Archive for September, 2017

Trump seeks new health chief after Price resignation

September 30, 2017
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Iran’s Zarif urges Europe to defy Trump on sanctions

September 30, 2017

AFP

© AFP/File | Iranian Foreign Minister Mohammad Javad Zarif

LONDON (AFP) – Iranian Foreign Minister Mohammad Javad Zarif has warned that the only way to stop its nuclear deal from collapsing is for Europe to defy any US reimposition of sanctions.

In an interview published Saturday by Britain’s Guardian newspaper, Zarif said Iran would develop much more advanced nuclear technology — though not for weapons purposes — if Europe followed the United States in returning to a sanctions regime.

“Europe should lead,” he said during an interview in New York.

The deal, agreed in 2015 between Iran and six world powers — the United States, China, Russia, France, Britain and Germany — lifts economic sanctions put in place in 2005 in exchange for curbs to Tehran’s nuclear programme.

The International Atomic Energy Agency (IAEA) is responsible for verifying that Iran meets the terms of the agreement.

US President Donald Trump has attacked the deal on numerous occasions, vowing to tear it up.

On October 15, Trump is due to testify to Congress whether Tehran is complying with the deal and whether it remains in the United States’ interests to stick by it.

If he decides it is not, it could open the way for US lawmakers to reimpose sanctions, leading to the potential collapse of the agreement.

“I think he has made a policy of being unpredictable, and now he’s turning that into being unreliable as well,” Zarif said.

“My assumption and guess is that he will not certify and then will allow Congress to take the decision.”

He said that if the United States scuppers the deal, the decision would prove counter-productive.

“The deal allowed Iran to continue its research and development. So we have improved our technological base,” he said.

“If we decide to walk away from the deal we would be walking away with better technology. It will always be peaceful… but we will not observe the limitations that were agreed on as part of the bargain.”

Zarif said “walking away” was one of the options being considered by Tehran.

“If Europe and Japan and Russia and China decided to go along with the United States, then I think that will be the end of the deal,” he said.

Washington on Thursday pressed for the IAEA to carry out more nuclear inspections in Iran, warning that failure to do so would make the nuclear deal with Tehran “an empty promise”.

Trump Blasts San Juan Mayor in Series of New Tweets

September 30, 2017
Arit John
 
  • Power outages remain widespread as island continues to dig out
  • President set to view recovery efforts in visit next week
Trump Says Puerto Rico ‘Literally Starting From Scratch’

President Donald Trump, under rising criticism for the federal response to hurricane-damaged Puerto Rico, swung from defending his administration’s approach to lashing out at the San Juan mayor for her “poor leadership ability.”

 Image result for Mayor Carmen Yulin Cruz, photos

The president, in a series of Saturday morning tweets, said Mayor Carmen Yulin Cruz, “who was very complimentary only a few days ago, has now been told by the Democrats that you must be nasty to Trump.”

The Mayor of San Juan, who was very complimentary only a few days ago, has now been told by the Democrats that you must be nasty to Trump.

“Such poor leadership ability by the Mayor of San Juan, and others in Puerto Rico, who are not able to get their workers to help,” Trump told his almost 40 million Twitter followers. “They want everything to be done for them when it should be a community effort.”

Trump went on to say that there are “10,000 Federal workers now on Island doing a fantastic job” and an “amazing job.”

Follow the Trump Administration’s Every Move

The president, who’s spending the weekend at his golf club in Bedminster, New Jersey, is scheduled to spend an hour on Saturday in five different telephone briefings on the hurricane recovery efforts.

Trump will speak with FEMA Administrator Brock Long, the current and former governors of Puerto Rico, the commonwealth’s representative in Congress, and the governor of the U.S. Virgin Islands. He isn’t scheduled to speak with Cruz. Vice President Mike Pence will receive an in-person briefing at FEMA headquarters in Washington.

Life-Threatening Conditions

Trump a day earlier defended his administration’s response to the crisis in Puerto Rico following Hurricane Maria, which slammed into the territory on Sept. 20, amid rising criticism on the island and in Congress that more resources are needed to help residents cope with life-threatening conditions.

Cruz blasted acting Homeland Security Secretary Elaine Duke for telling reporters at the White House that that the relief efforts were “a good-news story in terms of our ability to reach people and the limited number of deaths that have taken place.”

In an interview on CNN, Cruz called Duke’s remarks “irresponsible.”

“This is a people-are-dying story,” Cruz said. “This is a story of devastation that continues to worsen because people are not getting food or water.”

Trump, speaking to reporters as he left the White House on Friday for New Jersey, said he wasn’t aware of the remarks by Duke or the mayor but that Puerto Rico’s governor has been “unbelievably generous” in his praise for federal efforts.

“I can tell you this: We have done an incredible job considering there’s absolutely nothing to work with,” said Trump, who’s scheduled to visit Puerto Rico on Tuesday. The president may also stop in the U.S. Virgin Islands, which also sustained heavy damage from Maria.

Impassable Roads

More than week after getting slammed by the storm, which hit as Category 4 hurricane, Puerto Ricans continued to endure sweaty, dark nights, with a resolution to the near-total power outage nowhere in sight. Mobile-phone coverage improved gradually, but many residents still had no way of reaching loved ones outside their communities, and rural areas still had impassable roads.

The administration has come under criticism from some Republicans as well as Democrats in Congress.

Republican Senator Marco Rubio of Florida said Thursday that the White House hasn’t grasped the significance of the damage in Puerto Rico compared with recent hurricane damage in his state, from Hurricane Irma, and in Texas from Hurricane Harvey in August.

Thirty-seven Democrats and one independent in the Senate signed a letter urging Trump to take steps including issuing a broader disaster declaration, naming a White House coordinator for rebuilding, and providing for more help to restore electricity. New Jersey Democratic Senator Robert Menendez, who toured the island on Friday, said on Twitter that “it feels like the hurricane just hit yesterday. This federal response needs to double or triple right now.”

‘Surrounded by Water’

In a speech Friday to the National Association of Manufacturers in Washington, the president said recovery in Puerto Rico, which already faced a $74 billion mountain of debt and a shrinking economy, will be costly.

“We’re literally starting from scratch,” Trump said, adding that the hurricane had damaged roads and sewage systems and knocked out the electric power grid. “Nobody has ever seen anything like it.”

“The response and recovery effort probably has never been seen for something like this,” Trump said. “This is an island surrounded by water, big water, ocean water.”

The territorial government will have to work with federal authorities to determine “how this massive rebuilding effort — it will be one of the biggest ever — will be funded and organized, and what we’ll do with the tremendous amount of existing debt already on the island,” he said.

More Funding

White House Homeland Security Adviser Thomas Bossert said the administration will ask Congress in the next two to four weeks for additional funding on top of an existing $7.1 billion appropriation to the Federal Emergency Management Agency that becomes available on Oct. 1. That money covers initial requests for the hurricanes that hit Texas, Louisiana and Florida, as well as Puerto Rico and the U.S. Virgin Islands.

Cruz, the San Juan mayor, said that while she was angry over Duke’s characterization of the situation, the working relationship with the federal officials on the ground was good.

“They do get the dire situation,” she said on CNN. The biggest difficulty was getting supplies, which are bottled up in port, out to where it’s needed. She said that rather than waiting for power to be restored, crews could be rounded up to unload by hand.

“The intentions are there,” Cruz said. “We just need to find a way around the logistics.”

Duke, who took an aerial tour of the island Friday and met with first responders and others laboring in the recovery effort, said in a statement that she and Trump “will not be fully satisfied, however, until every Puerto Rican is back home, the power is back on, clean water is fully available, schools and hospitals are fully open, and the Puerto Rican economy is working.”

Transportation Blocked

Florida Governor Rick Scott, who is lending aid to Puerto Rico’s government after Hurricane Irma damaged his state less severely than expected, said the territory’s biggest problem is ground transportation.

“We need more truck drivers and we need more trucks” to get goods out of ports, he said at the White House, where he had lunch with Trump on Friday.

He said the territorial government also is “asking for a lot of police resources,” and Florida will dispatch Spanish-speaking officers from its forces. Puerto Rican college students will also be offered in-state tuition at Florida colleges, and he’s examining how the state can assist Puerto Rican grade-school students, he said.

“This is not a time for politics, this is a time to help people,” Scott said.

Construction worker Carlos Martel-Fernandez found out on the radio that Trump was coming, but it didn’t mean much to him.

“We don’t need him. We need fuel,” Martel-Fernandez said as he inched a bit closer in the line waiting to fill up his two red gas tanks. “If he’s going to make a mess here, then stay home. We don’t need the traffic.”

Natalia de Jesus had spent the week since Maria dealing with landslides near her partner’s house in Naranjito and had heard too many broken promises of help coming. She also heard Trump would be landing in Puerto Rico in a few days.

“The truth is I don’t think he can do anything,” she said.

— With assistance by Justin Sink

https://www.bloomberg.com/news/articles/2017-09-29/trump-defends-response-to-historic-puerto-rico-storm-damage

Spain and Catalonia: Heading for Showdown Over Independence Vote

September 30, 2017

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BARCELONA, Spain — Montserrat Aguilera wasn’t intending to vote for the Catalonia region to secede from the rest of Spain.

But the 52-year-old laboratory worker changed her mind amid an unprecedented crackdown by Spain’s government as it tries to prevent Sunday’s independence referendum from going ahead.

Spain and its most powerful and prosperous region are headed for a showdown, with police trying to shut down polling stations to stop the referendum and activists, students and parents occupying schools designated voting places to keep them open.

Much remains unclear, including whether police will forcibly remove people who are still in the polling stations at a 6 a.m. Sunday deadline and how many of Catalonia’s voters will be able to cast ballots amid the central government’s crackdown.

Also unknown is what happens next if regional leaders declare any vote legitimate and Catalonia declares independence. The referendum was suspended under constitutional rules weeks ago so a court could consider its legality.

Turnout will be key, and if people like Aguilera are any indication, it could be high. She wanted a referendum to be held under constitutional rules so she could vote “no” and try to keep Spain and Catalonia united. Now, she wants Madrid to feel the pinch of the region’s disgust.

“I don’t agree with the way the vote has been convoked by the Catalan government. It should have been a legal one,” Aguilera said. “But this is going to be a demonstration of democratic force to show (Prime Minister Mariano) Rajoy that we deserve respect and that he needs to listen to Catalonia.”

Catalan authorities have pledged to make the voting possible even if police, acting on judges’ orders, manage to close polling stations and seal off ballot boxes. Some 5.3 million people are eligible to vote in the region, one of 17 in Spain.

The latest surge for independence essentially started in 2010, when Spain’s Constitutional Court struck down key parts of a groundbreaking charter that would have granted Catalonia greater autonomy and recognized it as a nation within Spain.

The rejection stung, and Spain’s 2008-2013 financial crisis and the harsh austerity measures that followed generated more support for secession, with many Catalans feeling they could do better on their own. Catalonia contributes a fifth of the country’s 1.1 trillion-euro economy ($1.32 trillion.)

While the vast majority of Catalans favor holding a referendum, they have long been almost evenly split over independence.

If “yes” wins, Catalan authorities have promised to declare independence within 48 hours. No minimum participation rate has been set, but regional President Carles Puigdemont has acknowledged that a significant turnout will be needed to declare the results legitimate.

In a mock referendum in 2014, only about 35 percent of Catalans voted. Eighty percent favored independence.

Officials say the Spanish crackdown could make the difference this time. Catalan Vice President Oriol Junqueras said six out of 10 Catalans were expected to vote, according to the regional government’s polling.

Nou Barris, where Aguilera lives, showed the least support among Barcelona’s neighborhoods for separatist parties in regional elections two years ago. In balconies and windows, there are few of the pro-independence flags ubiquitous in other central and wealthier areas of Barcelona.

Still, Aguilera says many in her neighborhood, including her son, have decided to show for Sunday’s disputed vote.

“Vote yes, vote no, vote null or an empty ballot, but vote to be free and be heard,” she said. “These two governments need to sit down and talk, and this is how we’ll make them understand that.”

The Spanish government says the vote, which has been ordered suspended by the Constitutional Court, will not take place. It has called in thousands of police reinforcements that are being housed in ferries in Barcelona’s port, raising tensions in one of Europe’s most popular tourist destinations.

The government has also initiated a barrage of legal challenges, including placing 700 pro-independence mayors under investigation and briefly arresting a dozen or so government officials.

“These are not easy days, for sure, but we feel strong,” Puigdemont said recently. “While Spain acts like a regime where the authority of power grows inversely to its moral strength, we feel increasingly supported by the Catalan people’s greatest asset: its people.”

But it’s hard to see how a vote will take place when millions of ballot papers were seized and police have been ordered to make sure no polling center stays open. There is no electoral board to monitor the election, but Catalan authorities say votes will be counted.

“Voting is not guaranteed,” Andrew Dowling, a Catalonia specialist at Cardiff University in Wales, said. “We don’t know what will happen but there won’t be a referendum in any meaningful sense.”

There has also been little or no campaigning by those opposed to independence.

“The ‘no’ side don’t feel they have to turn out on Sunday because they don’t think independence is going to happen,” Dowling said.

No country or international body has expressed an appetite for Catalan independence either. The European Union backs Spain and says an independent Catalonia would have to reapply for EU membership, something Spain could block.

“On a legal level, Madrid is right,” European Parliament President Antonio Tajani said Friday. “I think it’s important to talk on a political level after Monday and to respect laws — Catalan laws and Spanish laws.”

U.S. President Donald Trump said Tuesday that Spain should stay united, branding the secession move as “foolish.”

Rajoy, the prime minister, has warned Catalonia to drop the referendum bid, which he called a “totalitarian act.”

Talks between the two sides have been virtually nonexistent and both accuse each other of acting illegally and undemocratically.

The issue has so far had almost no economic fallout, although the S&P credit rating agency warned that growth prospects may weaken if tensions in Catalonia escalate.

“If you have got financial interests in Madrid or internationally you do not think that Catalan independence is imminent and I think that feeling is true for lots of Spanish people and lots of Catalans,” Dowling said.

___

Giles contributed from Madrid.

___

Find complete AP coverage of the Catalonia referendum here.

Swedish police make arrests prior to Nazi demonstration

September 30, 2017

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Image may contain: one or more people and outdoor

Riot police in Gothenburg. Photo: Thomas Johansson/TT
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Three people have been arrested and several others detained by police in Gothenburg prior to a neo-Nazi demonstration in the city Saturday.

Two foreign citizens were arrested at Gothenburg’s Landvetter Airport on Friday night after knives were found in their luggage. The two were arrested on suspicion of planning assault, the Swedish police confirmed in a message posted on its website.

A further seven foreign nationals have been taken into custody and a third person was arrested at Gothenburg Central Station, also on suspicion of planning violent acts, reports news agency TT.

Police have also taken action in other parts of Sweden in connection with the demonstration due to be held by the neo-Nazi Nordic Resistance Movement (NMR) in Gothenburg on Saturday.

In Helsingborg, a foreign citizen was arrested on board a bus after hitting a policeman in the face.

Nine foreign nationals have been detained and one ejected from the country under Sweden’s Foreign Citizens Law (Utlänningslagen) provision for foreign nationals, according to the report.

Gothenburg city centre is expected to be particularly busy on Saturday due to several other events taking place, including the annual Book Fair and a football match, and its timing as the first Saturday after pay day.

The march also coincides with the Jewish holiday Yom Kippur – a day of atonement observed by fasting and praying – and the route was initially planned to pass close to a Gothenburg synagogue.

However, earlier this week a local court changed the route, cutting its total length by almost half, citing risks to public order and security. Marchers will no longer be allowed to pass by the synagogue or to gather outside the location of the Book Fair.


The route of the march (red) and the route prior to the court ruling which forced it to be shortened (dotted). Graphic: TT

Police in Gothenburg were on Saturday morning present at the designated meeting point of the NMR prior to its planned march, reports TT.

Several other locations in the city are already under police surveillance and roadblocks have been put in place, according to the report.


Some businesses on the march route have chosen to board up windows prior to the demonstration. Photo: Jonas Dagson/TT

The NMR, set up in 1997, promotes an openly racist and anti-Semitic doctrine, and its growing popularity in Sweden has caused concern in neighbouring Norway.

Earlier in the month, about 50 members of extremist group marched through the centre of Gothenburg, an event for which the group did not have a permit. According to media reports, a minor fight broke out between some of the protesters and a counter-demonstrator, but police quickly intervened and did not make any arrests.

READ ALSO: Why 2016 saw a surge of neo-Nazi activity in Sweden

https://www.thelocal.se/20170930/swedish-police-make-arrests-prior-to-gothenburg-nazi-demonstration

U.S. Government Talks Directly With North Korea, Tillerson Says

September 30, 2017

Bloomberg

By Nick Wadhams

  • Situation with North Korea is ‘a bit overheated right now’
  • Tillerson says U.S. won’t accept nuclear armed North Korea

The U.S. government is communicating with North Korea to see whether it’s willing to negotiate over its nuclear program, Secretary of State Rex Tillerson said, the most explicit public acknowledgment yet of direct contact between the countries over the issue.

“We can talk to them, we do talk to them,” Tillerson said Saturday at a briefing in Beijing. Previously the countries have generally communicated through other governments or former officials.

Rex Tillerson and Xi Jinping on Sept. 30.

Photographer: Lintao Zhang/Getty Images

North Korea conducted its sixth and most powerful nuclear test on Sept. 3, and has launched more than a dozen missiles this year as Kim Jong Un’s regime seeks the capability to hit the continental U.S. with an atomic weapon. The United Nations has imposed stringent sanctions on North Korea for its weapons tests, and U.S. President Donald Trump has said all options — including military — are on the table to stop Kim.

A war of words has escalated between the two leaders in recent weeks, with Trump labeling Kim “Rocket Man” and telling the UN that the U.S. would “totally destroy” North Korea if it attacks. Kim responded by calling Trump a “dotard” and warning of the “highest level of hard-line countermeasure in history.”

“We can talk to them, we do talk to them directly, through our own channels,” Tillerson said. “We have lines of communication to Pyongyang — were not in a dark situation, a blackout.”

The most important thing to do now is to ease the rhetoric and tension on the peninsula because the situation “is a bit overheated right now,” he said.

https://www.bloomberg.com/news/articles/2017-09-30/u-s-government-talks-directly-with-north-korea-tillerson-says

See also:

Trump administration confirms it is in direct talks with North Korea over nuclear programme

 President Trump and Kim Jong-un have exchanged a war of words over North Korea’s nuclear programme
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By 

The United States is communicating with North Korea as it seeks to encourage the regime to abandon its build up of nuclear weapons, Secretary of State Rex Tillerson said.

Mr Tillerson made his comments in Beijing after holding talks with Chinese leaders on Saturday amid rising concerns over Pyongyang’s military programme.

Washington is known to have back channels which it uses to help negotiate the release of US citizens who have been held captive in the North.

But Mr Tillerson’s disclosure suggests US officials are also using secret talks to convince Pyongyang to hold official negotiations aimed at easing tensions.

“We are probing, so stay tuned,” he told reporters.

“We ask. We have lines of communication with Pyongyang. We’re not in a dark situation, a blackout, we have a couple, three channels open to Pyongyang.”

“We can talk to them, we do talk to them,” he said.

Asked whether China was acting as a go-between for the contacts, Mr Tillerson said: “Our own channels.”

Tensions have increased in northeast Asia with Kim Jong-un’s regime carrying out a series a missile tests and detonating a nuclear bomb earlier this month.

South Korean media reported on Saturday that North Korean missiles were being moved from a research facility, suggesting another provocation could be imminent.

During his visit to Beijing, Mr Tillerson also discussed arrangements for a trip by Donald Trump to China in November, and Mr Xi spoke about his close relationship with the US President.

He has met him in Florida in April and at the G20 summit in Hamburg in July. The leaders have also held several phone calls.

“I have enjoyed each and every one of those engagements and we have made considerable efforts to push for the development of China-US relations,” Mr Xi said.

North Korea shrugs off Donald Trump's threat as 'dog's bark'
North Korea shrugs off Donald Trump’s threat as ‘dog’s bark’

00:33

 http://www.telegraph.co.uk/news/2017/09/30/us-confirms-direct-talks-north-korea-nuclear-programme/

“The two of us have also maintained a good working relationship and personal friendship.”

Mr Tillerson’s arrival to Beijing had been delayed due to technical difficulties with his plane in Tokyo.

Beijing has been pushing for negotiations between the US and Pyongyang amid the current tensions.

China’s Global Times newspaper said there were “two trains of thought” with regards to Pyongyang’s increasingly frequent provocations: “Crush North Korea or talk to North Korea.”

“China and Russia hold the latter view,” the newspaper said.

“The US, South Korea and Japan should respect China and Russia’s down-to-earth attitude toward North Korea’s nuclear issue and act in concert with China and Russia.”

http://www.telegraph.co.uk/news/2017/09/30/us-confirms-direct-talks-north-korea-nuclear-programme/

U.S. Gets Warm Words From China’s Xi Ahead of Trump Visit

September 30, 2017

BEIJING — Chinese President Xi Jinping offered warm words for U.S. President Donald Trump on Saturday, calling him a friend and saying he expected Trump’s visit to China in November would be “wonderful”.

China’s relationship with the United States has been strained by the Trump administration’s criticism of Chinese trade practices and by demands that Beijing do more to pressure North Korea to halt its nuclear weapons and missiles programs.

Xi and Trump met for the first time in person at Trump’s Mar-a-Lago estate in Florida in April. Trump has since played up his personal relationship with Xi, even when criticizing China over North Korea and trade.

Meeting U.S. Secretary of State Rex Tillerson at Beijing’s Great Hall of the People, Xi said he had enjoyed his meetings with Trump and that the two had made considerable efforts to push the development of China-US relations.

Image may contain: one or more people and suit

U.S. Secretary of State Rex Tillerson (L) meeting with Chinese President Xi Jinping (R) at the Great Hall of the People on September 30, 2017 in Beijing, China. REUTERS/Lintao Zhang/Pool

“The two of us have also maintained a good working relationship and personal friendship,” Xi said, in comments in front of reporters.

“I believe that President Trump’s upcoming visit to China means an important opportunity for the further development of China-U.S. relations,” Xi added. “And I believe his visit will be a special, wonderful and successful one.”

In comments later reported by China’s Foreign Ministry, Xi added that cooperation was the only correct choice for both countries, whose common interests far outweighed their differences.

Both countries must “on the basis of respecting each other’s core interests and important concerns appropriately handle, via dialogue and consultations, differences and sensitive issues”, the statement cited Xi as saying.

Trump will travel to Asia in November for the first time since becoming president, stopping in Japan, South Korea, China, Vietnam and the Philippines on a trip expected to be dominated by the North Korea nuclear threat.

Tillerson told Xi that Trump and his wife Melania were looking forward to going to Beijing.

“This is a relationship that continues to grow and mature on the strength of the relationship between yourself and President Trump. And we look forward to advancing that relationship at the upcoming summit,” he said.

There was no mention of North Korea in comments made in front of journalists at any of Tillerson’s meetings, which also included top diplomat State Councillor Yang Jiechi and Foreign Minister Wang Yi.

China’s Foreign Ministry, in separate statements on Tillerson’s meetings with Yang and Wang, simply said they exchanged views on the situation on the Korean peninsula, without elaborating.

(Reporting by Phil Stewart and Ben Blanchard; Editing by Andrew Bolton)

Iran, Iraq plan joint drills over Kurdish independence vote

September 30, 2017

AFP

© afp/AFP/File | Iranian soldiers march on the anniversary of the start of the 1980-1988 war with Saddam Hussein’s Iraq, on September 22, 2017 in Tehran

TEHRAN (AFP) – Iran will hold a joint military exercise with Iraq in response to the Iraqi Kurdistan region’s “illegitimate” independence referendum, an Iranian military official announced on Saturday.Iran, which borders Iraq and the autonomous Kurdish region, strongly opposed the vote held Monday, fearing it would provoke separatists among its own Kurdish population.

Iraq’s central government has demanded the annulment of the referendum, which resulted in a huge “yes” for independence.

“A joint military exercise between Iran’s armed forces and units from the Iraqi army will be held in the coming days along the shared border,” Iranian Armed Forces spokesman Masoud Jazayeri told reporters.

The drills will take place at several crossings on Iran’s border with Iraqi Kurdistan, he said, speaking after a high-level meeting of Iranian commanders.

“In the meeting, the territorial integrity and unity of Iraq and the illegitimacy of the independence referendum in northern Iraq were stressed again and necessary decisions were taken to provide security at the borders and welcome Iraq’s central government forces to take position at border crossings.”

Tehran has accepted a request by Baghdad for an Iraqi army presence at border crossings.

Iraqi soldiers on Tuesday also took part in a Turkish military drill close to the Iraqi frontier.

Iran has been cooperating with Baghdad in building pressure on Kurdistan, notably by suspending all flights to and from the autonomous region and banning fuel exports and imports.

If This Is a Trade War, China’s Winning

September 30, 2017

Beijing’s indifference to the West’s complaints signals confidence it has the upper hand

Chinese Premier Li Keqiang received U.S. Commerce Secretary Wilbur Ross in Beijing on Monday.
Chinese Premier Li Keqiang received U.S. Commerce Secretary Wilbur Ross in Beijing on Monday. PHOTO: EUROPEAN PRESSPHOTO AGENCY
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SHANGHAI— Steve Bannon, the recently departed White House chief strategist, asserts that, “We’re at economic war with China.”

If that’s the case, Beijing seems supremely confident of victory.

Eight months into a Trump presidency, the Chinese leadership has offered a few gestures to placate the U.S.—lifting a ban on U.S. beef was one—while pressing its advantages on all fronts in its competition with the West for industrial dominance.

Expect one or two more headline-grabbing concessions; Beijing is gearing up for a splashy announcement on electric vehicles, which may help Tesla. In Beijing this week, U.S. Commerce Secretary Wilbur Ross said he hoped for “very good deliverables,” when Mr. Trump visits in November.

But China sees competition as a zero-sum game. It flaunts its indifference to the West’s complaints almost gratuitously, as in Shanghai’s recent ban on soft-cheese imports, which sent French chefs on a hunt for local brie and Roquefort to fill their dessert trolleys.

Foreign businesses are on notice that they are tolerated in China only for as long as they serve Chinese state goals.

Even as President Xi Jinping promises to “push forward market opening faster,” his “Made in China 2025” plan has the overt aim of displacing foreign manufacturers in critical areas like robotics, medical equipment and driverless vehicles.

An evolving “social-credit” system will use intrusive monitoring and big data to ensure all companies—Chinese and foreign—align with five-year plans. As part of this effort, the Communist Party is accelerating its push to plant cells in private companies, including multinationals.

U.S. and European firms report they’ve rarely felt less welcome. Internet blocks make it increasingly hard for their executives to access business information in the cloud. Even email is difficult. Foreign investment is slowing this year.

This is the behavior of a government that senses it has the upper hand.

What emboldens China? Its sharpest trading practices fall outside the scope of World Trade Organization rules. The system wasn’t set up with a secretive and centrally directed colossus like China Inc. in mind. Western economies, once optimistic that WTO membership would induce transparency and free-market reforms in China, now have no good defense. Put crudely, China knows it can get away with it.

Consider the remarkably small number of cases brought against China since it joined the WTO in 2001, despite widespread complaints about forced technology transfers, rampant intellectual property theft and unfair competition from state firms. The total between 2002 and 2016: just 38. (During the same period, the U.S. was the target of 73 complaints.)

China looks at this data as affirmation that, by and large, it plays by the rules. Critics say it has gotten expert at going around them.

So far, the strategy is working. The economy is on an upswing, propped up by debt but also, for now, defying conventional theories that mercantilism will sap China’s creative vigor. One in three of the world’s “unicorns”—startups worth more than $1 billion—are Chinese, according to McKinsey.

Success reinforces predatory habits. China will soon have more middle-class consumers than the entire U.S. population, giving Beijing huge market power. Donald Trump’s chief trade negotiator, Robert Lighthizer, says he gets “an awful lot of complaints” from chief executives forced to share technology with joint venture partners. But those CEOs are reluctant to go public with their gripes for fear of retaliation in their most promising market.

Meanwhile, China is adept at exploiting divisions between U.S. interests on either side of the China trade: steel manufacturers, for example, support tariffs on imports; steel users oppose them.

What’s the answer for the U.S.? Mr. Trump has dropped threats to slap tariffs on Chinese exports, wary of a disastrous trade war. The need to enlist China’s help on North Korea also played into that decision.

The same consideration may end up blunting Mr. Lighthizer’s formal investigation into forced technology transfers.

For China, the message is Mr. Trump’s threats won’t be backed up with action.

From Washington to Berlin, the cry has gone up for “reciprocity”—equal market access—from Beijing. It’s a beguiling ideal to be sure. But to get there says Scott Kennedy, an expert on Chinese industrial policy at the Center for Strategic and International Studies, would require not just long-term engagement with China, and support from the WTO and other world bodies, but close cooperation among economies threatened by Chinese protectionism.

In other words, the Trump administration would have to inspire a coalition of countries that it is now trying to bully into submission over their trade surpluses with the U.S. South Korea is a prime example.

Mr. Kennedy is skeptical that it can. The Chinese, he says “think they’re in the driving seat.”

He predicts a flurry of largely symbolic market-opening announcements. “Eventually,” he says, “the U.S. will accept tokenism.”

Write to Andrew Browne at andrew.browne@wsj.com

Appeared in the September 27, 2017, print edition as ‘If This Is a Trade War, China Has an Edge on U.S..’

https://www.wsj.com/articles/if-this-is-a-trade-war-chinas-winning-1506418206?mod=e2fb

Bitcoin Bounces Around Wildly in Record-Setting Quarter

September 30, 2017

The virtual currency spanned a range of $3,100 in less than two months, a volatile quarter that followed a calmer period in 2016

Bitcoin more than doubled in price, then plunged by a third in what was a hectic three-month period even by the virtual currency’s Wild West standards.

Bitcoin surged to an intraday record high of $5,014 on Sept. 2, about twice the price on July 1 and 158% above its intraday low for the quarter, set July 16, according to news and research site Coindesk. Sept. 2, a Saturday, also marked the top of a furious yearlong rally, as bitcoin would then slide more than $2,000 before finishing Friday at $4,182, up 67% over the three-month period.

During the quarter, new crowdfunding vehicles backed by bitcoin and the newer Ethereum currency drove enthusiasm, as did growth in investor interest in Japan and South Korea. But new restrictions on bitcoin trading in China drove prices down in September.

Trading was lively not just for the original cryptocurrency but for hundreds of smaller tokens as well.

The early-September highs marked the turning point. While bitcoin trades 24 hours a day, seven days a week, The Wall Street Journal’s market-data group also measures a once-a-day closing price weekdays at 5 p.m. Eastern time. By that count, Bitcoin peaked on Sept. 2 at $5,014. Bitcoin traded as low as $1,837 on Sunday, July 16, before closing the next day at $1,939.

In all, the virtual currency spanned a range of $3,100 in less than two months, a volatile quarter that followed a calmer period in 2016.

The entire cryptocurrency market—a burgeoning cluster of more than 1,000 digital currencies and token-like “alt-coins”—rose to a total market value of $177 billion during the quarter, according to coinmarketcap, driven by the almost manic boom in the new-age crowdfunding vehicles called initial coin offerings, or ICOs.

For the crypto sector in total, there were more than 105 offerings that closed in the quarter, raising a record $1.32 billion, according to research firm Token Report. Ethereum, the second largest digital currency by total dollar value, and the basis for many of the initial coin offerings, ended Friday at $294, up 3.1% for the quarter after surging more than 30-fold during the first half of the year.

The coin-offering phenomenon has created vast wealth for hundreds of startups, many of which don’t even have working products. It also has produced its share of risky investments and outright scams.

That combination of promise and peril compelled the U.S. Securities and Exchange Commission to declare July 25 that some coin offerings could be classified as securities under existing law.

To date, the SEC hasn’t brought a major enforcement action, but the July report was widely seen as putting the industry on notice. Friday, the agency charged a businessman and two companies with defrauding investors in a pair of small coin offerings purportedly tied to real estate and diamonds.

Still, some of the largest offerings to date were conducted during the quarter. In July, a startup named Tezos raised $232 million, a record amount at the time. The record lasted for less than a month. Another startup called Filecoin raised $257 million in August.

The most chaotic developments, though, came out of China. On Sept. 4, China declared that coin offerings were illegal and ordered them to “cease immediately.” Chinese businesses had raised about $400 million via coin offerings in the first half of the year, and the move basically shut down the burgeoning business overnight. The country went a step further. Without formally announcing it, the government essentially shut down digital-currencies exchanges in the nation, a huge blow for bitcoin in once vibrant Chinese markets.

While China was trying to slow down the bandwagon, celebrities were jumping on it. First, boxer Floyd Mayweather promoted two coin offerings through his social media accounts. Socialite Paris Hilton did the same. Oscar-winning actor Jamie Foxx added his name to yet another.

Write to Paul Vigna at paul.vigna@wsj.com

 https://www.wsj.com/articles/bitcoin-bounces-around-wildly-in-record-setting-quarter-1506769201
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