The Federal Reserve’s decision to raise interest rates again is hardly a positive development for anyone with a job, a business or an investment in the stock or bond market.
But it isn’t a great shock, either.
This is all about curbing inflation, which is running at 8.3 percent annually, near its highest rate in 40 years. On Wednesday, the Fed raised the short-term federal funds rate for a third consecutive time, to 3.25 percent, and said it would keep increasing it.
“We believe a failure to restore price stability would mean far greater pain later on,” Jerome H. Powell, the Fed chair, said. He acknowledged that the Fed’s rate increases would raise unemployment and slow the economy.
last time severe inflation tested the mettle of the Federal Reserve was the era of Paul A. Volcker, who became Fed chair in August 1979, when inflation was already 11 percent and still rising. He managed to bring it below 4 percent by 1983, but at the cost of two recessions, sky-high unemployment and horrendous volatility in financial markets.
around 6 percent — and had set the country on a path toward price stability that lasted for decades.
The Great Moderation.” This halcyon period lasted long after he left the Fed, and ended only with the financial crisis of 2007-9. As the Fed now puts it on a website devoted to its history, “Inflation was low and relatively stable, while the period contained the longest economic expansion since World War II.”
mandates — “the economic goals of maximum employment and price stability”— as new information arrived.
Donald Kohn, a senior fellow at the Brookings Institution in Washington, was a Fed insider for 40 years, and retired as vice chair in 2010. With his inestimable guidance, I plunged into Fed history during the Volcker era.
I found an astonishing wealth of material, providing far more information than reporters had access to back then. In fact, while the current Fed provides vast reams of data, what goes on behind closed doors is better documented, in some respects, for the Volcker Fed.
That’s because transcripts of Fed meetings from that period were reconstructed from recordings that, Mr. Kohn said, “nobody was thinking about as they were talking because nobody knew about them or expected that this would ever be published, except, I guess Volcker.” By the 1990s, when the Fed began to produce transcripts available on a five-year time delay, Mr. Kohn said, participants in the meetings “were aware they were being recorded for history, so we became more restrained in what we said.”
What the Fed’s Rate Increases Mean for You
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A toll on borrowers. The Federal Reserve has been raising the federal funds rate, its key interest rate, as it tries to rein in inflation. By raising the rate, which is what banks charge one another for overnight loans, the Fed sets off a ripple effect. Whether directly or indirectly, a number of borrowing costs for consumers go up.
Consumer loans. Changes in credit card rates will closely track the Fed’s moves, so consumers can expect to pay more on any revolving debt. Car loan rates are expected to rise, too. Private student loan borrowers should also expect to pay more.
Mortgages. Mortgage rates don’t move in lock step with the federal funds rate, but track the yield on the 10-year Treasury bond, which is influenced by inflation and how investors expect the Fed to react to rising prices. Rates on 30-year fixed-rate mortgages have climbed above 6 percent for the first time since 2008, according to Freddie Mac.
Banks. An increase in the Fed benchmark rate often means banks will pay more interest on deposits. Larger banks are less likely to pay consumers more, and online banks have already started raising some of their rates.
So reading the Volcker transcripts is like being a fly on the wall. Some names of foreign officials have been scrubbed, but most of the material is there.
In a phone conversation, Mr. Kohn identified two critical “Volcker moments,” which he discussed at a Dallas Federal Reserve conference in June. “In both cases, the Fed moved in subtle ways and surprised people by changing its focus and its approach,” he said.
Congress, financial circles and academic institutions. Economics students may remember Milton Friedman saying: “Inflation is always and everywhere a monetary phenomenon.”
For Fed watchers, the change in the central bank’s emphasis had practical implications. Richard Bernstein, a former chief investment strategist at Merrill Lynch who now runs his own firm, said that back then: “You needed a calculator to figure out the numbers being released by the Fed. By comparison, now, there are practically no numbers. You just need to look at the words of Fed statements.”
The Fed as Psychologist
The Fed’s methods of dealing with inflation are abstruse stuff. But its conversations about the problem in 1982 were pithy, and its decisions appeared to be based as much on psychology as on traditional macroeconomics.
As Mr. Volcker put it at a Federal Open Market Meeting on Oct. 6, 1979, “I have described the state of the markets as in some sense as nervous as I have ever seen them.” He added: “We are not dealing with a stable psychological or stable expectational situation by any means. And on the inflation front, we‘re probably losing ground.”
17 percent by March 1980. The Fed plunged the economy into one recession and then, when the first one failed to curb inflation sufficiently, into a second.
unemployment rate stood at 10.8 percent, a postwar high that was not exceeded until the coronavirus recession of 2020. But in 1982, even people at the Fed were wondering when the economy would begin to recover from the damage that had been done.
The Pivot in 1982
The fall of 1982 was the second “Volcker moment” discerned by Mr. Kohn, who was in the room during meetings. The Fed decided that inflation was coming down — although in September 1982, it was still in the 6 to 7 percent range. The economy was contracting sharply, and the extraordinarily high interest rates in the United States had ricocheted around the world, worsening a debt crisis in Mexico, Argentina and, soon, the rest of Latin America.
Fed meeting that October, when one official said, “There have certainly been some other problem situations” in Latin America, Mr. Volcker responded, “That’s the understatement of the day, if I must say so.”
Penn Square Bank in Oklahoma had collapsed, a precursor of other failures to come.
“We are in a worldwide recession,” Mr. Volcker said. “I don’t think there’s any doubt about that.” He added: “I don’t know of any country of any consequence in the world that has an expansion going on. And I can think of lots of them that have a real downturn going on. Obviously, unemployment is at record levels. It is rising virtually everyplace. In fact, I can’t think of a major country that is an exception to that.”
It was time, he and others agreed, to provide relief.
The Fed needed to make sure that interest rates moved downward, but the method of targeting the monetary supply wasn’t working properly. It could not be calibrated precisely enough to guarantee that interest rates would fall. In fact, interest rates rose in September 1982, when the Fed had wanted them to drop. “I am totally dissatisfied,” Mr. Volcker said.
It was, therefore, time, to shift the Fed’s focus back to interest rates, and to resolutely lower them.
This wasn’t an easy move, Mr. Kohn said, but it was the right one. “It took confidence and some subtle judgment to know when it was time to loosen conditions,” he said. “We’re not there yet today — inflation is high and it’s time to tighten now — but at some point, the Fed will have to do that again.”
The Fed pivot in 1982 had a startling payoff in financial markets.
As early as August 1982, policymakers at the central bank were discussing whether it was time to loosen financial conditions. Word trickled to traders, interest rates fell and the previously lackluster S&P 500 started to rise. It gained nearly 15 percent for the year and kept going. That was the start of a bull market that continued for 40 years.
In 1982, the conditions that set off rampant optimism in the stock market didn’t happen overnight. The Volcker-led Fed had to correct itself repeatedly while responding to major crises at home and abroad. It took years of pain to reach the point at which it made sense to pivot, and for businesses to start rehiring workers and for traders to go all-in on risky assets.
Today, the Fed is again engaging in a grand experiment, even as Russia’s war in Ukraine, the lingering pandemic and political crises in the United States and around the globe are endangering millions of people.
When will the big pivot happen this time? I wish I knew.
The best I can say is that it would be wise to prepare for bad times but to plan and invest for prosperity over the long haul.
I’ll come back with more detail on how to do that.
But I would try to stay invested in both the stock and bond markets permanently. The Volcker era demonstrates that when the moment has at last come, sea changes in financial markets can occur in the blink of an eye.
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Market income will be bolstered by rising sustainability trends toward energy saving. HVAC systems account for over 30% of the energy consumed by commercial buildings. The use of 3D printing and computer modelling in HVAC pump manufacturing has resulted in tremendous growth potential for market players across the sector.
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Rest of Europe
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Bard Manufacturing Company Inc.
KSB SE & Co
Kirloskar Brothers Limited
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WILO SE CNP Pumps India Pvt. Ltd
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C.R.I. Pumps Private Limited
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SANTIAGO, Chile — Voters in Chile on Sunday could transform what has long been one of Latin America’s most conservative countries into one of the world’s most left-leaning societies.
In a single ballot, Chileans will decide whether they want legal abortion; universal public health care; gender parity in government; empowered labor unions; greater autonomy for Indigenous groups; rights for animals and nature; and constitutional rights to housing, education, retirement benefits, internet access, clean air, water, sanitation and care “from birth to death.”
It is perhaps the most important vote in the 204-year history of this South American nation of 19 million — a mandatory, nationwide plebiscite on a written-from-scratch constitution that, if adopted, would be one of the world’s most expansive and transformational national charters.
legalized divorce only in 2004, would suddenly have more rights enshrined in its constitution than any other nation. If they reject it, Chile would have little to show for what had once been seen as a remarkable political revolution.
the new administration of President Gabriel Boric, a tattooed, 36-year-old former student-protest leader who took office in March, but has quickly faced plummeting approval ratings amid rising inflation and crime. The constitution would enable Mr. Boric to carry out his leftist vision, while rejection could mire his term in more political fighting about what to do next.
A year ago, most Chileans would have bet that the country would embrace the proposed constitution. There has long been widespread discontent with the current constitution, which has roots in the brutal dictatorship of Gen. Augusto Pinochet, who ruled from 1973 until 1990.
In 2019, nationwide protests that left 30 people dead led Chile’s political leadership to grant a referendum on the constitution. A year later, nearly four out of five Chileans voted to replace it.
banned all forms of abortion until 2017, when it legalized the procedure only in cases of rape, an unviable fetus or a threat to the mother’s life.
some of the most expansive rights for Indigenous people anywhere, according to experts.
protesting in a Pikachu costume. Seventeen seats also went to Indigenous people.
Leftists won more than two-thirds of the convention’s seats, putting them in full control of the process since a two-thirds majority was necessary to add measures.
The motley crew deciding Chile’s future drew unwanted attention at times. There was the woman who gave a speech bare-chested and the man who left his camera on while showering during a remote vote. Many voters felt that the convention was not taking the process seriously.
“The behavior of the convention members pushed people away the most,” said Patricio Fernández, a leftist writer who was a convention member.
In recent months, Chileans have been bombarded with marketing from the “apruebo” and “rechazo” campaigns, some of it misleading, including claims that the constitution would allow abortion in the ninth month of pregnancy and ban homeownership.
On Thursday night, each side held closing rallies. Hundreds of thousands of “apruebo” supporters packed downtown Santiago and watched concerts by famous Chilean music acts, from rap to Andean folk.
“I’ve already lived, but I want deep change for the children of Chile,” said María Veloso, 57, who runs a food stand.
In a wealthier part of town, in a hillside amphitheater named after the Chilean poet Pablo Neruda, a much smaller crowd gathered to mark their campaign to reject the leftist text. (Mr. Neruda, ironically, was a communist.) Hundreds of people waved Chilean flags and danced to an act impersonating the flamboyant Mexican singer Juan Gabriel.
“Here in Chile, they’re defending dogs more than babies,” said Sandra Cáceres Ríos, 50, an herb seller.
Regardless of the vote’s outcome, there is more political negotiating ahead. In the case of approval, Chile’s Congress, which is ideologically split, will be tasked with figuring out how to implement many of the changes. Lawmakers could try to significantly limit the scope or impact of some policies, such as abortion or Indigenous rights, by passing laws interpreting the constitution’s language in a narrow way.
Ultimately, the real effect of many provisions would probably be determined by the courts.
If the text is rejected, Mr. Boric, Chile’s president, has said that he would like to see a new convention draft another proposed charter.
He would, in other words, like to try it all again.
Pascale Bonnefoy and Ana Lankes contributed reporting from Santiago, Chile.
BOGOTÁ, Colombia — In Chile, a tattooed former student activist won the presidency with a pledge to oversee the most profound transformation of Chilean society in decades, widening the social safety net and shifting the tax burden to the wealthy.
In Peru, the son of poor farmers was propelled to victory on a vow to prioritize struggling families, feed the hungry and correct longstanding disparities in access to health care and education.
In Colombia, a former rebel and longtime legislator was elected the country’s first leftist president, promising to champion the rights of Indigenous, Black and poor Colombians, while building an economy that works for everyone.
election of Andrés Manuel López Obrador in Mexico and could culminate with a victory later this year by a leftist candidate in Brazil, leaving the region’s six largest economies run by leaders elected on leftist platforms.
A combination of forces have thrust this new group into power, including an anti-incumbent fervor driven by anger over chronic poverty and inequality, which have only been exacerbated by the pandemic and have deepened frustration among voters who have taken out their indignation on establishment candidates.
sliding backward, and instead of a boom, governments face pandemic-battered budgets, galloping inflation fed by the war in Ukraine, rising migration and increasingly dire economic and social consequences of climate change.
In Argentina, where the leftist Alberto Fernández took the reins from a right-wing president in late 2019, protesters have taken to the streets amid rising prices. Even larger protests erupted recently in Ecuador, threatening the government of one of the region’s few newly elected right-wing presidents, Guillermo Lasso.
“I don’t want to be apocalyptic about it,” said Cynthia Arnson, a distinguished fellow at the Woodrow Wilson International Center for Scholars. “But there are times when you look at this that it feels like the perfect storm, the number of things hitting the region at once.”
Chile and Colombia, have shown people the power of the streets.
five of the six largest economies in the region will be run by leaders who campaigned from the left.
focused on austerity, is reducing spending.
What does link these leaders, however, are promises for sweeping change that in many instances are running headlong into difficult and growing challenges.
Ninety percent of poll respondents told the polling firm Cadem this month that they believed the country’s economy was stuck or going backward.
Like many neighbors in the region, Chile’s yearly inflation rate is the highest it’s been in more than a generation, at 11.5 percent, spurring a cost-of-living crisis.
In southern Chile, a land struggle between the Mapuche, the country’s largest Indigenous group, and the state has entered its deadliest phase in 20 years, leading Mr. Boric to reverse course on one of his campaign pledges and redeploy troops in the area.
Catalina Becerra, 37, a human resources manager from Antofagasta, in northern Chile, said that “like many people of my generation” she voted for Mr. Boric because Mr. Kast, “didn’t represent me in the slightest.”
according to the Institute of Peruvian Studies — is now subject to five criminal probes, has already faced two impeachment attempts and cycled through seven interior ministers.
40 percent of households now live on less than $100 a month, less than half of the monthly minimum wage — while inflation has hit nearly 10 percent.
Still, despite widespread financial anxiety, Mr. Petro’s actions as he prepares to assume office seem to have earned him some support.
He has made repeated calls for national consensus, met with his biggest political foe, the right-wing former president Álvaro Uribe and appointed a widely respected, relatively conservative and Yale-educated finance minister.
The moves may allow Mr. Petro to govern more successfully than say Mr. Boric, said Daniel García-Peña, a political scientist, and have calmed down some fears about how he will try to revive the economy.
But given how quickly the honeymoon period ended for others, Mr. Petro will have precious little time to start delivering relief.
“Petro must come through for his voters,” said Hernan Morantes, 30, a Petro supporter and environmental activist. “Social movements must be ready, so that when the government does not come through, or does not want to come through, we’re ready.”
Julie Turkewitz reported from Bogotá, Colombia, Mitra Taj from Lima, Peru and John Bartlett from Santiago, Chile. Genevieve Glatsky contributed reporting from Bogotá.
“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.
Understand Inflation and How It Impacts You
“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.
Spain likely to push for more shared intelligence, sources
Families making dangerous crossings from Africa to Canaries
Morocco clamping down on migration after deal with Spain
Migrant deaths in Melilla highlight dangers, NGOs say
MADRID/LAS PALMAS, June 27 (Reuters) – Spain is shifting its foreign policy towards Africa while lobbying the EU and NATO for support to address migration from the continent, aggravated by the Ukraine invasion, two senior government officials and two diplomatic sources told Reuters.
Spain will use a NATO summit in Madrid this week to press its case, and is likely to ask for increased intelligence sharing by the alliance including on issues related to migration, the diplomats said.
Even before Russia’s Feb. 24 invasion of Ukraine, Socialist prime minister Pedro Sanchez had revived a strategy mothballed by previous governments of working with African partners to contain migration and to tackle root causes such as instability and climate change, two officials close to him said.
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That drive has now taken on more urgency, they added.
“We are looking for good relations with all the neighbours around us and jointly managing phenomena that no one, not even the most powerful state on the planet, can deal with on its own,” Spain’s foreign minister Jose Manuel Albares told Reuters. He declined to give details.
Spain, its southern neighbours and EU officials are increasingly alarmed that a hunger crisis worsened by the disruption of Ukraine’s grain exports will trigger chaotic migration from the Sahel and sub-Saharan regions of Africa, with numbers already on the rise this year, the sources said.
On Friday, at least 23 migrants died after clashes with Moroccan security forces when around 2,000 people tried to cross into Spain’s North African enclave of Melilla. Morocco in recent weeks has toughened containment measures following Spain’s new diplomatic approach. read more
Migration by sea to the Canary Islands, another risky but popular entrance point into Europe, jumped 51% between January and May this year compared to last year, Spanish data showed, with the busiest period of the year still to come.
Spain is used as a gateway to Europe by migrants from other continents, including Africa and Latin America. Although it is largely a transit country, previous jumps in arrivals have put its border resources under intense pressure.
Albares said the new strategy, which has seen Sanchez visit nine African countries since last year, was designed to keep migrants from danger.
“We cannot allow the Mediterranean, the Atlantic, to become enormous watery tombs where every year thousands of human beings die when all they aspire to is a better life,” Albares said.
Human rights groups and migration advocates, however, say Spain’s quest to outsource enforcement puts vulnerable people in the hands of security forces in countries with a history of abuses and heavy-handed policing.
The deaths in Morocco “are a tragic symbol of European policies of externalizing the borders of the EU,” groups including the Moroccan Association for Human Rights and Spanish migration charity Walking Borders said in a joint statement on Saturday.
Sanchez’s office did not immediately reply to a request for comment.
In a sign of its growing anxiety, Madrid hopes to secure a commitment at the NATO summit to better policing of “hybrid threats,” including the possibility irregular migration is used as a political pressure tactic by hostile actors. It will also lobby NATO to dedicate resources to securing the alliance’s Southern Flank. read more
Madrid will ask NATO for “allied intelligence sharing,” including on issues related to migration, a senior Spanish diplomatic source and an EU diplomat said. This could formalise and expand on existing intelligence cooperation.
At the summit, NATO will reinforce cooperation efforts with southern countries and agree a package for Mauritania to help “the fight against terrorism, border control and strengthening its defence and security,” NATO secretary general Jens Stoltenberg told newspaper El Pais at the weekend.
Migrants wait to disembark from a Spanish coast guard vessel, at the port of Arguineguin, in the island of Gran Canaria, Spain, May 7, 2022. REUTERS/Borja Suarez
The expanded NATO presence could see Mauritania, which works closely with Spain, help coordinate with other countries in the Sahel region, said Felix Arteaga, senior defence analyst with Madrid’s Elcano Institute, a think tank.
Foreign Minister Albares declined to give details on how NATO could expand operations in Africa.
NATO sources and academics signal that Spain’s proposals will face resistance amid conflicting needs from countries such as Russia’s vulnerable neighbours in the Baltic States. read more
Spain says the growing influence of Russia in unstable countries including the Central African Republic and Sahel nation Mali risks fuelling insecurity to the south of Europe. read more
Citing the presence of Russian military contractors in Mali, the blockade of grains exports from Ukraine and Moscow ally Belarus’ policy last year of allowing migrants into the EU, Madrid says President Vladmir Putin could use migration and hunger as part of his war effort.
“Putin wants to use food crisis to orchestrate a repeat of migration crisis of the magnitude we have seen in 2015-16 to destabilise the EU,” one European Union official told Reuters.
Moscow denies responsibility for the food crisis, blaming Western sanctions that limit its own exports of grains for a jump in global prices.
Russia’s foreign ministry did not immediately reply to a request for comment.
FUNDING FOR THE SAHEL
In recent weeks, Sanchez has held a flurry of bilateral meetings with heads of state and officials from Nigeria, Morocco and Mauritania to discuss economic cooperation, human trafficking, capacity building for controlling borders and the fight against terrorism.
In June, the government sent to parliament a new development bill to channel funding to the Sahel. The legislation would mark a significant expansion of existing funding for migration control to eight African countries.
Italy too has sought to enlist support, with the government earlier hosting a meeting of southern European nations to push for a post-Ukraine migration policy that distributes arrival numbers more evenly throughout Europe. read more
People are already on the move. Data from the International Organisation for Migration (IOM) shows departures from the Sahelian nation of Niger in the first four months of this year have risen by 45%, and from neighbouring Mali they have doubled.
The rise has not yet been reflected by arrivals to European shores.
A Reuters review of data from European border and coast guard agency Frontex showed migrant numbers arriving in the Canary Islands from the Sahel region of Africa and below it, from Guinea, Senegal, Côte d’Ivoire and Ghana, rose in the first five months of 2022 compared to the same period last year.
Whole families are increasingly making the trip to the Atlantic islands in fragile rubber dinghies from as far south as Senegal and Guinea, citing insecurity, climate change and, in more recent cases, high food prices, said Jose Antonio Rodríguez Verona, a Red Cross official in the Canary Islands.
Morocco remains the biggest origin country and transit point for migrants to Spain, with record numbers of Moroccans reaching the Canary Islands in January and February this year.
Those figures however fell by 85% in March and April from the previous two months, according to figures from Frontex, after Spain changed its policy on the disputed Western Sahara to align with Morocco’s stance. Albares has attributed the drop directly to the change of policy.
“I would like to thank the extraordinary cooperation we have with the Kingdom of Morocco,” Spanish Prime Minister Sanchez said on Saturday, after the deaths in Melilla, which he blamed on human trafficking gangs.
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Reporting by Belen Carreno, Joan Faus and Borja Suarez, additional reporting Gabriela Baczynska in Brussels, Emma Farge in Geneva, Ed McAllister in Dakar, Ahmed El Jechtimi in Rabat, editing by Aislinn Laing and Frank Jack Daniel
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BOGOTÁ, Colombia — For the first time, Colombia will have a leftist president.
Gustavo Petro, a former rebel and a longtime legislator, won Colombia’s presidential election on Sunday, galvanizing voters frustrated by decades of poverty and inequality under conservative leaders, with promises to expand social programs, tax the wealthy and move away from an economy he has called overly reliant on fossil fuels.
His victory sets the third largest nation in Latin America on a sharply uncertain path, just as it faces rising poverty and violence that have sent record numbers of Colombians to the United States border; high levels of deforestation in the Colombian Amazon, a key buffer against climate change; and a growing distrust of key democratic institutions, which has become a trend in the region.
Mr. Petro, 62, received more than 50 percent of the vote, with more than 99 percent counted Sunday evening. His opponent, Rodolfo Hernández, a construction magnate who had energized the country with a scorched-earth anti-corruption platform, won just over 47 percent.
part of a different rebel group, called the M-19, which demobilized in 1990, and became a political party that helped rewrite the country’s constitution. Eventually, Mr. Petro became a forceful leader in the country’s opposition, known for denouncing human rights abuses and corruption.
called his energy plan “economic suicide.”
riddled with corruption and frivolous spending. He had called for combining ministries, eliminating some embassies and firing inefficient government employees, while using savings to help the poor.
One Hernández supporter, Nilia Mesa de Reyes, 70, a retired ethics professor who voted in an affluent section of Bogotá, said that Mr. Petro’s leftist policies, and his past with the M-19, terrified her. “We’re thinking about leaving the country,” she said.
Mr. Petro’s critics, including former allies, have accused him of arrogance that leads him to ignore advisers and struggle to build consensus. When he takes office in August, he will face a deeply polarized society where polls show growing distrust in almost all major institutions.
He has vowed to serve as the president of all Colombians, not just those who voted for him.
On Sunday, at a high school-turned-polling station in Bogotá,Ingrid Forrero, 31, said she saw a generational divide in her community, with young people supporting Mr. Petro and older generations in favor of Mr. Hernández.
Her own family calls her the “little rebel” because of her support for Mr. Petro, whom she said she favors because of his policies on education and income inequality.
“The youth is more inclined toward revolution,” she said, “toward the left, toward a change.”
Megan Janetsky contributed reporting from Bucaramanga, Colombia, and Sofía Villamil and Genevieve Glatsky contributed reporting from Bogotá.
WASHINGTON/MEXICO CITY, June 6 (Reuters) – The White House on Monday excluded Cuba, Venezuela and Nicaragua from the U.S.-hosted Summit of the Americas this week, prompting Mexico’s president to make good on a threat to skip the event because all countries in the Western Hemisphere were not invited.
The boycott by Mexican President Andres Manuel Lopez Obrador and some other leaders could diminish the relevance of the summit in Los Angeles, where the United States aims to address regional migration and economic challenges. President Joe Biden, a Democrat, hopes to repair Latin America relations damaged under his Republican predecessor, Donald Trump, reassert U.S. influence and counter China’s inroads.
The decision to cut out Cuba, Venezuela and Nicaragua followed weeks of intense deliberations and was due to concerns about human rights and a lack of democracy in the three nations, a senior U.S. official said.
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U.S. State Department spokesperson Ned Price said the Biden administration “understands” Mexico’s position, but “one of the key elements of this summit is democratic governance, and these countries are not exemplars, to put it mildly.”
Biden aides have been mindful of pressure from Republicans and some fellow Democrats against appearing soft on America’s three main leftist antagonists in Latin America. Miami’s large Cuban-American community, which favored Trump’s harsh policies toward Cuba and Venezuela, is seen as an important voting bloc in Florida in the November elections that will decide control of the U.S. Congress, which is now in the hands of the Democrats.
Lopez Obrador told reporters that his foreign minister, Marcelo Ebrard, would attend the summit in his place. The Mexican president said he would meet with Biden in Washington next month, which the White House confirmed. read more
“There can’t be a Summit of the Americas if not all countries of the American continent are taking part,” Lopez Obrador said.
Lopez Obrador’s absence from the gathering, which Biden is due to open on Wednesday, raises questions about summit discussions focused on curbing migration at the U.S. southern border, a priority for Biden, and could be a diplomatic embarrassment for the United States.
A caravan of several thousand migrants, many from Venezuela, set off from southern Mexico early Monday aiming to reach the United States. read more
But a senior administration official insisted Lopez Obrador’s no-show would not hinder Biden’s rollout of a regional migration initiative. The White House expects at least 23 heads of state and government, which the official said would be in line with past summits.
U.S. Senator Robert Menendez, a Democrat and chairman of the powerful Senate Foreign Relations Committee, criticized the Mexican president, saying his “decision to stand with dictators and despots” would hurt U.S.-Mexico relations.
Venezuelan President Nicolas Maduro shakes hands with his Cuban counterpart Miguel Diaz-Canel during the ALBA group meeting in Havana, Cuba, May 27, 2022. Miraflores Palace/Handout via REUTERS
Brazilian President Jair Bolsonaro, a right-wing populist and Trump admirer who leads Latin America’s most populous country, will attend after initially flirting with staying away. read more
The exclusion of Venezuela and Nicaragua had been flagged in recent weeks. President Miguel Diaz-Canel of Communist-ruled Cuba said last month he would not go even if invited, accusing the United States of “brutal pressure” to make the summit non-inclusive.
On Monday, Cuba called the decision “discriminatory and unacceptable” and said the United States underestimated support in the region for the island nation.
The United States invited some Cuban civil society activists to attend, but several said on social media that Cuban state security had blocked them from travel to Los Angeles. read more
Having ruled out Venezuelan President Nicolas Maduro, the Biden administration expects representatives for opposition leader Juan Guaido will attend, Price said. He declined to say whether their participation would be in person or virtually.
The senior administration official, asked whether Biden might have a call with Guaido during the summit, said there was a good chance of an “engagement,” but declined to elaborate.
Washington recognizes Guaido as Venezuela’s legitimate president, having condemned Maduro’s 2018 re-election as a sham. But some countries in the region have stuck with Maduro.
Also barred from the summit is Nicaraguan President Daniel Ortega, a former Marxist guerrilla who won a fourth consecutive term in November after jailing rivals.
Most leaders have signaled they will attend, but the pushback by leftist-led governments suggests many in Latin America are no longer willing to follow Washington’s lead as in past times.
Faced with low expectations for summit achievements, U.S. officials began previewing Biden’s coming initiatives. Those include an “Americas partnership” for pandemic recovery, which would entail investments and supply-chain strengthening, reform of the Inter-American Development Bank, and a $300 million commitment for regional food security.
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Reporting By Matt Spetalnick in Washington and Dave Graham in Mexico City; Additional reporting by Humeyra Pamuk, Eric Beech and Patricia Zengerle in Washington, Kylie Madry and Lizbeth Diaz in Mexico City, Jose Torres in Tapachula and Dave Sherwood in Havana; Writing by Ted Hesson; Editing by Grant McCool, Alistair Bell and Leslie Adler
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A LAPD helocopter flies near the LA Convention Center during the first day of the Ninth Americas Summit in Los Angeles, U.S., June 6, 2022. REUTERS/Daniel Becerril
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WASHINGTON, June 6 (Reuters) – President Joe Biden will announce this week at the Summit of the Americas an economic partnership for the Western hemisphere focusing on promoting economic recovery by building on existing trade agreements, U.S. administration officials said on Monday.
Dubbed the “Americas Partnership for Economic Prosperity”, the plan will cover five areas including mobilizing investments, reinvigorating institutions, clean energy jobs, resilient supply chains and sustainable trade.
“The overall objective is to build our economies from the bottom up and middle out by building on the foundation established by our free trade agreements with the region to better address inequality and lack of economic opportunity,” a senior administration official told reporters in a call.
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The plan would aim to offer an alternative in a region where China has been expanding its sphere of influence. It was unclear, however, how many countries in economically troubled Latin America would buy into such an arrangement.
The United States is hosting the Summit of the Americas in Los Angeles, a gathering where Biden aims to address regional migration and economic challenges. On Monday, the White House said it was not inviting Cuba, Venezuela and Nicaragua, prompting Mexico’s president to skip the event.
The summit is being convened in the United States for the first time since the first such gathering in Miami in 1994, as Biden seeks to reassert U.S. leadership and counter China’s growing clout. He is due to formally open the summit on Wednesday.
Biden will put forward “an ambitious reform” of the Inter-American Development Bank (IDB), the official said, adding that the United States would also seek an equity stake at the bank’s private sector lending arm to support the deployment of private capital.
“Because the private sector has a central role to play,” the official said.
Eric Farnsworth, vice president of the Council of the Americas think tank, told a Senate subcommittee last week that the Biden administration should push for a regional trade initiative similar to the one for the Indo-Pacific that Biden announced during his Asia tour in May.
But the idea of creating a hemisphere-wide trade bloc has never gotten off the ground, partly because of protectionism sentiment among U.S. labor unions and some lawmakers.
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Additional reporting by Matt Spetalnick in Los Angeles; Reporting by Humeyra Pamuk and Eric Beech; Editing by Chris Reese and Stephen Coates
Our Standards: The Thomson Reuters Trust Principles.
Two anti-establishment candidates, Gustavo Petro, a leftist, and Rodolfo Hernández, a right-wing populist, captured the top two spots in Colombia’s presidential election on Sunday, delivering a stunning blow to the country’s dominant conservative political class.
The two men will compete in a runoff election on June 19 that is shaping up to be one of the most consequential in the country’s history. At stake is the country’s economic model, its democratic integrity and the livelihoods of millions of people pushed into poverty during the pandemic.
The Petro-Hernández face-off, said Daniel García-Peña, a Colombian political scientist, pits “change against change.”
Fifty-four percent of eligible voters participated in the election, the same rate as 2018, when Mr. Petro faced the current president, Iván Duque, and a slate of other candidates.
The day was largely peaceful as millions of Colombians voted, despite growing unrest in parts of the country that have seen a resurgence of armed groups.
If Mr. Petro wins the runoff election next month, he will become Colombia’s first leftist president, a watershed moment for a nation that has long been led by a conservative establishment.
In his postelection speech at a hotel near the center of Bogotá, Mr. Petro stood beside his vice-presidential pick and said Sunday’s results showed that the political project of the current president and his allies “has been defeated.”
He then quickly issued warnings about Mr. Hernández, painting a vote for him as a dangerous regression, and daring the electorate to take a chance on what he called a progressive project, “a true change.”
His rise reflects not just a leftist shift across Latin America but also an anti-incumbent fervor that has gained strength as the pandemic has deepened poverty and inequality, intensifying feelings that the region’s economies are built mostly to serve the elite.
Mr. Petro has vowed to transform Colombia’s economic system, which he says fuels inequality, by expanding social programs, halting oil exploration and shifting the country’s focus to domestic agriculture and industry.
Colombia has long been the United States’ strongest ally in the region, and Mr. Petro is calling for a reset of the relationship, including changes to the approach to the drug war and a re-examination of a bilateral trade agreement that could lead to a clash with Washington.
Mr. Hernández, who was relatively unknown before he began surging in the polls in the campaign’s closing days, pushes a populist anti-corruption platform, but has raised alarms with his plan to declare a state of emergency to accomplish his goals.
“Today the country of politicking and corruption lost,” Mr. Hernández wrote in a Facebook message to his supporters following Sunday’s results. “Today, the gangs who thought that they could govern forever have lost.”
Many voters are fed up with rising prices, high unemployment, low wages, rising education costs and surging violence, and polls show that a clear majority of Colombians have an unfavorable view of Mr. Iván Duque, who is largely regarded as part of the conservative establishment.
The election comes as polls show growing distrust in the country’s institutions, including the country’s national registrar, an election body. The registrar bungled the initial count in a March congressional vote, leading to concern that losing candidates in the presidential vote will declare fraud.
The country is also seeing a rise in violence, undermining the democratic process. The Mission for Electoral Observation called this pre-election period the most violent in 12 years.
Mr. Petro and his running mate, Francia Márquez, have both received death threats, leading to increased security, including bodyguards holding riot shields.
Despite these dangers, the election has invigorated many Colombians who had long believed their voices were not represented at the highest levels of power, infusing the election with a sense of hope. That feeling of optimism is partly inspired by Ms. Márquez, a former housekeeper and environmental activist who would be the country’s first Black vice president if her ticket won.
Her campaign has focused on fighting systemic injustice, and its most popular slogan, “vivir sabroso,” means, roughly, “live richly and with dignity.”
Reporting was contributed by Sofía Villamil, Megan Janetsky and Genevieve Glatsky in Bogotá.