How China Is Policing the Future

The more than 1.4 billion people living in China are constantly watched. They are recorded by police cameras that are everywhere, on street corners and subway ceilings, in hotel lobbies and apartment buildings. Their phones are tracked, their purchases are monitored, and their online chats are censored.

Now, even their future is under surveillance.

The latest generation of technology digs through the vast amounts of data collected on their daily activities to find patterns and aberrations, promising to predict crimes or protests before they happen. They target potential troublemakers in the eyes of the Chinese government — not only those with a criminal past but also vulnerable groups, including ethnic minorities, migrant workers and those with a history of mental illness.

They can warn the police if a victim of a fraud tries to travel to Beijing to petition the government for payment or a drug user makes too many calls to the same number. They can signal officers each time a person with a history of mental illness gets near a school.

automating systemic discrimination and political repression.

to quell ethnic unrest in the western region of Xinjiang and enforce some of the world’s most severe coronavirus lockdowns. The space for dissent, always limited, is rapidly disappearing.

“Big data should be used as an engine to power the innovative development of public security work and a new growth point for nurturing combat capabilities,” Mr. Xi said in 2019 at a national public security work meeting.

ChinaFile, an online magazine published by the Asia Society, which has systematically gathered years of records on government websites. Another set, describing software bought by the authorities in the port city of Tianjin to stop petitioners from going to neighboring Beijing, was provided by IPVM, a surveillance industry publication.

China’s Ministry of Public Security did not respond to requests for comment faxed to its headquarters in Beijing and six local departments across the country.

The new approach to surveillance is partly based on data-driven policing software from the United States and Europe, technology that rights groups say has encoded racism into decisions like which neighborhoods are most heavily policed and which prisoners get parole. China takes it to the extreme, tapping nationwide reservoirs of data that allow the police to operate with opacity and impunity.

Megvii, an artificial intelligence start-up, told Chinese state media that the surveillance system could give the police a search engine for crime, analyzing huge amounts of video footage to intuit patterns and warn the authorities about suspicious behavior. He explained that if cameras detected a person spending too much time at a train station, the system could flag a possible pickpocket.

Hikvision, that aims to predict protests. The system collects data on legions of Chinese petitioners, a general term in China that describes people who try to file complaints about local officials with higher authorities.

It then scores petitioners on the likelihood that they will travel to Beijing. In the future, the data will be used to train machine-learning models, according to a procurement document.

Local officials want to prevent such trips to avoid political embarrassment or exposure of wrongdoing. And the central government doesn’t want groups of disgruntled citizens gathering in the capital.

A Hikvision representative declined to comment on the system.

Under Mr. Xi, official efforts to control petitioners have grown increasingly invasive. Zekun Wang, a 32-year-old member of a group that for years sought redress over a real estate fraud, said the authorities in 2017 had intercepted fellow petitioners in Shanghai before they could even buy tickets to Beijing. He suspected that the authorities were watching their communications on the social media app WeChat.

The Hikvision system in Tianjin, which is run in cooperation with the police in nearby Beijing and Hebei Province, is more sophisticated.

The platform analyzes individuals’ likelihood to petition based on their social and family relationships, past trips and personal situations, according to the procurement document. It helps the police create a profile of each, with fields for officers to describe the temperament of the protester, including “paranoid,” “meticulous” and “short tempered.”

Many people who petition do so over government mishandling of a tragic accident or neglect in the case — all of which goes into the algorithm. “Increase a person’s early-warning risk level if they have low social status or went through a major tragedy,” reads the procurement document.

When the police in Zhouning, a rural county in Fujian Province, bought a new set of 439 cameras in 2018, they listed coordinates where each would go. Some hung above intersections and others near schools, according to a procurement document.

Nine were installed outside the homes of people with something in common: mental illness.

While some software tries to use data to uncover new threats, a more common type is based on the preconceived notions of the police. In over a hundred procurement documents reviewed by The Times, the surveillance targeted blacklists of “key persons.”

These people, according to some of the procurement documents, included those with mental illness, convicted criminals, fugitives, drug users, petitioners, suspected terrorists, political agitators and threats to social stability. Other systems targeted migrant workers, idle youths (teenagers without school or a job), ethnic minorities, foreigners and those infected with H.I.V.

The authorities decide who goes on the lists, and there is often no process to notify people when they do. Once individuals are in a database, they are rarely removed, said experts, who worried that the new technologies reinforce disparities within China, imposing surveillance on the least fortunate parts of its population.

In many cases the software goes further than simply targeting a population, allowing the authorities to set up digital tripwires that indicate a possible threat. In one Megvii presentation detailing a rival product by Yitu, the system’s interface allowed the police to devise their own early warnings.

With a simple fill-in-the-blank menu, the police can base alarms on specific parameters, including where a blacklisted person appears, when the person moves around, whether he or she meets with other blacklisted people and the frequency of certain activities. The police could set the system to send a warning each time two people with a history of drug use check into the same hotel or when four people with a history of protest enter the same park.

Yitu did not respond to emailed requests for comment.

In 2020 in the city of Nanning, the police bought software that could look for “more than three key people checking into the same or nearby hotels” and “a drug user calling a new out-of-town number frequently,” according to a bidding document. In Yangshuo, a tourist town famous for its otherworldly karst mountains, the authorities bought a system to alert them if a foreigner without a work permit spent too much time hanging around foreign-language schools or bars, an apparent effort to catch people overstaying their visas or working illegally.

In Shanghai, one party-run publication described how the authorities used software to identify those who exceeded normal water and electricity use. The system would send a “digital whistle” to the police when it found suspicious consumption patterns.

The tactic was likely designed to detect migrant workers, who often live together in close quarters to save money. In some places, the police consider them an elusive, and often impoverished, group who can bring crime into communities.

The automated alerts don’t result in the same level of police response. Often, the police give priority to warnings that point to political problems, like protests or other threats to social stability, said Suzanne E. Scoggins, a professor at Clark University who studies China’s policing.

At times, the police have stated outright the need to profile people. “Through the application of big data, we paint a picture of people and give them labels with different attributes,” Li Wei, a researcher at China’s national police university, said in a 2016 speech. “For those who receive one or more types of labels, we infer their identities and behavior, and then carry out targeted pre-emptive security measures.”

Mr. Zhang first started petitioning the government for compensation over the torture of his family during the Cultural Revolution. He has since petitioned over what he says is police targeting of his family.

As China has built out its techno-authoritarian tools, he has had to use spy movie tactics to circumvent surveillance that, he said, has become “high tech and Nazified.”

When he traveled to Beijing in January from his village in Shandong Province, he turned off his phone and paid for transportation in cash to minimize his digital footprint. He bought train tickets to the wrong destination to foil police tracking. He hired private drivers to get around checkpoints where his identification card would set off an alarm.

The system in Tianjin has a special feature for people like him who have “a certain awareness of anti-reconnaissance” and regularly change vehicles to evade detection, according to the police procurement document.

Whether or not he triggered the system, Mr. Zhang has noticed a change. Whenever he turns off his phone, he said, officers show up at his house to check that he hasn’t left on a new trip to Beijing.

Credit…Zhang Yuqiao

Even if police systems cannot accurately predict behavior, the authorities may consider them successful because of the threat, said Noam Yuchtman, an economics professor at the London School of Economics who has studied the impact of surveillance in China.

“In a context where there isn’t real political accountability,” having a surveillance system that frequently sends police officers “can work pretty well” at discouraging unrest, he said.

Once the metrics are set and the warnings are triggered, police officers have little flexibility, centralizing control. They are evaluated for their responsiveness to automated alarms and effectiveness at preventing protests, according to experts and public police reports.

The technology has encoded power imbalances. Some bidding documents refer to a “red list” of people whom the surveillance system must ignore.

One national procurement document said the function was for “people who need privacy protection or V.I.P. protection.” Another, from Guangdong Province, got more specific, stipulating that the red list was for government officials.

Mr. Zhang expressed frustration at the ways technology had cut off those in political power from regular people.

“The authorities do not seriously solve problems but do whatever it takes to silence the people who raise the problems,” he said. “This is a big step backward for society.”

Mr. Zhang said that he still believed in the power of technology to do good, but that in the wrong hands it could be a “scourge and a shackle.”

“In the past if you left your home and took to the countryside, all roads led to Beijing,” he said. “Now, the entire country is a net.”

Isabelle Qian and Aaron Krolik contributed research and reporting. Production by Agnes Chang and Alexander Cardia.

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WTO strikes global trade deals deep into overtime

  • Deals reached on food, health and fishing
  • Formerly defiant India joins consensus
  • Package seen boosting credibility of WTO

GENEVA, June 17 (Reuters) – The World Trade Organization agreed on the first change to global trading rules in years on Friday as well as a deal to boost the supply of COVID-19 vaccines in a series of pledges that were heavy on compromise.

The deals were forged in the early hours of the sixth day of a conference of more than 100 trade ministers that was seen as a test of the ability of nations to strike multilateral trade deals amid geopolitical tensions heightened by the Ukraine war.

Delegates, who had expected a four-day conference, cheered after they passed seven agreements and declarations just before dawn on Friday.

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Director-General Ngozi Okonjo-Iweala told them: “The package of agreements you have reached will make a difference to the lives of people around the world. The outcomes demonstrate that the WTO is in fact capable of responding to emergencies of our time.”

Earlier she had appealed to WTO members to consider the “delicate balance” required after nearly round-the-clock talks that have at times been charged with anger and accusations.

The package, which the WTO chief called “unprecedented”, included the two highest profile deals under consideration – on fisheries and on a partial waiver of intellectual property (IP) rights for COVID-19 vaccines.

The accord to curb fishing subsidies is only the second multilateral agreement on global trading rules struck in the WTO’s 27-year history and is far more ambitious than the first, which was designed to cut red tape.

At one stage, a series of demands from India, which sees itself as the champion of poor farmers and fishermen as well as developing countries, appeared set to paralyse talks but accommodations were found, trade sources said.

The WTO’s rules dictate that all decisions are taken by consensus, with any single member able to exercise a veto.

‘LOT OF BUMPS’

“It was not an easy process. There were a lot of bumps, just like I predicted. It was like a roller coaster, but in the end we got there,” an exhausted but elated Okonjo-Iweala told a final news conference.

The deal to ban subsidies for illegal, unreported and unregulated fishing or fishing of an over-fished stock has the potential to reverse collapsing fish stocks. Though pared back significantly, it still drew approval.

“This is a turning point in addressing one of the key drivers of global over-fishing,” said Isabel Jarrett, manager of The Pew Charitable Trusts’ campaign to reduce harmful fisheries subsidies.

Okonjo-Iweala said it was the first step after 21 years of talks towards what she hoped would be a more comprehensive deal.

The deal on a partial IP waiver to allow developing countries to produce and export COVID-19 vaccines has divided the WTO for nearly two years, but finally passed. It has also drawn the fiercest criticism from campaign groups that say it barely expands on an existing exemption in WTO rules and is too narrow by not covering therapeutics and diagnostics.

“Put simply, it is a technocratic fudge aimed at saving reputations, not lives,” said Max Lawson, co-chair of the People’s Vaccine Alliance.

The pharmaceutical industry was also critical of the deal, saying that there is currently a surplus of shots which governments and other authorities haven’t figured out how to distribute and administer.

“Rather than focus on real issues affecting public health, like solving supply chain bottlenecks or reducing border tariffs on medicines, they approved an intellectual property waiver on COVID-19 vaccines that won’t help protect people against the virus,” Stephen Ubl, President of the Pharmaceutical Research and Manufacturers of America (PhRMA), said in an emailed statement.

One agreement also reached was to maintain a moratorium on e-commerce tariffs, which business says is vital to allow the free flow of data worldwide. read more

Overall, many observers said the deals should boost the credibility of the WTO, which was weakened by former U.S. President Donald Trump’s crippling of its ability to intervene in trade disputes, and set it on a course for reform.

European Trade Commissioner Valdis Dombrovskis said the WTO meeting had clinched outcomes of global significance despite unprecedented challenges.

“The profound divergences here amply confirm that a deep reform of the organisation is urgently needed, across all its core functions,” he said, adding he would work to get it agreed at the next ministerial conference due in 2023.

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Writing by Emma Farge and Philip Blenkinsop; Editing by Richard Pullin, Raju Gopalakrishnan and Toby Chopra

Our Standards: The Thomson Reuters Trust Principles.

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Crypto Firms Quake as Prices Fall

SAN FRANCISCO — No one wanted to miss out on the cryptocurrency mania.

Over the last two years, as the prices of Bitcoin and other virtual currencies surged, crypto start-ups proliferated. Companies that market digital coins to investors flooded the airwaves with TV commercials, newfangled lending operations offered sky-high interest rates on crypto deposits and exchanges like Coinbase that allow investors to trade digital assets went on hiring sprees.

A global industry worth hundreds of billions of dollars rose up practically overnight. Now it is crashing down.

After weeks of plummeting cryptocurrency prices, Coinbase said on Tuesday that it was cutting 18 percent of its employees, after layoffs at other crypto companies like Gemini, BlockFi and Crypto.com. High-profile start-ups like Terraform Labs have imploded, wiping away years of investments. On Sunday, an experimental crypto bank, Celsius, abruptly halted withdrawals.

dropped by about 65 percent since autumn, and analysts predict the sell-off will continue. Stock prices of crypto companies have cratered, retail traders are fleeing and industry executives are predicting a prolonged slump that could put more companies in jeopardy.

stocks crashing, interest rates soaring and inflation high, cryptocurrency prices are also collapsing, showing they have become tied to the overall market. And as people pull back from crypto investments, the outflow is exposing the unstable foundations of many of the industry’s most popular companies.

OpenSea, the largest marketplace for the unique digital images known as nonfungible tokens, reached a staggering $13 billion valuation. And Wall Street banks such as JPMorgan Chase, which previously shunned crypto assets, and Fortune 500 companies like PayPal rolled out crypto offerings.

confidence evaporated in the early 2000s, many of the dot-coms went bust, leaving just the biggest — such as eBay, Amazon and Yahoo — standing.

This time, investors predict there will be more survivors. “You certainly have some overhyped companies that don’t have the fundamentals,” said Mike Jones, an investor at the venture firm Science Inc. “But you also have some really strong companies that are trading way below where they should.”

There have been warning signs that some crypto companies were not sustainable. Skeptics have pointed out that many of the most popular firms offered products underpinned by risky financial engineering.

Terraform Labs, for example, offered TerraUSD, a so-called stablecoin with a fixed value linked to the U.S. dollar. The coin was hyped by its founder, Do Kwon, who raised more than $200 million from major investment firms such as Lightspeed Venture Partners and Galaxy Digital, even as critics warned that the project was unstable.

The coin’s price was algorithmically linked to a sister cryptocurrency, Luna. When the price of Luna plummeted in May, TerraUSD fell in tandem — a “death spiral” that destabilized the broader market and plunged some investors into financial ruin.

drew scrutiny from several state regulators. In the end, a drop in crypto prices appeared to put the company under more pressure than it could withstand.

With the price of Bitcoin tumbling, Celsius announced on Sunday that it was freezing withdrawals “due to extreme market conditions.” The company did not respond to a request for comment.

The market instability has also triggered a crisis at Coinbase, the largest U.S. crypto exchange. Between the end of 2021 and late March, Coinbase lost 2.2 million active customers, or 19 percent of its total, as crypto prices dropped. The company’s net revenue in the first three months of the year shrank 27 percent from a year earlier, to $1.2 billion. Its stock price has plunged 84 percent since it went public last year.

This month, Coinbase said it would rescind job offers and extend a hiring freeze to battle the economic downturn. On Tuesday, it said it would cut about 1,100 workers.

Brian Armstrong, Coinbase’s chief executive, informed employees of the layoffs in a note on Tuesday morning, saying the company “grew too quickly” as crypto products became popular.

“It is now clear to me that we over-hired,” he wrote. A Coinbase spokesman declined to comment.

“It had been growth at all costs over the last several years,” said Ryan Coyne, who covers crypto companies and financial technology at the Mizuho Group. “It’s now turned to profitable growth.”

memo to staff, the Winklevoss twins said the industry had entered a “crypto winter.”

commercial starring the actor Matt Damon, who declared that “fortune favors the brave” as he encouraged investors to put their money in the crypto market. Last week, Crypto.com’s chief executive announced that he was laying off 5 percent of the staff, or 260 people. On Monday, BlockFi, a crypto lending operation, said it was reducing its staff by roughly 20 percent.

Gemini and BlockFi declined to comment. A Crypto.com spokesman said the company remains focused on “investing resources into product and engineering capabilities to develop world-class products.”

Cryptocurrencies have long been volatile and prone to boom-and-bust cycles. In 2013, a Chinese ban on Bitcoin sent its price tumbling. In 2017, a proliferation of companies creating and selling their own tokens led to a run-up in crypto prices, which crashed after regulators cracked down on so-called initial coin offerings.

These bubbles are built into the ecosystem, crypto enthusiasts said. They attract talented people to the industry, who go on to build valuable projects. Many of the most vocal cheerleaders encourage investors to “buy the dip,” or invest more when prices are low.

“We have been in these downward spirals before and recovered,” Mr. Jones, the Science Inc. investor, said. “We all believe in the fundamentals.”

Some of the companies have also remained defiant. During Game 5 of the N.B.A. finals on Monday night, Coinbase aired a commercial that alluded to past boom-and-bust cycles.

“Crypto is dead,” it declared. “Long live crypto.”

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Google Sidelines Engineer Who Claims Its A.I. Is Sentient

SAN FRANCISCO — Google placed an engineer on paid leave recently after dismissing his claim that its artificial intelligence is sentient, surfacing yet another fracas about the company’s most advanced technology.

Blake Lemoine, a senior software engineer in Google’s Responsible A.I. organization, said in an interview that he was put on leave Monday. The company’s human resources department said he had violated Google’s confidentiality policy. The day before his suspension, Mr. Lemoine said, he handed over documents to a U.S. senator’s office, claiming they provided evidence that Google and its technology engaged in religious discrimination.

Google said that its systems imitated conversational exchanges and could riff on different topics, but did not have consciousness. “Our team — including ethicists and technologists — has reviewed Blake’s concerns per our A.I. Principles and have informed him that the evidence does not support his claims,” Brian Gabriel, a Google spokesman, said in a statement. “Some in the broader A.I. community are considering the long-term possibility of sentient or general A.I., but it doesn’t make sense to do so by anthropomorphizing today’s conversational models, which are not sentient.” The Washington Post first reported Mr. Lemoine’s suspension.

fired a researcher who had sought to publicly disagree with two of his colleagues’ published work. And the dismissals of two A.I. ethics researchers, Timnit Gebru and Margaret Mitchell, after they criticized Google language models, have continued to cast a shadow on the group.

neural network, which is a mathematical system that learns skills by analyzing large amounts of data. By pinpointing patterns in thousands of cat photos, for example, it can learn to recognize a cat.

Over the past several years, Google and other leading companies have designed neural networks that learned from enormous amounts of prose, including unpublished books and Wikipedia articles by the thousands. These “large language models” can be applied to many tasks. They can summarize articles, answer questions, generate tweets and even write blog posts.

But they are extremely flawed. Sometimes they generate perfect prose. Sometimes they generate nonsense. The systems are very good at recreating patterns they have seen in the past, but they cannot reason like a human.

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Shortage of Artillery Ammo Saps Ukrainian Frontline Morale

DONETSK REGION, Ukraine — Nearly four months after Russia invaded, the Ukrainian military is running low on ammunition for its Soviet-era artillery and has not received enough supplies from its allies to keep the Russians at bay, Ukrainian officials and artillery officers in the field say.

The shortage has put Ukrainian troops at a growing disadvantage in the artillery-driven war of attrition in the country’s east, with Russia’s batteries now firing several times as many rounds as Ukraine’s. While the West is sending in weapons, they are not arriving fast enough or in sufficient numbers to make up for Ukraine’s dwindling arsenal.

The Western weapons, heavy, long-range artillery pieces and multiple-launch rocket systems, are more accurate and highly mobile, but it takes time to deploy them and train soldiers to use them. In the meantime, Ukraine is running out of ammunition for the older weapons.

The Guardian newspaper that Ukraine was losing the artillery battle with Russia on the front lines because of the shortage of artillery shells for its older guns. He said Ukraine was firing 5,000 to 6,000 artillery rounds a day and had “almost used up all of our ammunition.”

By contrast, Russian forces are firing about 60,000 artillery shells and rockets each day in the Donbas fighting, according to a senior adviser to the Ukrainian military command who was not authorized to speak publicly.

Michael Kofman, the director of Russia studies at CNA, a research institute in Arlington, Va., said ammunition supplies would be critical to the final outcome in the battle for eastern Ukraine.

“This war is far more about attrition by artillery than maneuver, which means one of the deciding factors is who has more ammunition,” he said.

That Ukraine was running low on ammunition has hardly been a secret. Ukrainian officials flagged the problem months ago. On the front lines, commanders watched, alarmed, as stocks dwindled mid-battle. Soldiers say requests for artillery support go unanswered, for lack of shells.

Vadym Mischuk, 32, a Ukrainian soldier who had just rotated off the frontline near the eastern city of Bakhmut, said Thursday that there is so much Russian artillery fire that “we don’t even hear ours.” One soldier, who declined to provide his name for security reasons, estimated that for every one Ukrainian shell fired, the Russians fired 10.

The Ukrainian military has been honest about the shortfalls — something an army would not typically telegraph to the enemy in a war — perhaps because doing so adds a sense of urgency to appeals for more powerful Western weaponry.

“In early March we were already well aware that during intensive war with Russia our resources were depleting,” Ukraine’s defense minister, Oleksiy Reznikov, wrote on Facebook on Thursday. He added, “Relying solely on Soviet weapons was definitely a losing strategy.”

Even before the invasion, Ukraine’s ammunition depots had been targets for saboteurs, regularly blowing up like gigantic, lethally dangerous fireworks displays.

Spies or drones dropping incendiary devices were blamed in many cases. Between 2015 and 2019, six ammunition depots blew up in Ukraine, burning about 210,000 tons of ammo, or three times more than the Ukrainian army expended in the same time span fighting Russian-backed separatists, according to Radio Free Europe/Radio Liberty.

Following Russia’s invasion, NATO countries have stepped in to bolster Ukraine’s supply of ammunition, but the transfers have not always gone smoothly. Countries of the old Warsaw Pact and NATO countries used different calibers of ammunition — an enduring legacy that means much of Ukraine’s arsenal, built decades ago to Soviet specifications, cannot fire Western ammunition.

Ukraine’s newly acquired hoard of NATO’s 155-millimeter artillery shells is now larger than its entire artillery ammunition stockpile before the war started, Mr. Reznikov said. But the Ukrainian forces have too few guns at the front to fire the munitions, and are facing extensive logistics challenges not only to get them into the fight, but also to maintain them once there.

Some European countries have shipped so many of their own ammunition reserves to Ukraine — in some cases up to 30 percent — that they’re increasingly anxious about replenishing their stocks, European Union officials said.

Officials said that while there was still a relatively steady flow of military equipment from the E.U. and its allies, Ukraine was not receiving as much heavy artillery as it needs.

With artillery shells in short supply, Ukrainian forces have adjusted their tactics to compensate for the lack of artillery support. On Friday, for example, a tank unit in Donbas was using a Ukrainian T-64BV tank more like an artillery piece than a main battle tank.

Instead of attacking targets directly, the tank drove several kilometers toward the front, positioned itself in a tree line, and lobbed shells at Russian positions while a Ukrainian officer adjusted its aim over the radio and using a drone overhead — the procedure typically used with mortars or howitzers.

“It is a fact already that the tanks are used because there is not enough artillery,” said the artillery unit commander, who asked to go by his nom de guerre, Razor. His unit of 122-millimeter, self-propelled howitzers had run out of Ukrainian ammunition and was now using Czech-supplied shells.

But ammunition can be fickle. Decades-old ammunition can become unreliable if not stored properly over time, potentially leading to more duds. Another soldier, who spoke on the condition of anonymity, said that a batch of Czech-supplied rockets were faulty, with only three out of 40 firing.

Ukrainian soldiers wounded in combat have also voiced dismay about the paltry artillery support, which they blamed on a lack of ammunition.

“There is not an hour with a pause” in Russian bombardments, Lt. Oleksandr Kolesnikov, who was wounded late last month, said in an interview in an ambulance while being evacuated to a hospital to the west. “The artillery is very intense.” He said his commander called in artillery in response but received only one salvo.

The Russian artillery superiority has frightened soldiers, he said. “In war, everything is scary and we fear everything. Only idiots are not afraid.”

Reporting was contributed by Oleksandr Chubko from Kramatorsk, Ukraine, Maria Varenikova from Barvinkove, Ukraine, Matina Stevis-Gridneff from Brussels and Helene Cooper and John Ismay from Washington.

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DBRS Morningstar: Spanish Housing and Securitisation Market Update

LONDON–(BUSINESS WIRE)–In this commentary, we provide an overview of the Spanish housing market as well as how the recent past is shaping the residential mortgage-backed securities (RMBS) market.

Key findings include:

— The Spanish government introduced several supportive measures due to the impact of the pandemic, which kept the delinquencies low.

— Despite the double-digit decline in GDP caused by the pandemic, Spanish house prices have remained strong.

— The total number of Spanish RMBS deals rated by DBRS Morningstar is 44 and the weighted-average 90+-day arrears by current balance of these deals was 0.8%.

“In 2022, DBRS Morningstar expects the economic recovery to continue, albeit at a slower pace than previously expected, due to geopolitical uncertainties gripping the major world economies. Despite the double-digit decline in GDP caused by the pandemic, Spanish house prices have remained strong overall and house price appreciation may continue during 2022, particularly in large cities such as Madrid and Barcelona”, said Ketan Thaker, Managing Director of European RMBS at DBRS Morningstar..

To view the full report, click here: https://www.dbrsmorningstar.com/research/398160/spanish-housing-and-securitisation-market-update

The DBRS Morningstar group of companies consists of DBRS, Inc. (Delaware, U.S.)(NRSRO, DRO affiliate); DBRS Limited (Ontario, Canada)(DRO, NRSRO affiliate); DBRS Ratings GmbH (Frankfurt, Germany)(EU CRA, NRSRO affiliate, DRO affiliate); and DBRS Ratings Limited (England and Wales)(UK CRA, NRSRO affiliate, DRO affiliate). For more information on regulatory registrations, recognitions and approvals of the DBRS Morningstar group of companies, please see: https:// www.dbrsmorningstar.com/research/highlights.pdf.

The DBRS Morningstar group of companies are wholly-owned subsidiaries of Morningstar, Inc. © 2021 DBRS Morningstar. All Rights Reserved.

The information upon which DBRS Morningstar ratings and other types of credit opinions and reports are based is obtained by DBRS Morningstar from sources DBRS Morningstar believes to be reliable. DBRS Morningstar does not audit the information it receives in connection with the analytical process, and it does not and cannot independently verify that information in every instance. The extent of any factual investigation or independent verification depends on facts and circumstances. DBRS Morningstar ratings, other types of credit opinions, reports and any other information provided by DBRS Morningstar are provided “as is” and without representation or warranty of any kind. DBRS Morningstar hereby disclaims any representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability, fitness for any particular purpose or non-infringement of any of such information. In no event shall DBRS Morningstar or its directors, officers, employees, independent contractors, agents and representatives (collectively, DBRS Morningstar Representatives) be liable (1) for any inaccuracy, delay, loss of data, interruption in service, error or omission or for any damages resulting therefrom, or (2) for any direct, indirect, incidental, special, compensatory or consequential damages arising from any use of ratings and rating reports or arising from any error (negligent or otherwise) or other circumstance or contingency within or outside the control of DBRS Morningstar or any DBRS Morningstar Representative, in connection with or related to obtaining, collecting, compiling, analyzing, interpreting, communicating, publishing or delivering any such information. No DBRS Morningstar entity is an investment advisor. DBRS Morningstar does not provide investment, financial or other advice. Ratings, other types of credit opinions, other analysis and research issued or published by DBRS Morningstar are, and must be construed solely as, statements of opinion and not statements of fact as to credit worthiness, investment, financial or other advice or recommendations to purchase, sell or hold any securities. A report with respect to a DBRS Morningstar rating or other credit opinion is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. DBRS Morningstar may receive compensation for its ratings and other credit opinions from, among https://www.dbrsmorningstar.com/disclaimer/ others, issuers, insurers, guarantors and/or underwriters of debt securities. DBRS Morningstar is not responsible for the content or operation of third party websites accessed through hypertext or other computer links and DBRS Morningstar shall have no liability to any person or entity for the use of such third party websites. This publication may not be reproduced, retransmitted or distributed in any form without the prior written consent of DBRS Morningstar. ALL DBRS MORNINGSTAR RATINGS AND OTHER TYPES OF CREDIT OPINIONS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AT https://www.dbrsmorningstar.com/about/disclaimer. ADDITIONAL INFORMATION REGARDING DBRS MORNINGSTAR RATINGS AND OTHER TYPES OF CREDIT OPINIONS, INCLUDING DEFINITIONS, POLICIES AND METHODOLOGIES, ARE AVAILABLE ON https://www.dbrsmorningstar.com. Users may, through hypertext or other computer links, gain access to websites operated by persons other than DBRS Morningstar. Such hyperlinks are provided for convenience only, and are the exclusive responsibility of the owners of such websites. DBRS Morningstar does not endorse the content, the operator or operations of third party websites. DBRS Morningstar is not responsible for the content or operation of such websites and DBRS Morningstar shall have no liability to you or any other person or entity for the use of third party websites.

The English version of this press release prevails.

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What Happened on Day 105 of the War in Ukraine

Even as Russia hammers eastern Ukraine with heavy artillery, it is cementing its grip on the south, claiming to have restored roads, rails and a critical freshwater canal that could help it claim permanent dominion over the region.

The extension of Russian infrastructure into the occupied south could allow Moscow to fortify a “land bridge” between Russia and Crimea and build on efforts to claim control through the introduction of Russian currency and the appointment of proxy officials.

Russia’s defense minister, Sergei K. Shoigu, said on Tuesday that the military, working with Russian Railways, had repaired about 750 miles of track in southeastern Ukraine and set the conditions for traffic to flow from Russia through Ukraine’s eastern Donbas region to occupied territory in Kherson and Crimea.

Mr. Shoigu also said that water was once again flowing to Crimea through the North Crimean Canal — an important source of freshwater that Ukraine cut off in 2014 after the Kremlin annexed the peninsula. Mr. Shoigu claimed that car traffic was now open between “continental” Russia and Crimea.

Mr. Shoigu’s claims of restored roads and rails could not be immediately verified.

Satellite imagery reviewed by The New York Times showed that water was flowing through the parts of the canal in Crimea that were dry until March. Russian engineers blew open a blockage in the canal in late February, days after Russian forces invaded Ukraine. Ukrainian officials did not immediately comment on Wednesday.

The North Crimean Canal, a 250-mile-long engineering marvel built under the Soviet Union, had channeled water from Ukraine’s Dnipro River to the arid Crimean Peninsula until President Vladimir V. Putin seized it in 2014.

Credit…Brendan Hoffman for The New York Times

After Crimea’s annexation, Ukraine dropped bags of sand and clay into the canal to prevent the Russian occupiers from benefiting from the valuable freshwater.

Instead of flowing to Crimea, the canal was used to irrigate the melon fields and peach orchards in Ukraine’s Kherson region to the north.

Ukrainian officials said that cutting off the water was one of the few levers at their disposal to inflict pain on Russia without using military force.

For the Kremlin, the blockage represented a vexing and expensive infrastructure challenge, with Crimea’s residents suffering chronic water shortages and occasional shut-offs at the tap.

When Mr. Putin massed troops on Ukraine’s border last year, some analysts speculated that the canal was one of the prizes the Kremlin wanted.

Even as Russia sought to entrench its control in the south this week, a clandestine battle has emerged inside the occupied regions, involving Kremlin loyalists, occupying Russian forces, Ukrainian partisans and the Ukrainian military.

On Tuesday, Ukrainian media posted video of what they said was an explosion at a cafe in the occupied city of Kherson that had served as a gathering place for people collaborating with Russian forces. Russian state media described it as an act of “terror.”

It was the latest in a series of attacks targeting Russian supporters and proxies. It came amid reports — most impossible to independently verify — of Ukrainian guerrillas blowing up bridges, targeting rail lines used by Russian forces and killing Russian soldiers on patrol.

Credit…Tyler Hicks/The New York Times

Oleksiy Arestovych, an adviser to the Ukrainian president, said that there was a focused guerrilla movement operating in the south. “Partisans are fighting very actively,” he said on his YouTube channel.

In the east, where both armies are fighting for control, Ukrainian officials were weighing whether to withdraw their forces in the city of Sievierodonetsk, the last major pocket of Ukrainian resistance in the Luhansk region.

Sievierodonetsk has been blasted by weeks of Russian shelling, and President Volodymyr Zelensky of Ukraine referred to the city and its neighbor, Lysychansk, on Monday as “dead cities,” physically destroyed and nearly empty of civilians.

“Fighting is still raging and no one is going to give up the city, even if our military has to step back to stronger positions,” Serhiy Haidai, the Ukrainian military governor of the Luhansk region, said on Ukrainian television, according to Reuters.

Credit…Finbarr O’Reilly for The New York Times

Moscow’s announcement that it was extending its ties to the occupied south seemed certain to be greeted in Ukraine as further evidence of Russia’s determination to break Ukraine apart and pillage its natural resources.

“Russia is trying to build infrastructure for military supply,” said Mykhailo Samus, deputy director for international affairs at the Center for Army Studies, Conversion and Disarmament, a research group in Kyiv, the Ukrainian capital.

“Maybe they try to steal the agriculture, food products from occupied territories,” he added.

The Russian authorities said that the first train had traveled from the occupied city of Melitopol to Crimea carrying grain — freight that Ukrainian officials say was stolen from Ukrainian farmers forced to hand over their crops for a pittance or nothing at all.

Russia has blockaded Ukraine’s Black Sea ports since the start of the war, trapping more than 20 million tons of grain meant for export and deepening a global food crisis. Dimming the long-term outlook, grain silos in Ukraine are still about half full, the Ukraine Grain Association said on Wednesday, raising the possibility that much of this year’s crop could be left in the fields.

On Wednesday, the Russian and Turkish foreign ministers held talks focused on allowing Ukraine’s grain to reach global markets through the Black Sea.

Credit…Nicole Tung for The New York Times

But the Russian foreign minister, Sergey V. Lavrov, minimized the issue, suggesting that a global food catastrophe caused by a Russian blockade was a Western exaggeration.

“The current situation has nothing to do with the food crisis,” Mr. Lavrov said at a news conference in Ankara, the Turkish capital. “The Russian Federation is not creating any obstacles for the passage of ships and vessels.”

He blamed Ukraine, saying that its naval mines and refusal to use humanitarian corridors offered by Russia in Black Sea shipping lanes were stalling exports.

The Turkish foreign minister, Mevlut Cavusoglu, disagreed, saying that there was a global problem, but that it involved both Russian and Ukrainian products.

“The food crisis in the world is a real crisis,” Mr. Cavusoglu said, noting that Russia and Ukraine together supply about one-third of the world’s grain products.

Mr. Cavusoglu said that a mechanism was needed to get not just agricultural products from Ukraine out through the Black Sea, but also Russian fertilizer, which is vital for global agriculture.

He suggested that the answer lay in a United Nations proposal that the international community provide guarantees for the shipments that addressed security concerns on both sides.

Ukraine was not invited to the talks in Ankara, and its government and Russia’s each blame the other for the lack of exports.

The two countries normally supply about 40 percent of wheat needs in Africa, according to the United Nations.

Ukrainian officials are deeply skeptical of a promise by Mr. Putin, which Mr. Lavrov repeated, that if harbors were demined, Russia would not exploit them to dispatch an invasion fleet. Russian warships have also been patrolling Black Sea shipping lanes.

Oleksii Danilov, the secretary of Ukraine’s National Security and Defense Council, said on Twitter on Wednesday, “Our position on the supply of grain is clear: security first.” He accused Russia of “artificially creating obstacles to seize the market and blackmail Europe over food shortages.”

The United States has cited satellite imagery of cargo ships to accuse Russia of looting Ukrainian wheat stocks that it exported, mostly to Africa, echoing Ukrainian government allegations that Russia has stolen up to 500,000 tons of wheat, worth $100 million, since it invaded Ukraine in February.

Wheat is not the only Ukrainian resource prompting alarm. As Ukraine braces for what promises to be a difficult winter, Mr. Zelensky said that the country would not sell its gas or coal abroad. “All domestic production will be directed to the internal needs of our citizens,” he said.

Reporting was contributed by Valerie Hopkins, Ivan Nechepurenko, Malachy Browne, Neil MacFarquhar, Safak Timur and Anushka Patil.

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What Happened on Day 103 of the War in Ukraine

KHERSON REGION, Ukraine — Since Russia invaded, NATO nations have upgraded Ukraine’s arsenal with increasingly sophisticated tools, with more promised, like the advanced multiple-launch rocket systems pledged by the United States and Britain.

But training soldiers how to use the equipment has become a significant and growing obstacle — one encountered daily by Junior Sgt. Dmytro Pysanka and his crew, operating an aged antitank gun camouflaged in netting and green underbrush in southern Ukraine.

Peering through the sight attached to the gun, Sergeant Pysanka is greeted with a kaleidoscope of numbers and lines that, if read correctly, should give him the calculations needed to fire at Russian forces. However, errors are common in the chaos of battle.

More than a month ago, the commanders of his frontline artillery unit secured a far more advanced tool: a high-tech, Western-supplied laser range finder to help with targeting.

But there’s a hitch: Nobody knows how to use it.

“It’s like being given an iPhone 13 and only being able to make phone calls,” said Sergeant Pysanka, clearly exasperated.

The range finder, called a JIM LR, is like a pair of high-tech binoculars and likely part of the tranche of equipment supplied by the United States, said Sergeant Pysanka.

It may seem like a perfect choice to help make better use of the antitank gun, built in 1985. It can see targets at night and transmit their distance, compass heading and GPS coordinates. Some soldiers learned enough to operate the tool, but then rotated elsewhere in recent days, leaving the unit with an expensive paperweight.

“I have been trying to learn how to use it by reading the manual in English and using Google Translate to understand it,” Sergeant Pysanka said.

Credit…Tyler Hicks/The New York Times

On Monday, Britain promised to send Ukraine mobile multiple-rocket launchers, improving the range and accuracy of Ukrainian artillery, days after President Biden committed to sending similar weapons.

Ukraine’s most advanced new arms are concentrated in the eastern Donbas region, where the fiercest fighting rages as President Vladimir V. Putin’s forces — approaching from the east, north and south — try to crush a pocket of Ukrainian-held territory. At the eastern tip of that pocket, the two sides have waged a seesaw battle for the devastated, mostly abandoned city of Sievierodonetsk.

Over the weekend, Ukrainian troops regained some ground in the city, according to Western analysts and Ukrainian officials. But on Monday, the Ukrainians were forced back again as the Russian military ramped up its already intense artillery attack, according to Serhiy Haidai, Ukraine’s administrator for the region.

A day after a risky visit to troops in Lysychansk, near Sievierodonetsk, President Volodymyr Zelensky on Monday gave journalists a blunt assessment of the challenge: “There are more of them. They are more powerful. But we have every chance to fight in this direction.”

Ukraine’s leaders frequently call for high-end Western weapons and equipment, pinning their hopes for victory to requests for new antitank guided missiles, howitzers and satellite-guided rockets.

But atop the need for the tools of war, Ukrainian troops need to know how to use them. Without proper training, the same dilemma facing Sergeant Pysanka’s unit and their lone range finder will be pervasive on a much larger scale. Analysts say that could echo the United States’ failed approach of supplying the Afghan military with equipment that couldn’t be maintained absent massive logistical support.

“Ukrainians are eager to employ Western equipment, but it requires training to maintain,” said Michael Kofman, the director of Russian studies at C.N.A., a research institute in Arlington, Va. “Some things it’s not easy to rush.”

The United States and other NATO countries gave extensive training to the Ukrainian military in the years before the war, though not on some of the advanced weapons they are now sending. From 2015 to early this year, U.S. military officials say, American instructors trained more than 27,000 Ukrainian soldiers at the Yavoriv Combat Training Center near Lviv. There were more than 150 American military advisers in Ukraine when Russia invaded in February, but they were withdrawn.

Since the beginning of the war, the United States has pledged roughly $54 billion in aid for Ukraine and supplied a bevy of weapons and equipment, most recently several advanced HIMARS mobile rocket launchers, a move greeted with swift condemnation from the Kremlin.

But to avoid a more direct confrontation with Russia, the Biden administration has so far declined to send military advisers back into Ukraine to help train Ukrainian forces to use new weapons systems, and has instead relied on training programs outside the country.

This has put enormous pressure on Ukrainian soldiers like Sgt. Andriy Mykyta, a member of the country’s border guard who, before the war, received brief training from NATO advisers on the advanced British antitank weapons, known as NLAWs.

Credit…Tyler Hicks/The New York Times

Now he races around frontline positions trying to educate his comrades on how to use them. In many cases, he said, Ukrainian soldiers learned how to use some weapons, including NLAWs, on their own, using online videos and practice.

“But there are types of weapons that you can’t learn from intuition: surface-to-air missiles, artillery and some gear,” Sergeant Mykyta said in a telephone interview. “So we need formal courses,” he added.

Ukraine’s needs are palpable in the region where Sergeant Pysanka’s unit is dug in, just northeast of the Russian-occupied city of Kherson. The area was the site of a brief Ukrainian offensive in the past week that slowed as soon as the retreating Russians destroyed a key bridge; the Ukrainians’ lack of longer-range artillery meant they were unable to attempt a difficult river crossing in pursuit, Ukrainian military officials said.

For Sergeant Pysanka’s gun team, the only instructor available for the laser range finder is a soldier who remained behind from the last unit and had taken time to translate most of the 104-page instruction manual. But it’s still trial and error as they figure out what combination of buttons do what, while searching for ad hoc solutions to solve the lack of a mounting tripod and video monitor (both of which are advertised in the instruction manual).

“If you’re working long distances while holding it by hand, sometimes it can transmit inaccurate figures,” Sergeant Pysanka said. “It is safer,” he added, “to work when the gear is stationed on the tripod facing the enemy and the operator is working with the monitor under cover.”

The JIM LR, made by the French company Safran, looks like a cross between a virtual reality headset and traditional binoculars, and can be used alongside a mapping application on a computer tablet that Ukrainian troops use to help call in artillery strikes.

At around six pounds, it is far smaller than the four-and-a-half-ton, U.S.-supplied M777 155 mm howitzer that has recently made its way to the frontline in Ukraine’s east. But both pieces of equipment have intricacies that are reminders of the complications that come from supplying a military with foreign matériel.

The M777 is highly mobile and capable of firing long distances, but training has been a bottleneck in deploying the howitzers, Ukrainian officers say. At courses in Germany that lasted a week, the United States trained soldiers to fire the weapon and others to maintain it.

Credit…Ivor Prickett for The New York Times

But an oversight nearly delayed all maintenance on the guns at the hard-to-reach front lines, Ukrainian officers said. The entire M777 machine is put together on the imperial system used in the United States, meaning that using a Ukrainian metric wrench on it would be difficult, and would risk damaging the equipment.

Only after sending the guns did the United States arrange for a rushed shipment of toolboxes of imperial-gauge wrenches, said Maj. Vadim Baranik, the deputy commander of a maintenance unit.

But tools can be misplaced, lost or destroyed, potentially leaving guns inoperable unless someone scrounges up a U.S.-supplied wrench.

And the JIM LR, capable of displaying extremely accurate targeting data, supplies the information, known as grid coordinates, in a widely used NATO format that Sergeant Pysanka has to convert to the Soviet-era coordinate system used on the Ukrainians’ maps. Such minor speed bumps and chances for error add up, especially when under the stress of a Russian artillery barrage.

Credit…Tyler Hicks/The New York Times

For now, Sergeant Pysanka is focused on learning the range finder. In his small slice of the war, Western-supplied weapons and equipment are limited to a small number of antitank rockets and first-aid kits.

“We can’t boast the same kind of resources that there are in the east,” said Maj. Roman Kovalyov, a deputy commander of the unit that oversees Sergeant Pysanka’s gun position. “What Ukraine gets, we can only see on the TV. But we believe that sooner or later it will turn up here.”

Reporting was contributed by Andrew E. Kramer from Kramatorsk, Ukraine, and Eric Schmitt from Washington State.

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Taser maker halts drone project; most of its ethics panel resigns

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The headquarters for Axon Enterprise Inc, formerly Taser International, is seen in Scottsdale, Aizona, U.S., May 17, 2017. Picture taken May 17, 2017. To match Special Report USA-TASER/EXPERTS REUTERS/Ricardo Arduengo

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June 6 (Reuters) – Taser-maker Axon Enterprise Inc (AXON.O) said it was halting a project to equip drones with stun guns to combat mass shootings, a reversal that did not stop most of its ethics advisory board members from announcing their resignation on Monday in protest over the original plans.

The May 24 school shooting in Uvalde, Texas, which killed 19 children and two teachers, prompted Axon to announce last week it was working on a drone that first responders could operate remotely to fire a Taser at a target about 40 feet (12 m) away.

Nine of 12 members of the company’s AI Ethics Board quit over concerns the drones would harm over-policed communities and that Axon publicized its ambitions without consulting the group. The resignations and Axon’s scuttled plans were first reported by Reuters.

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“In light of feedback, we are pausing work on this project and refocusing to further engage with key constituencies to fully explore the best path forward,” Chief Executive Rick Smith said in a statement.

The action by ethics board members marked a rare public rebuke for one of the watchdog groups some companies have set up to gather feedback on emerging technologies, such as drones and artificial intelligence (AI) software.

Smith said it was unfortunate that members withdrew before Axon could address their technical questions, but the company “will continue to seek diverse perspectives to challenge our thinking.”

Axon, which also sells body-worn cameras and policing software, has said its clients include about 17,000 out of the roughly 18,000 law enforcement agencies in the United States.

It explored the idea of a Taser-equipped drone for police since at least 2016, and Smith depicted how one could stop an active shooter in a graphic novel he wrote. The novel shows a daycare center with what looks like an enlarged smoke alarm, which first recognizes the sound of gunfire and then ejects a drone, identifying and tasing the shooter in two seconds.

Axon first approached its ethics board more than a year ago about Taser-equipped drones, and the panel last month voted eight to four against running a limited police pilot of the technology.

The company announced the drone idea anyway, as it said it wanted to get past “fruitless debates” on guns after the Uvalde shooting, sending shares up nearly 6%. They were down 0.5% on Monday.

Ethics board members worried the drones could exacerbate racial injustice, undermine privacy through surveillance and become more lethal if other weapons were added, member Wael Abd-Almageed said in an interview.

“What we have right now is just dangerous and irresponsible,” said Abd-Almageed, an engineering research associate professor at University of Southern California.

The board likewise had not evaluated use of the drones by first responders outside police, it said. And members questioned how a drone could navigate closed doors to stop a shooting.

The drone is “distracting society from real solutions to a tragic problem,” resigning board members said in a Monday statement.

CEO Smith has said drones could be stationed in hallways and move into rooms through special vents. A drone system would cost a school about $1,000 annually, he said.

Formed in 2018, the ethics panel has guided Axon productively on sensitive technologies such as facial recognition in the past.

Giles Herdale, one of the remaining ethics board members, told Reuters he chose not to resign because he could have more influence “if I am in the tent than outside it.”

For others, the company’s drone announcement prior to a formal report by the board broke with practice, said member Ryan Calo, a University of Washington law professor.

“I’m not going to stay on an advisory board for a company that departs so far from expectation and protocol or, frankly, who believes ubiquitous surveillance coupled with remote non-lethal weapons is a viable response to school shootings,” he said.

Barry Friedman, the board chairman, resigned as well.

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Reporting by Jeffrey Dastin in Palo Alto, Calif., and Paresh Dave in Oakland, Calif.; Editing by Clarence Fernandez, Robert Birsel and Tomasz Janowski

Our Standards: The Thomson Reuters Trust Principles.

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