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Global Tax Deal Reached Among G7 Nations

June 5, 2021 by Staff Reporter

LONDON — The top economic officials from the world’s advanced economies reached a breakthrough on Saturday in their yearslong efforts to overhaul international tax laws, unveiling a broad agreement that aims to stop large multinational companies from seeking out tax havens and force them to pay more of their income to governments.

Finance leaders from the Group of 7 countries agreed to back a new global minimum tax rate of at least 15 percent that companies would have to pay regardless of where they locate their headquarters.

The agreement would also impose an additional tax on some of the largest multinational companies, potentially forcing technology giants like Amazon, Facebook and Google as well as other big global businesses to pay taxes to countries based on where their goods or services are sold, regardless of whether they have a physical presence in that nation.

Officials described the pact as a historic agreement that could reshape global commerce and solidify public finances that have been eroded after more than a year of combating the coronavirus pandemic. The deal comes after several years of fraught negotiations and, if enacted, would reverse a race to the bottom on international tax rates. It would also put to rest a fight between the United States and Europe over how to tax big technology companies.

has been particularly eager to reach an agreement because a global minimum tax is closely tied to its plans to raise the corporate tax rate in the United States to 28 percent from 21 percent to help pay for the president’s infrastructure proposal.

EU Tax Observatory estimated that a 15 percent minimum tax would yield an additional 48 billion euros, or $58 billion, a year. The Biden administration projected in its budget last month that the new global minimum tax system could help bring in $500 billion in tax revenue over a decade to the United States.

The plan could face resistance from large corporations and the world’s biggest companies were absorbing the development on Saturday.

“We strongly support the work being done to update international tax rules,” said José Castañeda, a Google spokesman. “We hope countries continue to work together to ensure a balanced and durable agreement will be finalized soon.”

said this month that it was prepared to move forward with tariffs on about $2.1 billion worth of goods from Austria, Britain, India, Italy, Spain and Turkey in retaliation for their digital taxes. However, it is keeping them on hold while the tax negotiations unfold.

Finishing such a large agreement by the end of the year could be overly optimistic given the number of moving parts and countries involved.

“A detailed agreement on something of this complexity in a few months would just be lighting speed,” said Nathan Sheets, a former Treasury Department under secretary for international affairs in the Obama administration.

The biggest obstacle to getting a deal finished could come from the United States. The Biden administration must win approval from a narrowly divided Congress to make changes to the tax code and Republicans have shown resistance to Mr. Biden’s plans. American businesses will bear the brunt of the new taxes and Republican lawmakers have argued that the White House is ceding tax authority to foreign countries.

Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, said on Friday that he did not believe that a 15 percent global minimum tax would curb offshoring.

“If the American corporate tax rate is 28 percent, and the global tax rate is merely half of that, you can guarantee we’ll see a second wave of U.S. investment research manufacturing hit overseas, that’s not what we want,” Mr. Brady said.

At the news conference, Ms. Yellen noted that top Democrats in the House and Senate had expressed support for the tax changes that the Biden administration was trying to make.

“We will work with Congress,” she said.

Liz Alderman contributed reporting from Paris.

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Iraqi Activism Fights for Survival Amid Murders and Threats

May 25, 2021 by Staff Reporter

BAGHDAD — ‘Who killed me?’ the signs asked, alongside images of dead men and women, among the roughly 80 Iraqi activists murdered since late 2019. Young demonstrators held aloft the posters in Baghdad’s Tahrir Square on Tuesday, illustrating both the enduring spark and diminished strength of Iraq’s anti-government protest movement.

The demonstrators (publicly) and Iraqi officials (privately) say they know who killed many of the activists: Iran-backed militias that have essentially crushed a grass-roots anti-corruption movement that blames Iranian influence, and the militias, for many of Iraq’s ills. In a country where militias — nominally a part of the security apparatus — operate with impunity, the killers have gone unpunished.

The several thousand young men gathered in Baghdad’s central square Tuesday comprised the biggest protest in the Iraqi capital since the anniversary last October of demonstrations in 2019 that swept Baghdad and southern cities and brought down a government. The movement is driven by anger at the government’s failure to make promised reforms, including curbs on Iranian-backed militias.

But in the shadow of assassinations, kidnappings and intimidation of people who criticize the Iraqi government and Iranian interference, turnout on Tuesday was far smaller than organizers had hoped.

Green Zone, where government buildings and foreign embassies are clustered. A few of the protesters responded by throwing rocks as police chased demonstrators down alleys. Security forces said the demonstrators later set fire to security vehicles.

“We expected more people to come but some people are afraid — afraid for their jobs and afraid for themselves,” said one of the longtime activists, Dr. Mohammad Fadhil, a physician from Diyala province, speaking before the clashes erupted.

Another protester, Hani Mohammad, said he had been threatened by a group of fighters three days before.

“They came to my house,” said Mr. Mohammad, naming one of the biggest Iran-backed militias, which he did not want to name publicly for fear of retaliation. He said he had already fled.

A year after taking power, prime minister Mustafa al-Kadhimi has largely failed to deliver reforms he promised in response to the 2019 protests, including reining in Iran-backed militias, which are also blamed for attacks on the U.S. embassy and military installations.

Activists who have been killed include protest leaders in the holy city of Karbala, a female doctor in Basra, and a prominent Baghdad security analyst, Hisham al Hashimi, who advised the prime minister. Many of them were shot dead in the streets in view of security cameras or the police, some in the middle of the day.

Though at least one commander has been relieved of duty, no one is known to have been prosecuted.

“What’s the main purpose of these killings? It’s to deter the formation of leadership among the protest movement,” said Randa Slim, a senior fellow at the Middle East Institute. “So you target key leaders that have the potential of rallying the masses, you eliminate them and then you create fear within the rest.”

She said there was little prospect that Iraqi political leaders would reform the system that elevated them to power, or push back against the pervasive influence of Iran, and that intimidation and lack of support had left the protest movement too weak to create change.

“You need leadership, you need organization, you need political machinery, you need funding for that,” said Ms. Slim, listing elements that the diverse movement lacks.

Ali al Bayati, a member of the Iraqi High Commission for Human Rights, said, “The security establishment is not serious in its efforts, beginning from the investigations within security institutions to bringing the case to the court.”

The United Nations envoy to Iraq, Jeanine Hennis-Plasschaert, told the U.N. Security Council this month that many of the protest leaders were being hunted down with ‘rampant impunity’ ahead of the early elections they had demanded.

In addition to those assassinated, more than 560 protesters, the vast majority of them unarmed, have been killed by security forces and gunmen during the protests themselves since 2019. Most were shot with live bullets or killed by tear gas canisters that became lethal projectiles after being fired directly into the crowd.

Ahead of Tuesday’s protest, one of the main Iran-backed militias, the Hezbollah Brigades, issued what many perceived as a veiled threat to the demonstrators, saying that it and other paramilitary forces “must protect these young men who are deceived,” so they cannot be used by enemies, including the United States. It accused the protesters of aiming to delay the elections planned for Oct. 10.

The assassinations have had a chilling effect on the political campaign. The grass-roots movement that began in 2019 aimed to end the corruption-ridden system of government in place since 2003, where government ministries have been carved up between powerful political blocs and militias.

Activists originally saw the upcoming elections as a chance for a fresh start with new faces, but now they appear likely to return the same factions to power.

“There are no parties with integrity that I can vote for,” said Hadeel, a 19-year-old university student protesting Tuesday in Baghdad’s Nasour square. She did not want to give her last name.

“After the election we will not be able to even protest because the government is going to be stronger than before and the militias will have even more power.”

Despite the danger, the protests Thursday could be a harbinger of a painful summer in Iraq.

The protests in 2019 spread from the southern coastal city of Basra, where citizens took to the streets to demand public services. Iraq last year recorded life-threatening record high temperatures of over 125 degrees, leaving many to swelter without electricity or even clean water.

This summer, a lack of winter rain, water mismanagement and water conflicts with neighboring Turkey and Iran are expected to result in even worse shortages for millions of Iraqis, misery that could fuel renewed mass protests.

Among the protesters Tuesday, there was little fear of the coronavirus ravaging Iraq, where only about 1 percent of the population has been vaccinated. No one in the demonstrations was seen wearing masks, and social distancing in the crowded squares was impossible.

“We know virus exists,” said one of the protesters, Hamza Khadham. “But the violence, injustice and oppression by the government against the people is more dangerous than the coronavirus.”

Falih Hassan, Awadh al-Taiee and Nermeen al-Mufti contributed reporting.

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Vaccinated Travelers From ‘Safe Countries’ Will Be Allowed to Visit, European Union Says

May 19, 2021 by Staff Reporter

BRUSSELS — The European Union agreed on Wednesday to reopen its borders to visitors who have been fully vaccinated with an approved shot and to those coming from a list of countries considered safe from a coronavirus perspective, permitting broader travel just in time for the summer tourism season.

Ambassadors from the 27 member states of the European Union endorsed a plan that would allow visits from tourists and other nonessential travelers, who have been mostly barred from entering the bloc for more than a year.

The move has been seen as an economic imperative for tourism-dependent countries such as Greece and Spain, and it has been months in the works. Other E.U. nations that are less reliant on tourists for jobs and income, particularly in northern Europe, had been eager to maintain higher barriers for nonessential visitors to keep the coronavirus at bay. But they relented as vaccinations advanced and after they were promised the ability to reverse course if cases surge again.

The new rules are set to become formal policy next week after clearing some bureaucratic hurdles, and, depending on how well each country has prepared to welcome tourists, could be implemented immediately. Some countries, like Greece, have already said that they will remove testing and quarantine requirements for vaccinated visitors. But most countries are likely to implement such changes more slowly and conservatively.

in an interview with The New York Times in April. The formalization of freer international travel for vaccinated people will deepen the divide between the majority of countries that still have extremely limited access to the lifesaving shots and the few richer nations that do. That is likely to sharpen the debate about how to improve equitable access to vaccines around the world.

Under the E.U. plan, the bloc would accept visitors who have completed their immunization at least two weeks before their arrival, using one of the shots approved by its own regulator or by the World Health Organization. That covers the vaccines from AstraZeneca, Johnson & Johnson, Moderna, Pfizer-BioNTech and Sinopharm, according to a draft of the rules seen by The New York Times. That would open the door to immunized Americans, who have been receiving shots from Johnson & Johnson, Moderna and Pfizer.

according to data reported by the European Center for Disease Prevention and Control.

And individual E.U. states would retain the freedom to tweak the measures if they wanted to take a more conservative approach, meaning that some countries could retain demands for negative PCR tests or quarantines for certain visitors.

The draft document of the rules indicated that children would not be required to be vaccinated when traveling with vaccinated parents but that they might be asked to show a negative PCR test conducted no more than 72 hours before arrival.

The bloc would also maintain an emergency brake option, a legal tool that would allow it to quickly snap back to more restrictive travel conditions if a threatening variant or other Covid emergency emerged.

A key question about the practical application of the rules is how the vaccination status of a visitor would be determined.

Those issued so far are vulnerable to fraud.

Europeans will be furnished with digital certificates that will be readable across the bloc sometime in June. The European Union ultimately wants to bridge its own certificates with those issued by the national authorities in partner countries such as the United States, but that goal could be far off.

For visitors from outside the European Union, the draft document of the rules says, “Member states should be able to accept third country certificates containing at least the minimum data set based on national law, taking into account the ability to verify the authenticity, validity and integrity of the certificate and whether it contains all relevant data.”

That, too, would give border authorities in each E.U. country leeway to accept or reject a vaccination certificate based on whether it looks authentic and contains the information needed.

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Vaccinated Travelers Will Be Allowed to Visit, E.U. Says

May 19, 2021 by Staff Reporter

according to data reported by the European Center for Disease Prevention and Control.

A key question about the practical application of the rules is how the vaccination status of a visitor would be determined.

Those issued so far are vulnerable to fraud.

That, too, would give border authorities in each E.U. country leeway to accept or reject a vaccination certificate based on whether it looks authentic and contains the information needed.

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Investors Put Millions Into a Luxury Student Dorm. They Say They Were Ripped Off.

May 18, 2021 by Staff Reporter

Ms. Martinez, who lives not far from the dorm, said she had invested a little over $100,000 in the deal — money that came from the sale of a rental property. Like many investors in Skyloft, she was looking for a way to defer paying capital gains on the prior sale, and the private placement was marketed by brokers as a “1031 exchange” deal that would keep the Internal Revenue Service at bay.

A 1031 exchange deal, named after a section of the federal tax code, allows an investor to defer paying capital gains on the sale of property as long as the proceeds are invested into another property of equal or greater value to the one sold. These transactions are often criticized as a tax break for the rich, but the deals have also long attracted interest from investors of more moderate means.

The Biden administration is considering eliminating many of these deals as a way to raise additional revenue to pay for increased spending on child care and family leave programs. The Biden plan would allow 1031 exchanges to continue for most investors seeking to defer up to $500,000 in capital gains — many in the Skyloft deal fit that bill.

In recent years, student housing projects like Skyloft have become especially attractive real estate investments — especially as universities have encouraged the building of luxury apartment buildings to cater to students from wealthy families. Before the pandemic, there were, on average, $7 billion in student housing transactions in the United States each year. That was up from $3 billion just a decade ago, according to CBRE, a commercial real estate services firm.

Court filings and interviews with investors set out how the Skyloft project financing worked. To secure the $124 million purchase of Skyloft, Nelson Partners obtained a $66 million mortgage from a group of lenders led by UBS, in addition to the $75 million raised from ordinary investors. It also got $35 million in short-term financing from Axonic Capital, a New York hedge fund that specializes in commercial real estate transactions. The loan from Axonic was used to complete the purchase while Nelson Partners was raising money from investors.

Nelson Partners was to pay Axonic back the bridge loan, plus interest, using money raised from investors like Ms. Martinez. But Mr. Nelson’s firm did not pay back the loan, according to court filings. In February 2020, Axonic put Nelson Partners on notice, and it notified him last May that it was declaring Nelson Partners in default and taking control of the building.

Mr. Nelson opposed Axonic’s move but did not inform investors about his dealings with the hedge fund, according to the lawsuits. Instead, in April 2020, Nelson Partners stopped paying monthly cash dividends to the investors, telling them that it needed to conserve cash during the pandemic in the event students and their parents stopped paying rent. Mr. Nelson’s firm also received a loan of just over $1.2 million from the Small Business Administration’s Paycheck Protection Program.

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Why Vaccinating the World Against Covid-19 Will Be Hard

May 15, 2021 by Staff Reporter

In delivering vaccines, pharmaceutical companies aided by monumental government investments have given humanity a miraculous shot at liberation from the worst pandemic in a century.

But wealthy countries have captured an overwhelming share of the benefit. Only 0.3 percent of the vaccine doses administered globally have been given in the 29 poorest countries, home to about 9 percent of the world’s population.

Vaccine manufacturers assert that a fix is already at hand as they aggressively expand production lines and contract with counterparts around the world to yield billions of additional doses. Each month, 400 million to 500 million doses of the vaccines from Moderna, Pfizer and Johnson & Johnson are now being produced, according to an American official with knowledge of global supply.

But the world is nowhere close to having enough. About 11 billion shots are needed to vaccinate 70 percent of the world’s population, the rough threshold needed for herd immunity, researchers at Duke University estimate. Yet, so far, only a small fraction of that has been produced. While global production is difficult to measure, the analytics firm Airfinity estimates the total so far at 1.7 billion doses.

dangerous new variants emerge, requiring booster shots and reformulated vaccines, demand could dramatically increase, intensifying the imperative for every country to lock up supply for its own people.

The only way around the zero-sum competition for doses is to greatly expand the global supply of vaccines. On that point, nearly everyone agrees.

But what is the fastest way to make that happen? On that question, divisions remain stark, undermining collective efforts to end the pandemic.

Some health experts argue that the only way to avert catastrophe is to force drug giants to relax their grip on their secrets and enlist many more manufacturers in making vaccines. In place of the existing arrangement — in which drug companies set up partnerships on their terms, while setting the prices of their vaccines — world leaders could compel or persuade the industry to cooperate with more companies to yield additional doses at rates affordable to poor countries.

Those advocating such intervention have focused on two primary approaches: waiving patents to allow many more manufacturers to copy existing vaccines, and requiring the pharmaceutical companies to transfer their technology — that is, help other manufacturers learn to replicate their products.

more than 100 countries in asking the W.T.O. to partially set aside vaccine patents.

But the European Union has signaled its intent to oppose waivers and support only voluntary tech transfers, essentially taking the same position as the pharmaceutical industry, whose aggressive lobbying has heavily shaped the rules in its favor.

Some experts warn that revoking intellectual property rules could disrupt the industry, slowing its efforts to deliver vaccines — like reorganizing the fire department amid an inferno.

“We need them to scale up and deliver,” said Simon J. Evenett, an expert on trade and economic development at the University of St. Gallen in Switzerland. “We have this huge production ramp up. Nothing should get in the way to threaten it.”

Others counter that trusting the pharmaceutical industry to provide the world with vaccines helped create the current chasm between vaccine haves and have-nots.

The world should not put poorer countries “in this position of essentially having to go begging, or waiting for donations of small amounts of vaccine,” said Dr. Chris Beyrer, senior scientific liaison to the Covid-19 Prevention Network. “The model of charity is, I think, an unacceptable model.”

halting vaccine exports a month ago. Now, as a wave of death ravages the largely unvaccinated Indian population, the government is drawing fire at home for having let go of doses.

poses universal risks by allowing variants to take hold, forcing the world into an endless cycle of pharmaceutical catch-up.

“It needs to be global leaders functioning as a unit, to say that vaccine is a form of global security,” said Dr. Rebecca Weintraub, a global health expert at Harvard Medical School. She suggested that the G7, the group of leading economies, could lead such a campaign and finance it when the members convene in England next month.

Pfizer expects to sell $26 billion worth of Covid vaccines this year; Moderna forecasts that its sales of Covid vaccines will exceed $19 billion for 2021.

History also challenges industry claims that blanket global patent rights are a requirement for the creation of new medicines. Until the mid-1990s, drug makers could patent their products only in the wealthiest markets, while negotiating licenses that allowed companies in other parts of the world to make generic versions.

Even in that era, drug companies continued to innovate. And they continued to prosper even with the later waivers on H.I.V. drugs.

“At the time, it rattled a lot of people, like ‘How could you do that? It’s going to destroy the pharmaceutical industry,’” recalled Dr. Anthony S. Fauci, President Biden’s chief medical adviser for the pandemic. “It didn’t destroy them at all. They continue to make billions of dollars.”

Leaders in the wealthiest Western nations have endorsed more equitable distribution of vaccines for this latest scourge. But the imperative to ensure ample supplies for their own nations has won out as the virus killed hundreds of thousands of their own people, devastated economies, and sowed despair.

The drug companies have also promised more support for poorer nations. AstraZeneca’s vaccine has been the primary supply for Covax, and the company says it has sold its doses at a nonprofit price.

stumbled, falling short of production targets. And producing the new class of mRNA vaccines, like those from Pfizer-BioNTech and Moderna, is complicated.

Where pharmaceutical companies have struck deals with partners, the pace of production has frequently disappointed.

“Even with voluntary licensing and technology transfer, it’s not easy to make complex vaccines,” said Dr. Krishna Udayakumar, director of the Duke Global Health Innovation Center.

Much of the global capacity for vaccine manufacturing is already being used to produce other lifesaving inoculations, he added.

But other health experts accuse major pharmaceutical companies of exaggerating the manufacturing challenges to protect their monopoly power, and implying that developing countries lack the acumen to master sophisticated techniques is “an offensive and a racist notion,” said Matthew Kavanagh, director of the Global Health Policy and Politics Initiative at Georgetown University.

With no clear path forward, Ms. Okonjo-Iweala, the W.T.O. director-general, expressed hope that the Indian and South African patent-waiver proposal can be a starting point for dialogue.

“I believe we can come to a pragmatic outcome,” she said. “The disparity is just too much.”

Peter S. Goodman reported from London, Apoorva Mandavilli from New York, Rebecca Robbins from Bellingham, Wash., and Matina Stevis-Gridneff from Brussels. Noah Weiland contributed reporting from New York.

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What Would It Take to Vaccinate the World Against Covid?