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James Harden

When James Harden made his way to the Sixers just before the trade deadline, he vowed to be in for the long haul. Not a few quarters thought it was simply bluster, though, and with reason. He said the same thing just 13 months before, when he also forced his way out of a situation he no longer deemed worth his while to move to a seemingly cozy setup with the Nets. And he looked like he meant what he said then, what with the prospect of teaming up with fellow All-Stars Kevin Durant and Kyrie Irving theoretically as good an incentive to stay as any.

To be sure, Harden soured on the Nets in some measure due to circumstances beyond his control. Irving’s refusal to get vaccinated against the COVID-19 vaccine affected their competitiveness and, as things turned out, camaraderie; it appeared that he didn’t particularly care for the increased load amid all the uncertainty, even with Durant sharing it. In any case, his output suffered, and to the point where all and sundry figured he had already mentally checked out.

It bears noting that Harden’s numbers were marginally worse with the Sixers for the remainder of their 2021-22 campaign. He was just the third-leading scorer in the first round of the playoffs, and proved particularly atrocious in Game Six of the Eastern Conference Semifinals. Reminiscent of his previous postseason failures, he pulled a disappearing act in the elimination match; he took only nine shots in 43 minutes, borne off an uncharacteristically low 14.1 usage rate. Which, for all intents, was why raised eyebrows greeted his reiteration of his pledge to remain in the City of Brotherly Love.

Well, Harden didn’t merely keep his promise; he did so while lending the Sixers a helping hand. He could have exercised his $47.3-million option for the 2022-23 season, guaranteeing a big payday in the interim while he negotiated for his next contract. Instead, he opted out and formally became a free agent to sign for less money and allow the red, white, and blue to go after desired talent. And, ostensibly, they’ll be using the additional salary cap space to ink journeyman P.J. Tucker to a two-year deal at the $103-million midlevel exception. In so doing, they won’t just pave the way for a reunion of the former Rockets teammates and president of hoops operations Daryl Morey; more importantly, they’ll be acceding to the request of top dog Joel Embiid, who gave the would-be acquisition a ringing endorsement following their elimination.

There’s something to be said about Harden’s magnanimity in the face of his dwindling Q rating. No doubt, he likewise understood his diminishing capacity to produce points with the same efficiency that once made him a singular offensive force in the National Basketball Association. As Embiid noted, “I’m sure since we got him, everybody expected the (Rockets version) of James Harden, but that’s not him anymore. He’s more of a playmaker.” It may be a backhanded compliment, but he knows it’s true. And because he sees the writing on the wall, he’s angling for less, but over a longer time frame.

Whether Harden’s gamble will ultimately enable him to get his hands on the Larry O’Brien Trophy remains to be seen. At the very least, however, he has laid the groundwork for a graceful exit. At 32 and with declining skills, he will likely be affixing his Hancock on his last contract. Needless to say, it would also be good for him to repair his image and claim the hardware along the way.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and Human Resources management, corporate communications, and business development.

Reminders and unwanted legacies

PIXABAY

With only three weeks in office left, National Security Council (NSC) Adviser and Anti-Terrorism Council (ATC) Vice-Chair Hermogenes Esperon ordered the National Telecommunications Commission (NTC) on June 6 to block access to the websites of Bulatlat and Pinoy Weekly and those of several civil society and advocacy groups that he alleged “support terrorists and terrorist organizations.”

It was not only a reminder to all, especially the media, of the Duterte regime’s long record of hostility to free expression and press freedom, but also of how much that unwanted legacy has added to the many difficulties responsible journalists and other truth-tellers are already burdened with.

Not surprisingly was there no mention of it in the regime publicists’ accounts of regime “accomplishments.” But if the killing of journalists has discouraged many would-be practitioners from being part of the profession, so have the threats against the press, and the demonstration effect of how government can shut down media organizations with impunity, been as disturbing.

Equally distressing are some practitioners’ concerns for the future of Philippine journalism, and their doubts over whether truth-telling is worth the risks to life, limb, fortune, and peace of mind to which the last six years of despotic rule have exposed them. In interviews with several practitioners, Philstar.com reporter Xave Gregorio also found that many also fear that the incoming Marcos II administration will be even more hostile to the press than Duterte’s.

Rappler’s Lian Buan, who was not only shoved by Marcos Junior’s security personnel when she tried to interview the then candidate, but was also ignored by his spokesperson when she asked him a question during a press conference, told Gregorio that the Marcos victory is “an indictment of facts and journalism as a profession.”

She is correct in that dim assessment. Mass indifference to, and outright disdain for the facts, as well as disinformation helped clinch the Presidency for Marcos Junior — and it happened despite the efforts of some journalists at fact-based reporting and analysis.

Still other practitioners mentioned how much the harassments, threats, and “red-tagging” they have had to endure have added to such other woes as low pay, and, one might add, the bashing that even the most professional among them suffer from the troll armies.

Unprecedented since the Marcos Senior dictatorship is the pessimism that today afflicts some of the more responsible members of the journalism community. One has to go back in time, to 50 years ago, to find a similar situation. During that period, many journalists stopped writing, took up other professions, or emigrated to foreign but less threatening climes.

The declaration of martial law did not usher in a golden age; rather did it put a stop to it. The Marcos Senior dictatorship was built not only on the ruins of the Republic. It was also at the cost of the growth and development of Philippine mass media and journalism, and of the widespread acceptance of the need to democratize governance so the Philippines can take its place among the developed countries of the world.

If there was ever a Philippine “golden age,” it was the late 1960s and early 1970s. Many sectors of the population — workers, farmers, students, academics, artists, professionals, nationalist businessmen — made their demands for change with information and reason enough for those to be the subjects of debate and discourse in the public sphere. Every day the newspapers demonstrated a capacity for the skilled reporting and analysis that have become rare today. And every week magazines like Graphic and Asia-Philippines Leader published investigative, long-form and explanatory articles in the manner of the US’ Atlantic and New Yorker.

Among the journalists then were such eminent practitioners as Nick Joaquin, who, as Quijano de Manila, produced some of the best, if not the best writing in Philippine journalism; and Jose F. Lacaba, whose articles on the protests during that period, published in book form under the title Days of Disquiet, Nights of Rage, are still unequaled today.

Martial law put an end to all that: to the resumption of the democratization process that began in the late 19th century, and to the golden age of Philippine journalism. Part of Marcos Senior’s unwanted legacies was the long-term damage to the press, from which it had only partly recovered by the time Rodrigo Duterte became President 44 years later.

The Constitution protects press freedom and free expression among other democratic entitlements, but the recurrent terrors of martial law have demonstrated how powerless, and even unwilling, the administrations that succeeded Marcos Senior’s were in guaranteeing their observance. The killing of journalists in fact continued in 1986 and became even worse as the years passed.

The return of authoritarian rule has remained a constant threat, due among others to the failure of a media and press system besieged by legions of problems to critically monitor and hold to account the administrations that came to power after EDSA 1986 (Corazon Aquino’s, Fidel Ramos’, Gloria Macapagal-Arroyo’s, Benigno Aquino III’s, and Rodrigo Duterte’s). The only exception was that of Joseph Estrada.

What those regimes did not do was to the benefit of press freedom and free expression. What they did do was detrimental to both. Among the latter were the filing of libel suits against journalists by Corazon Aquino, Estrada, and Macapagal-Arroyo’s husband, and Fidel Ramos’ cajoling journalists into reporting favorably on his administration. But Mr. Duterte’s many attempts to silence the free press outdid them all.

In contrast, what the administration of Benigno Simeon Aquino III — whose first death anniversary was last June 24 – did not do against the press and media was significant enough to encourage them to do their jobs without fear of government harassment.

Like his predecessors, Aquino III was also critical of the press. He complained often about its supposed bias, but never threatened, insulted, or harassed journalists. He thought the numbers in the killing of journalists exaggerated, but he did not justify them by blaming the victims. Neither did he prevent any journalist from covering his Office, or shut down any media organization.

Because journalists could criticize his acts and policies without fear of retaliation, the full exercise of press freedom and free expression was possible during his six years in office. It was a possibility that was not always realized, but not because of government intimidation. The preservation of democratic space was one of the legacies for which he will be remembered.

Mr. Duterte’s are entirely different as far as the press, as a necessary institution in the democratic enterprise, is concerned. Among the many acts that shrank the democratic space and will be less than fondly remembered is his regime’s blocking on June 6 of access to the websites of two of the best and oldest alternative media organizations in the Philippines.

The regime did it despite the long history of the alternative media tradition that goes back to Marcelo H. del Pilar’s La Solidaridad, Antonio Luna’s La Independencia and other publications which, as truth-tellers and heralds of change, were crucial to the emergence of the Filipino nation.

But whoever really believed that the Duterte regime was for the changes it claimed were coming?

Together with, and partly as a result of, its attacks on the press, it is leaving behind it neither change nor development, but more of the same rule of the few, even worse poverty, and, as it kept reminding us, the use of State violence and terror against anyone who dared exercise the freedoms the Constitution protects.

 

Luis V. Teodoro is on Facebook and Twitter (@luisteodoro).

www.luisteodoro.com

Credit rating says a lot

PCH.VECTOR-FREEPIK

Last Wednesday, the broadsheets reported that credit rating agencies (CRAs) are optimistic about the Philippines’ debt prospects, that the level would remain manageable. On that basis, both government and the market must be firming up their prognosis that the country might succeed in keeping its current investment-grade (IG) credit rating.

What is interesting is that the broadsheets linked this steady credit rating performance to the new administration’s ability to source cheap funding. Let’s connect the dots.

In one of our past columns, we argued that such higher investment-grade credit rating could be eaten, something that many had disputed in the past. If they simply consulted the chart showing the decline in our borrowing costs following our successive upgrades between 2010-2016 and thereafter, they would have found the truth. And the truth could have freed them to understand that we saved millions of dollars in debt servicing for so many basis-point reductions in our borrowing costs. In turn, such savings funded, one, infrastructure; two, cash transfers; and three, social services.

But we did not get the upgrades without sweat.

Before the transition to the PNoy (Benigno Aquino III) administration in 2010, the BSP (Bangko Sentral ng Pilipinas) decided to look into the methodologies of the three major CRAs. As documented by our staff who directly worked with us on this issue, Cristeta B. Bagsic and Eufrocinio M. Bernabe, Jr., in their article “Predicting the RP Sovereign Credit Ratings: Has the Philippines Been Underrated?” published in the BSP Economic Newsletter of November-December 2012, we needed to find the reasons why more favorable macroeconomic and governance indicators in the Philippines failed to earn us even a single upgrade from the CRAs from 2002 to 2010.

In 2002, both S&P and Fitch rated us BB+ while Moody’s gave us an equivalent Ba1. Both ratings served notice to the market that the country’s sovereign bonds are junk.

From 1999 to 2010, all of 12 years, the Philippine performed excellently in those macroeconomic and governance indicators the CRAs regularly monitor and compress into a single rating, as in BBB+, and an outlook, like positive. Such indicators include, for instance, economic growth. In this, we managed to record uninterrupted, positive economic growth even through the Global Financial Crisis. With the implementation of flexible inflation targeting framework in 2022, inflation had started stabilizing at much lower rates compared to the previous 10 years. Between 2002 and 2010, GDP per capita more than doubled. The consolidated public sector debt to GDP ratio was reduced from 104.1% to only 68.8%, while for the national government alone, debt to GDP ratio came down from 67.1% to just 52.4%. Gross international reserves (GIR) nearly quadrupled from $16.4 billion to $62.4 billion. The external debt to GDP ratio was more than halved, from 66.1% to only 30.1%. As a result, the proportion of the country’s external debt to our GIR shrank from 3.3% to only 1%.

But surprise! By 2010, both S&P and Fitch had rated us one notch lower at BB. Moody’s downgrade was even more significant at only Ba3.

Taking a page from Hong Kong’s playbook a few years earlier, we began to engage the CRAs more intensely at every opportunity — meetings of the IMF and World Bank, ADB, ASEAN, investment roadshows. Hong Kong itself was likewise underrated until they campaigned for sustained upgrades given the leaps and bounds in their economic performance. We did not only face the CRAs with the glowing figures in the economy but also with the validation of their assessment based on our own independent study. BSP used three models to validate our credit ratings, namely, ordered logit, panel regression involving some 78 economies using ordinary least squares (OLS) and cluster analysis.

The findings were very revealing.

First, three indicators figured prominently across the three methodologies: inflation rate, unemployment rate, and World Bank indicator for government effectiveness. As stressed by Bagsic and Bernabe, such a result highlighted the need for stronger collaboration between monetary and fiscal policy, enhancing government credibility and commitment to a stable policy environment. Government effectiveness was the most important in the CRAs’ assessment.

And second, the empirical results show that based on any one of the three methodologies, the Philippines was underrated by all three CRAs. In particular, cluster analysis showed that at BB+ and Ba1, both speculative or junk grade, the Philippines was lower than warranted and should have been grouped with economies that were rated one to two notches higher. That should have put us into the investment-grade category which starts at BBB-, or just one notch higher. This signifies the country’s adequate capacity to pay its debt.

One lesson in our own experience with CRAs is that there is scope for public servants to engage them with actual data and trends including rigor in our analytical work. While credit rating says a lot, it is incumbent upon the government to ensure the message is accurate.

The other reason why credit rating is edible is its impact on attracting foreign direct investment (FDI). We agree that liberalizing the entry of FDI in the Philippines is a big plus in lessening the country’s reliance on foreign debt and closing the saving-investment gap. More FDI builds capital stock for production activities, increases labor employment, encourages technology transfer including managerial skills, and integrates the domestic economy into the global chain.

The enactment of the Public Service Act, Foreign Investment Act, and the Retail Trade Liberalization Act also constitute key policy reforms that are strategically pro-investment, decidedly being monitored by prospective business partners especially as we recover from the pandemic and work for quick economic recovery.

How does credit rating figure in the FDI equation?

In a very interesting discussion paper for the BSP’s Research Academy in December 2021, BSP technical officers Hazel C. Parcon-Santos, Maria Rica M. Amador, and Marie Edelweiss G. Romarate noted the disparities in FDI that went into the ASEAN member countries Indonesia, Malaysia, the Philippines, Thailand, and Vietnam from some 15 source countries for the period 2009-2019, quite recent coverage.

Using a gravity model approach which posits the basic idea that market size and geographical distance are key determinants of FDI, other related factors were also considered. Their paper found that not one or two factors explain investor interest, but a number of both economic and non-economic factors.

Parcon-Santos, Amador, and Romarate found that “sovereign credit ratings have signaled effects for FDI, which bodes well for governments that are pursuing measures to improve credit ratings, with the end goal of enhancing an economy’s efficiency and competitiveness.” True, CRAs’ assessment provides would-be non-resident investors a good look into the macroeconomy and economic dynamics of prospective investment destinations. While the IMF’s annual Article IV consultation staff report might be more comprehensive, CRAs’ assessment is more focused on the economy’s liquidity and solvency conditions and what risks could affect the prospects.

The other ingredients to investment friendly environment include ease of cross-border trading, quality of human capital that is primary to labor cost, reduction of FDI restrictions, and good public governance.

The paper also clarified that good public governance is associated with ease of doing business, quality of infrastructure, competitive industrial performance, and technological innovations. It is helpful, but reducing corporate income tax is not an absolute in attracting FDI. It should never be a race to the bottom: the economy might be giving up potential resources that could otherwise have been used to address those basic considerations of FDI like better infrastructure, education, and medical care.

As the BSP officers concluded, there is no factor “that can single-handedly attract FDI.” But going back to credit rating, the study highlighted that credit rating says a lot about a country. By giving a better understanding of the host economy due to the CRAs’ assessment, a good credit rating could therefore enable it to raise funding cheaply while attracting a greater amount of FDI.

So, when the government announces its goal to hit the road to A, it should not be empty rhetoric. For our people, it becomes an earnest expectation of better days ahead. With what is happening to prices and jobs, they see nothing but hope in a credit upgrade.

 

Diwa C. Guinigundo is the former deputy governor for the Monetary and Economics Sector, the Bangko Sentral ng Pilipinas (BSP). He served the BSP for 41 years. In 2001-2003, he was alternate executive director at the International Monetary Fund in Washington, DC. He is the senior pastor of the Fullness of Christ International Ministries in Mandaluyong.

How Catholicism lost political clout in the Philippines

PHILIPPINE STAR/KRIZ JOHN ROSALES

FOUR DECADES AGO, the Catholic Church inspired the movement that helped overthrow Ferdinand Marcos, Sr. Now, as the autocrat’s son begins his own presidential term, the Church’s sway over politics doesn’t come close. Few figures can step into the vacuum left by the nation’s towering public figure of the late 1980s, Cardinal Jaime Sin, who became a key architect of the “People Power Revolution.”

While about 80% of Filipinos are Catholic, attendance at Mass is waning. The clergy has suffered some big defeats, chiefly the passage of landmark legislation in 2012 that made contraception more widely available to the poor.

In recent years, the Church has lost ground to more conservative Christian organizations that resemble megachurches in the US. These highly disciplined congregations — with their own media networks, even stadiums — delivered block votes to Marcos Jr., known as Bongbong, in May’s election. They did the same for outgoing leader Rodrigo Duterte six years earlier.

I spoke to Jayeel Cornelio, an associate professor at Ateneo de Manila University, who specializes in religion and social change, about the developments in Filipino society, governance and economics that diminished the clout of Catholicism. The following transcript is lightly edited for clarity and length.

Daniel Moss: What role does the Catholic Church play in the Philippines today and how does that compare with 1986, when Bongbong’s father was toppled and fled to exile in the US? 

Jayeel Cornelio: Things have changed dramatically. We can no longer attribute to the Church the role it had. In the 1970s and 1980s, it was the only institution credible enough to contest the power of the state in the form of Ferdinand Marcos. Today, the state is not the enemy. Duterte hasn’t been seen as the enemy by the wider public. You can say the same about Bongbong, even if some in the church frame him as the embodiment of the enemy.

The influence is there, but is based mainly on issues like divorce, gender equality, and same sex marriage. The population is still predominantly conservative on these moral issues, and the church echoes and articulates public sentiment. But when it came to showdowns like the passage of the Reproductive Health Act in 2012 or favoring this or that candidate, people don’t look to the church that much.   

The emerging churches are important. The rising stars of religion in the Philippines are megachurches like Iglesia Ni Cristo (INC) and Kingdom of Jesus Christ (KJC), led by a televangelist called Apollo Quiboloy. Are they ominous stars, good omens or bad omens? They are very influential even though they are religious minorities.

DM: Is this because the emerging churches are more tightly organized and less sprawling than the Catholic church?

JC: They are tightly organized with reliable social control mechanisms that can monitor people’s political behavior. While INC says it doesn’t do bloc voting — they simply endorse and everyone follows — surveys and exit polls show that about 70% of INC followers adhere. If you ask INC members, they will say it’s not bloc voting, just exercising unity. But from the point of view of a sociologist, that is precisely how bloc voting works. You are being watched and you toe the line.

In KJC, it might be a bit different because they are based in Davao and have a connection with Rodrigo Duterte and his daughter Sara, the new vice-president. Both are from Davao. INC is more than 100 years old and has mastered the art of political influence. I don’t think anyone took the KJC seriously. But given money and Davao, the stars have aligned.   

DM: Why are these groups on the ascent while the Catholic Church appears to be in relative decline?

JC: Let me qualify that question a little bit. These groups are influential, but not necessarily popular. In that sense, the Catholic Church still has the space to maneuver politically. They tried doing that in recent months, with some priests and nuns turning pink, the campaign color of Leni Robredo, Marcos’ main opponent, in the recent campaign. However, they are misreading the population. The Church is coming from this prophetic sense of who they are. Because of Cardinal Sin’s giant status in the 1980s, they are still behaving very old school. I think their influence lies somewhere other than the national stage. 

DM: Are the megachurches inherently conservative or are they merely sensing a winner and then getting on board? Should we think of Donald Trump’s support among evangelical Christians in 2016 as a kind of template?

JC: For Quiboloy’s group, the time has come to exercise influence because of the Duterte family. INC, by contrast, has been powerful for some time now. They don’t really explain their theological reasons for supporting a candidate. In the US, despite Trump’s lifestyle, his three marriages, people would say they support Trump because he wanted to recognize Jerusalem as Israel’s capital, put conservatives on the Supreme Court, and so on. You don’t pick up anything so sophisticated from these groups in the Philippines.

When INC was just starting in the early part of the 20th century, they were small. It was very important for them to align themselves with powerful politicians to protect them from persecution. Their view is that they need allies in politics. It’s partly a matter of backing someone who is going to win. But INC has also endorsed people who don’t win. They do consult members and their members were inclined to back Bongbong.

DM: During the People Power Revolution of 1986, the support of the Church was critical. Was that just a product of the unique circumstances of that time?

JC: The Catholic Church had a moral gravitas in the 1980s and lent it to Cory Aquino, who succeeded Marcos, Sr. as president. It was the only organization that could mobilize on that scale. And that didn’t happen overnight. Even during the 1970s and 1980s, parishes had begun organizing, especially those disenfranchised by the military. By 1986, the time was right for Cardinal Sin to make his move. It’s important to remember that as late as the 1970s, the church was dilly-dallying on how to react to Marcos. Some clerics believed in what they called “critical collaboration.” They opted for a kind of middle course, where they worked with the government while criticizing some things. During this phase, Sin thought Marcos was a reasonable man who could be influenced. I suspect this is how many bishops view Bongbong.

Ultimately, Church leaders came to the realization that martial law was a lethal regime and opposition was the only credible path, especially after Benigno Aquino was assassinated. History can teach a lesson. Maybe the national stage isn’t where they should be concentrating now and should return to the community level. A big majority of Filipinos, most of whom are Catholic, voted for Bongbong. All the pontification fell on deaf ears.

BLOOMBERG OPINION

Russia steps up attacks in Ukraine after landmark NATO summit

MADRID/KYIV — Russia pressed on with its offensive in eastern Ukraine on Thursday after NATO branded Moscow the biggest “direct threat” to Western security and agreed plans to modernize Kyiv’s beleaguered armed forces.

Ukrainian authorities said they were trying to evacuate residents from the frontline eastern city of Lysychansk, the focus of Russia’s attacks where about 15,000 people remained under relentless shelling.

“Fighting is going on all the time. The Russians are constantly on the offensive. There is no let-up,” regional Governor Serhiy Gaidai told Ukrainian television.

“Absolutely everything is being shelled.”

In the southern Kherson region, Ukrainian forces were fighting back with artillery strikes of their own, Oleskiy Arestovych, adviser to the Ukrainian president, said in a video posted online.

At a summit on Wednesday dominated by Russia’s invasion of Ukraine and the geopolitical upheaval it has caused, NATO invited Sweden and Finland to join and pledged a seven-fold increase from 2023 in combat forces on high alert along its eastern flank.

In reaction, President Vladimir Putin said Russia would respond in kind if NATO set up infrastructure in Finland and Sweden after they join the US-led military alliance.

Mr. Putin was quoted by Russian news agencies as saying he could not rule out that tensions would emerge in Moscow’s relations with Helsinki and Stockholm over their joining NATO.

US President Joseph R. Biden announced more land, sea and air force deployments across Europe from Spain in the west to Romania and Poland bordering Ukraine.

These included a permanent army headquarters with accompanying battalion in Poland — the first full-time US deployment on NATO’s eastern fringes.

“President Putin’s war against Ukraine has shattered peace in Europe and has created the biggest security crisis in Europe since the Second World War,” NATO Secretary-General Jens Stoltenberg told a news conference.

“NATO has responded with strength and unity,” he said.

Britain said it would provide another 1 billion pounds ($1.2 billion) of military support to Ukraine, including air defense systems, uncrewed aerial vehicles and new electronic warfare equipment.

‘FIGHTING EVERYWHERE’
As the 30 national NATO leaders were meeting in Madrid, Russian forces intensified attacks in Ukraine, including missile strikes and shelling on the southern Mykolaiv region close to front lines and the Black Sea.

The mayor of Mykolaiv city said a Russian missile had killed at least five people in a residential building there, while Moscow said its forces had hit what it called a training base for foreign mercenaries in the region.

There was relentless fighting around the hilltop city of Lysychansk, which Russian forces are trying to encircle as they try to capture the industrialized eastern Donbas region on behalf of separatist proxies. Donbas comprises Donetsk and Luhansk provinces.

A video clip aired on Russia’s RIA state news agency showed former US soldier Alexander Drueke, who was captured while fighting for Ukrainian forces.

“My combat experience here was that one mission on that one day,” said Mr. Drueke, from Tuscaloosa, Alabama, referring to the day he was captured outside Kharkiv, Ukraine’s second-largest city. “I didn’t fire a shot. I would hope that would play a factor in whatever sentence I do or don’t receive.”

President Volodymyr Zelensky once again told NATO that Ukrainian forces needed more weapons and money, and faster, to erode Russia’s huge edge in artillery and missile firepower, and said Moscow’s ambitions did not stop at Ukraine.

The Russian invasion that began on Feb. 24 has destroyed cities, killed thousands and sent millions fleeing. Russia says it is pursuing a “special military operation” to rid Ukraine of dangerous nationalists. Ukraine and the West accuse Russia of an unprovoked, imperial-style land grab.

The top US intelligence official Avril Haines said on Wednesday the most likely near term scenario is a grinding conflict in which Moscow makes only incremental gains, but no breakthrough on its goal of taking most of Ukraine.

‘FULL SOLIDARITY’
In a nod to the precipitous deterioration in relations with Russia since the invasion, a NATO communique called Russia the “most significant and direct threat to the allies’ security,” having previously classified it as a “strategic partner.”

NATO issued a new Strategic Concept document, its first since 2010, that said a “strong independent Ukraine is vital for the stability of the Euro-Atlantic area.”

To that end, NATO agreed a long-term financial and military aid package to modernize Ukraine’s largely Soviet-era military.

“We stand in full solidarity with the government and the people of Ukraine in the heroic defense of their country,” the communique said.

Mr. Stoltenberg said NATO had agreed to put 300,000 troops on high readiness from 2023, up from 40,000 now, under a new force model to protect an area stretching from the Baltic to the Black seas.

NATO’s invitation to Sweden and Finland to join the alliance marks one of the most momentous shifts in European security in decades as Helsinki and Stockholm drop a tradition of neutrality in response to Russia’s invasion. — Reuters

Biden unlikely to meet bold Democrat demands after abortion ruling

WASHINGTON — The White House is unlikely to take up the bold steps to protect women’s right to have an abortion that Democratic lawmakers have called for in recent days, interviews with officials show.

In a speech after the rollback of the Roe vs. Wade decision on Friday, President Joseph R. Biden slammed the “extreme ideology” of the conservative-leaning Supreme Court, but said then there are few things he could do by executive order to protect women’s reproductive rights.

Since then, lawmakers including Senator Elizabeth Warren and Representative Alexandria Ocasio-Cortez have suggested Mr. Biden limit the Supreme Court’s jurisdiction or expand its membership, end the legislative “filibuster” rule, build abortion clinics on federal lands, declare a national emergency and establish Planned Parenthood outposts outside US national parks, among other options.

More than 30 Senate Democrats signed a letter to Mr. Biden, urging him to ‘fight back,” take “bold action” and “lead a national response to this devastating decision” after the court overturned the right to abortion.

But the White House is pursuing a more limited set of policy responses while urging voters and Congress to act. The White House’s plans include a range of executive actions in the coming days, as well as promising to protect women who cross state lines for abortions and support for medical abortion.

Mr. Biden and officials are concerned that more radical moves would be politically polarizing ahead of November’s midterm elections, undermine public trust in institutions like the Supreme Court or lack strong legal footing, sources inside and outside the White House say.

Mr. Biden is “telling people the truth and putting the focus where it needs to be, holding Republicans’ feet to the fire for the harm they’re causing,” a White House official said when asked about the strategy.

Mr. Biden is “fighting hard in the executive branch — like through protecting access to medication and protecting the right to interstate travel — while pushing for legislation.”

Protecting abortion rights is a top issue for women Democrats, Reuters polling shows. The White House, which misjudged when the ruling would be issued, is still not meeting the moment on the issue, some health experts and Democrats complain.

“The White House had a month, if not a year, to plan for this and they should have really come out with a major white paper plan of action the moment Dobbs was announced,” said Lawrence Gostin, a professor of medicine at Georgetown University and faculty director of its Institute for National and Global Health Law. “The impression is that the White House is leading from behind, that they were caught flat footed.”

Here’s what may happen, and what may not, in the weeks to come, based on interviews with White House officials, outside advisers, Congressional aides and legal experts.

COURT REFORM
A number of legal experts, constitutional scholars and irate Democrats say the Supreme Court’s recent rulings, including on abortion, undermine the court’s legitimacy, in part because they don’t reflect popular opinion.

But the White House is not publicly entertaining the idea of reforming the court itself or expanding the nine-member panel, an option pushed by Congressional Progressive Caucus chair Representative Pramila Jayapal.

Privately, Mr. Biden has expressed skepticism about a wide range of Supreme Court reform proposals, including restricting the court’s power, setting term limits for justices, and strengthening ethics and transparency rules, according to a person involved in the conversations weeks prior to the most recent Supreme Court decision.

Last week’s ruling is unlikely to change his thinking, this person said. An expert commission Mr. Biden created to examine the issue of Supreme Court deadlocked on reform proposals in December.

FILIBUSTER CARVE-OUT?
Mr. Biden has not endorsed scrapping the Senate filibuster rule that could allow them to pass a federal law making abortion legal with a simple majority. Democrats only have 50 votes in the 100-seat Senate — not enough to get around a filibuster — and Republicans have lined up against proposals to make abortion a legal right nationwide.

Several Democratic lawmakers want to get rid of the filibuster altogether, including House of Representatives Speaker Nancy Pelosi. And Republicans plan to scrap it to pass a law making abortion illegal nationwide, former Republican National Committee chair Michael Steele said this week.

Mr. Biden has only endorsed Congress suspending the filibuster in limited cases, for instance to pass voting rights legislation or to raise the debt ceiling.

White House officials worry Democrats don’t have enough votes currently to support doing away with the filibuster to pass an abortion bill, and see political risks to Mr. Biden supporting the idea. Key swing votes, especially Senator Joe Manchin of West Virginia, oppose doing away with the filibuster.

NO FEDERAL LANDS
The White House does not support calls to allow abortion providers to work from federal property, because it is worried the federal government won’t be able to keep them safe on or off the property, two sources explained.

Offering federal funding to women to travel out of state could run afoul of the Hyde Amendment, which prohibits federal funding of abortions except in cases of risk to a mother’s life, rape or incest, two sources said.

A White House official said the idea is well-intentioned but it could put women and providers at risk. “In states where abortion is now illegal, women and providers who are not federal employees could be potentially be prosecuted,” the official said.

WHAT IS BEING CONSIDERED
The White House may take executive action in coming days, sources said, and is pushing federal agencies to make announcements on steps they will take to protect a woman’s right to reproductive care.

On Tuesday, Health and Human Services Secretary Xavier Becerra said the federal government would protect access to medication abortion, defend medical professionals who perform abortions and is watching closely for states that violate women’s rights.

Officials plan to meet with activists, and are considering proposals to defend the right of a woman to travel to another state to get an abortion or fund travel to another state using Medicaid funds.

Separately, Ms. Pelosi outlined specific legislation that Democrats will consider including shielding women from criminal prosecution if they travel out of state to seek an abortion and protecting women’s personal data stored in reproductive health apps from state lawmakers. — Reuters

EU nears compromise to defuse Kaliningrad standoff with Russia

VILNIUS/BRUSSELS — Trade through Lithuania to the Russian exclave of Kaliningrad could return to normal within days, two sources familiar with the matter said, as European officials edge towards a compromise deal with the Baltic state to defuse a row with Moscow.

Kaliningrad, which is bordered by European Union (EU) states and relies on railways and roads through Lithuania for most goods, has been cut off from some freight transport from mainland Russia since June 17 under sanctions imposed by Brussels.

European officials are in talks about exempting the territory from sanctions, which have hit industrial goods such as steel so far, paving the way for a deal in early July if EU member Lithuania drops its reservations, said the people, who declined to be named because the discussions are private.

The row over the Russian exclave’s isolation is testing Europe’s resolve to enforce sanctions imposed following Russia’s invasion of Ukraine, fueling fears of an escalation after other restrictions pushed Russia to default on its debt.

While Western powers have pledged to stand up for Ukraine, reiterating their resolve at both G7 and NATO summits this week, it is proving hard for Europe both to stand by strict sanctions and avoid further escalation with Russia.

That’s why European officials, with the backing of Germany, are seeking a compromise to resolve one of their many conflicts with Moscow, said one of the people.

If the traditional route for Russian goods to Kaliningrad, first via its ally Belarus and then Lithuania, is not restored, the Baltic state fears Moscow could use military force to plough a land corridor through its territory, the person said.

Germany, meanwhile, has soldiers stationed in Lithuania and could be sucked into a confrontation alongside its NATO allies if that were to happen.

Europe’s biggest economy is also heavily reliant on Russian gas imports and would be vulnerable to any reduction in flows if the Kaliningrad dispute escalated.

“We have to face reality,” said one person with direct knowledge of the EU discussions, describing Kaliningrad as “sacred” for Moscow.

“(Putin) has much more leverage than we have. It’s in our interests to find a compromise,” he said, conceding that the eventual outcome may appear unfair.

COMPROMISE DEAL
A spokesperson for Lithuania’s foreign ministry said it will continue to consult with the European Commission about the application of sanctions and that any change by the bloc should not single out the Baltic state.

“Sanctions must be enforced, and any decisions taken should not undermine the credibility and effectiveness of EU sanctions policy,” the spokesperson said.

“As Kaliningrad transit is possible through various EU member states, the European Commission’s explanation of how to implement the EU sanctions… cannot be limited to Lithuania.”

A spokesperson for the European Commission pointed to its June 22 statement that Lithuania was implementing EU restrictions and that the supply of essential goods to Kaliningrad remained unhindered.

One of the people with direct knowledge of the matter said they expected a compromise deal would be found by July 10 and a second person said it could be announced next week.

One compromise could see the movement of freight between Russia and Kaliningrad exempt from EU sanctions on the grounds it does not count as normal international trade because the exclave is part of Russia, said one of those people.

That concession could only be made on condition sanctioned freight is used in Kaliningrad and not exported via its port, where Russia’s Baltic Fleet is headquartered.

That could be hard to guarantee and might put Lithuania, which is tasked with determining the end destination of goods, on a collision course with Russia, said the person.

Another person said humanitarian grounds could be used to carve out an exemption for Kaliningrad, which is sandwiched between Lithuania, Poland and the Baltic Sea.

He said, however, that Lithuania had serious reservations about making what could be seen as a concession to Moscow.

ALCOHOL AND CEMENT
Lithuania, formerly ruled from Moscow, is now one of Russia’s fiercest critics in the European Union and has been at odds with officials in Germany and Brussels who want to defuse the row.

So far, EU sanctions against Russia prevent the transport of iron, steel and metals to Kaliningrad through EU states.

The list of sanctioned goods will extend to cement and alcohol from July 10, coal in August and oil products such as fuel in December. When the final phase kicks in, roughly half the freight sent to Kaliningrad from Russia will be sanctioned.

Neither passengers nor food products are banned and Kaliningrad can still be reached by plane or sea.

While the United States and European Union have promptly rolled out sanctions to curb Russia’s access to international finance and its sales of coal and oil, the punitive measures have done little to temper Russian military aggression.

In recent weeks, Moscow has also turned the tables on Europe by paring back critical gas supplies, prompting Germany to brace for rationing and watch the escalating row over Kaliningrad with increasing apprehension.”

Kaliningrad, which has a population of almost one million, was cut off from Moscow when Lithuania became independent during the break-up of the Soviet Union and residents must transit EU territory to reach the rest of Russia by land.

Dmitry Medvedev, deputy chairman of Russia’s Security Council, said this week that curbs on the shipment of goods to Kaliningrad were part of a Western proxy war and that Russia had numerous ways to retaliate.

“There are many opportunities, a significant part of them are of an economic nature and are capable of cutting off the oxygen to our Baltic neighbours who have taken hostile actions,” he told a Russian newspaper.

“There is also the possibility of using asymmetric measures, which … will cause a critical escalation of the conflict.” — Reuters

General retail price index in the National Capital Region

Retail price growth in Metro Manila was 2.7% in March, the largest rise in three years, as oil and food prices continued to pick up, the Philippine Statistics Authority (PSA) reported. Read the full story.

General retail price index in the National Capital Region

Viber sees 506% growth in transactional messages, PHL top market for business messaging in SEA

By Brontë H. Lacsamana, Reporter

Viber has seen a 506% year-on-year growth in transactional messages as brands have been using the messaging platform to send order and account status updates in order to provide better customer support. 

In the Philippines, the messaging platform has a penetration of over 80%, making it the top market for business messaging in Southeast Asia, according to Cristina V. Constandache, chief revenue officer of Viber, at a roundtable on June 30. 

“We’re not aiming to become another WeChat or another Line. … We’re not aiming to copy anybody. We’re aiming to provide features and services that are going to help you in the Philippines and in other markets around the world,” she said. “It’s no longer about messaging. It’s much more a utility app.”  

Viber aims to provide “conversational commerce” to reduce the pain points in the user experience.   

In a May 2022 study by Attentive Mobile, 71% of consumers said they want convenient access to communication with a business, while 90% of consumers expect a fast response regardless of the time of day.  

Etienne Dupont, Viber’s senior director of global sales & B2B marketing, shared that Filipino brands can avoid making customers wait or go through unnecessary hurdles. 

“You can build lasting customer relationships with conversational Viber business messages,” he said. “All the solutions are really to reduce the gap and frustrations of users when communicating with brands.”  

He added that Viber’s business solutions cover the entire customer journey, from brand awareness (using advertising, branded stickers, and branded lenses) to conversion and loyalty (using business messages and chatbots).  

According to Viber, the top three industries using its business solutions in the Philippines are retail (51%), finance (27%), and hospitality and travel (10%).   

Retail companies contributed to the 20% rise in promotional messages year-on-year, as they sent out messages about redeemable coupons and discounts. 

Primer Group of Companies, which carries lifestyle brands, maintained the growth of their retail sales and distribution by enabling online purchases through Viber, which became an avenue for customers to buy essentials during lockdown in the Philippines.  

“Security is part of our DNA. … A high priority in business development from onboarding to encryption,” said Berina Tanovic, Viber’s senior partnership manager.  

Aside from ensuring limited application programming interface (API) systems whitelisted on the application, Viber manually checks each submission for opening business accounts so that there will be only one official or verified account.

Ovialand provides ‘instant home, instant financing’ for Filipino families

Every family dreams of having a beautiful home to live in. However, construction of a house may take time. Add to that the financing process to purchase a home.

But Ovialand, Inc., a real estate mass housing developer, offers ‘instant home, instant financing,’ which means providing a fast yet quality home building and buying service for Filipino families.

“Our ‘Instant Homes, Instant Financing’ is a result of Ovialand reinventing and rethinking the business of mass housing. After our years of experience and understanding the pain points of our clients, we came up with these solutions to help Filipinos purchase their home without a headache,” Ovialand President Pammy Olivares-Vital said.

Families looking to build their own homes through Ovialand can expect the structure of their houses to be completed in just three days. This is made possible through the developer’s proprietary precast technology. Then, the finishing of the house, such as painting, laying the down tiles, and electrical and plumbing works, will take another 30 days to accomplish.

But just because Ovialand finishes a house quickly does not mean it sacrifices the quality. Its precast system uses solid concrete and strong structural design to build the houses, while its skilled workers are provided with ample tools and materials to ensure a well-constructed house. And before the turnover of the house to the buyers, Ovialand’s Quality Control team double-checks the house first to assure that it is built within the standard.

Ovialand also continuously builds the houses according to the schedule set, unlike some of its competitors that wait for a certain percentage of equity from homebuyers before starting to construct the house. And as the house is in the building process, Ovialand assists the buyers with their home financing applications.

After a homebuyer purchased a unit, Ovialand assigns them to a Personal Account Officer. Their service is to ensure that the buyers have a smooth home-buying transaction, which starts from the assessment of the buyer’s loan eligibility and home-buying commitment. And with the strong real estate value of Ovialand’s homes, it has partner financing institutions that are willing to finance homebuyers.

With such help in the home financing applications, Ovialand lets buyers move in as soon as the house is built. The process usually takes between 30 to 120 days, depending on the availability of the house.

“We believe that, if you can buy a car, pay down payment, get financing approval, and leave the dealership with a brand new car in a span of one month, then why can’t you do the same with your home?” Ms. Olivares-Vital said.

Ovialand’s developments are currently focused in the Southern Luzon region, providing premier family living with its residential projects in Laguna and Quezon. The company is preparing to build its presence in new areas.

 

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Easing COVID-19 rules, growth focus aid China bulls’ cautious return

REUTERS

HONG KONG — The latest easing of coronavirus travel rules combined with other encouraging policy signals have began luring some foreign investors back to Chinese stocks, raising the chances that the market can sustain its bounce after months of heavy selling. 

As the S&P 500 is about to close its worst first half of any year since 1970 and bonds have taken a thrashing, China’s beaten-down equity markets start looking like a shelter from a global storm of runaway inflation, interest rate hikes, and recession fears. 

China’s blue-chip CSI300 index is up about 20% from April lows, as is the Shanghai Composite after losses of more than 10% in the first quarter. 

The gains, together with the relaxation of lockdowns and signals that Beijing could ease up both on virus policies and regulatory clampdowns, have tempted money managers, who were quitting China en-masse in March, to return. 

Those who were on the sidelines, “have shown some increase in appetite for China in the past few weeks,” said Elizabeth Kwik, investment director of Asian equities at British asset manager abrdn. “Some have chosen to add to their position.” 

Foreign investors bought a net 74.6 billion yuan ($11 billion) worth of China-listed shares in June so far, which is set to be the biggest monthly inflow this year, according to data from Refinitiv Eikon. 

This week, travel and gambling stocks leapt as China halved travelers’ quarantine to one week. 

Investors hope it is a sign Beijing could eventually ease its draconian zero COVID-19 policy, and authorities are making efforts to come good on promises to support the world’s second-biggest economy. 

“COVID zero policy has been mentioned as the biggest hurdle facing investors as they look to understand China’s current policy focus,” Morgan Stanley analysts said in a Wednesday report. “These latest developments will help rebuild investor confidence that economic growth is being prioritized.” 

Unlike the rest of the world, China has no inflation problem. coronavirus disease 2019 (COVID-19) curbs and the absence of massive consumption-focused stimulus have kept demand soft and put a lid on prices — allowing the central bank to ease policy while most of its peers keep tightening. 

Senior officials have also vowed to support capital markets and growth and have eased a crackdown on once-hot sectors such as technology. 

Shares in e-commerce giant Alibaba, which were pounded through 2020 and 2021, have rallied 60% from a record low in March. 

J.P. Morgan analysts last Friday advised clients to add to positions in China directly, a shift from earlier advice to keep indirect exposure via commodities or other markets. 

PARING LOSSES
The market rebound is also helping improve the performance of regional funds that stayed invested last year and through March, when Western sanctions on Russia stoked fears China could also become a target. 

A Eurekahedge index tracking Greater China-focused hedge funds with long-short strategies gained 1.1% in May, after losing 13.6% in the first four months of 2022. 

Anatole Investment Management Ltd., a Hong Kong-based firm managing around $1.9 billion with its flagship fund, saw monthly returns turn positive for May and extend in June after a 22% drop in the first four months, people familiar with its performance said. 

They requested anonymity because they are not authorized to speak publicly. That was partly due to bets on Chinese internet firms after Chinese authorities, concerned about markets, signaled willingness to wind down a regulatory crackdown of nearly two years. 

When contacted by Reuters, the fund described this month’s expansion as significant and said Greater China remained its biggest exposure. 

Aspex Management, which manages around $7 billion, reported positive returns in April and May, according to documents seen by Reuters, trimming losses for the first five months of the year to 14.4%. Aspex did not respond to queries. 

RESET
There are still reasons to be cautious and June’s $11 billion in equity inflows are modest against a tide that saw roughly $50 billion in outflows from stocks and bonds over the first quarter, according to the Institute of International Finance. 

Investors worry Western sanctions on Russia could serve as a blueprint for China, while the health of the property market, once its growth engine, has been a concern ever since developer China Evergrande defaulted on some debts last year. 

State Street Global Markets Yuting Shao said the firm had not returned to overweight on Chinese stocks, while Ewan Markson-Brown a fund manager at CRUX Asset Management was avoiding anything to do with real estate. 

“The property market is still a big issue,” he said. 

Still, money is flowing again and sentiment has shifted. 

The 20 biggest open-ended and exchange-traded funds traded in Hong Kong with Greater China equities strategy all reported positive returns last month and 17 of them grew their assets in May, according to Morningstar data. 

Paul O’Connor, head of the multi-asset team at Janus Henderson in London, said China has had its “capitulation” and now it has its chance to outperform. 

“They have had a valuation reset and they don’t have the policy headwinds we have in other places where central banks are draining liquidity and putting up interest rates.” ($1 = 6.7025 Chinese yuan renminbi) — Xie Yu/Reuters

BOJ’s public relations crisis forces rethink on inflation message

WIKIPEDIA.ORG

TOKYO — Japan’s central bank has stumbled into a rare public relations storm that has dragged debate about its ultra-low interest rates out of sterile boardrooms and into tabloid and social media, amid surging household ire over rising living costs. 

Bank of Japan (BOJ) Governor Haruhiko Kuroda issued an unprecedented public apology and retraction earlier this month after comments that households were more “accepting” of retail price hikes triggered a flurry of angry tweets. 

Once regarded for its masterful communication of complicated monetary policy to the world’s largest and shrewdest investors, Mr. Kuroda’s recent fumble shows the BOJ much less skilled at managing the wider public’s price expectations. 

That could force the BOJ to rethink the way it communicates policy intentions to a population active on social media and unaccustomed to rising prices after decades of deflation or subdued price growth, three people familiar with the bank’s thinking say. 

“The fact the governor had to take back his comment shouldn’t be taken lightly,” one of the sources told Reuters. “It’s become harder now to speak about changing public perceptions.” 

Those concerns come amid broader questions about the credibility of central banks globally, which have drawn public fire recently for underestimating the inflationary hit to consumers and businesses from supply chain disruptions and the Ukraine war. 

Public anger has been particularly strident in Japan where tabloids and television programmes criticized the 77-year-old Mr. Kuroda as someone earning a fat salary and out of touch with the pain households are facing from rising costs. 

“What’s heightening is not households’ tolerance of price rises, but frustration over Kuroda’s BOJ,” Japanese tabloid Shukan Post wrote in its recent edition. 

“He’s an elite celebrity who bought a luxury condominium with cash,” wrote a weekly magazine catering to housewives, taking aim at Mr. Kuroda’s salary which, at roughly 35 million yen ($258,608), is more than eight times the average Japanese households earned last year. 

The BOJ told Reuters it would not comment on media reports about the governor’s private affairs. 

Online, web searches made in Japanese for Mr. Kuroda’s name spiked this month to more than double the historical peak hit of April 2013, according to Google Trends, bringing unwanted public attention to the central banker whose term as governor ends next year. 

“He should look at the people shopping. No one is willingly paying higher prices. They’re doing so to survive, while sighing of discontent,” wrote one Twitter user. 

“Needless to say, we have no choice but to buy food and daily necessities even if their prices soar. People are absolutely not accepting price hikes,” wrote another tweet. 

HECKLED, NOT HAILED
After almost a decade leading efforts to shock Japan out of deflation with a wall of money, Mr. Kuroda has finally accomplished his mission: he has stopped an economically debilitating rise in the yen and propped up inflation to his 2% target. 

However, instead of being praised, he has been pilloried. 

That’s because inflation is rising for the wrong reasons. 

Consumer inflation exceeded the BOJ’s target for two straight months in May, but mostly due to the soaring cost of fuel and raw material imports rather than strong demand. 

Unlike in Western economies, rising inflation has yet to spark strong wage growth as the economy’s delay in recovering from the pandemic discourages firms from raising pay. 

In fact, wages remained flat in Japan in the decade to 2020, contrary to a 13% rise in the United States, Organisation for Economic Co-operation and Development (OECD) data showed. 

“Japan is inherently a country less tolerant of price hikes, so even a small rise in inflation triggers a big public response,” said Izuru Kato, chief economist at Totan Research. 

“People want prices to go down, while the BOJ wants to push it up. That gap will make the BOJ’s communication with the public extremely difficult,” said Mr. Kato, a veteran BOJ watcher. 

‘UNFIT FOR JOB’
Mr. Kuroda’s remarks on June 6 were not just an off-the-cuff gaffe, but part of a speech carefully prepared by BOJ staff. 

Speaking before business executives and market players at a seminar, Kuroda said households’ tolerance for price rises had increased, allowing firms to charge more for goods. 

“This can be regarded as an important change from the perspective of achieving sustained inflation,” the governor said. 

BOJ officials say the speech was intended to explain the need for wages to rise more to ensure households can keep paying more. That message was lost when newspaper headlines focused on his comments about households accepting price rises, rather than his arguments for pay hikes. 

Mr. Kuroda was forced to retract his comment and apologize for any misunderstanding, marking an extremely rare reversal for the head of an institution proud of its independence from political meddling. 

Many in the BOJ, including those at the board, were caught off guard by the reaction and initially struggled to understand why it drew fire on social media, the three sources who spoke to Reuters said. 

“The BOJ has been saying similar things in the past. But the reaction was big this time partly because inflation was actually perking up and hurting households,” one of the sources said. 

The BOJ lacks a playbook on how to deal with such cases beyond apologizing to politicians and clarifying its intentions at Kuroda’s public appearances, they said. 

At the BOJ, public relations is handled by staff who rotate positions once every few years, rather than by professionals with experience dealing with media. 

“I don’t think they thought about the comprehensive impact of the message on the entire audience universe, including how the media would react,” David Wagner, a media specialist with experience with Japanese organizations for two decades, said of Mr. Kuroda’s comments. 

“They have to make sure that their messages are really strategically considered before they release them,” he said. “Not complicated, not rocket science — it’s pretty simple.” 

A MESSAGING MESS
That communication challenge could become even more critical as the central bank increasingly communicates its view on future price moves and an eventual exit from ultra-loose policy. 

Public discontent over Mr. Kuroda also risks undermining the BOJ’s credibility and leaves it vulnerable to political attack. 

Opposition parties jumped on Mr. Kuroda’s remark as a perfect opportunity to attack the government’s stimulus policies. 

“It’s a comment insensitive to what people are going through,” Kenta Izumi, head of Japan’s leading opposition, said on Kuroda’s remark, urging the BOJ to end its zero interest-rate policy to stem yen falls that were pushing up import costs. 

A survey by Kyodo news agency, taken on June 11–13, showed 77.3% of respondents thought Kuroda’s comment was inappropriate, and 58.5% thought he was unfit for the job. Over 70% said they will take into account soaring prices in voting at the election. 

So far, Prime Minister Fumio Kishida is defending Kuroda and his ultra-loose monetary policy, saying repeatedly that there was no need to change the BOJ’s stimulus policy. 

But some ruling party lawmakers have not hidden their discomfort over Mr. Kuroda’s remark, which came weeks ahead of an upper house election slated for July 10. 

While a weak opposition means Kishida’s Liberal Democratic Party is expected to stay in power, Kuroda’s remark and public concern over rising inflation may affect the premier’s popularity. That, in turn, could affect Kishida’s choice of next BOJ governor when Kuroda’s term ends in April next year. 

“Frankly, it doesn’t help for Kuroda to talk about households accepting price rises,” said ruling party lawmaker Shoji Nishida. “It’s particularly so as we’re facing an election.” — Leika Kihara and Kantaro Komiya/Reuters

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