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First Gen awards contract to Singaporean gas supplier

LOPEZ-LED First Gen Corp. has awarded the contract for its new liquefied natural gas (LNG) cargo to Singapore-based Shell Eastern Trading Pte., Ltd., which will provide supply to its gas-fired power plants in Batangas, its chairman said.

“We just awarded one (contract) to Shell,” First Gen Chairman and Chief Executive Officer Federico R. Lopez told reporters on the sidelines of a conference organized by Net Zero Carbon Alliance on Thursday.

Earlier this month, the company invited bidders for it to procure 154,500 cubic meters of LNG cargo which is scheduled for delivery next month.

The LNG cargo will be delivered to the Subic Bay Freeport in Zambales, where it will be loaded into the BW Batangas, a floating storage and regasification unit, and then used for the power plants.

First Gen has four existing gas-fired power plants with a combined capacity of 2,017 megawatts in the First Gen Clean Energy Complex in Batangas. These plants have been supplied for many years with gas from the Malampaya gas field, the country’s sole natural gas provider.

Its subsidiary, FGEN LNG Corp., constructed an interim offshore LNG terminal and executed a five-year time charter party for BW Batangas to provide LNG storage and regasification services.

As the company procures its LNG requirements via spot purchases, Mr. Lopez said that the Philippines is positioned to get “the best benefit of LNG” through long-term contracting.

“You get better terms, and the country will get better terms and prices if you do it that way. I think that’s really where we really need to head,” he said.

“Right now, we’re just all buying on spot, which can be done, but it’s not the most efficient cost for the country. The country can do better if we all work together,” he added.

In June, First Gen President and Chief Operating Officer Francis Giles B. Puno said that they had deferred the delivery of its fifth LNG cargo as it still has residual supply.

Japanese company TG Global Trading Co. bagged the contract to supply one LNG cargo of approximately 125,000 cubic meters which was supposedly be delivered in July.

Asked if the company will buy another supply this year after the recent purchase, Mr. Lopez said: “As long as it’s needed because you have to keep the lights on.”

“But again, as we’re saying, it’s always better if you can get into large volumes. Again, if the country gets together and we all contract, pool our volumes together,” he said.

First Gen completed its first LNG cargo delivery in Subic in Aug. 2023 and made subsequent deliveries at its Batangas complex in Dec. 2023 and Feb. and May 2024.

At the local bourse, shares in the company went up by 0.59% to close at P17 each. — Sheldeen Joy Talavera

UMG, Taylor Swift’s music label, sees higher profit, helped by superfans

Universal Music Group (UMG) said on Tuesday it expects annual core profit growth of more than 10% through 2028 on higher subscription revenue, expanded partnerships, and boosted by the superfans of its artists such as Taylor Swift, BTS, and Drake.

At its first Capital Markets Day, held at London’s Abbey Road Studios, the world’s biggest music label spelled out its plans to revive slowing subscriber and streaming growth.

CEO Lucien Grainge said streaming was entering a new era that would rely on monetizing superfandom, focusing not only on subscriber growth, but also on average revenue per user (ARPU).

“Valuable as streaming is, it has also leveled the playing field… the deeply passionate listener pays the same price for the same access as the casual one,” Mr. Grainge told investors.

He said the company was targeting superfans through physical collectibles, premium merchandise, as well as live and digital experiences.

Mr. Grainge added that subscription penetration was still under 50% in the group’s most established markets, while high potential markets such as India and China were still in early stages of subscription adoption.

The Amsterdam-listed group, which announced its financial targets through 2028 ahead of the event, also said it expects compound annual revenue growth of 7% in the period.

The forecast was better than the consensus outlook for 6.1% annual revenue growth and 8.8% annual adjusted EBITDA growth, according to ING.

UMG’s second-quarter results had triggered a 30% slump in its stock in late July, after subscription revenue growth slowed to 6.9% from 12.5% in the same quarter a year earlier, missing the 11.1% estimate in a company-compiled consensus cited by Barclays.

“We expect periods of acceleration and deceleration,” said finance chief Boyd Muir at the Capital Markets Day, urging investors “not to overreact to modest period-to-period fluctuations,” as the group implements its multi-year strategy.

In Tuesday’s outlook, UMG said it sees annual subscription revenue growth of 8-10% through 2028, higher than the consensus of 6.6%, as quoted by ING.

It expects a free cash flow conversion rate (before investing activity) of 60-70%, it added. — Reuters

What if China invaded the Philippines?

RAWPIXEL.COM

Recently, the magazine The Diplomat (June 2024) found that “76% of the 1,200 respondents polled on March 11-14 said that they saw China as the ‘greatest threat’ to the Philippines. This compared to just 9% for Russia, which was viewed as the country’s second biggest threat, followed by minuscule proportions of respondents who chose North Korea, Pakistan, and Japan.” The survey also found “that 91% of respondents said they “distrust” China, up from 58% at the start of the Marcos administration.”

Unfortunately, a March 2024 survey saw only 77% of Filipinos willing to defend the country. This perhaps can be connected to a recent AidData report (“Investing in Narratives: How Beijing promotes its development projects in the Philippines”), which found China resorting to employing thousands of troll accounts, PRC-sponsored journalist training in China “to socialize Filipino journalists to Beijing’s perspectives,” as well as heavy reliance on mainstream and social media. China’s objectives circled around three main narratives around its “development financing in the Philippines: cooperation with the PRC is win-win, its rise is inevitable, and Asia should be led by Asians.” China’s propaganda thus “emphasizes its investments, focusing on infrastructure projects and their economic benefits.”

Hence, this need to perhaps discuss what are the stakes for Filipinos. What would be the possible consequences for life in the Philippines should a Chinese invasion take place? The best way perhaps to find out how an invading Chinese government would treat Filipinos is to see how they treat their own.

ON FREEDOM OF RELIGION
China pursues a policy of “Sinicization,” in that it requires religious groups to align their doctrines, customs and morality with Chinese culture. This particularly “affects so-called ‘foreign’ religions — including Islam as well as Catholicism and Protestantism — whose adherents are expected to prioritize Chinese traditions and show loyalty to the state.”

Sinicization takes sinister forms: “Authorities have removed crosses from churches and demolished the domes and minarets of mosques to make them look more Chinese.” The Bible and Quran have been edited to have the teachings therein “align with ‘Chinese culture in the new era’.” Finally, “children under 18 are constitutionally prohibited from having any formal religious affiliation in China. There is also a ban on religious education, including Sunday schools, religious summer camps and other forms of youth religious groups. Schools focus on promoting non-religion and atheism, and many children join CCP-affiliated youth groups, where they must pledge commitment to atheism.” (All this from “10 things to know about China’s policies on religion,” Pew Research Center, 2023)

ON HOMOSEXUALITY

Chinese culture emphasizes procreation and the raising of children, and “not doing so is considered by many a social transgression.” As a consequence, “a considerable number of mental health professionals in China still consider homosexuality a disorder that should be treatable by sexual orientation conversion efforts (SOCE).” But China’s society itself is geared against homosexuality. As example, when heterosexual participants were asked about the acceptance of their own children being bisexual, 25.1% indicated rejection, Furthermore, “more than 10% of heterosexual participants rejected the idea of being close (in terms of relationships) to LGBT people and did not believe bisexual (6%), homosexual (8·2%), or transgender (21.9%) people should be allowed to raise children.” (“Discrimination against LGBT populations in China,” Yuanyuan Wang, et al, 2019)

ON EDUCATION
Not surprisingly, the “current command and control system used by the National Government limits university autonomy and has created many problems, including a lack of scientific innovation, a widening poverty gap in terms of access to higher education, and a mismatch between supply and demand in the labor market.” (“Challenges for the government-controlled higher education system in China,” Chengqi Xia, 2023)

ON BUSINESS
“Under Mr. Xi’s leadership, China is returning to its roots: a state-controlled economy that demands businesses conform to the aims of the Chinese Communist Party. Many of Mr. Xi’s hallmark policies, favoring state prerogatives over pro-business, free-market
changes, have had an arresting influence on the economy.”

Consequently, the “shift in the business climate has been stark. Internet companies, once idolized as champions for China on the world stage, are now fenced in by government agencies. Billionaire tycoons, including Jack Ma, the founder of Alibaba, have been driven underground or imprisoned after criticizing the government.” (“In Xi’s China, the Business of Business is State-Controlled,” New York Times, 2022)

ON CORRUPTION
Perhaps it will surprise no one but with such huge amount of State control, then China’s level of “corruption has been on the rise in recent decades. The public investigation and prosecution of corruption at such a scale occurred against the backdrop of widening inequality within China. This was not a mere coincidental correlation. Inequality in China, especially that within cities, soared after the reforms of the 1980s and then surged even more after the privatization and restructuring of many state-owned enterprises in the early 1990s.” (“How Corruption Fuels Inequality in China,” Foreign Affairs, 2024)

FREEDOM OF SPEECH
China’s penchant for censorship seems to have no bounds. However, one interesting recent development is that “Chinese authorities, recognizing in recent years that limited freedom of expression enables the government to better monitor potentially problematic social issues (referred to as ‘’) have begun to tolerate criticism, but only from certain categories of people, a kind of ‘free-speech elite,” and only then in government-controlled forums.” This group is composed of “senior government and Communist Party leaders, those with the patronage of such leaders and, to a lesser extent, academics and journalism professionals.” (“Freedom of Expression in China: A Privilege, Not a Right,” Congressional-Executive Commission on China)

ON HUMAN RIGHTS
This is perhaps the area that would be most important for Filipinos to understand: China’s adherence to human rights is perhaps amongst the most appalling in the world. From its treatment of the Uighurs to the fact that the worst genocide in history was not by Hitler or Stalin but by Mao Zedong’s Great Leap Forward, which resulted in the murder of 45 million of his own people.

But “communist China has adopted other methods of suppressing the growth of the individual by attacking three bedrock institutions of society; namely, the family, the school, and free speech. In 1980, communist China announced a ‘one child’ policy to prevent a population ‘crisis’. Chinese families were limited to only one child or faced severe penalties.

Then there’s abortion: “throughout the 35 years of the one-child policy, there were a recorded 196 million sterilizations and 336 million abortions. (That 336 million figure is greater than the entire population of the United States).” (“How Beijing Controls Chinese Citizens Through Family, Education, and Speech,” The Heritage Foundation, 2019)

The foregoing, albeit sporadic, hopefully provided a sufficient snapshot of what life would be like under an invading Chinese regime. In a recent 60 Minutes segment on the West Philippine Sea, Defense Secretary Gilberto Teodoro had this exchange:

Cecilia Vega: You’re talking about a rusty, old warship. How realistic is it to expect the United States to intervene over the fate of a warship like that?

Gilbert Teodoro: There are people in there, that is an outpost of Philippine sovereignty. So we’re not talking about a rusty, old vessel solely. We’re talking about a piece of Philippine territory in there.

That was the right answer. Our defense of territory is simply not merely about a number of rocks or waters. It ultimately boils down to defending our way of life.

 

Jemy Gatdula is the dean of UA&P Law, as well as a Philippine Judicial Academy law lecturer for constitutional philosophy and jurisprudence.

https://www.facebook.com/jigatdula/

Twitter  @jemygatdula

PNB eyes offshore bond offer before yearend

BW FILE PHOTO

PHILIPPINE NATIONAL Bank (PNB) is planning to return to the offshore bond market before yearend to help refinance previously-issued debt maturing this month, its top official said.

“We will be floating bonds, perhaps in the later part. We’re targeting December or November,” PNB President and Chief Executive Officer Florido P. Casuela told reporters on the sidelines of the PNB-Philippine Airlines (PAL) Mabuhay Miles World Elite Mastercard launch on Wednesday.

Mr. Casuela said the issuance size has yet to be decided, while the tenor of the bond issue could range from three to five years and could be in a sustainability bond format, but noted that nothing has been finalized.

“But right now, we are preparing for that because as I’ve said, we have maturing bonds this month,” he added.

PNB in May said it is looking to raise at least $300 million from an issuance of offshore bonds with an option to upsize.

It also doubled its euro medium-term note program to $2 billion from $1 billion previously. The approved $300-million bond offer will be issued out of this updated program, the bank said.

PNB last tapped the offshore debt market in 2019, raising a record $750 million via fixed-rate senior notes, more than double the $300-million target, as the order book reached $3.25 billion.

These bonds were priced at 99.473% for a yield of 3.391% and a coupon rate of 3.28%.

Proceeds from the offer were used to support PNB’s loan expansion.

CONSUMER LOANS
Meanwhile, PNB is looking to increase its lending to consumers and small businesses, Mr. Casuela said.

“Our mission is to diversify our loan portfolio to the point that we are increasing our exposure to small and medium enterprises and also consumer loans,” he said. “Right now, we have the lowest exposure to consumer loans among banks. So, we are increasing that as a percentage of the total loan portfolio. When you increase this, the percentage of corporate loans will be reduced.”

At present, about 60-70% of the bank’s loan portfolio is made up of corporate loans, he said.

As part of its bid to boost consumer lending, PNB on Wednesday launched the PNB-PAL Mabuhay Miles World Elite Mastercard, which offers low point-to-mile conversion and travel perks such as birthday reward points, online discounts on international flights, and VIP access to airport lounges worldwide, private jets, cruises, and exclusive hotel packages.

Mr. Casuela added that PNB expects a “substantial” increase in lending by next year even as it has seen slower-than-expected loan growth in 2024.

“One thing is that our total loan portfolio has not gone as fast as we would like it to… But by next year, we expect a substantial increase in the portfolio,” he said.

PNB’s loans grew by 2.45% to P631.85 billion in the at end-June from P616.71 billion at end-2023.

However, amid rising credit, banks could see more nonperforming loans (NPL) amid an industry-wide decline in asset quality, Mr. Casuela noted.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed the banking industry’s gross NPL ratio went up to a two-year high of 3.58% in July from 3.51% in June and 3.43% a year ago. This was the highest bad loan ratio in 25 months or since 3.6% in June 2022.

Still, Mr. Casuela said the Philippine banking sector’s outlook remains robust, especially with interest rates going down.

“We are very optimistic for the industry and for PNB. In fact, we are very confident for our performance for next year,” he said. “The reduction of interest rates is a big factor in terms of us giving more loans. It makes it more affordable for those availing of consumer loans — credit card, housing loans, and auto loans, in particular.”

The BSP’s policy-setting Monetary Board on Aug. 15 reduced its policy rate by 25 basis points (bps) to 6.25%, marking its first easing move in nearly four years.

BSP Governor Eli M. Remolona, Jr. has said they could cut rates by another 25 bps within the year. The Monetary Board’s last two policy-setting meetings this year are on Oct. 17 and Dec. 19.

For his part, Mr. Casuela said they expect a total of 50-75 bps in rate reductions from the Philippine central bank for this year.

Lower reserve requirements for banks will also make more funds available for lending, he added.

Mr. Remolona on Wednesday said the BSP plans to reduce big banks’ reserve requirement ratio (RRR) “substantially” this year, with further reductions likely in 2025.

The RRR is the portion of reserves that banks must hold onto rather than lending out. The BSP reduced the ratio for universal and commercial banks and nonbank financial institutions with quasi-banking functions by 250 bps to 9.5% in June 2023.

Mr. Remolona earlier said that they are eyeing to bring down big banks’ RRR to as low as 5% coming from a high of 20% in 2018.

PNB’s attributable net income inched down by 0.07% to P4.95 billion in the second quarter as it set aside higher loan loss provisions. This brought its net income for the first semester to P10.22 billion, up by 4.72% year on year.

Its shares rose by 20 centavos or 0.84% to end at P23.95 apiece on Thursday. — A.M.C. Sy

Vivant divests from Buskowitz Energy

LISTED Vivant Corp. announced that a unit of its energy-related holding company Vivant Energy Corp. (VEC) is divesting from solar power provider Buskowitz Energy, Inc. as part of refocusing its investments.

VEC’s wholly owned subsidiary Vivant Renewable Energy Corp. (VREC) is divesting its 32.26% stake, equivalent to 560,000 Common B shares, in Buskowitz Energy, Vivant said in a statement to the stock exchange on Thursday.

“The divestment is part of VEC’s efforts to focus its investments on its core competencies, particularly in its retail energy supply and small power utilities group businesses.” VREC President and Chief Executive Officer (CEO) Mark D. Habana said.

Under the planned divestment, Singapore-based private limited company Aurora Sustainable Energy Pte. Ltd. will acquire outstanding Common B shares through the assignment by Buskowitz Energy of its right to purchase VREC’s shares under the shareholders’ agreement.

Despite this transition, Buskowitz is still a potential solar engineering, procurement, and construction partner of VEC.

“This decision is rooted in mutual respect and a shared vision for a sustainable future. We value our past collaboration and look forward to pursuing our respective growth strategies,” Buskowitz Energy President and CEO James Buskowitz said.

Buskowitz Energy has business interests in solar development, engineering, procurement, and construction. It offers solar power purchase agreements, leases and solar loans for companies and individuals to help their switch to renewable energy solutions.

To date, VEC is on track with its 70%-30% conventional and renewable energy capacity mix target by 2030.

Vivant shares were last traded on Sept. 17 at P14.86 apiece. — Revin Mikhael D. Ochave

Harvey Weinstein pleads not guilty to new sexual assault charge

IMDB

NEW YORK — Harvey Weinstein pleaded not guilty to a new sexual assault charge on Wednesday, nearly five months after the disgraced Hollywood movie mogul’s earlier sex crimes conviction in New York was overturned.

Mr. Weinstein, 72, who is recovering from emergency heart surgery, entered his plea to committing a criminal sexual act in the first degree at a hearing before Justice Curtis Farber in a New York state court in Manhattan.

“Not guilty,” Mr. Weinstein responded emphatically when asked for his plea to the felony charge.

Mr. Weinstein still faces two other criminal counts from an earlier indictment where he also pleaded not guilty, including another first-degree criminal sexual act charge and a third-degree rape charge.

He appeared in court in a wheelchair, wearing a dark suit and a blue tie, and with a large bandage on his right hand.

The new charge announced by Manhattan District Attorney Alvin Bragg accuses Mr. Weinstein of sexually assaulting a woman in a downtown Manhattan hotel between April 29 and May 6, 2006.

“Thanks to this survivor who bravely came forward, Harvey Weinstein now stands indicted for an additional alleged violent sexual assault,” Mr. Bragg said in a statement.

Mr. Weinstein’s latest accuser has yet to be publicly identified.

“She will be fully prepared to speak her truth at trial to hold Mr. Weinstein accountable before a jury of his peers,” her lawyer Lindsay Goldbrum said in a statement.

It was unclear whether a retrial of Mr. Weinstein would include the three charges he now faces.

Jurors had found Mr. Weinstein guilty of rape and sexual assault in February 2020, less than 2-1/2 years after sexual misconduct accusations made his case the impetus for the #MeToo movement.

But the state’s highest court, the Court of Appeals, threw out Mr. Weinstein’s conviction and 23-year sentence in April, saying he did not get a fair trial because the judge allowed testimony from women who Mr. Weinstein was not charged with assaulting.

Mr. Weinstein has denied having nonconsensual sexual encounters with anyone. His original trial judge, James Burke, was not reappointed to the bench after his term expired at the end of 2022.

NEW CHARGE MAY DELAY RETRIAL
The new charge was announced two months after prosecutors said they were investigating additional alleged “violent sexual assaults” by Mr. Weinstein, after new accusers came forward.

Mr. Farber at the time set a tentative Nov. 12 retrial date, but prosecutors said on Wednesday they would likely not be ready until January.

Mr. Weinstein’s lawyer Arthur Aidala said his client wants to go to trial “as soon as humanly possible.”

He later told reporters that Mr. Weinstein was “vehemently opposed” to adding the new charge to the original case, and wants a retrial on the original charges as soon as possible.

Mr. Farber did not set a new trial date, but said he would proceed when both sides are ready.

Mr. Weinstein remains in custody, because he was convicted separately last year in California for the 2013 rape of an actress in Los Angeles and sentenced to 16 years in prison.

Mr. Weinstein’s lawyers have said he is beset with health problems. He was rushed to the hospital from New York City’s Rikers Island jail on Sept. 8 to undergo heart surgery.

Once among Hollywood’s most powerful people, Mr. Weinstein co-founded the Miramax studio, whose hits included Shakespeare in Love and Pulp Fiction.

Mr. Weinstein’s film studio filed for bankruptcy in March 2018, imploding after the original accusations of sexual misconduct.

In the New York trial, prosecutors portrayed Mr. Weinstein as a serial predator who manipulated women with promises of career advancement in Hollywood, coaxed them into hotel rooms or private apartments, and then overpowered and attacked them. — Reuters

Australia can’t afford an AUKUS about-face: 5 things the critics are getting wrong

DAN FREEMAN-UNSPLASH

Three years have passed since the United States, Australia and United Kingdom announced on Sept. 15, 2021 that they would enter into a security partnership called AUKUS.

A major part of the deal involved the US and UK helping Australia acquire nuclear-propulsion submarines. This decision by the Morrison government controversially entailed backing out of a A$90-billion deal with a French company to purchase 12 submarines.

In recent months, the AUKUS deal has generated a fair amount of criticism from former Prime Ministers Paul Keating and Malcolm Turnbull, former Foreign Minister Gareth Evans, and some in the media.

Critics have focused on five main arguments about AUKUS:

• the pact enhances the prospects of war with China

• Australia doesn’t need nuclear-propulsion submarines

• the deal makes our neighbors in South-East Asia uneasy

• it drags us back to our Anglosphere past, tying us closely to the US and UK

• the forecast cost of the submarines (between A$268 and $368 billion) is unconscionably high.

Yet, each of these claims is based on assertions that miss the point. Here’s why.

1. AUKUS increases the likelihood of war

Some critics argue that by acquiring nuclear-propulsion submarines, Australia will support a more belligerent posture by the US towards China, notably over Taiwan. And this makes war more likely.

This, however, belies American awareness of its own limitations and the risks such a provocative approach would entail.

Others argue AUKUS encourages a military industrial complex that ostensibly makes Australia more of a dependent — rather than independent — ally to the US. And this denies Australia agency in regional or global security affairs.

But this bleak interpretation, again, sees a binary world in which Australia would be expected to support the US unquestioningly in a potential war with China over Taiwan. It also overlooks the prospect that war might not happen — that China will squeeze, rather than seize Taiwan.

As defense expert Peter Dean has observed, the debate over Taiwan’s security is “an argument without context.” It ignores the importance of Australia’s own regional security strategy. Whether or not we’d support the US in a war, Dean says, is the wrong question in the wrong argument.

This belief that AUKUS increases the likelihood of war also misreads the nuanced nature of deterrence for which credible force is needed.

Indeed, realists widely acknowledge that weakness invites adventurism, even aggression. The whole point of having a defense force is to deter would-be aggressors by giving them pause for thought and, failing that, to inflict such costs on an enemy, they fail in their objectives.

Tensions are greater today than they have been in generations. And as strategic studies expert Brendan Taylor argues, there are at least four flash points in Australia’s region: Korea, the East China Sea, the South China Sea, and Taiwan.

Australia has a vested interest in preserving peace and stability in the region to protect and foster its prosperity. Capable and potent deterrent capabilities have proven increasingly effective at doing this, as conflicts in recent years in Ukraine and the Middle East have shown by not spiraling out of control.

So, the AUKUS deal shouldn’t be seen as provocative. Rather, it maintains strong deterrence in the region. Our neighbors understand that.

2. Australia doesn’t need nuclear-propulsion submarines

This myth persists despite mounting evidence. Australia is interested in nuclear-propulsion submarines because its ageing fleet of diesel-electric propulsion submarines has become vulnerable to aerial detection and strikes.

Most of earth is now covered by low-earth polar orbit satellites. Coupled with armed drones, artificial intelligence, and pattern analysis, this means a determined adversary can detect the wake of traditional submarine funnels when they raise their snorkels to recharge their batteries.

Given that stealth had been their only advantage over surface warships, diesel-electric submarines are no longer so useful where long transits are involved.

Australia’s diesel-electric submarines cannot transit from any major domestic or foreign port to their base in Western Australia without multiple snorts. And each snort generates a grave risk of detection. This leaves nuclear propulsion as the only viable option for countries with vast ocean distances to transit, such as Australia or the United States.

Operationally, nuclear-propulsion submarines have other considerable benefits. For one, they can travel faster (about 20 knots on average instead of 6.5 knots). The transit time from Fremantle to the Strait of Malacca, therefore drops from 18 days to just six days.

The faster transit speeds means coverage of key choke points can be maintained with a handful of submarines that can relocate (away from danger or to a new surveillance location) with breathtaking speed.

The nuclear-propulsion submarines can also stay underwater “on station” (at an assigned patrol location, say, the Malacca or Lombok straits) for longer. A fleet should also be able to be deployed three times longer than Australia’s current submarines, remaining undetected without needing to recharge batteries.

3. The neighbors don’t like it

Official reservations about AUKUS in public declarations are entirely understandable, given Indonesia’s “free and active” foreign policy.

Yet, the new enhanced defense pact signed by Australia and Indonesia on Aug. 29 suggests that Indonesia, like the Philippines, Singapore, and Vietnam, are quite comfortable with Australia engaging in AUKUS and with its neighbors concurrently.

4. The focus on the Anglosphere detracts from regional engagement

Australia was once described as a “torn country” because of its geographical location in the Asia-Pacific and its historical and cultural connections to the United Kingdom.

But these days, Australia is successfully managing the tension between its Anglosphere roots and its physical place in the world. Arguably, it’s a key factor making it attractive for foreign students and migrants, luring them away from UK and US alternatives.

Foreign Minister Penny Wong’s diplomatic successes also belie the line that AUKUS detracts from engagement with our neighbors. Successful summits with the Pacific Islands Forum and Association of South East Asian Nation leaders recently make a mockery of such claims.

Even France, the most slighted out of the AUKUS deal, has gotten over it because Australia matters to its Indo-Pacific claims.

Indeed, Labor’s election victory in 2022 allowed for a convenient reset in relations. This has been illustrated with the recently refreshed trilateral “FRANZ” agreement between France, Australia, and New Zealand.

5. The cost is unconscionable

A cost of up to A$368 billion over 30 years sounds like a lot. But this amount is unlikely to be fully spent as other efficiencies may arise and because defense is accommodating the submarines from its existing budget, much to the chagrin of the Air Force and Army having to make cutbacks.

Defense budget increases are occurring only incrementally, with substantial increases slated for several years into the future.

To be sure, the government must grapple with competing demands for missiles, aircraft, drones, and other fighting systems. As retired Lieutenant General Peter Leahy observed, military readiness requires additional expenditures in the short term to hedge against uncertainty.

Ironically enough, however, increased reliance on US-sourced technology is key to enabling a more self-reliant defense posture.

Australia prides itself on its high level of interoperability with the US military as part of maintaining a qualitative technological edge. This is intended to compensate for its lack of quantity when it comes to military hardware and uniformed personnel.

Under AUKUS, the US is transferring the know-how to build, maintain and operate the nuclear-powered submarines in Australia. This relies on trusted access to the most advanced US military technology — building on more than 80 years of collaboration on intelligence matters.

These advanced systems are vital should the US prove unwilling or unable to engage as actively in the neighborhood as we might like in the future.

BALANCING INTERESTS
What has emerged in recent times is what Rory Medcalf, head of the ANU National Security College, describes as “the Australian way of war and peace.” This means Australia is respectfully but firmly asserting its rights, protecting its interests and setting an example for others in the neighborhood to follow.

In weighing up Australia’s interests, we must look beyond the critiques. Now is not the time for yet another submarine about-face.

The geopolitical circumstances and new technological advances point to the need to stay the course.

THE CONVERSATION VIA REUTERS CONNECT

 

John Blaxland is a professor at the Strategic and Defense Studies Center, Australian National University. From 2015-2018, he received funding from the US Department of Defense Minerva Research Initiative to undertake a study on the US-Thai alliance and Asian international relations (co-authored with Dr. Greg Raymond and published with Routledge in 2021).

Teamsters will not endorse Trump or Harris in US presidential race

REUTERS

WASHINGTON — The International Brotherhood of Teamsters said Wednesday that the union will not endorse any US presidential candidate despite polling that showed a majority of members backed Republican candidate Donald Trump over Democrat Kamala Harris.

The 1.3-million-member union — which represents truck drivers and a wide range of other workers ranging from airline pilots to zookeepers — had released a national electronic poll of its members Wednesday that showed rank-and-file members preferred the former president over Vice-President Harris by 59.6% to 34%.

The Teamsters have endorsed every Democratic candidate for president since 2000 but have on occasion endorsed Republicans, including President Ronald Reagan in 1984 and Vice-President George H.W. Bush in 1988. It is the first time since 1996 the union is not making an endorsement.

Most major unions have endorsed Ms. Harris, including the United Auto Workers union. The AFL-CIO, which represents 60 unions and 12.5 million workers, endorsed Ms. Harris in July.

The Teamsters’ executive board endorsement had been widely anticipated because it was seen as a factor in a handful of battleground states that will decide the Nov. 5 election, including Michigan, Nevada, and Pennsylvania, where union membership is strong.

“We couldn’t get solid commitments on our core issues,” Teamsters President Sean O’Brien told Fox News said in explaining the union’s decision. “No endorsement I think sends a message to both parties that if they truly want to support working people, they have to re-evaluate it and understand that nothing is given, it is earned.”

Ms. Harris campaign spokeswoman Lauren Hitt noted that despite the national union decision, some Teamsters locals have endorsed Ms. Harris. “When she is elected president, she will look out for the Teamsters rank and file no matter what — because they always have been and always will be the people she fights for,” Ms. Hitt said.

Mr. Trump, speaking to reporters at a New York bar, said of the Teamsters decision not to endorse a candidate: “It’s a great honor. They’re not going to endorse the Democrats. That’s a big thing.”

In a later survey, the union said that, following the Sept. 10 presidential debate, independent polling firm Lake Research Partners found in a survey ending Sept. 15 that Teamsters members selected Mr. Trump by 58% for endorsement over 31% for Ms. Harris.

Mr. O’Brien and other union representatives met with Ms. Harris Monday after meeting with Mr. Trump in January. The Teamsters said its own polling data showed that, before Mr. Biden’s withdrawal from the presidential race on July 21, members backed Mr. Biden 44.3% to Trump’s 36.3%.

O’Brien spoke to the Republican National Convention in July, but also criticized Trump for suggesting that workers who go on strike could be fired. — Reuters

After supersized Fed policy rate cut, market hopes ride on US soft landing

REUTERS

NEW YORK — One of the most consequential US Federal Reserve meetings in recent history has put investors’ focus squarely on one question: whether the central bank has kicked off its rate cutting cycle in time to keep the economy from slowing too rapidly.

The Fed delivered a 50-basis-point (bp) rate cut on Wednesday — lowering borrowing costs for the first time in more than four years — and assured investors the jumbo-sized reduction was a measure to safeguard a resilient economy, rather than an emergency response to recent weakness in the labor market. Bets on the size of the rate cut swung in the days before the meeting and were near an even split on Wednesday morning.

The degree to which Fed Chair Jerome H. Powell’s outlook pans out is likely to be a key factor in the trajectory of stocks and bonds for the remainder of 2024.

Prospects of a “soft landing,” where the Fed brings down inflation without pushing the economy into recession, have lifted stocks and bonds this year, though signs of a softening labor market have fueled worries that the Fed may be too late in acting to shore up growth.

“Right now, it looks as if the market is going to pause to digest what was to many a surprise,” said Eric Beyrich, co-CIO of investment advisory firm Sound Income Strategies. “There will still be people thinking, ‘wow, If the Fed cuts big like that, what do they see that we’re not seeing that suggests the economy will get worse?’”

Market reaction on Wednesday was relatively subdued as stocks, Treasuries and the dollar retraced initial, post-decision rallies. The S&P 500 ended down 0.3%, after rising as much as 1% during the session. The index is up nearly 18% this year and stands near a record high.

In comments following the decision, Powell called the move a “recalibration” to account for the sharp decline in inflation since last year and said the central bank wanted to stay ahead of any potential weakening in the jobs market.

Some investors were skeptical of that sunny view.

“Despite what Chair Powell is saying in the press conference, a 50 basis point move does indicate that there is concern that they are behind the curve,” said Josh Emanuel, chief investment officer at Wilshire.

Mr. Emanuel said he was already overweight bonds coming into the meeting, favoring investment-grade credit over riskier high-yield bonds ahead of an expected deterioration in the economy.

Many others, however, believed the rate cuts were a positive development for the market and would buoy the economy.

“I think that this dramatically increases the odds of the Fed being able to stick the landing, which ultimately will be bullish for risk assets,” said Jeff Schulze, head of economic and market strategy at ClearBridge Investments.

Indeed, stocks have performed well following rate cuts — as long as the economy stayed out of recession. The S&P 500 has posted an average 14% gain in the six months following the first reduction of a rate-cutting cycle, when the Fed cut in a non-recessionary period, data from Evercore ISI going back to 1970 showed. That compares to a 4% decline in that period after the initial cut when the economy is in a recession.

Rick Rieder, chief investment officer for global fixed income at BlackRock, said investors may have overreacted to recent labor markets reports that had come in weaker than expected. Other data, such as gross domestic product growth estimates, continued to show a resilient economy.

“I think the markets got ahead of themselves again in terms of interpreting that data was very soft,” he said. “Chair Powell said it’s a solid economy, and it is.”

LONG-TERM ADJUSTMENTS
Fed officials updated their views on interest rates from their latest June projections, but while they now anticipate deeper cuts, those rate forecasts remained above market expectations of a more accommodative central bank.

The Fed said it expects the Fed funds rate — currently in the 4.75% to 5% range — at 3.4% by the end of next year, while rates traders are betting on about 2.9%. Also, the Fed’s endpoint for rate cuts reflected a slight upgrade, to 2.9% from 2.8%.

The outlook gap may have sparked a reversal in Treasury markets, sparking a selloff in longer-term Treasuries on Wednesday. The benchmark 10-year Treasury yield, which moves inversely to bond prices, stands at around 3.73 after touching its lowest level since mid-2023 earlier this week.

“In terms of the pace at which cuts were priced in, I think this is a right reaction,” said John Madziyire, head of US Treasuries and TIPS at Vanguard, who was betting on long-term yields moving higher.

Others were looking even further out, with some pointing to the outcome of the US presidential election as potentially complicating the path for rate cuts going forward.

“If trade wars were to ensue under a Trump presidency, that could be negative for fixed income,” said Andrzej Skiba, head of US fixed income for RBC Global Asset Management. “That would be inflationary and limit the Fed’s ability to cut rates.” — Reuters

SMLEs told to adopt sustainable practices

BW FILE PHOTO

SMALL, medium, and large enterprises (SMLEs) should adopt sustainable practices to support the country’s growth, the Securities and Exchange Commission (SEC) said.

“Sustainability is about making choices for a long-term impact on the environment, society, and economy,” SEC Corporate Governance and Finance Department Director Rachel Esther J. Gumtang-Remalante said in an e-mailed statement on Thursday.

“We envision that sustainability is not just a matter of awareness but a standard practice of SMLEs,” she added.

Ms. Remalante said this as the commission held the third installment of the SEC Small and Medium Industries and Large Enterprises Embracing Sustainability (SMILEES) Roadshow in Baguio City on Sept. 18.

The roadshow was organized by the SEC in collaboration with the United Nations Development Programme, through the Accelerating Green and Climate Finance, a project funded by the Canadian government.

The two previous roadshows were held in Cebu in March and in Davao in June, respectively.

The roadshow seeks to encourage sustainable practices among SMLEs by fostering awareness, capacity building, developing measuring tools, establishing effective monitoring schemes, and giving the participants the opportunity to share and learn from each other about sustainability practices.

“The SEC SMILEES Roadshow aims to embed sustainability concepts among SMLEs while gearing toward a greener capital market and sustainable future,” the commission said.

Following the roadshow in Baguio City, the SEC will be holding the annual Corporate Governance Forum, organized together with the Philippine Stock Exchange in November. — Revin Mikhael D. Ochave

Sean ‘Diddy’ Combs pleads not guilty to sex trafficking; judge denies bail

Sean “Diddy” Combs on the talk show Late Night with Seth Myers. — IMDB

NEW YORK — Sean “Diddy” Combs used his fame as one of hip-hop’s biggest names to coerce women into demeaning sexual acts as part of a long-running scheme of sex trafficking and racketeering, prosecutors said on Tuesday in bringing three criminal charges against him.

Mr. Combs, 54, pleaded not guilty in Manhattan federal court hours after the 14-page indictment was unsealed. US Magistrate Judge Robyn Tarnofsky denied bail for Mr. Combs, granting a prosecution request for continued detention before trial following the music mogul’s arrest on Monday.

The rapper and producer used his business empire including his record label Bad Boy Entertainment to transport women, as well as male sex workers, across state lines to take part in recorded sexual performances called “Freak Offs” in which the music mogul would watch and masturbate, prosecutors said.

In a possible preview of defense strategy, Mr. Combs’ lawyer Marc Agnifilo called the sexual activity described by prosecutors consensual.

“Does everybody have experience with being intimate this way? No. Is it sex trafficking? No. Not if everybody wants to be there,” Mr. Agnifilo told the judge.

Mr. Combs faces a sentence of up to life in prison, and a minimum of 15 years, if convicted of the three felony counts: racketeering conspiracy, sex trafficking, and transportation to engage in prostitution.

Prosecutors said Mr. Combs enticed women by giving them drugs such as ketamine and ecstasy, financial support, or promises of career support or a romantic relationship. Mr. Combs then used the surreptitious recordings of the sex acts as “collateral” to ensure that the women would remain silent, and sometimes displayed weapons to intimidate abuse victims and witnesses, prosecutors said.

The indictment did not specify how many women were alleged victims. It contained no allegation that Mr. Combs himself directly engaged in unwanted sexual contact with women, though he was accused of assaulting them by punching, kicking, dragging, and throwing objects. Mr. Combs and his associates used bribery and violence such as arson and kidnapping to try to keep his conduct secret, prosecutors said.

When Ms. Tarnofsky asked how he wished to plead, Mr. Combs — wearing a black T-shirt and gray sweatpants — stood up, pulled a thin microphone on the defense table upward, and said, “Not guilty.”

“My concern is that this is a crime that happens behind closed doors,” the judge said in denying bail, before Mr. Combs was led out of the courtroom by members of the US Marshals Service.

Defense lawyer Marc Agnifilo said he will appeal his client’s continued detention at a hearing on Wednesday before US District Judge Andrew Carter, who will oversee the rest of the case.

Also known during his career as P. Diddy and Puff Daddy, Combs founded Bad Boy records and is credited with helping turn rappers and R&B singers such as Mary J. Blige, Faith Evans, Notorious B.I.G., and Usher into stars in the 1990s and 2000s.

‘EXTREMELY DANGEROUS’
Prosecutors accused Mr. Combs of running a criminal enterprise to facilitate his exploitation of women, dating back at least 16 years, in a case brought by the office of Manhattan US Attorney Damian Williams.

“The defendant Sean Combs physically and sexually abused victims for decades,” prosecutor Emily Johnson, arguing for continued detention, told the judge. “He is extremely dangerous to the community.”

The defense had sought to have Mr. Combs released on $50 million bond secured by his Miami home. Mr. Agnifilo acknowledged that Mr. Combs has a history of drug use and toxic relationships, and said he was getting treatment and therapy, without going into specifics.

Mr. Combs is the highest-profile music industry figure charged with sexual misconduct since R&B singer R. Kelly was sentenced to a combined 31 years in prison after being convicted in New York in 2021 and Chicago in 2022 sex trafficking, racketeering, child sex crimes, and other counts.

Hit with a series of civil lawsuits accusing him of sexual and other misconduct as well as a federal criminal investigation, Mr. Combs’ career has been derailed in the past year.

Last November, his former girlfriend Casandra Ventura, an R&B singer known as Cassie, accused him in a lawsuit of serial physical abuse, sexual slavery and rape. She agreed to an undisclosed settlement one day after suing. Mr. Combs denied her allegations.

In a March 2016 incident that resembles Ms. Cassie’s description of his alleged attack, prosecutors said Mr. Combs was captured on a hotel security video striking and dragging a woman trying to leave a “Freak Off.” Mr. Combs then offered a stack of cash to a hotel security officer who intervened, prosecutors said.

Prosecutors said Mr. Combs’ employees helped arrange the “Freak Offs” by booking hotel rooms and buying controlled substances and other items used during sex, according to the indictment.

During raids of his homes in Los Angeles and Miami Beach, Florida six months ago, authorities found drugs and 1,000 bottles of baby oil and lubricant, along with AR-15 rifles with defaced serial numbers, the indictment said. — Reuters

The worrisome Wild West of testosterone hacking

FREEPIK

NOWADAYS, men in their 40s like me are constantly being urged to get their testosterone levels checked, as private clinics and online providers tout “testosterone replacement therapy” (TRT) as the way to improve sexual, physical and mental well-being. It’s a concerning development in TRT’s two-decade journey from being a niche therapy to a lifestyle panacea.

While I’m all for restoring natural testosterone levels for those with a genuine deficiency, the boundaries of therapeutic use and physical enhancement are becoming fuzzy. There’s a danger that opting for TRT as a cure-all means health issues such as obesity aren’t appropriately addressed, while young men risk impaired fertility and a lifetime of unnecessary and costly injections.

This “Wild West” of medical overprescribing and self-medication of testosterone has been fueled by an image-conscious culture obsessed with self-optimizing, stymieing the aging process and averting a supposed crisis of masculinity, as well as by commercial medicine’s fondness for billable “wonder” cures to complex health problems.

Championed by buff podcasters, Hollywood actors, fitness influencers, and even former US presidential candidates, testosterone consumption is booming: In February, the trailing 12-month total of US dispensed prescriptions surpassed 10 million, according to data from healthcare research firm Iqvia Holdings, Inc.

TRT is a long-established, medically approved treatment for male hypogonadism — a relatively uncommon failure of endogenous testosterone production due to disorders of the testes, pituitary gland, or brain, commonly accompanied by low libido and erectile disfunction.

The idea of TRT is to restore normal hormone levels. But the benefits are potentially profound and go beyond improving sexual function. Testosterone increases bone density and hemoglobin, and thus can help with osteoporosis and anemia. Patients also tend to be evangelical about the impact on their mood, mental health, and overall quality of life.

“We have good evidence that TRT makes a big difference for men with a proper diagnosis of testosterone deficiency,” says Ben Davis, a London-based general practitioner specializing in sexual medicine and clinical sexology. “The big issue is around accurate diagnosis and thresholds for treatment — when do you say no to a patient wanting TRT? When do you say this isn’t testosterone deficiency?”

Over the past 20 years, private clinics have extended the TRT market by exploiting ambiguities about what counts as a deficiency and which symptoms warrant treatment. Increasingly, these firms are promoting TRT for non-specific conditions like fatigue, lack of motivation, inability to concentrate, and weight gain, which may have other causes. (Obesity and diabetes are associated with decreased testosterone, and this might explain indications that today’s men have lower T-levels than prior generations.)

Robert Stevens, medical director of a men’s health clinic in Dorset, England, told me men should be looking to not need TRT by addressing lifestyle factors such as stress, sleep, nutrition, and physical exercise. “The whole premise of TRT is to normalize physiology to allow you to put the work in,” he said. “But instead, you have cash-cow companies saying ‘Congrats! You Qualify for TRT!’”

This isn’t an exaggeration. In 2018, New York state’s attorney general took a chain of men’s health clinics to task for featuring a “Low-T” quiz on its website; checking off even a single symptom out of 11 options — such as “I often fall asleep after dinner” — was sufficient for patients to be informed they could be a candidate.

This has contributed to a casualness about injecting testosterone, which men now believe is “akin to taking a multivitamin,” the author and lifestyle guru Tim Ferriss wrote in February. But messing with your hormones isn’t something you should do lightly.

TRT is considered relatively safe — when administered appropriately. In 2015, the US Food & Drug Administration (FDA) ordered that testosterone product labels warn about potential increased risk of heart attacks and strokes. However, European regulators didn’t echo these concerns, and a trial commissioned at the FDA’s request involving more than 5,000 men ages 45-80 has since found no increased risk of major cardiovascular events or prostate cancer following treatment with a testosterone gel.

While that’s reassuring, there are other potential risks, such as polycythemia (increased red blood cell production), which must be carefully monitored because it can lead to blood clots.

Another issue is that administering exogenous testosterone suppresses a patient’s natural testosterone and sperm production, causing the testes to shrink. This can lead to fertility problems unless supplementary medicines are consumed. “We see this all the time, where guys who are doing this in their 20s decide they want to have kids in their 30s and they can’t,” the physician and longevity expert Peter Attia told a podcast in April.

TRT can also become a lifelong commitment, because stopping will cause the patient’s testosterone levels to revert to where they were before treatment. And this dependency is a potential money-spinner for private clinics. Costs vary by provider and level of support, but fees of around $100-$200 per month are typical among US online-only providers, who often don’t accept insurance.

Terms about low testosterone coined by men’s health clinics, such as “male menopause” and “andropause,” are unhelpful and misleading, according to Britain’s NHS. Testosterone levels ebb around 1% a year starting from the age of around 30 or 40 — nowhere near comparable to the unavoidable change women experience during menopause.

While estimates vary, around 75% of men maintain normal testosterone levels into old age, according to the British Society for Sexual Medicine. (Unfortunately, men in the UK who might genuinely benefit from TRT often struggle to access it via the NHS, either because general practitioners lack sufficient knowledge or because US overprescribing trends have made physicians more guarded.)   

The FDA regulates drug approvals, not the practice of medicine, and hence clinics aren’t prevented from dispensing testosterone off-label, providing patients are informed of the risks. But in an e-mailed statement, the regulator warned it has “not approved any testosterone or estrogen products to slow, stop or reverse the biological aging process in men or women,” nor has it evaluated “the effectiveness and the safety of these hormone therapies when used off-label in the manner as described.”

Thanks to a relaxation of rules governing controlled substances during the pandemic, US telemedicine services have been able to prescribe testosterone without an in-person doctor’s visit.

A 2022 mystery shopper study of seven of these online platforms found six were willing to prescribe a 34-year-old man who was already comfortably within the normal testosterone range of 264-916 nanograms per deciliter. Only half of these companies discussed fertility risks, and three stated a treatment goal of testosterone-levels above 1,000 ng/dl. (The study did not identify the companies.)

“Private men’s health clinics tend to attract clients who want testosterone — everybody is happy. Their business model is prescribing testosterone and they don’t do anything that will get in the way of that,” says Richard Quinton, a consultant endocrinologist and adviser on reproductive health to the Society for Endocrinology. “If the blood test result comes back within the normal range, then men are told their testosterone levels should be even higher.”1

While men doubtless appreciate the privacy and convenience of these services, prescribing doses in excess of the body’s inherent ability to make testosterone to patients without a proven deficiency and absent appropriate counseling is irresponsible. Besides increasing the chances of adverse effects, it risks giving a legitimate therapy a bad reputation.

Online testosterone providers may soon have their wings clipped as the US Drug Enforcement Administration is reportedly considering restricting their ability to treat patients entirely virtually. This might sound reasonable enough, but there are potential drawbacks: The transgender community has raised legitimate concerns about access.

Moreover, if TRT patients are denied treatment, they have other, riskier options. Self-medicating with testosterone and similar synthetic steroids — which are relatively easy to acquire via the internet or at gyms — is a growing problem. It’s been estimated that 6.4% of men and 1.6% of women abuse them.2

A generation of young gym-goers have been convinced that taking huge amounts of testosterone is the only way to achieve the pumped-up male physique celebrated by Hollywood and on TikTok; distrustful of doctors, they’re relying on crowdsourced “bro-science” instead. I sympathize with men struggling with body dysmorphia and feelings of inadequacy, and steroid users are often in other respects quite health conscious. But they’re playing with fire.

Administering testosterone without medical supervision and at levels far greater than normally found in the body increases the possibility of side effects such as hair loss, male breast growth, mental health and cardiovascular problems. (Trials like the one mentioned endorsing the safety of testosterone are generally conducted with lower doses.)

TRT providers stress there’s a big difference between therapeutic use and taking steroids, but this is mostly a matter of dosage and intentions. In other words, it’s a spectrum. These days, terms like “sports TRT” are bandied around online to refer to “cruising” on a persistently high dose of testosterone. But not taking a break makes it harder for the body’s natural production to recover.

“Some of these men are resigned to being on self-medicated TRT for life,” warns Con Lafferty, a mental health nurse who set up a steroid harm reduction clinic in Edinburgh.

Essentially, it’s hard not to worry about a Pandora’s box, as the tendency to link testosterone with virility and masculinity opens the door to overprescribing and misuse. Doctors and regulators, as well as consumers, need to wise up.

BLOOMBERG OPINION

1To confirm a deficiency, it’s advisable to have two blood tests conducted on separate occasions, in a fasted state and in the morning when natural levels are highest. Not following best practice can result in a false diagnosis.

2While non-prescription testosterone is illegal in the US, possession is not a criminal offense in the UK.

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