” Jubeir quoted the crown prince as telling Biden. “Countries have different values and those values should be respected!”

The exchange highlighted tensions that have weighed on relations between Washington and Riyadh, its closest Arab ally, over issues including Khashoggi, oil prices and the Yemen war.

Biden needs the help of OPEC giant Saudi Arabia at a time of high crude prices and other problems related to the Russia-Ukraine conflict. Washington also wants to curb Iran’s sway in the region and China’s global influence.

Biden came to Saudi Arabia hoping to reach a deal on oil production to help drive down gasoline prices that are driving inflation above 40-year highs and threatening his approval ratings.

He leaves the region empty-handed but hoping the OPEC+ group, comprising Saudi Arabia, Russia and other producers, will boost production at a meeting on Aug. 3.

“I look forward to seeing what’s coming in the coming months,” Biden said.

FOOD SECURITY

A second senior administration official said Biden would announce that Washington has committed $1 billion in new near- and long-term food security assistance for the Middle East and North Africa, and that Gulf states would commit $3 billion over the next two years in projects that align with U.S. partnerships in global infrastructure and investment.

Gulf states, which have refused to side with the West against Russia over Ukraine, are seeking a concrete commitment from the United States to strategic ties that have been strained over perceived U.S. disengagement from the region.

Riyadh and Abu Dhabi have been frustrated by U.S. conditions on arms sales and at their exclusion from indirect U.S.-Iran talks on reviving a 2015 nuclear pact they see as flawed for not tackling concerns about Iran’s missile programme and behaviour.

Israel had encouraged Biden’s trip to Saudi Arabia, hoping it would lead to warmer ties between it and Riyadh as part of a wider Arab rapprochement.

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Additional reporting by Maha El Dahan in Jeddah and John Irish in Paris Writing by Ghaida Ghantous and Michael Georgy
Editing by Timothy Heritage and Helen Popper

Our Standards: The Thomson Reuters Trust Principles.

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The big default? The dozen countries in the danger zone

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LONDON, July 15 (Reuters) – Traditional debt crisis signs of crashing currencies, 1,000 basis point bond spreads and burned FX reserves point to a record number of developing nations now in trouble.

Lebanon, Sri Lanka, Russia, Suriname and Zambia are already in default, Belarus is on the brink and at least another dozen are in the danger zone as rising borrowing costs, inflation and debt all stoke fears of economic collapse.

Totting up the cost is eyewatering. Using 1,000 basis point bond spreads as a pain threshold, analysts calculate $400 billion of debt is in play. Argentina has by far the most at over $150 billion, while the next in line are Ecuador and Egypt with $40 billion-$45 billion.

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Crisis veterans hope many can still dodge default, especially if global markets calm and the IMF rows in with support, but these are the countries at risk.

ARGENTINA

The sovereign default world record holder looks likely to add to its tally. The peso now trades at a near 50% discount in the black market, reserves are critically low and bonds trade at just 20 cents in the dollar – less than half of what they were after the country’s 2020 debt restructuring.

The government doesn’t have any substantial debt to service until 2024, but it ramps up after that and concerns have crept in that powerful vice president Cristina Fernandez de Kirchner may push to renege on the International Monetary Fund. read more

Reuters Graphics

UKRAINE

Russia’s invasion means Ukraine will almost certainly have to restructure its $20 billion plus of debt, heavyweight investors such as Morgan Stanley and Amundi warn.

The crunch comes in September when $1.2 billion of bond payments are due. Aid money and reserves mean Kyiv could potentially pay. But with state-run Naftogaz this week asking for a two-year debt freeze, investors suspect the government will follow suit. read more

Ukraine bonds brace for default

TUNISIA

Africa has a cluster of countries going to the IMF but Tunisia looks one of the most at risk. read more

A near 10% budget deficit, one of the highest public sector wage bills in the world and there are concerns that securing, or a least sticking to, an IMF programme may be tough due to President Kais Saied’s push to strengthen his grip on power and the country’s powerful, incalcitrant labour union.

Tunisian bond spreads – the premium investors demand to buy the debt rather than U.S. bonds – have risen to over 2,800 basis points and along with Ukraine and El Salvador, Tunisia is on Morgan Stanley’s top three list of likely defaulters. “A deal with the International Monetary Fund becomes imperative,” Tunisia’s central bank chief Marouan Abassi has said. read more

African bonds suffering

GHANA

Furious borrowing has seen Ghana’s debt-to-GDP ratio soar to almost 85%. Its currency, the cedi, has lost nearly a quarter of its value this year and it was already spending over half of tax revenues on debt interest payments. Inflation is also getting close to 30%.

Reuters Graphics

EGYPT

Egypt has a near 95% debt-to-GDP ratio and has seen one of the biggest exoduses of international cash this year – some $11 billion according to JPMorgan.

Fund firm FIM Partners estimates Egypt has $100 billion of hard currency debt to pay over the next five years, including a meaty $3.3 billion bond in 2024.

Cairo devalued the pound 15% and asked the IMF for help in March but bond spreads are now over 1,200 basis points and credit default swaps (CDS) – an investor tool to hedge risk – price in a 55% chance it fails on a payment. read more

Francesc Balcells, CIO of EM debt at FIM Partners, estimates though that roughly half the $100 billion Egypt needs to pay by 2027 is to the IMF or bilateral, mainly in the Gulf. “Under normal conditions, Egypt should be able to pay,” Balcells said.

Egypt’s falling foreign exchange reserves

KENYA

Kenya spends roughly 30% of revenues on interest payments. Its bonds have lost almost half their value and it currently has no access to capital markets – a problem with a $2 billion dollar bond coming due in 2024.

On Kenya, Egypt, Tunisia and Ghana, Moody’s David Rogovic said: “These countries are the most vulnerable just because of the amount of debt coming due relative to reserves, and the fiscal challenges in terms of stabilising debt burdens.”

Kenya’s concerns

ETHIOPIA

Addis Ababa plans to be one of the first countries to get debt relief under the G20 Common Framework programme. Progress has been held up by the country’s ongoing civil war though in the meantime it continues to service its sole $1 billion international bond. read more

Africa’s debt problems

EL SALVADOR

Making bitcoin legal tender all but closed the door to IMF hopes. Trust has fallen to the point where an $800 million bond maturing in six months trades at a 30% discount and longer-term ones at a 70% discount.

PAKISTAN

Pakistan struck a crucial IMF deal this week. read more The breakthrough could not be more timely, with high energy import prices pushing the country to the brink of a balance of payments crisis.

Foreign currency reserves have fallen to as low as $9.8 billion, hardly enough for five weeks of imports. The Pakistani rupee has weakened to record lows. The new government needs to cut spending rapidly now as it spends 40% of its revenues on interest payments.

Countries in debt distress at record high

BELARUS

Western sanctions wrestled Russia into default last month read more and Belarus now facing the same tough treatment having stood with Moscow in the Ukraine campaign.

Belarus bonds

ECUADOR

The Latin American country only defaulted two years ago but it has been rocked back into crisis by violent protests and an attempt to oust President Guillermo Lasso. read more

It has lots of debt and with the government subsidising fuel and food JPMorgan has ratcheted up its public sector fiscal deficit forecast to 2.4% of GDP this year and 2.1% next year. Bond spreads have topped 1,500 bps.

NIGERIA

Bond spreads are just over 1,000 bps but Nigeria’s next $500 million bond payment in a year’s time should easily be covered by reserves which have been steadily improving since June. It does though spend almost 30% of government revenues paying interest on its debt.

“I think the market is overpricing a lot of these risks,” investment firm abrdn’s head of emerging market debt, Brett Diment, said.

Currency markets in 2022
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Reporting by Marc Jones; Additional Reporting by Rachel Savage in London and Rodrigo Campos in New York; Editing by Susan Fenton

Our Standards: The Thomson Reuters Trust Principles.

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G20 finance chiefs make few policy breakthroughs at Indonesia meeting

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NUSA DUA, Indonesia, July 16 (Reuters) – The Group of 20 major economies’ finance chiefs on Saturday pledged to address global food insecurity and rising debt, but made few policy breakthroughs amid divisions over Russia’s war in Ukraine at a two-day meeting in Indonesia.

With questions growing about the effectiveness of the G20 in tackling the world’s major problems, U.S. Treasury Secretary Janet Yellen said the differences had prevented the finance ministers and central bankers from issuing a formal communique but that the group had “strong consensus” on the need to address a worsening food security crisis.

Host Indonesia will issue a chair’s statement instead. Finance Minister Sri Mulyani Indrawati said most topics were agreed by all members except for particular statements about the war in Ukraine. She described it as the “best result” the group could have achieved at this meeting.

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Western countries have enforced strict sanctions against Russia, which says it is conducting a “special military operation” in Ukraine. Other G20 nations, including China, India and South Africa, have been more muted in their response.

“This is a challenging time because Russia is part of the G20 and doesn’t agree with the rest of us on how to characterize the war,” Yellen said, but stressed the disagreement should not prevent progress on pressing global issues.

Russia’s finance minister attended the meeting virtually while his deputy attended in person. Ukraine’s finance minister addressed the session virtually where he called for “more severe targeted sanctions”.

Indonesia’s Sri Mulyani said while chairing a fractured G20 has been “quite overwhelming” due to the war in Ukraine, all members agreed that food insecurity requires special attention and she called for removal of trade protections that prevented flow of food supplies.

The G20 will set up a joint forum between finance and agriculture ministers to address food and fertilize supply issue. A similar forum has been set up for finance and health ministers for pandemic preparedness.

Analysts said the failure to agree on a communique reflected the weakness of the once-mighty economic grouping.

“We are in a rudderless moment in the world economy with the G20 paralysed by Putin’s war and the G7 unable to lead on global public goods,” said Kevin Gallagher, who heads the Global Development Policy Center at Boston University.

G20 members pulled together at the start of the pandemic, but initiatives to cushion the shock for heavily indebted poor countries failed to produce significant results.

Western countries, concerned about the lack of transparency in China’s lending, were pressuring Beijing to restructure debt contracts and transform its role to “one that (contributes) to the country rather than to one of indebtedness and servitude,” said U.S. Ambassador to Japan Rahm Emanuel. But they were frustrated that Chinese officials did not attend the meetings in person, making sideline discussions impossible.

Kristalina Georgieva, head of the International Monetary Fund, warned more than 30% of emerging and developing countries – and a staggering 60% of low-income countries – were in or near debt distress. read more

“The debt situation is deteriorating fast and a well-functioning mechanism for debt resolution should be in place,” she said.

Sri Mulyani said G20 also encouraged further progress on the implementation of the Common Framework for Debt Treatment beyond the debt service suspension initiative in a timely, orderly, and coordinated manner.

She said there were discussions on how to make the framework more effective for countries in need.

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Additional reporting by Stefanno Sulaiman in Nusa Dua and Leigh Thomas in Paris; Editing by William Mallard, Kanupriya Kapoor, Tom Hogue and William Mallard

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Economy Is at Risk of Recession by a Force Hiding in Plain Sight

This past week brought home the magnitude of the overlapping crises assailing the global economy, intensifying fears of recession, job losses, hunger and a plunge on stock markets.

At the root of this torment is a force so elemental that it has almost ceased to warrant mention — the pandemic. That force is far from spent, confronting policymakers with grave uncertainty. Their policy tools are better suited for more typical downturns, not a rare combination of diminishing economic growth and soaring prices.

Major economies including the United States and France reported their latest data on inflation, revealing that prices on a vast range of goods rose faster in June than anytime in four decades.

China reported that its economy, the world’s second-largest, expanded by a mere 0.4 percent from April through June compared with the same period last year. That performance — astonishingly anemic by the standards of recent decades — endangered prospects for scores of countries that trade heavily with China, including the United States. It reinforced the realization that the global economy has lost a vital engine.

The specter of slowing economic growth combined with rising prices has even revived a dreaded word that was a regular part of the vernacular in the 1970s, the last time the world suffered similar problems: stagflation.

Most of the challenges tearing at the global economy were set in motion by the world’s reaction to the spread of Covid-19 and its attendant economic shock, even as they have been worsened by the latest upheaval — Russia’s disastrous attack on Ukraine, which has diminished the supply of food, fertilizer and energy.

“The pandemic itself disrupted not only the production and transportation of goods, which was the original front of inflation, but also how and where we work, how and where we educate our children, global migration patterns,” said Julia Coronado, an economist at the University of Texas at Austin, speaking this past week during a discussion convened by the Brookings Institution in Washington. “Pretty much everything in our lives has been disrupted by the pandemic, and then we layer on to that a war in Ukraine.”

Great Supply Chain Disruption.

meat production to shipping exploited their market dominance to rack up record profits.

The pandemic prompted governments from the United States to Europe to unleash trillions of dollars in emergency spending to limit joblessness and bankruptcy. Many economists now argue that they did too much, stimulating spending power to the point of stoking inflation, while the Federal Reserve waited too long to raise interest rates.

Now playing catch-up, central banks like the Fed have moved assertively, lifting rates at a rapid clip to try to snuff out inflation, even while fueling worries that they could set off a recession.

Given the mishmash of conflicting indicators found in the American economy, the severity of any slowdown is difficult to predict. The unemployment rate — 3.6 percent in June — is at its lowest point in almost half a century.

American consumers have enhanced fears of a downturn. This past week, the International Monetary Fund cited weaker consumer spending in slashing expectations for economic growth this year in the United States, from 2.9 percent to 2.3 percent. Avoiding recession will be “increasingly challenging,” the fund warned.

Orwellian lockdowns that have constrained business and life in general. The government expresses resolve in maintaining lockdowns, now affecting 247 million people in 31 cities that collectively produce $4.3 trillion in annual economic activity, according to a recent estimate from Nomura, the Japanese securities firm.

But the endurance of Beijing’s stance — its willingness to continue riding out the economic damage and public anger — constitutes one of the more consequential variables in a world brimming with uncertainty.

sanctions have restricted sales of Russia’s enormous stocks of oil and natural gas in an effort to pressure the country’s strongman leader, Vladimir V. Putin, to relent. The resulting hit to the global supply has sent energy prices soaring.

The price of a barrel of Brent crude oil rose by nearly a third in the first three months after the invasion, though recent weeks have seen a reversal on the assumption that weaker economic growth will translate into less demand.

major pipeline carrying gas from Russia to Germany cut the supply sharply last month, that heightened fears that Berlin could soon ration energy consumption. That would have a chilling effect on German industry just as it contends with supply chain problems and the loss of exports to China.

euro, which has surrendered more than 10 percent of its value against the dollar this year. That has increased the cost of Europe’s imports, another driver of inflation.

ports from the United States to Europe to China.

“Everyone following the economic situation right now, including central banks, we do not have a clear answer on how to deal with this situation,” said Kjersti Haugland, chief economist at DNB Markets, an investment bank in Norway. “You have a lot of things going on at the same time.”

The most profound danger is bearing down on poor and middle-income countries, especially those grappling with large debt burdens, like Pakistan, Ghana and El Salvador.

As central banks have tightened credit in wealthy nations, they have spurred investors to abandon developing countries, where risks are greater, instead taking refuge in rock-solid assets like U.S. and German government bonds, now paying slightly higher rates of interest.

This exodus of cash has increased borrowing costs for countries from sub-Saharan Africa to South Asia. Their governments face pressure to cut spending as they send debt payments to creditors in New York, London and Beijing — even as poverty increases.

U.N. World Food Program declared this month.

Among the biggest variables that will determine what comes next is the one that started all the trouble — the pandemic.

The return of colder weather in northern countries could bring another wave of contagion, especially given the lopsided distribution of Covid vaccines, which has left much of humanity vulnerable, risking the emergence of new variants.

So long as Covid-19 remains a threat, it will discourage some people from working in offices and dining in nearby restaurants. It will dissuade some from getting on airplanes, sleeping in hotel rooms, or sitting in theaters.

Since the world was first seized by the public health catastrophe more than two years ago, it has been a truism that the ultimate threat to the economy is the pandemic itself. Even as policymakers now focus on inflation, malnutrition, recession and a war with no end in sight, that observation retains currency.

“We are still struggling with the pandemic,” said Ms. Haugland, the DNB Markets economist. “We cannot afford to just look away from that being a risk factor.”

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Russia joins G20 meeting overshadowed by Ukraine conflict

  • Lavrov attending gathering of Russia’s most vocal opponents
  • Talks to include global food and energy security
  • Britain’s Truss to cut short trip – BBC
  • G7 countries not present at Bali reception
  • ‘Everyone has to feel comfortable’ – Indonesia minister

NUSA DUA, Indonesia, July 7 (Reuters) – Russian Foreign Minister Sergei Lavrov will have his first close encounter with the fiercest critics of his country’s invasion of Ukraine at a G20 gathering in Indonesia that was getting under way on Thursday with the war all but certain to dominate discussions.

A closed-door foreign minister’s meeting on Friday will be the first time Russian President Vladimir Putin’s top diplomat Lavrov will come face-to-face with the most vocal opponents of the invasion of Ukraine in February, which Moscow has called a “special military operation”.

Lavrov planned to meet some of his counterparts on the sidelines of the summit, Russian news agency TASS reported, but ministers including Germany’s Annalena Baerbock and U.S. Secretary of State Antony Blinken have ruled out separate meetings with him.

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Underlining tensions in the buildup to the meeting, Retno Marsudi, Indonesia’s foreign minister, said G7 counterparts had informed her they could not attend Thursday’s reception ceremony, decisions that the host nation understood and respected. It was not immediately clear if Lavrov attended.

“We’re talking about trying to create a comfortable situation for all,” Retno told reporters.

“I understand your position. Because once again, everyone has to feel comfortable to attend.”

Australian Foreign Minister Penny Wong said her country and like-minded nations would use the G20 meeting to highlight the impact of the war.

“We will be making very clear collectively our views about Russia’s position and Russia’s behaviour,” she said.

British Foreign Secretary Liz Truss, however, may leave early: the BBC reported she planned to return to London amid the political drama around Prime Minister Boris Johnson’s resignation.

A British Foreign Office official declined to comment.

GLOBAL FOOD CRISIS

Energy and food security are on the Bali meeting agenda, with Western nations accusing Russia of stoking a global food crisis and worsening inflation by blockading shipments of Ukrainian grain. Russia has said it is ready to facilitate unhindered exports of grain.

The Group of 20 includes Western countries that have accused Moscow of war crimes in Ukraine – which it denies – and have imposed sanctions, but also countries like China, Indonesia, India and South Africa that have been more muted in their response.

Speaking after meeting his Chinese counterpart Wang Yi, Lavrov emphasised the importance of Russia-China ties in shaping a more “just and democratic world based on the principles of international law”.

He also lashed out at what he said was an “openly aggressive” West “which seeks to maintain its privileged position and dominance in international affairs”.

Some U.S. and European officials have stressed the gathering will not be “business as a usual”. A spokesperson for the German foreign minister said G7 countries would coordinate their response to Lavrov.

In 2014, the G7 excluded Russia from what had become the G8, over its annexation of Crimea.

Top officials from Britain, Canada and the United States walked out on Russian representatives during a G20 finance meeting in Washington in April. However despite early talk of boycotting subsequent G20 meetings, some analysts say Western nations may have decided this would be counterproductive.

A senior U.S. State Department official said on Thursday it was important to maintain a focus on what Indonesia had set out for its G20 presidency and “not let there be any disruptions or interruptions to that”.

“We also want to make sure that there’s nothing that in any way, shape or form lends any conceivable legitimacy to what Russia is doing in brutalising Ukraine,” the official said.

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Reporting by Stanley Widianto and Yuddy Chaya Budiman in Nusa Dua, Kirsty Needham in Sydney and David Brunnstrom in Tokyo; Writing by Kate Lamb
Editing by Ed Davies, Frances Kerry, Martin Petty, William Maclean

Our Standards: The Thomson Reuters Trust Principles.

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Gas Prices Around the World Threaten Livelihoods and Stability

“NO ES SUFICIENTE” — It’s not enough. That was the message protest leaders in Ecuador delivered to the country’s president this past week after he said he would lower the price of both regular gas and diesel by 10 cents in response to riotous demonstrations over soaring fuel and food prices.

The fury and fear over energy prices that have exploded in Ecuador are playing out the world over. In the United States, average gasoline prices, which have jumped to $5 per gallon, are burdening consumers and forcing an excruciating political calculus on President Biden ahead of the midterm congressional elections this fall.

But in many places, the leap in fuel costs has been much more dramatic, and the ensuing misery much more acute.

Britain, it costs $125 to fill the tank of an average family-size car. Hungary is prohibiting motorists from buying more than 50 liters of gas a day at most service stations. Last Tuesday, police in Ghana fired tear gas and rubber bullets at demonstrators protesting against the economic hardship caused by gas price increases, inflation and a new tax on electronic payments.

largest exporter of oil and gas to global markets, and the retaliatory sanctions that followed have caused gas and oil prices to gallop with an astounding ferocity. The unfolding calamity comes on top of two years of upheaval caused by the Covid-19 pandemic, off-and-on shutdowns and supply chain snarls.

World Bank revised its economic forecast last month, estimating that global growth will slow even more than expected, to 2.9 percent this year, roughly half of what it was in 2021. The bank’s president, David Malpass, warned that “for many countries, recession will be hard to avoid.”

ratcheting down gas deliveries to several European countries.

Across the continent, countries are preparing blueprints for emergency rationing that involve caps on sales, reduced speed limits and lowered thermostats.

As is usually the case with crises, the poorest and most vulnerable will feel the harshest effects. The International Energy Agency warned last month that higher energy prices have meant an additional 90 million people in Asia and Africa do not have access to electricity.

Expensive energy radiates pain, contributing to high food prices, lowering standards of living and exposing millions to hunger. Steeper transportation costs increase the price of every item that is trucked, shipped or flown — whether it’s a shoe, cellphone, soccer ball or prescription drug.

“The simultaneous rise in energy and food prices is a double punch in the gut for the poor in practically every country,” said Eswar Prasad, an economist at Cornell University, “and could have devastating consequences in some corners of the world if it persists for an extended period.”

Group of 7 this past week discussed a price cap on exported Russian oil, a move that is intended to ease the burden of painful inflation on consumers and reduce the export revenue that President Vladimir V. Putin is using to wage war.

Price increases are everywhere. In Laos, gas is now more than $7 per gallon, according to GlobalPetrolPrices.com; in New Zealand, it’s more than $8; in Denmark, it’s more than $9; and in Hong Kong, it’s more than $10 for every gallon.

Leaders of three French energy companies have called for an “immediate, collective and massive” effort to reduce the country’s energy consumption, saying that the combination of shortages and spiking prices could threaten “social cohesion” next winter.

increased coal production to avoid power outages during a blistering heat wave in the northern and central parts of the country and a subsequent rise in demand for air conditioning.

Germany, coal plants that were slated for retirement are being refired to divert gas into storage supplies for the winter.

There is little relief in sight. “We will still see high and volatile energy prices in the years to come,” said Fatih Birol, the executive director of the International Energy Agency.

At this point, the only scenario in which fuel prices go down, Mr. Birol said, is a worldwide recession.

Reporting was contributed by José María León Cabrera from Ecuador, Lynsey Chutel from South Africa, Ben Ezeamalu from Nigeria, Jason Gutierrez from the Philippines, Oscar Lopez from Mexico and Ruth Maclean from Senegal.

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