Turkey’s Erdogan Threatens to Cut Off Oil From Iraq’s Kurdish Area Over Referendum
President Tayyip Erdogan warned on Monday that Turkey could cut off the pipeline that carries oil from northern Iraq to the outside world, intensifying pressure on the Kurdish autonomous region over its independence referendum.
Erdogan spoke shortly after Prime Minister Binali Yildirim said Ankara could take punitive measures involving borders and air space against the Kurdistan Regional Government (KRG) over the referendum and would not recognize the outcome.
Voting began on Monday despite strong opposition from Iraq’s central government and neighboring Turkey and Iran – both with significant Kurdish populations – as well as Western warnings the move could aggravate Middle East instability.
Erdogan, grappling with a long-standing Kurdish insurgency in Turkey’s southeast, which borders on northern Iraq, said the “separatist” referendum was unacceptable and economic, trade and security counter-measures would be taken.
He stopped short of saying Turkey had decided to close off the oil flow. Hundreds of thousands of barrels of oil a day come through the pipeline in Turkey from northern Iraq, but he made clear the option was on the table.
“After this, let’s see through which channels the northern Iraqi regional government will send its oil, or where it will sell it,” he said in a speech. “We have the tap. The moment we close the tap, then it’s done.”
Yildirim said Ankara would decide on punitive measures against the KRG after talks with Iraq’s central government.
“Our energy, interior and customs ministries are working on [measures]. We are evaluating steps regarding border gates and air space. We will take these steps quickly,” Yildirim told Turkish broadcasters.
Iraqi soldiers arrived in Turkey on Monday night to join a drill on the Turkish side of the border near the Habur area in the southeast, Turkey’s military said in a statement. Iraq’s defense ministry said the two armies started “major maneuvers” at the border area.
Local media said Turkey had blocked access to the KRG via the Habur border crossing with Iraq. Ankara’s customs minister denied this, saying Habur remained open but with tight controls on traffic, according to the state-run Anadolu agency.
However, Erdogan later said traffic was only being allowed to cross from the Turkish side of the border into Iraq. Maruf Ari, a 50-year-old truck driver, was one of those who had crossed back into Turkey early on Monday morning. He said a closure of the gate would ruin his livelihood.
“If the border is closed it will harm all of us. I’m doing this job for 20 years. I’m not making a lot of money. Around 1,000 lira ($285) a month. But if the gate is closed, we will go hungry.”
The United States and other Western powers also urged authorities in the KRG to cancel the vote, saying it would distract from the fight against Islamic State.
“We will continue to take determined steps and the Kurdistan Regional Government must take a step back. It is an absolute must,” Erdogan said.
Shares of Turkish Airlines, which has direct flights to northern Iraq, tumbled 6.5 percent, underperforming a 1.78 percent decline in the BIST 100 index. Turkey’s currency, the lira, also weakened.
Turkey took the Kurdish television channel Rudaw off its satellite service TurkSat, a Turkish broadcasting official told Reuters.
Turkey has long been northern Iraq’s main link to the outside world, but sees the referendum as a grave matter for its own national security. Turkey has the region’s largest Kurdish population and has been fighting a three-decade insurgency in its mainly Kurdish southeast.
On Saturday, Turkey’s parliament voted to extend by a year a mandate authorising the deployment of troops in Iraq and Syria.
Still, Turkey is unlikely to make rash moves when it comes to sanctions against the KRG, said Nihat Ali Ozcan, a professor of political science and international relations at TOBB University of Economics and Technology.
“Closing the border gate, cancelling international flights and, at the final step, cutting the pipeline can be discussed,” he said. “Military pressure can be used directly or indirectly.”
The Turkish army launched military exercises involving tanks and armored vehicles near the Habur border crossing a week ago and they are expected to continue until at least Sept. 26. Additional units joined the exercises as they entered their second stage.
Turkey’s military said in its statement that the third phase of the drill would be held on Sept. 26, and that Iraqi soldiers who arrived on Monday night would join.
The military has also in recent days carried out daily airstrikes against Kurdistan Workers Party (PKK) targets in northern Iraq, where the group’s commanders are based.
The PKK launched its separatist insurgency in 1984, and more than 40,000 people have been killed since. It is designated a terrorist group by Turkey, the United States and European Union.
In a travel warning, Turkey strongly recommended its citizens in the Iraqi Kurdish provinces of Dohuk, Erbil and Sulaimaniya leave as soon as possible if they are not obliged to stay.
Brazil to Reinstate Protection for Amazon Reserve
Brazil will reinstate a mining ban in a vast area of the Amazon rainforest, the government announced on Monday, in an about-face that is a victory for environmentalists who feared deforestation.
The Mines and Energy Ministry said in a statement that President Michel Temer’s administration had decided to revoke an August decree abolishing the National Reserve of Copper and Associates (Renca), an area of roughly 17,800 square miles (46,100 square kilometers) or slightly larger than Denmark.
The decision will be published in the Official Gazette on Tuesday, officials said.
The reserve in the northern states of Amapá and Pará was established in 1984 to protect what are thought to be significant deposits of gold, copper, iron ore and other minerals from the perceived threat of foreign miners at the time.
The reserve covers a section of the Amazon, the world’s largest rainforest, the preservation of which is seen as essential to soaking up carbon emissions responsible for global warming.
The government said it would revisit the issue in the future in a wider debate on the issue. “Brazil needs to grow and create jobs, attract mining investment and even tap the economic potential of the region,” the ministry statement said.
The government had argued that lifting the ban would be a boon to the economy and would allow better oversight of the area estimated to have 1,000 people illegally mining there.
Mining and Energy Minister Fernando Coelho Filho and other officials have maintained that the reserve merely applied to mining and that other protections for conservation areas and indigenous land inside Renca would remain.
But environmentalists argued that merely building roads or infrastructure in the area would bring deforestation and threaten biodiversity, with Brazilian supermodel Gisele Bundchen tweeting against the decree.
“If carried out, the cancellation of the decree shows that, no matter how bad, there is no leader absolutely immune to public pressures,” Marcio Astrini, coordinator of public policy for environmental group Greenpeace, said in a statement.
“It is a victory of society over those who want to destroy and sell our forest.”
The government had steadily backtracked in the face of the criticism, legal action and efforts to overturn the decree in Congress. A judge also granted an injunction blocking the decree.
Guardian Newspaper: Deloitte Hit by Sophisticated Cyber Attack
Global accountancy firm Deloitte has been hit by a sophisticated hack that resulted in breach of confidential information and plans from some of its biggest clients, Britain’s Guardian newspaper said on Monday.
Deloitte — one of the big four professional services providers — confirmed to the newspaper it had been hit by a hack, but it said only a small number of its clients had been impacted.
The firm discovered the hack in March, according to the Guardian, but the cyber attackers could have had breached its systems as long ago as October or November 2016.
The attack was believed to have been focused on the U.S. operations of the company, which provides auditing, tax advice and consultancy to multinationals and governments worldwide.
“In response to a cyber incident, Deloitte implemented its comprehensive security protocol and began an intensive and thorough review including mobilizing a team of cybersecurity and confidentiality experts inside and outside of Deloitte,” a spokesman told the newspaper.
“As part of the review, Deloitte has been in contact with the very few clients impacted and notified governmental authorities and regulators.”
A Deloitte spokeswoman declined immediate comment, saying that the firm would issue a statement shortly.
Airbnb Launches Local Tours in NYC with Sarah Jessica Parker
Airbnb is launching local tours and other experiences in New York City this week with a special host.
Her listing promises an “unforgettable shoe-shopping experience'” and her bio describes her as an “actor, producer, businesswoman” and “proud New Yorker.”
She’s Sarah Jessica Parker of ‘Sex and the City’ fame and she’ll be taking four guests shoe-shopping at Bloomingdale’s, then sending them to the ballet.
Parker’s listing goes live Tuesday, with four spots at $400 each, first come, first served. The money will benefit the New York City Ballet, where Parker is a board member.
Airbnb is primarily known for vacation rentals around the world. Officials in many cities have criticized the company, saying its short-term rentals are reducing long-term housing options for residents and forcing prices up.
Trump Promising Huge Tax Cut; Focus on Taxes vs Health Care
Poised to reveal a tax plan that is a pillar of his economic policy and delivering on a campaign pledge, President Donald Trump is promising “The largest tax cut in the history of our country.”
Trump’s declarations came as the health care legislation brought forward by Republicans teetered near failure. He said his “primary focus” is the tax overhaul plan, which would be the first major revamp of the tax system in three decades.
Trump has promised economic growth of 3 percent, and insists that slashing taxes for individuals and corporations is the way to achieve it. He said the tax plan that the White House and Capitol Hill Republicans have been working on for months is “totally finalized.” He was speaking on the tarmac at the Morristown Municipal Airport.
Trump’s details weren’t firm. He said “I hope” the top corporate tax rate will be cut to 15 percent from the current 35 percent. House Speaker Paul Ryan has said a 15 percent rate is impractically low, with a rate somewhere in the low- to mid-20 percent range more viable to avoid blowing out the deficit. The rate is “going to be substantially lower so we bring jobs back into our country,” Trump said.
Trump also said “We think we’re going to bring the individual rate to 10 percent or 12 percent, much lower than it is right now.” He did not say whether the tax rate for the wealthiest Americans, now at 39.6 percent would be cut, as some Republicans have advocated.
“This is a plan for the middle class and for companies, so they can bring back jobs,” he said.
The plan also is expected to reduce the number of tax brackets from seven to three.
Trump spoke as House Republicans on the tax-writing Ways and Means Committee huddled behind closed doors to discuss the plan. They have promised to reveal an outline and possible details of the plan later this week, after all Republican lawmakers in the House get a chance to discuss it and put questions to the chief architects, including Rep. Kevin Brady, R-Texas, who heads the Ways and Means panel.
“We’ll let the White House determine the timetable” of releasing the plan, Brady said following the meeting. He added it will “definitely” occur this week.
Republicans have been split on some core issues. They are divided over whether to add to the nation’s soaring $20 trillion debt with tax cuts. The GOP also is at odds over eliminating the federal deduction for state and local taxes.
Republican senators on opposing sides of the deficit debate have tentatively agreed on a plan for $1.5 trillion in tax cuts. That would add substantially to the debt and would enable deeper cuts to tax rates than would be allowed if Republicans followed through on earlier promises that their tax overhaul wouldn’t add to the budget deficit. That would mark an about-face for top congressional Republicans like Senate Majority Leader Mitch McConnell and Ryan, who had for months promised it wouldn’t add to the deficit.
Earlier Sunday, Treasury Secretary Steven Mnuchin said in a television interview the plan “creates a middle-income tax cut, it makes businesses competitive and it creates jobs.” He added that there are changes, too, for the “high end,” including “getting rid of lots of deductions.” He did not offer specifics.
Iraqi Government Asks Foreign Countries to Stop Oil Trade With Kurdistan
Iraq on Sunday urged foreign countries to stop importing crude directly from its autonomous Kurdistan region and to restrict oil trading to the central government.
The call, published in statement from Prime Minister Haider al-Abadi’s office, came in retaliation for the Kurdistan Regional Government’s plan to hold a referendum on independence on Monday.
The central government’s statement seems to be directed primarily at Turkey, the transit country for all the crude produced in Kurdistan. The crude is taken by pipeline to the Turkish Mediterranean coast for export.
Baghdad “asks the neighboring countries and the countries of the world to deal exclusively with the federal government of Iraq in regards to entry posts and oil,” the statement said.
The Iraqi government has always opposed independent sales of crude by the KRG, and tried on many occasions to block Kurdish oil shipments.
Long-standing disputes over land and oil resources are among the main reasons cited by the KRG to ask for independence.
Iraqi Kurdistan produces around 650,000 barrels per day of crude from its fields, including around 150,000 from the disputed areas of Kirkuk.
The region’s production volumes represent 15 percent of total Iraqi output and around 0.7 percent of global oil production. The KRG aspires to raise production to over 1 million barrels per day by the end of this decade.
Kurdish oil production has been dominated by mid-sized oil companies such as Genel, DNO, Gulf Keystone and Dana Gas. Major oil companies such as Chevron, Exxon Mobil and Rosneft also have projects in Kurdistan but they are mostly at an exploration stage.
However, Rosneft, Russia’s state oil major, has lent over $1 billion to the KRG guaranteed by oil sales and committed a total of $4 billion to various projects in Kurdistan.
Swiss Voters Reject Raising Women’s Retirement Age
Swiss voters rejected raising women’s retirement age to 65 in a referendum on Sunday on shoring up the wealthy nation’s pension system as a wave of Baby Boomers stops working.
Authorities pushing the first serious reform of the pension system in two decades had warned that old-age benefits were increasingly at risk as life expectancy rises and interest rates remain exceptionally low, cutting investment yields.
But it fell by a margin of 53-47 percent, sending the government back to the drawing board on the thorny social issue.
The package turned down under the Swiss system of direct democracy included making retirement between the ages of 62 and 70 more flexible and raising the standard value-added tax (VAT) rate from 2021 to help finance the stretched pension system.
It sought to secure the level of pensions through 2030 by cutting costs and raising additional revenue.
Minimum pay-out rates would have gradually fallen and workers’ contributions would rise, while public pensions for all new recipients would go up by 70 Swiss francs ($72.25) a month.
The retirement age for women would have gradually risen by a year to 65, the same as for men.
“That is no life,” complained one 49-year-old kiosk cashier, who identified herself only as Angie. “You go straight from work to the graveyard.”
Some critics had complained that the higher retirement age for women and higher VAT rates were unfair, while others opposed expanding public benefits and said the reforms only postponed for a decade rather than solved the system’s financial woes.
Opinion polls had shown the reforms just squeaking by, but support had been waning.
The standard VAT rate would have gone up by 0.3 point from 2021 to 8.3 percent — helping generate 2.1 billion francs a year for pensions by 2030 — but the rejection means the standard VAT rate will now fall to 7.7 percent next year as a levy earmarked for disability insurance ends.
A 2014 OECD survey found Switzerland, where a worker earns over $91,000 on average, spends a relatively low 6.6 percent of economic output on public pensions. Life expectancy at birth was 82.5 years. More than 18 percent of the population was older than 65.
($1 = 0.9690 Swiss francs)
After German Vote, Europe Can Turn to Patching Euro’s Flaws
Sunday’s national election in Germany will sound the starting gun for a renewed debate on fixing flaws in Europe’s shared currency to prevent future crises.
France’s new president Emmanuel Macron has made it clear he is willing to push for change to strengthen the euro and is expected to make proposals in a major speech Tuesday. He is pushing for, among other things, a finance minister for the eurozone to oversee a central fiscal pot of money that could even out recessions in individual members.
Even pro-euro policymakers concede their 19-nation currency union contains weaknesses that fed its debt crisis — and leave it exposed to new trouble. But action on fixes has slowed.
Macron’s ideas are not new but several of them have faced resistance from Germany, always allergic to the idea of being handed the bill for other members’ troubles. For example, German Chancellor Angela Merkel and her finance minister, Wolfgang Schaeuble, have pushed back against the idea of EU-wide insurance on bank deposits meant to keep bank troubles from hitting government finances.
Now there are signs that after its own elections are out of the way, Germany might be more open to change or at a minimum speeding up steps — like the deposit insurance idea — that have stalled. Polls suggest Merkel will win a fourth term. What’s not clear is which party her center right Christian Democratic Union will form a coalition.
“In several ways, the coming 12-18 months represent an exceptional opportunity for European reform,” says Nicolas Veron, senior fellow at the Bruegel think tank in Brussels and at the Peterson Institute for International Economics in Washington. Reasons for that, he said, include:
The two biggest EU countries, France and Germany, will now have new governments with fresh mandates from voters.
Europe’s banks are in better shape and the economy is growing, meaning leaders are not preoccupied with fighting a crisis.
Anti-euro populists have been turned back at the polls this year in France and the Netherlands, giving pro-EU forces a fresh shot of confidence.
Memories of the debt crisis that threatened to break up the eurozone at its peak in 2011-2012 may still be vivid enough to overcome complacency.
Merkel has expressed cautious openness to tweaking the setup of the euro.
“I have made clear that I don’t have anything against the title of a European finance minister per se — we would just have to clear up, and we are not yet that far along in talks with France — what this finance minister could do,” she said in August.
“I could imagine an economy and finance minister … so that we achieve a higher degree of harmonization of competitiveness.”
The euro, currently worth about $1.20, was created in 1999, and 19 of the 28 EU members use it.
European officials concede that the debt crisis, which exploded when Greece revealed in October 2009 that it was bankrupt, exposed serious flaws. Once financial trouble hit, member countries such as Greece, Ireland and Portugal lacked typical crisis safety valves such as letting their national currency devalue, which can help a country’s exports and attract investment. Without their own currencies, this was no longer possible. The countries wound up needing bailouts from the other member countries led by Germany and from the International Monetary Fund.
Additionally, the cost of rescuing failing banks threatened to bankrupt entire eurozone governments. And the euro lacks a central fiscal budget that could even out recessions in member countries by investing more in economies in need.
German resistance will likely remain strong to the bolder ideas, such as a well-stocked central fiscal pot worth several percentage points of EU gross domestic product. Currently, the EU’s budget is 1 percent of GDP, spent on things like support for farmers and infrastructure to help development in the poorest members.
More modest, politically realistic steps could include:
Pushing ahead with EU-wide deposit insurance, to be implemented over a period of years.
Regulations limiting the widespread practice of European banks buying their own governments’ bonds. That would increase pressure on governments to shape up their economies and finances.
A modest additional pot of money that could be used as targeted stimulus for eurozone countries that fall into serious recessions, with the condition that they implement economic reforms.
EU governments led by Germany, the bloc’s most influential member, have already taken some significant steps since the crisis days. They created a fund that can give bailout loans to states in need. They tightened banking oversight by moving it to the EU level at the European Central Bank, and they took steps to stick bank creditors — not taxpayers — with any losses in case of a rescue.
The new system proved its mettle in June, when the ECB pulled the plug on Spain’s troubled Banco Popular, the country’s sixth-largest bank, and then orchestrated a sale to Banco Santander for one euro. Shareholders and junior bondholders took the losses, while taxpayers and depositors were spared. It’s a step away from crisis times when the financial burden of rescuing banks drove Ireland and Spain to seek bailout help.
Carsten Brzeski, chief economist at ING Germany, says that reforms like a small central fund and deposit insurance are feasible.
“The opportunity in 2018 would be more a natural evolution of the process that has been ongoing now for the past couple of years, rather than being a revolution,” he said.