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How Elizabethan law once protected the poor from the high cost of living — and led to unrivaled economic prosperity

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In the closing years of Elizabeth I’s reign, England saw the emergence of arguably the world’s first effective welfare state. Laws were established which successfully protected people from rises in food prices.

More than 400 years later, in the closing years of Elizabeth II’s reign, the United Kingdom once again faces perilous spikes in living costs. Perhaps today’s government could learn something from its legislative ancestors.

Until the end of the 16th century, it was a given throughout medieval Europe that when food prices rose there would be a consequent surge in mortality rates, as people starved to death and diseases spread among the malnourished.

The Elizabethan Poor Laws of 1598 and 1601 turned the situation in England on its head. Now when food became too expensive, local parishes were obliged to give cash or food to those who could not afford to eat. For the first time in history, it became illegal to let anybody starve.

The laws were clear and simple, and required each of over 10,000 English parishes to set up a continuous relief fund to support the vulnerable. This included the lame, the ill, and the old, as well as orphans, widows, single mothers and their children, and those unable to find work. Occupiers of land (landowners or their tenants) had to pay a tax towards the fund in proportion to the value of their holding.

Overseen by local magistrates, the system’s transparency provided no loopholes for avoiding the tax. In fact, it encouraged a flourishing culture of charitable giving which provided almshouses, apprenticeships, and hospitals for the parish poor to alleviate destitution.

With this proliferation of localized mini-welfare states, England became the first country in Europe by more than 150 years to effectively put an end to widespread famine. And it also enabled England subsequently to enjoy by far the fastest rate of urbanization in Europe.

Between 1600 and 1800, huge numbers of young people left rural parishes to find work in cities, safe in the knowledge that their parents would be supported by the parish in times of need — and that they themselves would receive help if things didn’t work out. Long before the first steam engines arrived, the Poor Laws had created an urban workforce which enabled the industrial revolution to take off.

Then in 1834, everything changed. The cost of this level of welfare support was deemed too high, and replaced with a deliberately harsh new system in which the poorest men and women were separated from each other and their children and provided only with gruel in return for tedious chores in degrading workhouses. The fear of the workhouse was designed to force the poor to prefer work — for whatever abysmal wages the market offered.

It is this version of the Poor Laws which tends to stick in the popular memory, familiar from the books of Charles Dickens, and obscuring the achievements of the Elizabethan original. But extensive recent research has started to highlight how Elizabethan law changed British history — and provides us with urgent lessons for today’s welfare system and the pressures of the cost-of-living crisis.

Just as the old Poor Laws supported an extraordinary period of economic prosperity, so too did the UK’s welfare state after the second world war. Tax-funded investment in education (secondary and higher), and the newly created National Health Service (NHS) saw widened opportunities and living standards take off, as the UK enjoyed over two decades of the fastest productivity growth in its history (1951-73).

Today, people regularly speak of being forced to choose between eating and heating as food and energy prices surge. Yet there is no corresponding compensation for those whose wages and benefits do not stretch far enough. A one-off handout when millions of households are facing both fuel and food poverty is but a temporary sticking plaster.

Until there is a permanent increase in safety net payments to those on universal credit, food banks will continue to proliferate and children will continue to go to school hungry. The link between wealth and taxation was effectively used by the Elizabethans to start to tackle inequality. But today’s globalized economy facilitates offshore profits and ever-rising inequality.

In my new book, After the Virus: Lessons from the Past for a Better Future I explore changes in the sense of moral duty and the carefully legislated collective endeavor that formed the foundation of the UK’s past — and most recent — periods of prosperity.

The Poor Laws were far from a perfect system of welfare. But the fact that protecting the poorest in society has previously led to widespread economic growth is a history lesson that should not be ignored by any government during a cost-of-living crisis.

 

Simon Szreter is a professor of History and Public Policy, University of Cambridge.

THE CONVERSATION VIA REUTERS

These are the batteries we need to ease the power crunch

ATHER-ENERGY-UNSPLASH

THE WORLD is struggling with simultaneous energy and climate crises. To solve the first could require undoing all the progress made toward greener power and cleaner air. But it doesn’t have to be that way.

Euphoria for electric cars — and the powerpacks that run them — has obscured a more immediate and distinct need: batteries to run homes and businesses, as countries across the world deal with the repercussions of an ongoing power crisis. Despite the worsening state of energy and rising electricity prices, existing technologies aren’t being put to use. Instead, everyone is just thinking about the steepening cost of generation, paralyzed by the thought of escalating bills and more frequent blackouts.

There’s a simple solution: Store the energy and use it when the need arises. As the market for EV batteries expands and evolves, large industrial-scale powerpacks — energy storage systems, or ESS — are being overlooked as a potential solution to this power crunch. The market for the former, for instance, is expected to grow to $500 billion over the next two decades, while that of ESS won’t even make it past $100 billion, according to Morgan Stanley estimates. The latter is what we need far more urgently.

EV excitement has, no doubt, pushed development of battery technology overall and therefore helped ESS along as well. However, it hasn’t been driven by active concerns about our energy needs.

ESS are typically large, stationary powerpacks that can store excess energy from grids and other sources for later use, or when demand is peaking. As renewable energy contribution to power supply increases across the globe, the ability to store it and use it when people or businesses need it will become more important.

What’s underappreciated about these systems is that they benefit from all the EV battery developments like better energy density and safety, but don’t have the same problems or constraints. One big issue is size, for instance. Electric car batteries need to be small, high-energy, and safe. It’s been difficult to get all three factors operational at the same time. But for ESS, size isn’t an issue since they don’t need to be housed in a moving vehicle. That reduces one variable.

In addition, factors that worry EV buyers about smaller batteries are different: Energy density doesn’t matter as much, nor does how far they need to take a vehicle, or the range. That’s key: this issue has driven manufacturers to push for other formulations that are expensive and tough to deploy commercially. What matters is charging cycles, battery life, and frequency.

Viable options like lithium iron phosphate, or LFP, powerpacks, are underestimated. Life cycles and other metrics for stationary battery use are improving. Most materials used in this type are abundant, although prices have risen in recent months. They can operate for several thousand cycles of charging and discharging.

All this means that existing technologies have come far enough to make ESS a reality — even for a few hours a day. Several manufacturers are already onto the imminent need for such systems, investing billions in building out these energy storage systems.

The world’s largest battery company, China’s Contemporary Amperex Technology Co., has been actively expanding its work in this area. It’s sold these products at six projects in Texas to an independent power producer.

The looming issue is upfront costs. Analysts often talk about how unviable these systems are, but in reality, there are too many unknowns to make accurate estimates on how steep industrial-scale energy storage projects will be. The running expenses will depend on improvements including the quality of products and the life cycle of powerpacks — and these have both come a long way. Bottom line is, the status quo isn’t sustainable — it’s already cracking, and it’s time to look for solutions.

But are governments and companies willing to put ESS to use and boost adoption? The smart move would be to provide incentives, tax cuts, or consumer awareness programs to push things along. Ultimately, the upfront costs need to be brought down and that requires talking about something less exciting than electric cars.

China, for instance, has been widely deploying LFP chemistry. As part of its goals to have 30 gigawatts of energy storage systems over the next three years, it plans to slash costs to help businesses adopt and deploy these systems. Notably, it will ensure energy security to maintain its global supply chain heft. That’s not been a consideration for many others.

A recent MIT study on energy storage noted that the current policy focusing on short-term decarbonization goals has encouraged both public and private attention toward “relatively mature technologies.” That means markets and money haven’t pushed hard enough on new uses of storage and more effective energy utilization, since they continue to fly under the radar, set apart from mainstream policy.

Until they focus on the future, we should start worrying more about more blackouts and power shortages as climate change and extreme weather combine to put energy supplies at risk.

BLOOMBERG OPINION

AI, hybrid cloud computing to level playing field for Asian MSMEs, says IBM

Multinational corporation IBM announced on June 2 several partnerships involving artificial intelligence (AI) and hybrid cloud computing that signal a “rapid reordering of business” in Southeast Asia. 

“The cloud is a great leveler,” said IBM general manager for the Asia Pacific Paul Burton, at the IBM Think 2022 conference in Singapore.

“Size doesn’t mean what it used to be in terms of punching power and market reach. What does that mean? It means think bigger. You don’t have to remain local — unless [that’s] your objective,” he said, noting the cloud’s usefulness for micro, small, and medium enterprises.    

IBM is partnering with the Electricity Generating Authority of Thailand (EGAT), a power producer supervised by Thailand’s Ministry of Energy, for the use of AI-powered asset management solutions to its power plants; the Korea Electric Power Corporation (KEPCO), for the establishment of a performance evaluation platform for its assets; Thailand-based Siam Commercial Bank (SCB), for the adoption of IBM’s zSystem to run applications that support customer data and transactions; and Malaysia’s Silverlake Axis, an independent software vendor, for fintech infrastructure. 

AI AS BUSINESS DIFFERENTIATOR
Two studies conducted by IBM show that harnessing AI to increase sustainability is a top priority in the business sector. 

The Global AI Adoption Index 2022 surveyed 7,502 senior business decision-makers and found that business adoption of AI grew at a steady pace in the last 12 months. Findings from Singapore further found that almost two out of five IT (information technology) professionals in the country report that their organization is using AI in their business (39%). About half also say their company applies AI to accelerate ESG (environmental, social, and governance) initiatives (46%).  

These findings support a separate global CEO study on sustainability that found that while about half (48%) of CEOs say increasing sustainability is one of their highest priorities for their organization in the next two to three years, 33% say technological barriers stand in the way of implementing this priority.   

Every massive transformation across time has been punctuated by new technology, Mr. Burton said.  

“If you go back in time to 0 C.E., the line was flat until the 1800s, and then it started arching up. What happened in the 1800s? Steam power,” he added. The trend continued in the 1950s with intercontinental transportation, in the 1970s with computing enterprises, and in the 1990s with the Internet.   

“We are now on the cusp of another disruption, another punctuation — which is AI,” Mr. Burton said. Hybrid cloud and data harnessed by AI “will see an acceleration of the standard of living of everyone living on this planet,” he added. — Patricia B. Mirasol

PDS Group launches live fully DLT-based digital bond, with P11-B oversubscribed UnionBank bond and STACS as technology partner

The Philippine Dealing System Holdings Corp. (PDS Group) today announced the launch of a fully digitally native bond, issued on a distributed ledger technology (DLT) network powered by Hashstacs Pte Ltd (STACS), a Singapore-headquartered fintech firm. The digital bond was issued by the Union Bank of the Philippines (UnionBank) for P11 billion or approximately US$210 million and priced at 3.25% p.a. for a tenor of 1.5 years. With more than 895 bondholders for this launch, PDS Group becomes the first Asian national market infrastructure to launch a fully live DLT-based bond.

PDS Group subsidiary Phil. Depository & Trust Corp. (PDTC), the national Central Securities Depository for debt and equities, and STACS embarked on the project, a proof of concept to explore, use, and determine efficiencies of DLT for PDTC’s fixed-income registry and depository operations, with the aim of deploying a viable DLT-powered PDTC Digital Registry & PDTC Digital Depository system to support issuances and servicing (transfers and corporate actions) of a Philippine Digital bond and culminating in the live issuance of a digitally native bond.

The main benefits and features of DLT that underpin the digital bond include immutability, system resilience, and multiple redundancy. The DLT network has multiple nodes, which instantaneously record all transactions, thereby backing up each other while ensuring immutability.

Through the partnership, PDTC and STACS were able to effectively model and optimize the workflows involved, unlocking new efficiencies and strategic opportunities. The new digital processes remain completely seamless for the underwriters, issuers, and bondholders with a paperless submission of issuing documents for listing and registry via the PDS Group’s e-Securities Issue Portal (e-SIP) to create securities onto the PDTC Digital Registry, powered by STACS.

Importantly, these benefits were achieved, while being completely compliant with the existing Philippine securities laws and regulations, as well as the rules of the Phil. Dealing & Exchange Corp. (PDEx), another PDS Group subsidiary that is a Philippine SEC-licensed Fixed Income Market Operator. The UnionBank-issued Digital Bond is listed on the PDEx FI Market and secondary market transactions will occur on existing market infrastructure for trading to clearing and a newly built link from the clearing system to the PDTC Digital Depository to complete Delivery Versus Payment settlement. The project’s feature of interoperability was planned to allow PDEx Trading Participants and PDTC Depository Participants to seamlessly reap the benefits of the new digital market infrastructure while being supported by traditional market infrastructure and compliant with the regulatory framework.

Ramon Monzon, CEO at of the Group’s parent company, PDS Holdings, said: “The digital economy is quickly expanding across the globe, and it promises to be a significant engine for innovation, competitiveness, and economic growth. To be part of the digital economy, financial market infrastructures must ‘digitalize,’ and this has been the impetus for the PDS Group’s digitalization initiatives. In engaging in this POC, the focus on seamless inter-operability of digital with traditional infrastructure and the digital services’ compliance with existing securities laws and regulations foster an evolutionary approach. In that regard, we are pleased to have a like-minded partner in STACS, also looking to use technology to fulfill a vision of corporate issuers and client investors mutually benefiting from the convenience of digitalized funding and investment processes.”

As a leading fintech firm focused on environmental, social, and governance (ESG) fintech, in partnership with the Monetary Authority of Singapore’s (MAS) Project Greenprint, STACS contributed its domain expertise in DLT to power PDS Group’s platform. Earlier in May, STACS officially launched its flagship blockchain-powered platform, ESGpedia, which powers the ESG Registry of Project Greenprint. With over 20 institutional partners from both the financial and non-financial sectors, ESGpedia provides holistic and forward-looking ESG data on a common, standardized registry and, as of today, hosts more than 170,500 certificates.

Benjamin Soh, Managing Director at STACS, said: “We are thrilled to be partnering with the Philippines PDS Group and powering the first national market infrastructure in Asia to launch a fully live DLT-based bond, via our DLT expertise. Technology like DLT provides immutability and ease of access by different users, allowing the benefits to be reaped across borders on an international scale, by PDS and its wider ecosystem of financial institution partners, creating vast value and opportunities for the industry. DLT is also a key enabler of sustainable business models and related finance, and we hope to further enhance PDS Group’s platform.”

Future phases of the partnership include further engagement with the industry, in view of possibly scaling up PDS Group’s platform with more features, including ESG management via holistic ESG data as well as smart contracts to automate the lifecycle management of sustainable financial products.

 


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Enjoy Lexus vehicle services with a simple swipe of your Metrobank credit card at zero percent interest

Lexus believes that creating new standards of luxury is not simply a matter of adding more equipment features and technologies to its vehicles but is also about producing progressive luxury that welcomes and cares for its clients. This approach is inspired by Omotenashi, which encompasses the finest principles of traditional Japanese hospitality.

The Metrobank Credit Card Zero% Interest Installment Promo is a testament to Lexus commitment to providing exceptional service and hospitality to its customers. It reflects the excellence in customer service which has been a cornerstone of the Lexus brand since its foundation more than 30 years ago. It centers on the retailer treating the customer as they would a guest in their own home and exceeding service expectations by anticipating their needs.

With the swipe of your Metrobank credit card, you can avail of Lexus vehicle services at zero % interest, and easy installments for up to six months. This promo is valid until June 30, 2022.

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•   3 months 0% installment: Php 20,000 minimum spend
•   6 months 0% installment: Php 40,000 minimum spend.

This promo is offered at Lexus Manila and Lexus accredited dealerships: Toyota Mandaue-South, CebuToyota Davao City, Toyota San FernandoPampanga; Toyota Santa Rosa; and Toyota La Union.

This promo is applicable to all Metrobank Peso Visa/Mastercard, Metrobank Vantage Visa/Mastercard, M Mastercard, Titanium Mastercard, Platinum Mastercard, World Mastercard, NCCC Mastercard, PSBank Credit Mastercard, Toyota Mastercard, Rewards Plus Visa, Femme Visa, Femme Signature Visa, Cashback Platinum Visa, and Travel Platinum Visa credit cardholders in good standing.

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This promo is not applicable in conjunction with other Lexus promos or discounts.

Per DTI-FTEB  Permit Number 134948, Series of 2022.
Supervised by the Bangko Sentral ng Pilipinas
Email Address: consumeraffairs@bsp.gov.ph
SEC Registration No. 0000127904. SEC Certificate of Authority No. 994 (2008)

To learn more, visit the Lexus website at lexus.com.ph or visit our social media pages on Facebook and Instagram @lexusmanila.

To arrange a consultation with your personal sales consultant, visit the Lexus Remote page.

You may also download the MyLEXUS App available on both Android and iOS users to receive live updates and access other premium services.


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India’s new VPN rules spark fresh fears over online privacy

UNSPLASH

Virtual private networks (VPNs) that encrypt data and provide users with anonymity online have seen a surge in use in India in recent years as the government tightened its grip on the internet to curb dissent, and as more people worked from home. 

Now, some VPN providers are leaving India while others are considering doing so ahead of new rules that the government says are aimed at improving cybersecurity, but that the firms argue are vulnerable to abuse and could put users’ data at risk. 

Under legislation scheduled to take effect this month, VPN providers are required to retain user data and IP addresses for at least five years — even after clients stop using the service. 

“VPNs are central to online privacy, anonymity, and freedom of speech, so these restrictions represent an attack on digital rights,” Harold Li, vice president of ExpressVPN, told the Thomson Reuters Foundation. 

“The new laws are overreaching and are so broad as to open up the window for potential abuse. We refuse to put our users’ data at risk … as such, we have made the very straightforward decision to remove our India-based VPN servers,” he said. 

India ranks among the top 20 countries in VPN adoption, according to AtlasVPN’s global index, with users surging in 2020 and 2021 — as they did worldwide — as companies secured their networks with more people working from home amid the pandemic. 

Many are corporate users but there are also, activists, journalists, lawyers and whistleblowers who use them to access blocked websites, secure their data and protect their identity. 

With increasing digitisation of data and services, security is a major issue: India ranked third among countries with the most data breaches last year, according to estimates by Surfshark VPN, with nearly 87 million users affected. 

The new order, issued by the Indian Computer Emergency Response Team (CERT-In) in April, also requires companies to report data breaches within six hours of noticing them, and maintain IT and communications logs for six months. 

Failing to do so could be punishable with prison sentences. 

Tech firms and digital rights organizations have raised concerns about the compliance burden and reporting timeline, but officials have said there will be no changes to the rules. 

“If you don’t want to go by these rules, and if you want to pull out, then frankly … you have to pull out,” India’s junior IT minister Rajeev Chandrasekhar told reporters last month.  

MICROSCOPE OF SURVEILLANCE
Governments worldwide are imposing greater control on the flow of information online with a slew of regulations, as well as firewalls, internet shutdowns and social media blocks. 

India has tightened regulation of Big Tech firms in recent years, and ordered content takedowns. Dozens of lawyers, journalists and activists were also found to have been hacked by the Pegasus spyware last year. 

Indian authorities have declined to say whether the government had purchased Pegasus spyware for surveillance. 

Now, the new CERT-In rules can be used to keep close tabs on more citizens, said Ranjana Kumari, an activist and director of the Centre for Social Research in New Delhi. 

“The government has already been increasing its control of the internet to clamp down on any dissent, and people are already under increasing surveillance,” she said. 

“These new rules make it even worse.” 

While authorities have clarified that the rules do not apply to corporate VPNs, ProtonVPN said they are “are an assault on privacy and threaten to put citizens under a microscope of surveillance,” adding that it would maintain its no-logs policy. 

Surfshark also has a “strict no-logs policy, which means that we don’t collect or share our customer browsing data or any usage information,” said Gytis Malinauskas, its legal head. 

“Even technically, we would not be able to comply with the logging requirements,” he added. 

A spokesperson for NordVPN, one of the world’s largest providers, said that while they welcomed the government’s “intentions to improve the state of cybersecurity … we believe that the discussion period should be extended.” 

“If it comes to it — we will consider removing (our) presence from India.” 

The Information Technology Industry Council, a global coalition, said the new directives — including the “overbroad” definition of reportable incidents and six-hour reporting timeline — could “actually undermine cybersecurity.” 

The risk of surveillance for millions of people is exacerbated by the data retention mandate in CERT-In’s directive, said Raman Jit Singh Chima, Asia Pacific policy director at Access Now, in an open letter on Jun. 1. 

“Requiring service providers, including VPN providers, to log information that they may otherwise not collect, for five years or more, violates the right to privacy protected by the Indian Constitution,” he said. 

India’s information technology ministry could not be reached for comment. 

Authorities have declined requests from tech firms and digital rights groups to delay implementation, and have said the reporting timeline is “very generous.” 

EVERYONE AT RISK
India is not the only country cracking down on VPNs. 

Russia banned several VPN services last year as part of a wider campaign that critics say curbs internet freedom, although it has failed to block them entirely. 

Russia’s moves to block global news sites and social media platforms after its invasion of Ukraine — similar to China’s “Great Firewall” — have led to concerns that the internet is splitting along geopolitical lines, digitally isolating people. 

India’s new directive was drawn up with little consultation with the tech industry or with civil society organizations, said Prateek Waghre, policy director at Internet Freedom Foundation, a digital rights advocacy group in Delhi. 

“Because of that there are now a bunch of directions that are ambiguous, with a tremendous compliance burden, including potential imprisonment for non-compliance,” he said. 

The rules have the potential to cause a great deal of harm, particularly in the absence of a data protection law, he added. 

“While there is a clear need for enhanced cybersecurity, when you ask for indiscriminate data collection, everyone is at risk — and there is greater risk for people already at risk, such as activists, journalists, dissenters, minorities.” — Rina Chandran/Thomson Reuters Foundation

Dimon says brace for US economic ‘hurricane’ due to inflation 

REUTERS/KEVIN LAMARQUE/FILE PHOTO

Jamie Dimon, Chairman and Chief Executive of JPMorgan Chase & Co. described the challenges facing the US economy akin to an “hurricane” down the road and urged the Federal Reserve to take forceful measures to avoid tipping the world’s biggest economy into a recession. 

Mr. Dimon’s comments come a day after President Joseph R. Biden, Jr., met with Federal Reserve Chair Jerome Powell to discuss inflation, which is hovering at 40-year highs. 

“It’s a hurricane,” Mr. Dimon told a banking conference, adding that the current situation is unprecedented. “Right now, it’s kind of sunny, things are doing fine. Everyone thinks the Fed can handle this. That hurricane is right out there down the road coming our way. We just don’t know if it’s a minor one or Superstorm Sandy,” he added. 

The Fed is under pressure to decisively make a dent in an inflation rate that is running at more than three times its 2% goal and has caused a jump in the cost of living for Americans. It faces a difficult task in dampening demand enough to curb inflation while not causing a recession. 

“The Fed has to meet this now with raising rates and QT (quantitative tightening). In my view, they have to do QT. They do not have a choice because there’s so much liquidity in the system,” Mr. Dimon said. 

Major central banks, already plotting interest rate hikes in a fight against inflation, are also preparing a common pullback from key financial markets in a first-ever round of global quantitative tightening expected to restrict credit and add stress to an already-slowing world economy. 

The inflation battle has become the focal point of Biden’s June agenda amidst his sagging opinion polls and before November’s congressional election. 

Uncertainty about the US central bank’s policy move, the war in Ukraine, prolonged supply-chain snarls due to coronavirus disease 2019 (COVID-19) and higher Treasury yields have rocked global stock markets, with the benchmark S&P 500 index falling 13.3% year-to-date. 

“You gotta brace yourself. JPMorgan is bracing ourselves, and we’re going to be very conservative in our balance sheet,” Mr. Dimon added. 

SOFT LANDING?
Wells Fargo & Co’s CEO warned that the Federal Reserve would find it “extremely difficult” to manage a soft landing of the economy as the central bank seeks to douse the inflation fire with interest rate hikes. 

The CEO of the fourth-largest US lender also said that Wells Fargo is seeing a direct impact from inflation on consumers’ spending, particularly on fuel and food. 

“The scenario of a soft landing is … extremely difficult to achieve in the environment that we’re in today,” Wells Fargo Chief Executive Officer Charlie Scharf said at the conference. 

“If there is a short recession, that’s not all that deep… there will be some pain as you go through it, overall, everyone will be just fine coming out of it,” he added. 

Mr. Scharf said while the overall consumer spending is strong, growth is slowing. 

“Corporations are still spending, where they can, they’re increasing inventories … we do expect the consumer and ultimately businesses to weaken, which is part of what the Fed is trying to engineer but hopefully in a constructive way,” he added. 

Recent Fed reports and surveys reported households on average in a strong financial position, with working families doing well, and unemployment at levels more akin to the boom years of the 1950s and 1960s. Wages for many lower-skilled occupations are rising, and bank accounts, on average, are still flush with cash from coronavirus support programs. 

But confidence has waned, and in a recent Reuters/Ipsos poll the economy topped respondents’ list of concerns. 

“I don’t think our crystal ball relative to the macro later this year, 2023, 2024 is necessarily any better than others. Clearly, we’re going to see with the Fed actions different impacts in different businesses,” GE CEO Larry Culp, told the conference. 

Still, not everyone in corporate America is seeing slowdown. 

“Of the vast majority of the markets we serve are still quite strong,” Caterpillar Inc CEO Jim Umplebly said. 

“And our challenge at the moment, quite frankly, is supply chain, our ability to supply enough equipment to meet all the demand that’s out there,” he added. — Elizabeth Dilts Marshall and Niket Nishant/Reuters

How a Russian billionaire shielded assets from European sanctions

Sailing Yacht A, a 470-foot superyacht with a price tag of 530 million euros, belonging to Russian businessman Andrey Melnichenko. The vessel was seized by Italy this March. — WIKIMEDIA COMMONS

ISTANBUL/BRUSSELS — Russian businessman Andrey Melnichenko ceded ownership of two of the world’s largest coal and fertilizers companies to his wife the day before he was sanctioned by the European Union, according to three people familiar with the matter. 

Mr. Melnichenko, who built his fortune in the years following the 1991 fall of the Soviet Union, gave up his stakes in the coal producer SUEK AO and fertilizer group EuroChem Group AG on March 8, the day of his 50th birthday, leaving his wife, Aleksandra Melnichenko, the beneficial ownership of the companies, the people said. 

Until March 8, Mr. Melnichenko owned the two companies through a chain of trusts and corporations stretching from Moscow and the Swiss town of Zug to Cyprus and Bermuda, according to legal filings reviewed by Reuters. 

Since 2006, Mr. Melnichenko’s wife was second in line behind her husband on the list of beneficial owners of the two companies in trust documents, according to the three people, who spoke on condition of anonymity because they aren’t allowed to speak publicly about the couple’s assets. That meant that she stood to inherit ownership of the companies in the event her husband died, the people said. 

When the war in Ukraine began in February, however, Mr. Melnichenko grew concerned that he would be designated under the European Union’s Russia sanctions regime, the people familiar with the matter said. On March 8, Mr. Melnichenko notified trustees of his retirement as the beneficiary, the people said. That triggered the same chain of changes in trust records that would have happened if the businessman had passed away, and made his wife the beneficiary. 

Reuters was unable to reach Mr. Melnichenko and his wife for comment. 

A spokesman for Russia-based SUEK didn’t respond to messages seeking comment. Switzerland-based EuroChem confirmed that Aleksandra Melnichenko had replaced her husband as beneficial owner. 

“Following the departure of its founder, the primary beneficial ownership of a trust holding a 90% stake in the global fertilizer company has automatically passed to his wife,” the company said in a statement to Reuters on Wednesday. 

The role of Mr. Melnichenko’s wife at EuroChem was first reported by Swiss newspaper Tages-Anzeiger. Her role at SUEK as well as the timing of ownership changes and other details are reported here for the first time. 

Mr. Melnichenko, who founded SUEK and EuroChem two decades ago, was ranked as Russia’s eighth richest man last year by Forbes, with an estimated fortune of $18 billion. 

The European Union sanctioned Mr. Melnichenko, citing his alleged proximity to the Kremlin, on March 9 as part of a Western attempt to punish Russian President Vladimir Putin for the Feb. 24 invasion of Ukraine. The sanctions — which include freezing his assets, banning him from entering the European Union and prohibiting EU entities from providing funds to him — do not apply to his wife nor the couple’s daughter and son. 

Britain also put Mr. Melnichenko, who is Russian but was born in Belarus and has a Ukrainian mother, on its sanction list on March 15. Switzerland imposed sanctions against him the following day. 

The businessman said in a statement to Reuters in March, after the EU sanctions were imposed, that the war in Ukraine was “truly tragic” and he appealed for peace. A spokesman for Mr. Melnichenko said at that time he had “no political affiliations”. 

Western governments have imposed sweeping sanctions against Russian companies and individuals in an effort to force Moscow to withdraw. 

But some sanctioned Russian businessmen, including Roman Abramovich and Vladimir Yevtushenkov, have transferred assets to friends and family members, fueling doubts over the effectiveness of these attempts to pressure Moscow. 

Mr. Melnichenko, whose residence was registered in the Swiss alpine resort town of St. Moritz until he was hit by sanctions, gave his instructions to change the ownership of his companies from a retreat near Mount Kilimanjaro where he was celebrating his birthday, according to a person familiar with the matter. A Boeing 737 emblazoned with the billionaire’s signature “A” on the fuselage had landed in Tanzania on March 5, arriving from Dubai, according to flight-tracking service Flightradar24. 

A lawyer for Mr. Melnichenko didn’t respond to questions about the Kilimanjaro trip. 

Mr. Melnichenko’s transfer of ownership at SUEK and EuroChem had far-reaching implications. 

After reviews lasting several weeks, Swiss financial authorities concluded that the two companies could continue operating normally on the grounds that Mr. Melnichenko was no longer involved with them. SUEK and EuroChem said that British and German financial regulators have reached similar conclusions. 

The British and German regulators didn’t respond to requests seeking comment. 

Upon completion of the reviews in late April, SUEK and EuroChem — which had revenues last year of $9.7 billion and $10.2 billion respectively — were able to resume distribution of millions of dollars in interest payments to bondholders. 

In recent weeks, SUEK and EuroChem have also approached Western clients, showing them documents with the new ownership structure in a bid to reassure them that they can continue doing business with Mr. Melnichenko’s former companies, two people familiar with the matter said. 

NO MORE PAYMENTS
In Switzerland, the Secretariat for Economic Affairs (SECO) said neither SUEK nor EuroChem were under sanctions in the country. 

SECO said that, as far as it was aware, Mr. Melnichenko was no longer a beneficiary of the trust to which EuroChem belonged at the time of his sanction by the EU and Switzerland. 

SECO also said it sought confirmation from Eurochem that it would no longer provide funds to Mr. Melnichenko. 

“The company and its management have guaranteed in writing to SECO that the Swiss sanction measures will be fully complied with and in particular that no funds or economic resources will be made available to sanctioned persons,” SECO said in response to a query. 

Swiss authorities have defended their decision not to extend sanctions to Mr. Melnichenko’s wife or to his former companies, pointing to the fact that EU authorities had not sanctioned them either. 

“In this case, we have done exactly what the EU has done,” Switzerland’s Economy Minister Guy Parmelin told Swiss television on Wednesday. 

Mr. Parmelin added that Switzerland was also wary that sanctioning EuroChem at a time when fertilizer prices have soared in most parts of the world could have dire consequences on agriculture markets. EuroChem said it produced more than 19 million metric tons of fertilizer last year — roughly equivalent to 5% of the world’s output, according to UN data. 

The European Commission, the EU’s executive arm, said it had no information about the transfer of Mr. Melnichenko’s assets to his wife. The commission has said it is willing to close loopholes allowing individuals and companies to elude its sanctions. Earlier this week, it unveiled proposals aimed at criminalizing moves to bypass sanctions, including by transferring assets to family members, across the 27-nation bloc. 

Under the trust structure, control over SUEK and EuroChem is exercised by independent trustees while beneficial ownership, which was in the hands of Mr. Melnichenko until March 8, has moved to his wife. 

A mathematician who once dreamt of becoming a physicist, Mr. Melnichenko dropped out of university to dive into the chaotic — and sometimes deadly — world of post-Soviet business. 

He founded MDM Bank but in the 1990s was still too minor to take part in the privatizations under President Boris Yeltsin that handed the choicest assets of a former superpower to a group of businessmen who would become known as the oligarchs due to their political and economic clout. 

Mr. Melnichenko then began buying up often distressed coal and fertilizer assets, making him one of Europe’s richest men. 

The EU said, when it announced its sanctions, that Mr. Melnichenko “belongs to the most influential circle of Russian business people with close connections to the Russian government.” 

Mr. Melnichenko was among dozens of business leaders who met with Mr. Putin on the day Russia invaded Ukraine to discuss the impact of sanctions, showing his close ties to the Kremlin, the EU said in its March 9 sanction order. 

At the time, a spokesman for Mr. Melnichenko denied that the businessman belonged to Mr. Putin’s inner circle and said he would dispute the sanctions in court. On May 17, Mr. Melnichenko challenged the sanctions by lodging an appeal with the EU’s General Court, which handles complaints against European institutions, court records show. 

Russia calls its actions in Ukraine a “special operation” to disarm Ukraine and protect it from fascists. Ukraine and the West say the fascist allegation is baseless and that the war is an unprovoked act of aggression. 

Italy seized Mr. Melnichenko’s superyacht — the 470-foot Sailing Yacht A, which has a price tag of 530 million euros — on March 12, three days after he was placed on an EU sanctions list. 

SUEK and EuroChem said on March 10, a day after the EU announced sanctions against Mr. Melnichenko and 159 other individuals tied to Russia, that their founder had resigned from his board positions at the companies. — David Gauthier-Villars and Gabriela Baczynska/Reuters

Elon Musk tells Tesla staff: return to office or leave

DANIEL OBERHAUS-FLICKER

Tesla Inc. Chief Executive Elon Musk has asked employees to return to the office or leave the company, according to an email sent to employees and seen by Reuters. 

“Everyone at Tesla is required to spend a minimum of 40 hours in the office per week,” Mr. Musk wrote in the email sent on Tuesday night. 

“If you don’t show up, we will assume you have resigned.” 

“The more senior you are, the more visible must be your presence,” Mr. Musk wrote. “That is why I lived in the factory so much — so that those on the line could see me working alongside them. If I had not done that, Tesla would long ago have gone bankrupt.” 

Two sources confirmed the authenticity of the email reviewed by Reuters. Tesla did not respond to a request for comment. 

Major tech firms in Silicon Valley do not require workers to return to the office full-time, in the face of resistance from some workers and a resurgence of coronavirus cases in California. 

Tesla has moved its headquarters to Austin, Texas, but has its engineering base and one of its factories in the San Francisco Bay area. 

“There are of course companies that don’t require this, but when was the last time they shipped a great new product? It’s been a while,” Mr. Musk wrote in the email. 

“Tesla has and will create and actually manufacture the most exciting and meaningful products of any company on Earth. This will not happen by phoning it in.” 

One of Mr. Musk’s Twitter followers posted another email that Mr. Musk apparently sent to executives asking them to work in the office for at least 40 hours per week or “depart Tesla.” 

In response to this tweet, the billionaire, who has agreed to take Twitter Inc. private in a $44 billion deal, said, “They should pretend to work somewhere else.” 

Some Tesla workers expressed displeasure over Mr. Musk’s latest comments in posts they placed on the anonymous app Blind, which requires users to sign up using company email as proof of employment at firms. 

“If there’s a mass exodus, how would Tesla finish projects? I don’t think investors would be happy about that,” one Tesla employee wrote. 

“Waiting for him to backpedal real quick,” another worker posted. 

A California-based workers advocacy group assailed Mr. Musk’s return to office plan. 

“Employers including the state government are finding that mandating a return of all employees is a recipe for outbreaks,” Stephen Knight, executive director at Worksafe, wrote in an emailed statement to Reuters. 

“Unfortunately Tesla’s disregard for worker safety is well documented, including their flouting of the county public health department at the start of the pandemic,” he wrote. 

In May 2020, Mr. Musk reopened a Tesla factory in Fremont, California, defying Alameda County’s lockdown measures to curb the spread of the coronavirus. Tesla reported 440 cases at the factory from May to December 2020, according to county data obtained by legal information site Plainsite. 

Last year, Mr. Musk’s rocket company SpaceX reported 132 COVID-19 cases at its headquarters in the Los Angeles-area city of Hawthorne, according to county data. 

Mr. Musk previously played down the risks of coronavirus, saying “the coronavirus panic is dumb” and children were “essentially immune” to the coronavirus. He later got COVID-19 twice. 

Musk said last month, “American people are trying to avoid going to work at all,” whereas Chinese workers “won’t even leave the factory type of thing.” 

“They will be burning the 3 a.m. oil,” he said at a conference. 

Tesla’s Shanghai factory has been working all out to ramp up production following the lockdown of the Chinese economic hub which forced the factory to shut for 22 days. 

While some big employers have embraced voluntary work-from-home policies permanently, others, including Alphabet Inc.’s Google, are asking employees to return to office gradually. 

Alphabet has required employees be in offices at least three days a week starting in early April, but many employees have been approved for fully remote work. 

Twitter CEO Parag Agrawal tweeted in March that Twitter offices would be reopening but employees could still work from home if they preferred. — Hyunjoo Jin and Tiyashi Datta/Reuters

New global fund invests in nature to shore up climate change fight

KUALA LUMPUR — A new international fund backed by wealthy nations aims to invest at least $500 million in protecting nature in developing countries and giving indigenous people a bigger role in conserving their environment and tackling climate change.

The Climate Investment Funds (CIF), one of the world’s largest multilateral climate financing instruments, launched its “Nature, People, and Climate” (NPC) program on Wednesday at a major United Nations (UN) environment conference in Stockholm.

Backed so far by Italy and Sweden, and with a target of raising $500 million by November, the NPC will provide finance and expertise to initiatives that conserve wildlife, plants and forests, promote sustainable agriculture and food supplies, and enable people to cope with rising seas and extreme weather.

“Nature-based solutions help reduce emissions, support communities adapting to a changing climate and protect biodiversity,” Matilda Ernkrans, Sweden’s international development minister, said in a statement.

Improving conservation and management of natural areas, such as parks, oceans, forests and wildernesses, is seen as crucial to safeguarding the ecosystems on which humans depend and to limiting global warming to internationally agreed targets.

But forests are still being cut down — often to produce commodities such as palm oil, soy and beef — destroying biodiversity and threatening climate goals, as trees absorb about a third of planet-warming emissions produced worldwide.

The new NPC program expects to invest in efforts to expand approaches like carbon storage, mangrove restoration,

 and climate resilience in small island developing states, sub-Saharan Africa and forested countries around the globe

They are among the places hit hardest by the impacts of the coronavirus disease 2019 (COVID-19) pandemic and rising food and energy prices fueled by the Ukraine war, said Paul Hartman, a senior environmental specialist at the CIF.

“Many of these shocks that you see globally to food systems have an impact on countries’ economies but particularly on (the) economies of the farmers and livelihoods of people,” he told the Thomson Reuters Foundation.

Global annual spending to protect and restore nature on land needs to triple this decade to about $350 billion by 2030, a UN report said last year.

Boosting finance for developing nations to better protect their nature-rich ecosystems is a longstanding challenge.

Earlier this year, international green groups called on the world’s richest nations to provide at least $60 billion a year to protect and restore biodiversity in developing countries.

The NPC platform aims to invest in nature projects that are part of larger, national investment plans, also involving multilateral development banks, with the aim of raising more finance from the private sector and other sources, said Hartman.

In addition, the NPC aims to partner with indigenous groups and communities living in and around protected areas, who experts say play a vital role in conservation.

“This is more than just about working with them — it’s about putting them in positions of being the decision-makers,” Mr. Hartman said.

“It’s not just about involving them, it’s about them being at the table and making decisions and using their knowledge.” — Michael Taylor/Thomson Reuters Foundation

Some real estate markets seen falling as global frenzy fades

UNSPLASH

BENGALURU/LONDON — The global property market frenzy that gathered pace during the pandemic as people scrambled to buy more living space is likely over as interest rates rise, and house price inflation is expected to drop off, Reuters surveys of market experts showed. 

Huge price rises of as much as 50% through the past few years may be coming to an end, turning to modest falls in 2023 in some countries, according to analysts covering nine key world property markets. 

But they also say any declines won’t make housing more affordable, especially for first-time buyers, just as the basic cost of living soars and mortgage rates go up — for the first time in many young people’s lifetimes. 

“There is definitely a slowdown. So the pace of growth is slowing pretty much everywhere … (and) it is likely that a number of markets will see price falls,” said Liam Bailey, global head of research at Knight Frank. 

“The question really is whether there is a risk of a kind of crash scenario in certain markets.” 

For now, most real estate specialists aren’t forecasting even a 10% correction in house prices, instead sticking to the view that housing inflation will slow substantially, in most cases to less than the rate consumer prices are currently rising. 

With wages unlikely to match any of these inflation trends any time soon, agreement is exceptionally strong among analysts about the hit to basic affordability in the next few years from record high house prices and higher interest rates. 

A more than two-thirds majority of analysts, or 83 of 119, who answered an additional question said affordability for first-time buyers would either worsen or worsen significantly over the next two years. The remaining 36 said it would improve. 

Even in property markets like India and Dubai — which avoided the panic buying and high double-digit annual price appreciation seen during the worst of the pandemic in markets like the United States, Canada and Australia — analysts still agree affordability will worsen. 

INFLATION CHALLENGES 

Part of that has to do with the cost of building new homes, which almost universally are not being constructed fast enough to keep up with demand. 

Soaring costs from supply chain disruptions facing all businesses around the world are set to be passed on to first-time buyers, in much the same way as consumers are paying more for everything they buy. 

“The same inflation challenges … specifically in the construction market, and supply chain woes, which continue to plague … developers and house builders … are not being mitigated to any extent,” said Adam Challis, executive director of research and strategy for EMEA at JLL. 

“In fact over the short term, it’s very much likely to get worse as people have returned to the cities … and becoming much more excited about their urban living choices.” 

Indeed, while analysts are generally reluctant to predict the thinking behind consumer behavior, it was the urge for people to move while struck by coronavirus disease 2019 (COVID-19) lockdowns that got them bidding for property. Very few expected that to happen. 

Looking forward there seems little reason to predict existing homeowners, flush with home equity from soaring prices, will be much more restrained acting on a desire to return to city life. 

That leaves first-time buyers, who have been in a difficult situation coming up with a deposit for a property for the better part of a generation, in a worse situation every year that goes by. That may hold even if prices fall. 

“Your purchase price may be reduced … but actually the cost of servicing a loan may not actually decline along with that price,” added Knight Frank’s Mr. Bailey. 

Swathes of people in most countries, particularly the young, have resigned themselves to renting over owning. But the shortage of homes has also driven up rents everywhere. 

Asked what would happen to affordability in the home rental market over the next two years, more than 80% of analysts, or 82 of 99, said it would worsen. The rest said it would improve. — Reuters

AllHome Corp. to hold annual meeting of stockholders on June 24

 


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