SEOUL — South Korea’s Lee Jae Myung narrowly avoided what he called a “Zelensky moment” after US President Donald J. Trump welcomed him to Washington with right-wing conspiracy theories but then pulled off a high-stakes summit without unwanted drama.

Monday’s summit, the first between the two leaders, was largely what South Korea had hoped for, despite its inauspicious start, officials and analysts said.

Most importantly, the South Koreans dodged their biggest fear: an Oval Office ambush similar to the testy exchange in February when Mr. Trump berated Ukraine’s Volodymyr Zelensky over US aid and the war with Russia.

“President Lee’s Oval Office press availability appeared to go better than expected,” said Leif-Eric Easley, professor of international studies at Ewha Womans University in Seoul, noting Mr. Trump expressing support for Mr. Lee’s approach toward North Korea and enthusiasm for engaging Kim Jong Un.

Major questions remain over how much exactly South Korea will agree to pay toward the basing of 28,500 American troops, and many details are still being worked out in the hastily negotiated tariff agreement, which has yet to be put in writing.

But Mr. Lee avoided any explosive clash that some observers feared could publicly fracture the long-term alliance at a time when North Korea is leaping forward with nuclear weapons and ballistic missile development, and deepening ties with Russia.

Mr. Lee and Mr. Trump displayed a chummy and mutually flattering vibe while glossing over the prickly trade and defense issues and defusing a potential conflict related to South Korea’s political crisis in December.

Just a few hours before the pair was due to meet at the White House on Monday, Mr. Trump penned a social media post saying “WHAT IS GOING ON IN SOUTH KOREA? Seems like a Purge or Revolution,” and saying he would raise the issue with Mr. Lee.

“Before I met with President Trump today, he posted on Truth Social a very threatening post,” Mr. Lee said with a laugh at an event at the Center for Strategic and International Studies after the summit.

“My staff was worried that we might face a Zelensky moment,” Mr. Lee said. “But I already knew that I would not face that kind of a situation. That’s because I had read President Trump’s book, The Art of the Deal.”

Mr. Trump eased his tone and described his earlier comments as a potential “misunderstanding” and “rumor” after Mr. Lee explained that investigators conducted a raid confined to the Korean side of a base operated jointly with US in connection to the political crisis. Mr. Lee’s office said he didn’t really raise it again in their private discussions.

Instead of a dramatic clash, flattery and warm words dominated the conversation in the Oval Office where the two sat down and talked about Mr. Trump’s “good relationship” with North Korean leader Kim Jong Un.

“The summit ended without drama,” said Cheong Seong-chang, vice-president at Seoul-based Sejong Institute.

But keeping things vague means South Korea had policy goals of its own that went unaddressed, including requests for US approval for nuclear fuel reprocessing and revising American laws on shipbuilding, Mr. Cheong noted.

“Trump didn’t embarrass Lee and both sides seemed to try to avoid sensitive issues, such as South Korea’s political position in the tensions between China and Taiwan,” said Jun Kwang-woo, chairman at Institute for Global Economics. “Trump is probably not in a situation now to create tensions with Lee while he’s already under pressure with frictions with other countries.”

Yang Uk, of Seoul’s Asan Institute for Policy Studies, said Mr. Trump’s pressure on South Korea was a sign that he understands how much he can potentially gain from the country.

“(Trump’s) basic formula of first shaking the other person as much as possible, then getting what you want, was applied,” Mr. Yang said.

Mr. Lee said he had observed in negotiations with other countries that Mr. Trump would often present difficult conditions, but at the final stage would come to a reasonable conclusion.

“And because of the importance of the Korea-US alliance, I was confident that he would not inflict a wound to our alliance,” Mr. Lee said. “Everybody gave me the advice to have patience.” — Reuters

NEW YORK/WASHINGTON — US President Donald J. Trump on Monday said he was firing US Federal Reserve Governor Lisa Cook over alleged improprieties in obtaining mortgage loans, an unprecedented step that could test the boundaries of presidential power over the independent monetary policy body should it be challenged in court.

Mr. Trump said in a letter to Ms. Cook, the first African-American woman to serve on the US Federal Reserve’s governing body, that he had “sufficient cause to remove you from your position” because in 2021 Ms. Cook indicated on documents for separate mortgage loans on properties in Michigan and Georgia that both were a primary residence where she intended to live.

Ms. Cook responded several hours later in a statement e-mailed to reporters through the law office of lawyer Abbe Lowell, saying of Mr. Trump that “no causes exists under the law, and he has no authority” to remove her from the job she was appointed to by former US President Joseph R. Biden in 2022. “I will continue to carry out my duties to help the American economy.”

Mr. Lowell said that Mr. Trump’s “demands lack any proper process, basis or legal authority. We will take whatever actions are needed to prevent this attempted legal action.”

Questions about Ms. Cook’s mortgages were first raised last week by US Federal Housing Finance Agency director William Pulte, who referred the matter to Attorney General Pamela Bondi for investigation.

Though the terms of Fed governors are structured so they outlast the term of a given president, with Ms. Cook’s term lasting until 2038, the Federal Reserve Act does allow removal of a sitting governor “for cause.”

That has never been tested by presidents who, particularly since the 1970s, largely have taken a hands-off approach to Fed matters as a way to ensure confidence in US monetary policy.

Legal scholars and historians said the thicket of issues that could be raised in a legal challenge would span questions around executive power, the Fed’s unique quasi-private nature and history, as well as whether anything Ms. Cook did amounted to cause for removal.

Peter Conti-Brown, a scholar of the Fed’s history at the University of Pennsylvania, noted that the mortgage transactions preceded her appointment to the Fed, and were in the public record when she was vetted and confirmed by the Senate.

“These officials have been vetted by our President and our Senate, that means that all things that they had done during their times as a private citizen were already vetted,” Mr. Conti-Brown said.

“So the idea that you can then reach back, turn the clock backward and say, you know, all these things that have happened before now constitute fireable offenses from your official position is to me incongruous with the entire concept of ‘for cause’ removal.”

Mr. Trump in the letter accused Ms. Cook of having “deceitful and criminal conduct in a financial matter” and said he did not have confidence in her “integrity.”

“At a minimum, the conduct at issue exhibits the sort of negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator,” he said, claiming authority to fire Ms. Cook under Article 2 of the US Constitution and the Federal Reserve Act of 1913.

It is unclear how the matter might play out from here, with Mr. Trump saying the firing was “effective immediately,” and the Fed set to hold a policy meeting on Sept. 16-17.

Mr. Trump’s move was greeted with a steepening US Treasury yield curve as yields on 2-year notes — sensitive to near-term Fed policy expectations — quickly fell while yields on longer-dated 10-year notes — sensitive to inflation risks — rose briskly.

The reaction reflects expectations that the Fed policy rate may drop but at the expense of its commitment to thwart inflation.

Academic research has consistently found that policymakers allowed to manage inflation independent of political influence generally achieve better outcomes, a principle that may now be tested at the world’s most influential central bank.

“It speaks to the determination of this administration to remake the Federal Reserve and serves as a warning to the other Biden appointees. The Fed as an institution escaped harm in the first Trump Administration, and will not be so fortunate this time around,” said SGH Macro Advisors’ Tim Duy.

“It’s another reason to believe… that rates will be lower than would otherwise be the case.”

PRESSURE CAMPAIGN
Mr. Trump has repeatedly berated Fed chair Jerome Powell over not lowering interest rates, though has halted threats to fire him from a term that ends in a little under 9 months anyway.

His focus last week turned to Ms. Cook, whose departure would allow Mr. Trump to select his fourth pick to the Fed’s 7-member board, including Governor Christopher Waller and Vice-Chair for Supervision named in his first term, and the pending nomination of Council of Economic Advisers chief Stephen Miran to a currently open seat.

Ms. Cook took out the mortgages in question in 2021 when she was an academic. An official financial disclosure form for 2024 lists three mortgages held by Ms. Cook, with two listed as personal residences. Loans for primary residences can carry lower rates than mortgages on investment properties, which are considered riskier by banks.

The claims against Ms. Cook coincide with a broad effort by the Trump administration against diversity, equity and inclusion programs in the US government, a process that has led to the departure of some prominent women and minorities.

The Trump administration has also targeted other political opponents, including US Senator Adam Schiff, with similar accusations of mortgage fraud. — Reuters

COLOMBO — Tourists have long flocked to Sri Lanka for its pristine beaches, wildlife safaris and ancient Buddhist sites. Now, its first Marxist president is betting on casinos to attract high-rollers from India and China and usher in the next wave of foreign inflows.

The success of the casino strategy is crucial for President Anura Kumara Dissanayake, who completes one year in office next month and has vowed to improve the lives of ordinary Sri Lankans after the devastating economic collapse of 2022 and 2023.

Sri Lanka had a handful of small casinos but earlier this month, Mr. Dissanayake inaugurated a $1.2-billion City of Dreams casino complex in Colombo, a joint venture between John Keells Holdings and Macau-based Melco Resorts & Entertainment.

The launch of South Asia’s first integrated resort was headlined by Bollywood heartthrob Hrithik Roshan, who danced to hit Hindi songs in front of a packed house.

Mr. Dissanayake has also got legislation passed in parliament to regulate gambling including in casinos, reflecting the importance he is placing on the industry.

The push is part of Sri Lanka’s aim to raise tourist arrivals by 50% to 3 million this year, potentially lifting revenues from the industry to $5 billion from $3.7 billion last year, the deputy tourism minister, Ruwan Ranasinghe, told Reuters.

“Tourism plays a very significant role for us to get out of these economic issues that we have,” he said.

“So these couple of years we are working more on short-term targets and getting traffic, but in the long run, our plan is to go for quality, more sustainable, and high-end tourism and casinos and gambling will be a segment of that.”

Tourism accounted for about 4% of gross domestic product last year and the government hopes it will eventually hit 10%, backed partly by high-end gaming, he said. Tourism is the third biggest dollar earner after remittances and apparel exports.

The central bank this month forecast full-year economic growth of about 4.5%, partly on the back of strong tourism numbers, sharply higher than the World Bank’s April projection of 3.5%.

The $99-billion economy returned to growth only last year after two years of big contractions that forced the country to seek a $2.9-billion bailout from the International Monetary Fund.

Sri Lanka must resume repaying its creditors from 2028 after defaulting on its foreign debt in 2022.

‘VERY EXCITING’
City of Dreams, located on Colombo’s beachfront, features 800 rooms, a luxury mall, and conference facilities that investors anticipate will attract affluent visitors.

“It is a total greenfield market. It is similar to how we developed other markets in the past — in Manila, Macau and also in Cyprus,” Melco Chairman and Chief Executive Officer Lawrence Ho told Reuters.

“I think we are barely scratching the surface in terms of the tourism potential and also the integrated resort gaming potential of this country.”

Minister Ranasinghe expects Indians to be the main arrivals for the next decade. India, the world’s most populous country, permits casinos only in a few designated locations, while China restricts all legal casino operations to Macau.

Indians made up nearly a quarter of the 2 million tourist arrivals in Sri Lanka last year, while Chinese visitors accounted for 7%. Sri Lanka maintains close economic ties with both New Delhi and Beijing, and citizens of both countries benefit from visa-free entry.

To boost revenue collection and encourage responsible gambling, Sri Lanka’s parliament last week approved legislation to create a Gambling Regulatory Authority.

The legislation, however, has drawn criticism from experts for granting extensive powers to the finance minister, excluding state-run lotteries from oversight, omitting tourism industry representation in the authority and imposing low penalties for violations.

The government defends the legislation as vital to reduce social harm and raise employment, while it works to promote the industry.

“There has been gambling in Sri Lanka and in Colombo but not that significant,” Mr. Ranasinghe said. “With the arrival of City of Dreams — clientele from all over the world, I’m sure they will also come to Sri Lanka.” — Reuters