THE PHILIPPINE trade-in-goods deficit narrowed for a third consecutive month in June as imports contracted to a near three-year low while exports were flat as global demand for goods weakened. Read the full story.
By Brontë H. Lacsamana, Reporter
PHILIPPINE dairy farms can meet local needs by investing more in production and product development, leading to reduced reliance on dairy imports, according to an industry player.
“The potential is huge, whether it’s in the yogurt, fresh milk, or ice cream categories. These are multibillion-peso industries,” said Francisco “Paco” Magsaysay, founder of ice cream business Carmen’s Best.
Established in 2009, Carmen’s Best harvests milk from its own dairy farms in Bay, Laguna, and produces premium ice cream for the local market.
According to Mr. Magsaysay, the Philippines imports 99.6% of its dairy needs, with only 0.4% being supplied by local dairy farms. This means Carmen’s Best’s position in the niche market is just a fraction of what the country’s dairy industry could fulfill.
This year, Metro Pacific Investments Corp. (MPIC), which now holds a 51% stake in the dairy enterprise, has pledged to focus more on it in anticipation of the high demand and significant potential for local dairy production.
The Carmen’s Best group, including Carmen’s Best Dairy Products, Inc., Carmen’s Best International Dairy Co., Inc., Real Fresh Dairy Farms, Inc., and The Laguna Creamery, Inc., has achieved over 50% year-on-year growth, according to the company.
“We were surprised that the business is growing this much, so we want to push more,” MPIC’s agricultural arm Metro Pacific Agro Ventures (MPAV) President Jovy I. Hernandez said at a stockholders’ meeting in June.
MPAV and Israel’s LR Group are jointly investing P2 billion in a partnership that aims to build a dairy facility in Bay, Laguna. The objective is to produce at least six million liters of milk annually, with the operation expected to commence in late 2025 or early 2026.
Meanwhile, the National Dairy Authority aims for a growth target of 80 million liters per year until 2028. In June, it cited a lack of consistent annual funding, which hampers the industry’s ability to meet the local demand.
HUMBLE BEGINNINGS
Carmen’s Best started off with just milk production, utilizing 27 hectares of farmland with cows imported from New Zealand. The initial intention was to supply milk to people in the area, but it eventually resulted in a surplus.
Mr. Magsaysay said that within the first year of operation, his father former senator Ramon B. Magsaysay, Jr., who purchased the farm, asked him to sell the surplus milk they had.
Further product development involving different dairy products revealed the potential to create quality ice cream with the surplus milk.
“More than anything, I enjoyed eating it. I was the main market for the ice cream,” he said. “It all came from the idea of serving the Philippine market with a premium product.”
Carmen’s Best, named after Mr. Magsaysay’s daughter, eventually grew beyond its signature flavors like salted caramel and butter pecan to include alcohol-infused ice cream and even a lower-priced budget version.
“When we started selling ice cream in 2011, there was no real premium ice cream manufacturer targeting the A and B market since the amount of milk our farm produced limited the amount of ice cream we could make,” he said.
STAY UNTIL IT SNOWBALLS
For small businesses, the limited capital and manpower imply that forcing rapid market expansion too soon would be futile.
“The publicly listed companies like Selecta, Magnolia, and Nestlé — we purposely did not want to go head-to-head with them. We didn’t have the capital,” said Mr. Magsaysay.
“From day one, we wanted to make the best ice cream. We were not talking about market share or profitability.”
Starting small and catering to an underserved niche in the market implies that growth will indeed be slow, he noted.
Though Carmen’s Best started selling in 2011, its first full-time employee, a food technician, was only hired in 2014.
“You just have to stick to it. It really takes time for a small business,” he said.
For Mr. Magsaysay, the way they got into a rhythm was by acquiring “low-hanging fruit,” which meant selling to friends or family who owned restaurants or coffee shops.
“Little by little, there will be a snowball effect. We were getting more people to join the bandwagon, to sell the ice cream, to just try it. The product spoke for itself,” he said.
NICKEL ASIA Corp. (NAC) expects to benefit from the El Niño weather pattern, which will positively affect its production and shipments due to lower rainfall compared to the previous year, a company official said on Tuesday.
“Last year was an outlier because we had a lot of rains and that impacted production and shipment, so this will be a reverse effect,” Andre L. Dy, vice-president for treasury, investor relations, and sales of NAC, told a briefing.
“El Niño will give us less rains so in terms of our mine planning and production, we will be able to maximize a good weather and thereby for the shipments that could be done in Palawan,” he added.
Mr. Dy said that the “underperfomance” in the production last year could be reversed into “outperformance” due to the less rains brought about by El Niño.
“We haven’t seen the full effect of El Niño, and yet the better weather has just bumped up our ore export shipments by 17% year on year,” he said.
NAC has reported a first-half attributable net income of P1.7 billion, down 56% year on year from P3.8 billion a year earlier, citing lower nickel ore price.
Revenues declined 8% year on year to P10.9 billion against the P11.8 billion in the previous year.
In the six months ending in June, NAC said that its operating mines had sold a combined 7.52 million wet metric tons of nickel ore, up 8%.
NAC saw the London Metal Exchange (LME) prices of nickel to be stable in the short term.
“We expect nickel LME prices to be stable at these price levels in the short term due to the supply-demand dynamics that we are seeing in Class 1 and Class 2 nickel,” Mr. Dy said.
“Both of which have behaved in accordance to the market supply-demand conditions,” he added.
Class 1 nickel are used in electric vehicles batteries which has higher purity compared to Class 2 that is commonly used in stainless steel production.
The average nickel LME price stood at $10.70 per pound for the first half, lower than the $12.54 per pound in the same period last year.
Mr. Dy said that the prices may rise again if the demand would continue to outweigh the supply.
“The nickel ore shipment price which is for stainless steel, we expect price to be flat in the near term. Perhaps the upside is the faster than expected China recovery along with the soft landing in the United States,” he said.
At the local bourse on Tuesday, NAC shares went down by ten centavos or 1.71% to close at P5.75 apiece. — Sheldeen Joy Talavera
As the Philippines enters what is traditionally called the “wet season,” Filipinos across the country must deal with the effects of the torrential rains that accompany the monsoon season. This is not an unfamiliar experience as reports show that on average the Philippines gets hit by 18 to 20 typhoons per year, making it one of the most frequently and severely affected countries worldwide.1 Despite this frequent occurrence, excessive rain often makes it difficult for individuals to carry on with their daily activities. Sometimes, storms and downpours make it impossible to do so. This article explores the legal implications of such inclement weather for the performance of civil obligations. Specifically, it will evaluate what constitutes a fortuitous event, determine whether excessive rain meets such criteria, and discuss the issues in invoking such a defense.
In this jurisdiction, the concept of fortuitous event is enshrined in Article 1174 of the Civil Code which provides that “…no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable”.2 Legal scholars have referred to these events using various terms such as fortuitous event, force majeure, and caso fortuito.3 Civilist Arturo M. Tolentino adds that “[f]ortuitous events may be produced by two general causes: (1) by nature, such as earthquakes, storms, floods, epidemics, fires, etc. and (2) by the act of man, such as an armed invasion, attack by bandits, governmental prohibitions, robbery, etc.” Excessive rain would fall under the first type of general causes which the Supreme Court has classified as “acts of God.”4
In Nakpil & Sons v. Court of Appeals5, the Supreme Court enumerated the elements of a fortuitous event, as follows:
“(a) the cause of the breach of the obligation must be independent of the will of the debtor; (b) the event must be either unforeseeable or unavoidable; (c) the event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and (d) the debtor must be free from any participation in, or aggravation of the injury to the creditor.”
A successful invocation of a fortuitous event requires all above-quoted elements to be present. This is affirmed by subsequent cases which have adopted these elements.6 Two of the four elements relate to the nature of the event itself: first, it must be unforeseeable or unavoidable, and, second, it must prevent the fulfillment of the obligation in a normal manner.7 Therefore, in evaluating what constitutes a fortuitous event, the nature of the event itself must be considered.
Interestingly, the Supreme Court has on several occasions dealt with the question of whether the nature of excessive rain constitutes a fortuitous event.
As early as 1915, in Yap King Chuan v. Tiaoqui, the Supreme Court had to address an issue on damages caused by heavy rain.8 The Supreme Court absolved the defendant stating:
“No one, neither the defendant nor the plaintiffs, could have foreseen that on the said afternoon of April 14 it was going to rain in torrents and in an extraordinary manner, wherefore it is neither right nor proper to ascribe the wetting of the merchandise of the plaintiff-tenants to negligence, carelessness, or fault on the defendant’s part. It was a case of accident and force majeure which could not have been foreseen and which nobody could have prevented, and the fact that the defendant repaired and fixed the leaks in the roof the next day cannot be taken as proof of his liability, for he did not know and could not have foreseen that it was going to rain in torrents the said afternoon and that the roof of the building would leak and show defects.”9
Evidently, the Supreme Court considered the torrential rain as force majeure or a fortuitous event. The court anchored its reasoning on both the lack of contributory negligence on part of the defendant and the reports from the Weather Bureau which stated that the rainfall on April 14 was 46.5 millimeters in the span of one hour, the highest amount of rainfall in seven years.10 The Supreme Court explicitly stated that “this amount of rain in one hour is a fortuitous event or an ‘act of God’.”11
Subsequently, the Supreme Court quoted Justice Hugo E. Gutierrez’s ponencia which stated that forces of nature such as cyclones, drought, floods, lightning, and perils of the sea are acts of God.12 This was also affirmed in Southeastern College, Inc. v. Court of Appeals where the Supreme Court held that “there is no question that a typhoon or storm is a fortuitous event, a natural occurrence which may be foreseen but is unavoidable despite any amount of foresight, diligence or care.”13
Clearly, jurisprudence discloses that typhoons, storms, and heavy rains could be considered a fortuitous event. However, it must be noted that rain per se does not constitute a fortuitous event. Light rain or a mere drizzle cannot be considered a fortuitous event as it would not render it impossible for the debtor to fulfill his obligation in a normal manner. Thus, it is the severity of the downpour/rainfall and its ability to cause non-fulfillment of the civil obligations that allows one to successfully plead excessive rain as a fortuitous event.
It must be emphasized that the existence of a fortuitous event alone does not necessarily mean the successful invocation of the fortuitous event defense. The fourth element as laid down in Nakpil pertains to the presence of contributory negligence on the part of the debtor invoking the defense of fortuitous event.14 Jurisprudence is clear that a party’s contributory fault prevents him from invoking the fortuitous event defense under Article 1174. Thus, in evaluating a fortuitous event based on excessive rain, the diligence of the parties must be examined.
This has been applied by the Supreme Court in Southeastern College, Inc. v. Court of Appeals, where the court emphasized that in order to be exempt from liability arising from any adverse consequence engendered by the rain, there should have been no human participation amounting to a negligent act.15
In the landmark case of Napocor v. CA, the Supreme Court held that as a general rule, a flood, being caused by heavy rains, is a fortuitous event.16 However, in the event that there is a human intervention that showed negligence, a flood ceases to be a fortuitous event.17 It can therefore be concluded that negligence in dealing with the effects of excessive rain have barred the successful invocation of a fortuitous event. This was the case in Napocor v. Palad, where the court held that Napocor failed to exercise diligence in gradually spilling the water from dam since it anticipated the impending abnormal rise of water.18
As to what constitutes the standard of diligence parties must observe during heavy rainfall, Article 1173 of the Civil Code provides that diligence required of a party is determined by the nature of the obligation and the circumstances of the persons, time, and place.19 Applying this to the context of excessive rain, the degree of diligence would depend on the severity and the duration of the rainfall along with whether the parties had prior warning/knowledge of such rainfall.
In conclusion, whether excessive rain could be considered a fortuitous event requires a case-to-case evaluation of the existence of the factual circumstances and the parties’ acts (or lack thereof) to determine whether the elements of a fortuitous event in Nakpil are satisfied. This involves a consideration not only of the severity of the rainfall itself, but the damage and effects thereof and the diligence exercised by the parties involved. The requirements of Article 1174 of the Civil Code and jurisprudence disclose that excessive rain alone will not wash one’s civil obligations away. Accordingly, anyone who seeks to shield themselves from liability using a rainy day must be prepared to prove why their case warrants it.
This article is for informational and educational purposes only. It is not offered and does not constitute legal advice or legal opinion.
1 www.worlddata.info/asia/philippines/typhoons.
2 Civil Code, Article 1174.
3 Ruben Balane, Jottings and Jurisprudence on Civil Law (Obligations and Contracts) (2018 Ed.).
4 Asset Privatization Trust v. T.J. Enter, G.R. No. 167195, May 8, 2008.
5 G.R. No. L-47851, Oct. 3, 1986.
6 National Power Corp. v. Ct. of Appeals, G.R. No. 103442, May 21, 1993; Asset Privatization Trust v. T.J. Enter, G.R. No. 167195, May 8, 2008.
7 Czar Matthew Gerard Dayday and Amer Madcasim, Jr., “(Un)Fortuitous Event: The COVID-19 Pandemic as a Fortuitous Event,” 93 (Special Online Feature) PHIL. L.J. 71 (2020).
8 G.R. No. 10006, Sept. 18, 1915.
9, 10, 11 Ibid.
12 Nakpil & Sons v. Court of Appeals, G.R. No. L-47851, Oct. 3, 1986.
13 G.R. No. 126389, July 10, 1998.
14 Nakpil & Sons v. Court of Appeals, G.R. No. L-47851, Oct. 3, 1986.
15 G.R. No. 126389, July 10, 1998.
16 G.R. No. 96410, July 3, 1992.
17 Ibid.
18 G.R. No. 102206, June 25, 1993.
19 Civil Code, Article 1173.
Aloysius Francis M. Bresnan is an associate of the Litigation and Dispute Resolution Department of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW).
(632) 8830-8000
THE GOVERNMENT made a partial award of the reissued seven-year Treasury bonds (T-bonds) it auctioned off on Tuesday at a higher average rate amid a rise in yields due to Fitch Ratings’ downgrade of the United States.
The Bureau of the Treasury (BTr) raised just P23.629 billion from the reissued seven-year bonds on Tuesday, below the P30-billion program, even as total bids for the offer reached P43.374 billion.
The bonds, which have a remaining life of six years and two months, were awarded at an average rate of 6.468%, with accepted yields ranging from 6.378% to 6.5%.
The average rate of the reissued bonds was 16.9 basis points (bps) higher than the 6.299% quoted for the papers when they were last offered on July 18.
Still, this was 53.2 bps below the 7% coupon for the series.
The average rate was also 1.1 bps above than the 6.457% quoted for the six-year bond, but 1.8 bps below the 6.486% seen for the same bond series at the secondary market before Tuesday’s auction, based on PHP Bloomberg Valuation Service (BVAL) Reference Rates data provided by the Treasury.
“The Auction Committee partially awarded the reissued 7-year Treasury Bonds at today’s auction. With a remaining term of 6 years and 2 months, the bond (FXTN 07-68) was awarded at an average rate of 6.468%,” the BTr said in a statement on Tuesday.
“The auction was 1.4 times oversubscribed as total submitted bids amounted to P43.4 billion. With its decision, the Committee raised P23.6 billion out of the P30-billion offering, bringing the total outstanding volume for the series to P145.4 billion,” it added.
The bonds fetch higher yields as they “tracked the similar movement in T-bill (Treasury bill) auctions [on Monday] amid the impact of the US sovereign credit rating downgrade,” a trader said in an e-mail.
On Monday, the BTr partially awarded the T-bills it auctioned off as rates rose across the board, tracking the increase in US Treasury yields last week after Fitch’s rating action.
Fitch last week downgraded the United States to “AA+” from “AAA,” citing fiscal deterioration over the next three years and repeated down-the-wire debt ceiling negotiations that threaten the government’s ability to pay its bills, Reuters reported.
The average rate seen for the T-bonds offered on Tuesday were close to secondary market levels amid hawkish signals from the Philippine central bank’s chief, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort added in a Viber message.
Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona earlier said it is too early to “declare victory” against inflation, even if it is on its way to the 2-4% target band.
Mr. Remolona said they are ready to resume tightening if needed amid growing threats to the inflation outlook.
The BSP expects inflation to return to the 2-4% target by the fourth quarter.
The Monetary Board hiked borrowing costs by a total of 425 bps from May 2022 to March 2023, bringing the key rate to 6.25%.
It will next meet on Aug. 17 to review policy.
The BTr wants to raise P225 billion from the domestic market this month, or P75 billion via T-bills and P150 billion via T-bonds.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 6.1% of gross domestic product this year. — A.M.C. Sy with Reuters
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SEOUL — K-pop star Suga, songwriter and rapper for the boy band supergroup BTS, has begun the enlistment process for mandatory military service, the band’s label said on Monday, making him the third band member to go off to perform military duty.
“We would like to inform our fans that SUGA has initiated the military enlistment process by applying for the termination of his enlistment postponement,” Big Hit Music said in a statement.
All able-bodied South Korean men ages 18-28 must serve in the military for about two years.
Under a 2019 revision of the law, globally recognized K-pop stars were allowed to put off their service until the age of 30. Parliament is now debating a new amendment that would allow K-pop stars to do just three weeks of military training. In April, J-Hope, another member of Grammy-nominated BTS, began his mandatory military service, following Jin, the oldest, who joined the military in December.
“We ask you for your continued love and support for SUGA until he completes his military service and safely returns,” the label said.
Suga went on his first solo world tour earlier this year, running his YouTube talk show. — Reuters
THE PHILIPPINE trade-in-goods deficit narrowed for a third consecutive month in June as imports contracted to a near three-year low while exports were flat as global demand for goods weakened. Read the full story.
HAVITAS Developments Corp. on Tuesday said that it is planning to develop a two-hectare residential property in Batangas by the fourth quarter.
Havitas Chairman and Co-Founder Alejandro S. Mañalac said in a press briefing that the company is set to introduce its first residential development project in Talisay, Batangas.
Mr. Mañalac said that townhouse units for its Aya Hill project would range at about P10 million spanning between 100 to 110 square meters per lot, with 73 units within the 20 hectare property.
“We saw this property with a commanding view of Taal Lake and immediately realized that we could come up with a unique product, a lifestyle-oriented development of uniquely-designed vacation or staycation homes, with strong income potential from rentals,” he added.
Havitas President and Co-Founder Jonathan F. Caro said that the company is expected to spend around P300 million in development costs for the property.
“We expect that the time table for development would be in the next two to three years and there is room for more expansion in the area,” Mr. Caro added.
The company said that it would focus on pocket developments of vacation homes which have rental income potential. — Adrian H. Halili
By Miguel Hanz L. Antivola
INFORMATION and communications technology (ICT), data analytics, and cybersecurity are priority skills for micro, small, and medium enterprises (MSMEs), according to non-profit organization Philippine Business for Education (PBEd).
“There is great industry demand for these roles,” Justine B. Raagas, PBEd executive director, said in a Viber message to BusinessWorld on Tuesday, citing the group’s recent local labor market analysis.
PBEd previously partnered with the telecommunications network PLDT, Inc. and its wireless unit Smart Communications, Inc. to launch JobsNext, a program aimed at upskilling Filipino youth in digital skills for improved business adaptability and employability.
The training program focuses on developing foundational skills such as digital literacy, basic technology concepts, advanced IT learning tracks, and specialized cloud training, as well as entrepreneurship and project management.
“Through JobsNext, trainees are expected to contribute to businesses and MSMEs by driving innovation, enhancing cybersecurity measures, developing software solutions, and providing strategic insights for growth,” Ms. Raagas said.
“With this, we hope to empower the workforce with the right mix of core and digital skills to drive innovation in businesses,” she added, citing the Labor department’s regional consultations where most of the emerging opportunities will come from the green, IT and platform, and creative industries.
In the IMD business school’s World Digital Competitiveness Ranking 2022 report, the Philippines ranked 56th out of 63 countries, trailing behind neighboring economies such as Indonesia (51st), Thailand (40th), Malaysia (31st), and Singapore (4th).
The country saw a slight improvement, moving up two spots to 58th, in the sub-factor of adaptive attitudes. However, it fell to the 45th spot from the previous 37th spot in terms of business agility.
According to the World Bank’s Philippine Jobs Report 2023, the proportion of companies adopting digital solutions increased moderately to 71% in March 2022, up from 54% in May 2021 and 51% in November 2020.
“Even sectors that have been traditionally weak in technology adoption and heavy on labor use, such as agriculture, retail, and repair, reported having started to use technology during the pandemic,” the study said.
However, an underutilization of digital solutions can be observed due to the overall low level of digital competency among businesses and weak penetration of modern practice using digital tools, according to the World Bank.
In a World Bank survey conducted in March 2022, 62% of small firms (below 20 employees) and 73% of larger firms (above 20 employees) reported having online commerce solutions. In contrast, only about 25% of small firms reported having an enterprise resource planning which is far below the level reported by larger firms at 54%.
“Given the rapid technological advances and market environment, growing competition, and continued mismatches between the demand and supply of talents in the sector, investments in human capital and ICT skills are required,” the World Bank said.
JobsNext has prepared to upskill around 6,000 youth trainees in Laguna, Quezon City, Sorsogon, Eastern Samar, Samar province, Negros Occidental, and Cagayan de Oro, with 100 home WiFi units and 100 prepaid pocket WiFi devices provided in these areas.
“Together with PBEd, PLDT and Smart are working closely with local government units across the country to equip the youth with skills that will make them more attractive to potential employers,” Catherine Yap-Yang, first vice-president at PLDT and Smart, said in a press statement.
The project also underscores the PLDT group’s close collaboration with the National Government through the digital infrastructure pillar of the Private Sector Advisory Council.
YOU CAN THINK of the unfolding disaster in Niger in four ways, from embarrassing to ominous, catastrophic and apocalyptic.
Embarrassing, because the country’s coup on July 26 is blowback for a clueless West: Neither the hapless former colonial power, France, nor the waning superpower, the US, saw this coming. Ominous, because it’s a windfall for Russia and China, as they vie with the West for influence in the region and world. Potentially catastrophic, because it’s a setback in the struggle against jihadist terrorism and uncontrolled migration. Possibly apocalyptic, if it marks a slide into world war.
And all this because a general heard that he might be fired and decided instead to oust the leader he was meant to protect. That — not ideology, not geopolitics, not the world food crisis, not anything large, but a staffing problem — is the immediate reason for Niger’s coup, the fifth since its independence from France in 1960.
It brings to more than half a dozen the putsches in the region just since 2020, including two each in Mali and Burkina Faso, and others in Guinea and Sudan. Chaos now reigns from the Atlantic to the Red Sea. If there is hell on Earth, it’s the Sahel, the arid and wretched savannas south of the Sahara.
The Nigerien general’s name is Abdourahamane (Omar) Tchiani. As commander of the presidential guard, he was supposed to protect President Mohamed Bazoum, elected in 2021 and a rare American ally in the Sahel. But when Bazoum mused about replacing Tchiani, the general showed up with his junta and goons. Bazoum fled across the hall from his office into a safe room. Holed up, he’s been begging the outside world for help, even dictating an op-ed article in the Washington Post by phone.
If the coups in Burkina Faso and Mali are any guide, here’s what’ll happen next. Niger’s junta will kick out French and American troops stationed there and throw itself into the arms of Russian President Vladimir Putin and Yevgeny Prigozhin, leader of the Wagner Group, a ruthless Russian mercenary army. Even as the Nigerien revolt was underway, Putin was hosting other pliant African leaders in St. Petersburg, schmoozing them into supporting, or at least not opposing, his war against Ukraine.
Prigozhin also showed up in St. Petersburg for photo ops with the African leaders. That may seem surprising, since the Wagner boss is supposed to be in Belarusian exile, in punishment for his short-lived mutiny in June. Apparently, though, Putin’s interests in the Sahel trump his concerns about Prigozhin.
For years, the Wagner Group has been fighting for the worst kind of people in Africa, hawking its services in return for concessions to diamonds or other riches of the soil. Putin blesses these Wagner operations and atrocities because he’ll do anything to pry countries away from the US.
In that way, Putin — like his Chinese counterpart, Xi Jinping — views the Sahel as just another frontline in his civilizational struggle against the US-led West. Others run through Ukraine, obviously, but also Asia and the Arctic — last week, a combined Russian and Chinese flotilla sailed provocatively close to Alaska.
Putin is particularly drawn to the Sahel because the region can destabilize the West in many ways at once. It has become the global epicenter of terrorism, as groups such as Boko Haram and the local branches of the Islamic State move into the power vacuums left by coups, ethnic uprisings, banditry, and Wagner mercenaries. To fight the terrorists, Western countries, and notably France and the US, have stationed troops in the few places that remain cooperative. Niger has been among the most important, housing an American drone base. Without a Western presence, there’ll be nothing to stop the terrorists.
Putin loves that prospect. It’ll cause even more suffering and even greater migrations northward and toward the European Union, which he loathes and wants to destabilize. That’s also a reason Putin has weaponized grain, which he’s preventing Ukraine from exporting, fully aware that his blockade causes hunger in places like Africa.
The cynicism on the part of Putin and Prigozhin is breathtaking. Even as he’s starving other Africans by bombing Ukrainian grain depots, Putin promised the ones who showed up in St. Petersburg “free” Russian grain instead — in amounts the United Nations considers risible. Prigozhin went on Telegram to praise the Nigerien junta for its righteous “struggle” against their country’s “colonizers,” by which he apparently means the French and Americans.
The willful gullibility of their African audiences is just as shocking. It should be plain to all countries in the region, and indeed every human alive, that Russia is the cause of the world’s food crisis, and that Putin is nowadays the colonizer fighting an imperialist war of subjugation in Ukraine.
What can the rest of the world do? Hard to say. The African Union and the West have of course condemned the putsch. The Economic Community of West African States (Ecowas), a bloc led by Nigeria, has stopped trade with Niger and shut off Nigerian electricity exports to it.
Ecowas even issued the junta an ultimatum to restore Bazoum to power or face military intervention. On cue, the pro-Russian regimes in Burkina Faso and Mali answered that they’d then come to the aid of the new leaders in Niger. With Russians in the second row on one side and Americans on the other, we’d be in another proxy war, and another step closer to World War III.
For now, Nigeria and the other Ecowas countries appear to have calculated that the risk is too great — they let their ultimatum’s deadline pass on Sunday without sending soldiers. The US and France are also unlikely to take up arms for Bazoum. They fear that Niger could be the next Iraq or Afghanistan, or worse, that they might end up shooting at Russians and igniting a global conflagration.
As I said, blowback. The US and its allies have for years neglected the region diplomatically. Of late, Washington hasn’t even had ambassadors to Niger or Nigeria — Senator Rand Paul has been blocking nominees to force the White House to release information on COVID.
Politics must once again stop at the water’s edge. As Putin and Xi see it, we’re already in the next world war, even if nobody’s declared it yet or started shooting directly at the other side. The US, Europe and the wider West must support Africa — and indeed the whole Global South — not just now, but from now on. We have to make it easier for the world not just to stare down juntas, but to resist the dark side in geopolitics.
BLOOMBERG OPINION
THE YEN has weakened in the wake of the Bank of Japan’s (BoJ) surprise tweak to its yield curve control (YCC) program, a fact that won’t go unnoticed by central bank officials after Governor Kazuo Ueda took the unusual step of acknowledging that currency issues were considered in making policy decisions.
Ueda surprised many BoJ watchers last month in a post-policy meeting press conference, by saying that foreign exchange (FX) volatility had been a factor that prompted the BoJ to let 10-year bond yields rise beyond 0.5%.
That position appeared to contradict past communications from the central bank that sought to emphasize that currency policy fell fully under the remit of the finance ministry, analysts said. Usually the bank says it concerns itself solely with any impact the yen’s moves might have on the economy and inflation.
“Ueda took a step further in indicating the BoJ’s concern over currency moves,” said Hiroshi Miyazaki, senior economist at Mizuho Research & Technologies. “Ueda seemed to be trying to communicate more clearly in order to send a warning to market players.”
The question now is whether the BoJ’s policy decisions may be impacted more by currency moves. Despite Mr. Ueda’s warning, the Japanese currency fell to as low as 143.89 per dollar last week, a weakening spurred by the rise in US treasury yields after Fitch Ratings downgraded its assessment of US credit.
“I think many people took his remarks as a warning against the weak yen,” said Daisuke Karakama, chief market economist at Mizuho Bank in Tokyo. “But by citing the currency as a factor, Ueda may be increasing the probability that the market will go on an offensive toward a weaker yen. The market may test how much weakness in the yen the BoJ will tolerate.”
The BoJ said last month it will control 10-year yields with “greater flexibility,” by allowing fluctuations from 0.5% and by offering to buy the government bond at 1% every business day, effectively creating a higher upper ceiling.
At his post-meeting press conference, Ueda cited YCC side effects spurring currency volatility as one of the reasons for the revision to the program. After reiterating a standard assurance that the BoJ doesn’t target exchange rates, Mr. Ueda added that “within the context of YCC’s side effects, and our need to quell financial market volatility, currency volatility was taken into consideration in today’s move.”
Mr. Ueda’s right-hand man Shinichi Uchida also stressed that point at a press conference last week by saying that volatility in the currency market was “an important element” that led to the policy decision.
While such comments could serve as a warning against market participants, they could also spur speculation of further policy change if the yen continues to weaken.
With his forward-looking and risk-management focus, Mr. Ueda’s overall policy approach is similar to the norms set by other central banks, according to Naka Matsuzawa, chief strategist at Nomura Securities Co. However, the reference to foreign exchange volatility as a factor behind the YCC change was unusual, he added.
“It’s undeniable now that expectations for policy change and a weak yen are more closely linked,” Mr. Matsuzawa said. “It would be wise for the BoJ to put out this potential fire before further yen weakness spurs rate hike expectations.”
While the currency market is still digesting the meaning of the BoJ’s somewhat complicated policy, the direction of the yen hinges on how the BoJ operates its bond market operation and where yields will settle, according to Atsushi Takeuchi, a former head of foreign exchange division at the BoJ.
“The BoJ has always paid close attention to the currency market,” said Takeuchi, currently chief research fellow at Ricoh Institute of Sustainability and Business. “It just made its long-held stance clear that it doesn’t want abrupt moves to either side, as that would exert a drag on businesses and households and become a political concern.”
So far the central bank has intervened in markets twice last week to limit the increase in yields.
Mizuho Research’s Mr. Miyazaki said the BoJ can only allow 10-year yields to rise to around 0.7% to narrow rate differentials. Politicians and government officials won’t tolerate any moves higher than that, as it would increase the cost of fiscal spending too much.
In Japan, the finance ministry is in charge of foreign exchange rates and any currency intervention is decided by the finance minister. The BoJ carries out the action on behalf of the ministry. After last autumn’s highly watched interventions to support the yen, significant weakening is likely to spur more speculation over more action from authorities.
“I don’t think it’s likely to happen, but if the yen doesn’t stop falling even with the yield around 0.7%, then it will be the finance ministry’s turn to step in,” Mr. Miyazaki said. — Bloomberg
