After Qatar, Belligerent Saudi Takes on the UAE

♠ Posted by Emmanuel in , at 2/17/2021 10:07:00 AM

Will the world go to Riyadh if coerced to do so by the Saudi government?

With friends like Saudi Arabia, who needs enemies? Upon taking power, Crown Prince Mohammed bin Salman was seen as a reformist, market-friendly leader able to take Saudi Arabia forward into a post-fossil fuel future. This impression has taken a big hit in recent years with the 2017 embargo on Qatar as well as the still-unresolved 2018 murder of journalist Jamal Khashoggi at Saudi Arabia's Turkish consulate. Taking endless potshots at its fellow Gulf Cooperation Council (GCC) members doesn't seem to be the way to signal that Saudi Arabia is open for business. 

More recently, Saudi Arabia has come up with its most outlandish power play yet: It has cautioned multinationals that, unless they place their regional (read: Middle East) headquarters in Saudi Arabia, they will not be able to ink government contracts. Obviously aimed at Dubai in the UAE which vastly outstrips Saudi Arabia in "ease of doing business" indicators that you would naturally think companies would gravitate to when siting regional headquarters, the outcry has been understandably strong:

Saudi Arabia, in a bold and unexpected move, announced late Monday that by 2024 its government would cease doing business with any international companies whose regional headquarters were not based within the kingdom.  

The news has investors, bankers and expat workers buzzing — and scratching their heads.  

Saudi Arabia in recent years has pitched itself as a location for HQ offices in its campaign to create private sector jobs and diversify its economy as part of Crown Prince Mohammed bin Salman’s Vision 2030.

But what began as a pitch to global head offices has now become an ultimatum for some: either relocate your headquarters to the kingdom, or lose out on lucrative government contracts. And the move, Middle East analysts and finance professionals say, appears to be targeted at the region’s current headquarters hub: Dubai.  

Mind you, the UAE joined Saudi Arabia in the embargo on Qatar. Although regional economic rivalry is expected, punching below the belt in this way over restricting government procurement lest they headquarter in Saudi Arabia is widely perceived as unfair, especially since they are all supposedly part of a customs union in the GCC:

The Saudis are “trying to lure companies out of Dubai, I expect, and elsewhere,” Ryan Bohl, a Middle East analyst at risk consulting firm Stratfor, told CNBC. One UAE-based financier, who spoke anonymously due to having business operations in Saudi Arabia, described the move as “clearly targeting the UAE” and a “jab in the face” to Dubai.

“It’s a terrible decision,” the financier, a longtime veteran of the region, added. “It’s anti-common market, it’s anti-competition, and it’s essentially corporate bullying.”

The truth of the matter is that Saudi Arabia is a less attractive place to site your regional HQ with its more restrictive environment--economically and socially. The latter is of particular concern to Western expats:

The government aims to significantly increase Saudi Arabia’s current share of less than 5% of the region’s HQ offices...

But will that be enough to lure expats out of Dubai, where they can drink, wear bikinis on the beach and enjoy a far more liberal lifestyle, comparable on many levels to the West?

“The lifestyle in Saudi is not comparable,” said one Dubai-based venture capitalist, speaking anonymously due to professional restrictions. “You don’t have the same freedoms you have here — here I can go on a public beach and hang out ... Dubai is a global city, Riyadh is far from that. It lacks the diversity that Dubai has. That’s a big deal for me.”

Indeed, one of Dubai’s allures for foreigners is its majority expat population — 90% across the UAE as a whole. The success of Dubai’s global openness model manifests itself in numbers as well: according to the U.N.’s trade database, the UAE in 2019 received 300% more foreign direct investment than Saudi Arabia, despite its economy being about half the size.

And the UAE ranked 16th on the World Bank’s 2020 Ease of Doing Business Index, while Saudi Arabia ranked 63rd.

Speaking of government contracts, the lure is unmistakable: a supposed $220 billion that Saudi Arabia states it will spend to make Riyadh a global city (comparable to *gulp* Dubai). What's more, there are those who say Saudi Arabia is actually coming on in leaps and bounds:

The Saudi government is investing $220 billion in projects aimed at putting Riyadh in the world’s top 10 city economies, and is offering competitive tax-free salaries to employees willing to relocate there...

 Still, many expats who’ve worked in the kingdom feel differently. “There’s no doubt that Saudi will compete with Dubai,” said Alex Nasr, a consultant with several years of experience working around the country, adding that it’s already competing on the salary front.

“Now with Vision 2030 and the radical changes the nation is pushing through, it will begin catching up on the quality of life front … as soon as the veil is lifted on the lifestyle restrictions, the expats will begin to pour in.”

The West's WTO Hypocrisy on COVID-19 Meds?

♠ Posted by Emmanuel in ,, at 2/16/2021 12:37:00 PM

Should intellectual property laws upheld by the WTO be waived during a COVID-19 pandemic?

I almost forgot to post this one, but it's better late than never, I guess. There have been endless allusions to the idea that, rich or poor, the countries of the world are all in this fight against COVID-19 together. However, when push comes to shove, it appears the reality of the matter is rather different: A few weeks ago, large developing countries put forth the idea at the WTO that intellectual property rights on COVID-19 medicines should be abrogated while a global pandemic is going on. 

Perhaps unsurprisingly if regrettably, European and American countries indicated not being willing to go along. Since a consensus would have been required for an IP waiver on COVID-19 medicines to come into effect at the WTO, this effort was admittedly a long shot from the start:

Wealthy nations [...] reiterated their opposition to a proposal to waive intellectual property rules for COVID-19 drugs, three trade sources said, despite pressure to make an exception to improve access to drugs for poorer countries. Supporters of the waiver say existing intellectual property (IP) rules create barriers on access to affordable medicines and vaccines and they want restrictions to be eased, as they were during the AIDS epidemic.

But opposition from the European Union, the United States and some other wealthy nations at a meeting on Friday, means the proposal set to go before the World Trade Organization’s (WTO) General Council next month is likely to fail.

“If rich countries prefer profits to life, they will kill it by tying it down in technicalities.” said a delegate supporting the motion who attended the closed-door meeting. The 164-member WTO body usually has to agree by consensus unless members agree to proceed to a vote, which is exceptional.

Populous developing countries India and later China pushed for lifting IP restrictions on COVID-19 medicines, although you have to wonder if they have competing commercial interests since they too have production capabilities in making these medicines should IP be waived. Then again, the current WTO head Ngozi Okonjo-Iweala (this article was written before she became its Director-General) also supported the initiative:

The proposal was first raised by India and South Africa in October. Since then, China, which has five COVID-19 vaccine candidates in late-stage trials, has voiced its support, as have dozens of other WTO members, mostly from developing countries.

The World Health Organization says it supports tackling barriers to access to COVID-19 medicines, as does Nigeria’s Ngozi Okonjo-Iweala, selected by a panel to be the WTO’s next director-general.

You have to wonder though if some developing countries might want to declare medical emergencies that compel them to waive such IP on COVID-19 medicines under "compulsory licensing" procedures allowed by the WTO:

In 2001 — at the height of the AIDS crisis and under pressure from governments whose citizens were dying because they could not afford life-saving medicines — the World Trade Organization waded into the battle between intellectual property and public health. The resulting Doha Declaration ruled that the Agreement on Trade-Related Aspects of Intellectual Property Rights “should not prevent members from taking measures to protect public health.”

It confirmed that governments retained several mechanisms for guaranteeing affordable access to medicines, including issuing compulsory licenses, which allow them to use an invention without the patent holder’s consent in extraordinary circumstances. This applies not only to new drugs but also to existing medications whose patents have been extended because pharmaceutical companies made minor changes to formulations or discovered a new use for the medication.

Given the uncertainty over access to treatments for COVID-19, several countries have been laying the legislative groundwork to issue compulsory licenses for products that patent holders refuse to make accessible.

I think developing countries will first observe whether they can avail of more COVID-19 medicines they believe they need under the COVAX initiative. If that avenue proves unfruitful, then don't be surprised to see "compulsory licensing" claims start appearing. Make no mistake that our world remains riven by North-South divides even amidst a global pandemic. 

Biden's War on Coal @ World Bank

♠ Posted by Emmanuel in ,, at 2/14/2021 11:00:00 AM

There's an interesting article on Politico about how the Biden administration's pledge to limit emissions from fossil fuels will be implemented on the global stage. Sure, reducing subsidies for fossil fuel extraction and consumption at home to set an example for the rest of the world is one thing. However, there are also things the United States can do internationally to help ensure fossil fuels are kept in the ground. 

In an executive order issued last month, Biden tasked the United States' agencies involved in foreign assistance and development financing--the International Development Finance Corporation (formed in 2019 by combining the Overseas Private Investment Corporation and the Development Credit Authority), Treasury, USAID, and the Millennium Challenge Corporation among others--with devising emissions-reducing financing. 

This executive order also extends to the multilateral organizations the US is a member of, including the World Bank. It states:

[The Treasury Secretary shall] develop a strategy for how the voice and vote of the United States can be used in international financial institutions, including the World Bank Group and the International Monetary Fund, to promote financing programs, economic stimulus packages, and debt relief initiatives that are aligned with and support the goals of the Paris Agreement.

In doing so, the Biden administration wants to contrast clean, green American with dirty energy China. However, there is a danger that developing countries not as green-minded as Biden may instead be pushed to deal more with China:

President Joe Biden’s plan to halt U.S. funding for overseas fossil fuel projects will turn the global spotlight on China for bankrolling coal projects around the globe. But it could also push poor countries closer to Beijing — and risk ceding the United States’ position as a leading financier for developing economies...

Biden's directive last month to move toward withholding money from international institutions like the World Bank that help poor nations build fossil fuel power plants stands in stark contrast to Beijing's flow of cash under its Belt and Road Initiative, which supplies 70 percent of the financing for the world's new coal-fired plants. The White House is betting its move will paint China as hypocritical as that country — the world's top greenhouse gas emitter — aims to take a leading role in international climate change efforts.

To be sure, there will need to be a (sorry for the public administration jargon) whole-of-government approach for the US to get its message across in a way that resonates with developing countries deciding between clean energy and fossil fuels:

But the plan will require the Biden team to closely coordinate its foreign policy, trade and clean energy initiatives, because the absence of U.S. money for coal projects won't on its own sway other nations’ energy plans. And the U.S. cannot unilaterally offer sweet enough financial terms for clean energy to lure countries away from China's coal finance.

It's fair to say the US has its work cut out for it in a world which has not forsworn fossil fuels. It is worth pointing out that the Obama administration which Biden was a part of already started encouraging similar measures at the World Bank that have impacted the amount of fossil fuel-based energy projects it funded:

But the U.S. could immediately start shifting billions of dollars away from fossil energy if [Treasury Secretary] Yellen directs U.S. representatives at the World Bank and other multilateral funders to vote against coal, said Joe Thwaites, an associate with the World Resources Institute’s Sustainable Finance Center.

The number of coal projects funded by those institutions has already dwindled, due in part to efforts under the Obama administration, though multilateral development banks in which the U.S. is a shareholder accounted for $69.5 billion of fossil fuel finance between 2008 and 2019, according to environmental group Oil Change International.

Buy American: Biden More Protectionist Than Trump?

♠ Posted by Emmanuel in , at 1/25/2021 01:18:00 PM

Is Biden a worse protectionist than Trump? Prove it isn't so, Joe.

I've been engaged with a lot of real-world work, so I haven't been able to post that much as of late (apologies). Still, here's my initial take on events of 2021 with Joe Biden assuming the US presidency. Although the rest of the world breathed a sigh of relief that the isolationist Donald Trump has literally departed the White House with little fanfare, the question remains: How much of an improvement will Biden be for international economic relations? 

A new article makes me question whether he will be much of an improvement since Biden is indicating more "Buy American" provisos for government procurement are in store to shore up US industry during these challenging times: 

President Joe Biden will take steps Monday to encourage the federal government to buy more American-made products, a move the new administration argues will protect U.S. jobs and juice an economy severely hobbled by the deadly coronavirus pandemic.

Biden, who pushed a $700 billion Buy American campaign as a candidate for president, is set to sign an executive order that will advance several policies to boost the federal government’s purchase of U.S.-manufactured goods and services, administration officials said Sunday.

Federal law requires government agencies to give preference to American firms when possible, but critics say those requirements haven't always been implemented consistently or effectively. Some have not been substantially updated since the 1950s.

The federal government spends nearly $600 billion a year on contracts, which is money the administration says can spur a revitalization of the nation’s industrial strength and create new markets for new technologies.

To that end, Biden’s order will increase the domestic content threshold, which is the amount of a product that must be made in the U.S. before it can be purchased by the federal government.

Right now, loopholes in federal law allow products to be stamped "made in America" for purposes of federal procurement even if barely 51% of the materials used to produce them are domestically made. Administration officials did not say how much Biden intends to increase that threshold.

It remains to be seen how Biden will tiptoe around the United States' WTO GPA commitments without offending other member countries. Still, the question remains: Is Biden really going to be more internationalist in outlook than Trump? This episode gives us reasons to doubt whether Biden's actions will match his rhetoric (which is admittedly better to listen to).

PRC Cities Go Dark Without Aussie Coal

♠ Posted by Emmanuel in ,, at 1/05/2021 04:42:00 AM

While the US-China trade war occupies most of the headlines for obvious reasons--it's the geopolitical rivalry that matters--don't assume there are any number of others going on. Arguably the most notable among these is the deterioration in almost all respects of Australia-China trade relations, which have been accelerated by the Morrison government wanting to investigate China's role in the spread of COVID-19 worldwide seemingly at the outgoing Trump administration's behest.

This not-so-genius move is precisely biting the hand that feeds in terms of Australia losing significant access to its largest export market:

Australia’s economy has been badly hit by escalating trade tensions with China — and it’s possible growth might “never return” to its pre-virus levels even when the pandemic is over, according to research firm Capital Economics.

China is by far Australia’s largest trading partner, accounting for 39.4% of goods exports and 17.6% of services exports between 2019 and 2020, the firm said. But Beijing has for months been targeting a growing list of imported products from Down Under — putting tariffs on wine and barley, and suspending beef imports.

Gross domestic product (GDP) in Australia could contract even more if Beijing continues to pile tariffs on more Australian imports, said its senior economist Marcel Thieliant in a note last week. Goods and services that are already “in the firing line” are worth almost a quarter of Australia’s exports to China — forming 1.8% of its economic output, the research firm said.

The list of affected traded goods grows longer all the time. Exemplifying the current fashion for lose-lose, though, the Chinese are not exactly finding what they need from other countries so easily. Consider coal. Absent affordable and plentiful supplies from Oz, many PRC cities are now reportedly having power outages:

Several major Chinese cities have reportedly gone dark as authorities limit power usage, citing a shortage of coal. Analysts said prices of the commodity in the country have shot up due to the reported crunch. The reports also follow rising trade tensions between Beijing and Canberra, leading some analysts to tie the coal shortages and blackouts to the unofficial ban on Australian coal.

Relations between the two nations soured last year after Australia supported an international inquiry into China’s handling of the coronavirus pandemic. Coal is just one in a growing list of Australian goods that China is targeting, as a result of their escalating row.

Last year, China told its power plants to limit the amount of coal imports from other countries to keep a lid on prices. Beijing reportedly lifted those restrictions later, but didn’t remove curbs on coal imports from Australia. China also reportedly gave state-owned utilities and steel mills verbal notice to stop importing Australian coal.

The case for trade was nevermore evident than it is here. Both governments have done their people a welfare-reducing disservice by engaging in a pointless spat over COVID-19 that neither has an obvious benefit from engaging in.

US Obesity & Stupidity: Barr, Pompeo & Trump

♠ Posted by Emmanuel in , at 12/28/2020 02:49:00 PM

Who's the fattest of them all? Everyone else's well-being may be victims of their brainless girth.

[WARNING: In the spirit of Trump's disdain for political correctness, I am waiving it for this post, although the subjects here fully deserve the opprobrium they receive.] I do not need any encouragement to poke fun at American obesity since I've always considered it as part of US descent into, ah, fatheadedness. Prominent examples of US decline are its recent political class: Chicken Barr, Portly Pomepo and Plump Trump. These lard-assed eater-leaders exemplify current Americanness to the rest of the world--fat and obnoxiously loud despite having nothing good to say (or do). While busy wrecking the United States--and the rest of the world by sheer dint of America's influence and reach--the question is posed: How can the planet be saved from more malevolent Yankee lardasses?

This post was inspired by a Quora question asking who is the most obese among these biggies. I'm not entirely certain, but I'd say (1) Barr, (2) Pompeo, (3) Trump in terms of body mass index. No matter; all are comfortably obese. The more important question is the relation between obesity and stupidity as the title states: Trump and Pompeo have teamed up to destroy America's reputation abroad. Barr has done the same to the Department of Justice but lost Trump's favor anyway. That's some reward for longtime sycophancy.

Now, the evidence is not clear on whether low IQ leads to being fat or the other way around. Is it that fatsos like these cannot comprehend what it takes to maintain one's health, or that being fat has deleterious effects on cognitive functioning? That chicken-and-egg question remains unresolved. (In terms of sheer idiocy, Trump's idea that minimal exertion is the key to health literally takes the cake[s].) Still, one can probably make the intermediate argument that low IQ is an obesity risk based on existing research on the subject matter:

Although the present findings provide valuable information on the link between low IQ and obesity, it is important to understand that IQ is a nonmodifiable risk factor that is rarely assessed in the general population. Therefore, the development of obesity prevention programs focusing on intelligence is difficult to implement. Nevertheless, IQ may be regularly assessed in specific situations such as the follow‐up of children with developmental difficulties or the follow‐up of adults with psychiatric disorders. Our findings suggest that low IQ is an independent risk factor for obesity even after adjusting for several potential confounding factors. Thus, we believe that individuals with low cognitive abilities should be screened for obesity on a regular basis. Furthermore, the management of individuals with low IQ should be transdisciplinary, and should involve several health professionals (eg, dietitian, physiotherapist, and general practitioner) in order to evaluate their health behaviors (eg, diet and physical activity) that may lead to obesity.

They say that people choose the leaders they deserve. In the US case, you can at least vouch for its leaders exemplifying the, ah, width and breadth of its population. Physique-wise, and I would argue intellect-wise, these three are representative democracy weighing in fully on leadership attributes. 

Stopping Americans from electing obese people--who then put even more of their kind in leadership positions--is probably an overlooked way to avoid further American damage to the rest of the world. Given current trends, though, non-obese people are becoming an endangered species Stateside, so too bad for us all.

The British Empire Died on 1 September 2020

♠ Posted by Emmanuel in at 12/14/2020 03:04:00 PM

The chief architect of British decline at "work".

What marks the end of Britain's dominance in world affairs? That question has always been tied to that on British identity in the post-WWII era. To be sure, there are some who would say the ascent of the United States relative to the United Kingdom's fall rendered that debate moot a long time ago. (And many now question whether the US remains hegemonic, anyway.) Regardless, there have been bits of evidence to suggest how Britain still plays an outsized role in global affairs even after its numerous former territories--most notably India--became independent. 

Prominent among these has been London's status as a global financial capital. Many have argued that, at least until recently, London vied with New York for this status. Brexit largely put paid to that argument--not so much that New York is outperforming London so much as London has slumped so far back of New York (even if NY is not appreciably moving ahead). 

For me, then, London's loss as a global financial capital reached its apotheosis a few months ago. On 1 September 2020, a single US-listed firm, Apple, was worth more than the entire 100 corporations making up the FTSE 100 stock index:

Apple has notched up another milestone by overtaking the combined market value of the entire FTSE 100 index of the UK’s biggest publicly listed companies.

The iPhone and iMac maker has had a stellar performance this year with its share price rising an astonishing 75%, and last month it became the first US company to reach a $2tn (£1.48tn) market value. It has since climbed even further, reaching a new record of $2.268tn (£1.69tn) in early US trading on Tuesday.

In contrast London’s blue-chip companies, from Shell to HSBC, have lost nearly a quarter of their combined value since the start of the year. On Tuesday the FTSE 100 was down by 1.7% to 5862, its lowest level since the middle of May. In total the index is valued at £1.5tn.

Despite COVID-19 inflicting more damage Stateside than the UK, the US benefits from having many more "winners" in the pandemic era: technology companies offering the tools people living and working from home rely on nowadays. By contrast, British companies are in old school industries that have been losers during the pandemic. Think of the likes in energy, financial services, or even worse still, tobacco:

But the [FTSE 100] index has also missed out on the technology boom seen in the US and elsewhere during the coronavirus pandemic. 

Businesses in tech and e-commerce, from Apple and Amazon to online retailers, have benefited from consumers turning to digital services for entertainment and shopping while stuck at home during lockdown. The FTSE 100 is light on technology businesses and heavily populated by companies badly affected by the pandemic in sectors including property, aviation, hospitality and bricks-and-mortar retail.

Neil Wilson, chief market analyst at, said: “The FTSE 100 is a dinosaur, full of rather lumbering old-world stocks with precious little growth to offer. The FTSE 100 is a very good proxy for the global economy, which we know is on its knees. And if not exposed to the global economy (non-sterling earners), then they are fully exposed to the UK economy (eg Lloyds, RBS), which is doing worse than peers, we think.”

Years of British stock underperformance have dispelled the argument the UK is economically better off outside the European Union. Yet, the beating UK stocks have received post-Brexit vote has been such that people are beginning to look at them as promising dirt-cheap investments [1. 2]. The larger point remains: any "empire" worthy of the name would be able to command higher valuations befitting the regard others show it instead of being bargain basement buys. Insofar as UK plc has been deemed nearly worthless as evidenced by the discount placed on British companies, 1 September marked an important milestone showing just how far Blighty's standing has fallen in global league tables.  

The British Empire died on 1 September 2020, indeed.

Trump's Losing War on ESG Investing

♠ Posted by Emmanuel in , at 12/06/2020 03:32:00 PM

Funds like this one from BlackRock's iShares now list ESG no-nos. Trumpists couldn't care less.

The Trump administration is essentially a throwback to a time when white men ruled the world, burned fossil fuels with wild abandon, and were unapologetic about America's dodgy history concerning racism. So, it was perhaps inevitable that one of its last few efforts on the way out the door was to throw a middle finger to the very idea of environmental, social and governance [ESG] investing. You see, the US government manages any number of funds, including those of government employees for retirement. 

The Department of Labor manages one of these, and under the guise of maximizing returns and not entertaining misguided leftist ideas about being politically correct while investing, it has ruled out ESG criteria:

In a new Department of Labor (DOL) rule issued on October 30, the DOL essentially prohibits the use of widely used environmental, social and governance (ESG) factors in selecting investments for employee retirement plans...

For 30 years, however, the US Department of Labor has been considering whether recommending these kinds of investments in employee retirement accounts - that is, those factors which look at other than financial objectives - might be problematic. Their concern was that by focusing on the ESG needs, a manager using ESG products was not focusing attention on the client's financial goals - which is the basic fiduciary requirement under DOL rules.

Alike with many of these parting shots from the Trump administration, however, the mad rush to get them done make them vulnerable to rollbacks when Joe Biden becomes president.

Unlike many DOL rules, which typically take at least 18 months and often years to be passed, the ESG rule was pushed through at "warp speed," commented Bryan McGannon of US SIF, a sustainable business policy group. But it is considered likely that litigation under the Administrative Procedures Act may reverse the rule or that an incoming Biden administration may well act to reverse the rule. The Biden administration has been predicted to be far more sympathetic to ESG issues and is expected by some to begin reversing controversial Trump administration policies such as this.

In the end, the large and growing interest from investors in ESG investments as well as the likely hostility of the incoming administration to the new rule make it unlikely that the rule will stand. Moreover, the current research and performance history demonstrate that it probably shouldn't.

I think the economic rationale of ESG will ultimately prove irresistible anyway. Arms, energy and tobacco are your archetypal sunset industries, and stock valuations do bear this assertion out. The days of--shall we call it antisocial investing?--are numbered.

Trump's Expanding PRC Blacklist: CNOOC, SMIC

♠ Posted by Emmanuel in , at 12/01/2020 06:59:00 PM

If you think Trump's 2020 electoral defeat at the hands of Joe Biden have slowed his anti-China instincts, then you are sadly mistaken. Given that Biden has historically been sanguine about free trade, his policies towards China are expected to be more moderate than the orange China-basher. To preempt Biden, therefore, the Trump administration is speeding up plans to blacklist even more state-owned companies over their Communist Party links. 

Reuters reports that China's largest energy company, CNOOC, and its largest chipmaker, SMIC. In reaction, their share prices declined significantly:

The Department of Defense (DOD) is poised to designate four more Chinese companies as owned or controlled by the Chinese military, bringing the total number to 35. A recent executive order issued by President Donald Trump would prevent U.S. investors from buying securities of the blacklisted firms starting late next year.

It was not immediately clear when the new additions to the blacklist would be published in the Federal Register, making the move official. But the list includes China Construction Technology Co Ltd and China International Engineering Consulting Corp, as well as Semiconductor Manufacturing International Corp (SMIC) and China National Offshore Oil Corp (CNOOC), according to the document seen by Reuters and four sources.

SMIC said it continued “to engage constructively and openly with the U.S. government” and that its products and services were solely for civilian and commercial use. “The Company has no relationship with the Chinese military and does not manufacture for any military end-users or end-uses,” it said in a statement. Shares in SMIC closed 2.7% lower on Monday.

CNOOC’s listed unit CNOOC Ltd, whose shares fell by almost 14% on Monday, said in a statement that it had checked with its parent and no formal notice from relevant U.S. authorities had been received.

What is the practical implication of this move, though? As mentioned, Biden will probably roll things back to try and bring the temperature down in Sino-US relations. What's more, some US fund managers may have to divest their holdings in these large PRC SOEs:

This month, the White House published an executive order, first reported by Reuters, that sought to give teeth to the list by prohibiting U.S. investors from buying securities of the blacklisted companies from November 2021.

The directive is unlikely to deal the firms a serious blow, experts said, due to its limited scope, uncertainty about the stance of the Biden administration and already-scant holdings by U.S. funds.

Still, top U.S. asset managers Vanguard Group and BlackRock Inc each own about 1% of shares of CNOOC’s listed unit CNOOC Ltd, and together own roughly 4% of outstanding shares of SMIC, disclosures show.

Like Trump's other scorched earth measures, the intent is not only meant to irreparably harm relations such that Biden's team can't fix them but to also show action on anti-China rhetoric. Unfortunately, Trump remains a political force Stateside, and he will be able to point to actions like this in the future should he choose to run again or endorse allies or relatives running for office.

Trump's Racism: Introducing African Travel Bonds

♠ Posted by Emmanuel in , at 11/23/2020 07:21:00 PM

In the final days of the horrid Trump administration, they are putting the final touches on his most blatantly isolationist and racist pipe dreams to put President-Elect Joe Biden in the worst position to possible to try and undo the damage. Just when you thought thing couldn't sink any lower in these categories, the State Department is mulling the requirement that travelers from--you guessed it--African countries put up bonds of up to $15,000 if they want to travel to the US that would be forfeited to Uncle Sam if they overstayed in America. From Reuters:

The outgoing administration of U.S. President Donald Trump on Monday issued a new temporary rule that could require tourist and business travelers from two dozen countries, most in Africa, to pay a bond of as much as $15,000 to visit the United States.

The U.S. State Department said the temporary final rule, which takes effect Dec. 24 and runs through June 24, targets countries whose nationals have higher rates of overstaying B-2 visas for tourists and B-1 visas for business travelers. The Trump administration said the six-month pilot program aims to test the feasibility of collecting such bonds and will serve as a diplomatic deterrence to overstaying the visas.

Depending on the average "overstay rate," consular officials could make them post bonds of up to $15,000--a huge sum for nationals of the countries being targeted:

The visa bond rule will allow U.S. consular officers to require tourist and business travelers from countries whose nationals had an “overstay rate” of 10% or higher in 2019 to pay a refundable bond of $5,000, $10,000 or $15,000.

Twenty-four countries meet that criteria, including 15 African countries. While those nations had higher rates of overstays, they sent relatively few travelers to the United States...

Countries whose tourist and business travelers could be subject to the bond requirement include those from Democratic Republic of Congo, Liberia, Sudan, Chad, Angola, Burundi, Djibouti and Eritrea. Other countries include Afghanistan, Bhutan, Iran, Syria, Laos and Yemen.

The draft text of this abomination is available online. 

Although I am sure the Biden administration would roll back any such implementation of this hideous policy, Trump and his minions realize that doing so will take some time. Meanwhile, the white supremacist faction of today's Republican Party--unfortunately large as it is nowadays--will cheer this move. It's a racist populist ploy that further threatens to harm freedom of travel in the COVID-19 era. Just be glad Trump will soon be out of the White House. 

When leaders of other countries make harebrained policies, their citizens suffer. When the US president does so, the whole world suffers. Exhibit A is four years of Trump. Thankfully, all bad things must come to an end.