1UA TV

The head of Australia’s central bank is upbeat about domestic economic growth despite a disappointing end to last year, but fears the specter of a trade war calling threatened U.S. tariffs “highly regrettable.”

President Donald Trump intends to slap duties on imports of steel and aluminum, a pledge that has met with warnings of retaliation from the rest of the world and spooked financial markets.

Reserve Bank of Australia (RBA) Governor Philip Lowe’s comments on Wednesday come as data showed growth in Australia’s A$1.8 trillion ($1.40 trillion) economy slowed last quarter as bad weather hit exports, although a pickup in spending helped it extend its 26-year run without recession.

Lowe slammed the tariffs on Wednesday at a business summit in Sydney, saying a tit-for-tat move from other countries would be very damaging.

“The recent announcement on tariffs by President Trump was highly regrettable,” Lowe said, strong words for a typically measured policymaker. “History shows protectionism is bad.”

Australia’s export-driven economy relies heavily on international trade and capital. It is particularly vulnerable to a U.S.-led trade war, which threatens the outlook for global growth and the demand for commodities.

Those concerns have been reflected in global financial markets, with investors dumping shares for the safety of gold, cash, the Japanese yen and Swiss francs.

The Australian dollar, considered a risky asset, has been volatile since the start of February, losing 3.6 percent that month alone.

On Wednesday, it slipped 0.6 percent to go as low as $0.7772, not far from a recent two-month trough of $0.7713. It was last down 0.4 percent at $0.7797.

To add to the uncertainty a key advocate for free trade in the White House announced his resignation on Wednesday, fanning fears Trump would go ahead with tariffs and risk a trade war.

Closer to home, Lowe sounded confident about the country’s future, saying the economy was moving in the right direction and signaling the next move in rates was likely up, not down.

Speed bump

Lowe’s confidence rests partly on unexpected strength in the domestic labor market and a synchronized upturn in global activity.

That helped offset a disappointing end to last year with official data showing annual economic growth slowed to 2.4 percent in the December quarter, from an upwardly revised 2.9 percent in third quarter.

Not all economists were as optimistic as Lowe.

“The outlook for business investment is better, but dwellings investment will probably continue to decline and consumption may weaken again soon,” said Paul Dales, Sydney-based chief economist at Capital Economics.

“So while the RBA believes that GDP growth will step up, we think another year of growth of about 2.5 percent is on the cards,” Dales added. “That partly explains why we doubt the RBA will raise interest rates until late in 2019.”

The RBA held rates at a record low 1.50 percent for a 17th straight meeting on Tuesday as inflation is still below its 2-3 percent target band.

The RBA sees only gradual progress in reducing unemployment and inflation. As a result, “the Board does not see a strong case for a near-term adjustment of monetary policy,” Lowe said.

The futures market reacted by pushing back the chance of a rate hike, with a 25 basis-point increase not fully-priced in until May 2019.

 
…

North Korea’s agreement to enter into talks with the United States could be a diplomatic breakthrough to reach a peaceful resolution to the nuclear crisis, or a ruse to weaken sanctions, or both. 

North Korean leader Kim Jong Un’s willingness to engage with the United States in negotiations to end his country’s nuclear weapons program, and his promise to suspend nuclear and missile tests while talks are under way, was reported on Tuesday by Chung Eui-yong, the head of South Korea’s National Security Office, following his meeting with Kim in Pyongyang.

Contradictory messages

The North Korean government has not yet confirmed the South Korean interpretation of the potential diplomatic breakthrough. In fact the North’s state newspaper, Rodong Sinmun, on Wednesday ran a seemingly contradictory column that justified the nation’s nuclear deterrence as necessary to protect “against U.S. nuclear threats,” and said the issue is not open to dispute.

The South Korean Unification Ministry on Wednesday refuted the newspaper’s uncompromising stance and said the Kim government’s position, as communicated to the South Korean envoy, is open to end its nuclear program under the right conditions.

“North Korea clearly stated its willingness to denuclearize, and also clarified that it had no reason to retain nuclear weapons if the military threat against North Korea is resolved and regime security is guaranteed,” said Baik Tae-hyun, spokesperson for the Unification Ministry.

North Korea has broken past agreements to end its nuclear program, in exchange for economic assistance and security guarantees. In the last two years, the Kim Jong Un government accelerated long-range ballistic missile and nuclear tests, defiantly declared North Korea a nuclear weapons state, and moved closer to developing operational capability to target U.S. mainland cities with a nuclear-armed intercontinental ballistic missile.

Skeptical allies

U.S. President Donald Trump has responded with a “maximum pressure” strategy to force Pyongyang to halt its nuclear program by imposing tough sanctions that ban billions of dollars worth of North Korean coal, iron ore, clothing products and seafood exports. The Trump administration has also emphasized a willingness to use military force, if needed, to eliminate the nuclear threat.

The South Korean chief envoy, along with Suh Hoon, the head of the National Intelligence Service, will travel this week to Washington to brief U.S. security officials on their findings. They will also visit Beijing, Moscow and Tokyo to brief officials.

Trump said North Korea seems “sincere” in its offer to engage in talks. But Vice President Mike Pence emphasized that the United States will keep up sanctions pressure until Pyongyang takes significant measures to halt its nuclear program.

Japan also voiced strong support for maintaining economic sanctions on North Korea while any talks are underway.

“If we were to have a meaningful discussion, North Korea needs to commit to a denuclearization plan that is verifiable, and irreversible. They need to take specific action. This is of utmost importance,” said Japanese Chief Cabinet Secretary Yoshihide Suga.

China has encouraged reconciliation efforts, but the Global Times, a state-run newspaper, published an editorial on Wednesday emphasizing that China, Russia and the United Nations Security Council must also be included in negotiations to resolve the Korean nuclear issue.

Cautious progress

Analysts view North Korea’s offer to hold nuclear talks, while also suspending provocative tests, with a mix of cautious optimism and skepticism. 

“We should just continue talks forever as far as I am concerned, because if they do not conduct nuclear tests and if they do not conduct missile flight tests, that’s a win,” said regional security analyst Daniel Pinkston with Troy University in Seoul.

While engaging in talks may be a positive step, it is unclear that the United States and North Korea can even agree on what denuclearization means. Washington wants to dismantle Pyongyang’s nuclear program, but North Korea’s longstanding requirement for denuclearization includes the removal of all U.S. forces from the Korean Peninsula, and the withdrawal of the American commitment to use its nuclear arsenal to defend its allies in the region.

“They say if you will remove those things that will make North Korea feel more secure, and then at that point North Korea will be in a position to consider, that is their word, consider denuclearization,” said Evans Revere, a security analyst at the Albright Stonebridge Group and a former State Department official who was involved in past negotiations with North Korea. 

There are also concerns that the Kim government is only offering to engage in talks to extract concessions from South Korean President Moon Jae-in when they meet for a summit in late April. 

The agreement to hold an inter-Korean leaders summit at the truce village of Panmunjom, on the South Korean side of the demilitarized zone border region, was also worked out during the envoy’s visit to Pyongyang. This will be the first meeting of leaders from North and South since 2007.

The progressive South Korean leader has tried to encourage the North’s cooperation through engagement, most recently by facilitating Pyongyang’s participation in the winter Olympics. 

Some worry Moon may seek an exemption from sanctions, to offer the North economic incentives when he meets with Kim in April, such as reopening the jointly run Kaesong Industrial Complex that employed over 5,000 North Korean workers until it was shut down following a Pyongyang nuclear test in 2016.

“Anything that would weaken or dilute the impact of existing economic sanctions on North Korea would be a great mistake,” said Bong Young-shik, a political analyst with the Yonsei University’s Institute for North Korean Studies in Seoul.

However President Moon on Wednesday said there are no plans to ease sanctions related to the summit, according to the South’s Yonhap news agency.

Lee Yoon-jee in Seoul contributed to this report.
…

The United States says it will impose new economic sanctions on North Korea for using a lethal chemical nerve agent in last year’s assassination of the estranged half-brother of leader Kim Jong Un.

The U.S. State Department announced Tuesday that it has determined that Pyongyang used the banned VX nerve agent to kill Kim Jong Nam on February 13, 2017 as he walked through Kuala Lumpur’s International Airport. Two women were caught on airport security cameras spraying a liquid in Kim’s face. He died just minutes later. 

“This public display of contempt for universal norms against chemical weapons use further demonstrates the reckless nature of North Korea and underscores that we cannot afford to tolerate a North Korean WMD (weapons of mass destruction) program of any kind,” State Department spokeswoman Heather Nauert said in a written statement. The statement did not explain how the department reached its conclusion.

The United States will impose a new set of economic sanctions against Pyongyang for carrying out Kim Jong Un’s brother, but they will likely make little, if any, impact as North Korea is already under severe sanctions over its nuclear and ballistic missile programs.

Two women, 25-year-old Indonesian Siti Aisyah and 28-year-old Vietnamese Doan Thi Huong, are on trial for Kim Jong Nam’s murder. The women claim they were tricked by North Korean agents who told them they were taking part in a prank television show. 

Kim Jong Nam was estranged from Kim Jong Un. He reportedly fell out of favor with their father, the late Kim Jong Il, in 2001, when he was caught trying to enter Japan on a false passport to visit the Disneyland theme park in Tokyo.

North Korea is believed to have a large stockpile of chemical weapons. A leaked United Nations report says Pyongyang has supplied forces under Syrian President Bashar al-Assad with chemical weapons equipment and expertise. 
…

A federal watchdog says White House counselor Kellyanne Conway violated the federal law prohibiting government officials from using their positions to influence political campaigns.

The Office of Special Counsel, which is unrelated to Robert Mueller’s office, says Conway violated the Hatch Act twice last year when she advocated for Republican Roy Moore and against his Democratic rival, Sen. Doug Jones, in the Alabama’s Senate race.

Special Counsel Henry Kerner is sending his office’s findings to President Donald Trump Tuesday “for appropriate disciplinary action.” Trump will decide what – if any – punishment she will receive. The White House has not immediately commented on the report.

Conway came under fire for violating a different ethics provision last year, when she urged Trump supporters to purchase Ivanka Trump brand products.

 
…

Shortly before embarking on his first official visit to Africa, U.S. Secretary of State Rex Tillerson said Tuesday the U.S. is committed to building on a “strong foundation of U.S.-Africa relations” and accused China of “encouraging dependency” in its approach to Africa.

In his first speech describing the administration’s Africa policy, Tillerson said the U.S. is “eager” to lower barriers to trade and investment in Africa, whose largest trading partner by far is China. He added that the U.S. approach of “incentivizing good governance” contrasts sharply to China’s, “which encourages dependency, using opaque contracts, predatory loan practices and corrupt deals that mire nations in debt and undercut their sovereignty.”

Tillerson’s one-week, five-nation trip will focus on counterterrorism, promoting peace, good governance and trade and investment.

“Our country’s security and economic prosperity are linked with Africa’s like never before,” the top U.S. diplomat said before an audience at George Mason University just outside of Washington.

The trip comes two months after President Donald Trump triggered a wave of controversy when he reportedly referred to African nations as “s***hole countries” during an Oval Office meeting on immigration with a bipartisan group of senators.

The African Union, which represents 55 countries on the continent, demanded an apology from Trump. A group of African ambassadors to the United Nations also denounced Trump’s remarks, saying they were “outrageous, racist and xenophobic.”

After more than a year since entering the White House, Trump still has not nominated a chief U.S. diplomat for Africa. And embassies in the Democratic Republic of Congo, Somalia, South Africa and in five other African countries remain without ambassadors.

Tillerson is scheduled to meet with top officials in the allied nations of Chad, Djibouti, Ethiopia, Kenya and Nigeria, some of which are helping in the battle against rebellions from jihadists linked to al-Qaida and Islamic State.

“To understand where the world is going, one must understand Africa is the future,” Tillerson said, noting Africa will be home this year to six of the world’s 10 fastest-growing economies and will have one-fourth of the world’s workforce by 2030.

Without partnerships to build infrastructure and achieve more economic development, Tillerson warned there will be “new ways for terrorists to exploit the next generation.” He said the administration is willing to collaborate with African countries to address the “drivers of conflict” and to build the “institutional law enforcement capacity of African nations.”

Tillerson also said the U.S. and African leaders “must work to find long-term diplomatic solutions” to regional conflicts “that cause so much human suffering.” He announced the U.S. will give $533 million in additional aid to alleviate famine and other needs caused by conflicts in Ethiopia, the Lake Chad Basin, Somalia and South Sudan.

“Greater stability will attract United States’ trade and investment with African nations,” he said.

Tillerson’s trip will overlap with Russian Foreign Minister Sergey Lavrov, who is scheduled to visit Ethiopia at the same time.

 
…

U.S. intelligence chief Dan Coats said Tuesday the U.S. government has yet to put in place any “coherent strategy” to thwart any Russian interference in the November congressional elections, even though it is “highly likely” that Moscow will engage in a campaign of disruption, just as it did in the 2016 presidential election.

Coats told a Senate Armed Services Committee hearing on worldwide threats that several U.S. agencies are “well aware” of the need for the government to protect against Russian election meddling in the U.S. But he was stumped when Sen. Mazie Hirono, a Hawaii Democrat, asked him, “Why do we not have a whole-in-government strategy in place?”

“We understand it has to be addressed,” Coats said. “I don’t have a specific answer to your question.”

Hirono replied, “The conclusion is that this is not a top priority” for President Donald Trump after the U.S. intelligence community concluded that Russia’s 2016 election meddling was aimed at helping him defeat his election challenger, Democrat Hillary Clinton.

Coats, the director of national intelligence, said the U.S. has to date “not seen evidence of a robust effort yet on the part of Russia, but we know their malign activities continue to exist. It’s highly likely that they will be doing something. We just don’t know how much and when and where.”

Coats said that as soon as next week, he expects the U.S. Treasury to announce sanctions against 13 Russians accused by Special Counsel Robert Mueller of interference in the 2016 election.

Russia has rejected playing any role in the U.S. election, but the U.S. intelligence community has concluded it was personally directed by Russian President Vladimir Putin. Trump has called several U.S. probes into whether his campaign colluded with Russia a “witch hunt” and an excuse by Democrats to explain his upset victory over Clinton.

Coats told the lawmakers, “We assess that Russia is likely to continue to pursue even more aggressive cyberattacks with the intent of degrading our democratic values and weakening our alliances. Persistent and disruptive cyber and influence operations will continue against the United States and European countries and other allies.” He said Moscow will be “using elections as opportunities to undermine democracy, sow discord and undermine our values.”

The intelligence chief said that “Russia perceives its past efforts as successful and views the 2018 U.S. midterm elections as a potential target. We continue to see Russian activities designed to exacerbate social and political figures in the United States. In the next year, we assess Russia will continue to use propaganda, social media, false flag personas, sympathetic spokesmen and other means of influence to try to build on its wide range of disruptive operations.”

VOA’s Jeff Seldin contributed to this report from the Pentagon.
…

U.S.-backed ground operations against Islamic State remnants in eastern Syria have been put on hold because Kurds who had spearheaded combat against the extremists have shifted to a separate fight with Turkish forces, U.S. officials said Monday.

The public acknowledgement of what Col. Rob Manning, a Pentagon spokesman, called an “operational pause” is the most explicit sign yet that Turkey’s intervention in the Kurdish-held enclave of Afrin is hindering the U.S. effort to finish off IS in Syria.

For weeks, Defense Secretary Jim Mattis and other U.S. officials have called Turkey’s operation a “distraction” from the anti-IS campaign. Mattis also has said the U.S. understands that Turkey has an active Kurdish insurgency inside its own borders and that it views Syrian Kurdish People’s Protection Units, or YPG, to be a terrorist organization. The U.S. says the YPG is separate from the Kurdish fighters inside the U.S.-backed Syrian Democratic Forces, but Turkey disagrees.

Turkey launched its air and ground offensive in the Afrin enclave on Jan. 20, conducting airstrikes and artillery strikes on a daily basis. It is just one dimension of a complex war in Syria that includes a range of local opposition fighters, extremist elements, Syrian government troops, proxy forces and military units from Russia and the United States.

Manning said that although ground operations against IS in the Euphrates River Valley have been temporarily suspended, U.S. airstrikes against IS holdouts in that area are continuing. He said one airstrike Sunday near the city of Abu Kamal destroyed two IS supply routes.

“The nature of our mission in Syria has not changed,” Manning said. He said the Syrian Democratic Forces, which are comprised of Kurdish as well as Arab fighters, remain “our major partner” in completing the war against IS in Syria.

Another Pentagon spokesman, Maj. Adrian Rankine-Galloway, said he could not offer an estimate of the number of Kurdish fighters who have left the Euphrates River Valley battlefield to join the fight against Turks in Afrin.

“They’re not fighting ISIS any more, and that basically meant that they’re not taking territory back from ISIS as quickly as they had been in the past,” Rankine-Galloway said, using an acronym for Islamic State. He added that the pause in offensive ground operations has not resulted in the loss of any territory retaken from IS.
…

Longtime Republican U.S. Senator Thad Cochran says he will resign April 1 because of health reasons.

Cochran, who is 80 years old and has represented Mississippi in the Senate since 1978, has been ill in recent months, missing several weeks of voting late last year.

“I regret my health has become an ongoing challenge,” Cochran said in a statement. “I intend to fulfill my responsibilities and commitments to the people of Mississippi and the Senate, through the completion of the 2018 appropriations cycle, after which I will formally retire from the U.S. Senate.”

Cochran is chairman of the powerful Senate Appropriations Committee, and his departure means Mississippi will have two Senate elections on the ballot this November.

His exit will affect the battle for the Senate majority, forcing Republicans to defend another seat during this year’s midterm elections.

Republicans currently hold a 51-49 advantage over Democrats in the Senate. Midterm elections are historically difficult for the president’s party to retain seats, and Republicans have little room to lose in the effort to remain in control of the chamber.

The other Mississippi Senate seat is held by Republican Roger Wicker, who is up for re-election this year.

Cochran’s temporary replacement will be chosen by Mississippi’s governor. A special election will be held in November to fill the rest of Cochran’s term, which runs through January 2021.

When Cochran was first elected to the Senate in 1978, he became the first Republican in more than 100 years to win a statewide election in Mississippi. Now the state, along with many others in the south, regularly sends Republicans to Washington.

Cochran served six years in the House of Representatives before joining the Senate, putting his time in Congress at over 40 years.
…

Ten years after a financial crisis rocked the nation’s economy, the Senate is poised to pass legislation that would roll back some of the safeguards Congress put into place to prevent a relapse.

The move to alter some key aspects of the Dodd-Frank law has overwhelming Republican support and enough Democratic backing that it’s expected to gain the 60 votes necessary to clear the Senate. Several Democratic lawmakers facing tough re-election races this year have broken ranks with Minority Leader Chuck Schumer, D-N.Y., and Senator Elizabeth Warren, D-Mass.

The legislation would increase the threshold at which banks are considered too big to fail. Such banks are subject to stricter capital and planning requirements, and lawmakers are intent on providing them relief in hopes that it will boost lending and the economy.

Banks have long complained about the cost of complying with the many requirements of Dodd-Frank. Under the Senate bill, some of the nation’s biggest banks would no longer have to undergo an annual stress test conducted by the Federal Reserve. The test assesses whether a bank has enough capital to survive an economic shock and continue lending. Dozens of banks would also be exempted from making plans called “living wills” that spell out how the bank will sell off assets or be liquidated in a way that won’t create chaos in the financial system.

The legislation increases from $50 billion to $250 billion the threshold at which banks are considered critical to the system. The change would ease regulations on more than two dozen financial companies, including BB&T Corp., Sun Trust Banks Inc. and American Express.

Response from opponents

Opponents of the bill argue that the same banks getting regulatory relief through the Senate bill also got about $50 billion in taxpayer-funded bailouts during the financial crisis. They note Countrywide Financial, which was at the center of the mortgage crisis, was smaller than some of the banks targeted for relief now.

“There is no reason at all to roll back the rules on these big banks so they can pad their pockets even more — and cut them loose to take on wild risks again,” wrote Warren, who before joining the Senate led a congressional oversight panel for the bailout programs.

The Senate bill emerged from lengthy negotiations between Senator Mike Crapo, the Republican chairman of the Senate Committee on Banking, Housing and Urban Affairs, and Democratic members on the committee. The ranking Democrat, Senator Sherrod Brown of Ohio, said the changes go too far and he walked away.

But many Democrats stayed on board, and the bill has 13 Republican and 13 Democratic or independent co-sponsors, a rare level of bipartisanship for substantive legislation in the current Congress. By contrast, the House effort to roll back Dodd-Frank didn’t generate a single Democratic vote in support.

Banks and donations

Commercial banks are major players on Capitol Hill, spending $66 million on lobbying Congress last year and $44 million on federal election campaigns in the previous election cycle, according to the Center for Responsive Politics, which tracks campaign spending. About two-thirds of the money went to Republican campaigns and about a third to Democratic campaigns.

This cycle, commercial banks have targeted their campaign donations to major players on committees with jurisdiction over banking issues, including the incumbent senators in competitive races: Among the top 10 recipients of commercial bank donations are Democratic Senators Heidi Heitkamp of North Dakota, Joe Donnelly of Indiana, Jon Tester of Montana and Republican Senator Dean Heller of Nevada. All four are co-sponsors of Crapo’s bill.

Crapo said the Federal Reserve will have the authority to tailor tougher capital and liquidity requirements for individual banks when it believes it’s necessary. For the others, compliance costs should drop.

“It’s going to free up a phenomenal amount of capital in this country that right now for no good reason, no safety or soundness reason, is being held back,” Crapo said.

Bill details

The Federal Reserve conducts annual stress tests of banks with $50 billion or more in assets. Under the Senate bill, banks with under $100 billion in assets won’t have to undergo the Fed’s yearly test. Banks with between $100 billion and $250 billion in assets will be exempted from the yearly stress test after 18 months. The Federal Reserve will have authority to accelerate the exemption or extend it.

Federal Reserve Chairman Jay Powell seemingly endorsed that approach when he appeared before the Senate’s banking committee last week.

“I think it gives us the tools that we need to continue to protect financial stability,” Powell said of the bill.

The largest dozen or so banks in the country will still have to undergo the yearly test.

The bill also exempts banks with less than $10 billion in assets from what is referred to as the Volcker Rule, which limits banks from using their own capitol to trade the markets.
…

A U.S. Navy aircraft carrier is paying a visit to a Vietnamese port for the first time since the Vietnam War ended in 1975, seen by many as both countries’ efforts to stem expansionism by China in the South China Sea.

The nuclear-powered USS Carl Vinson with more than 6,000 crew members, accompanied by a cruiser and a destroyer, anchored off the central Vietnamese port city of Danang Monday for a five-day visit.

Although this is the first time a U.S. aircraft carrier has made a port call to Vietnam, smaller U.S. warships have made visited as ties between the former foes have improved in recent years.

Those port calls include a 2016 visit by submarine tender USS Frank Cable and guided-missile destroyer USS John S. McCain to Cam Ranh Bay, a U.S. logistics complex during the Vietnam War.

Sailors from the American carrier are scheduled to spend time at a treatment center for people who were exposed to Agent Orange, the toxic defoliant sprayed over large swathes of land by the U.S. military during the war, and at an orphanage. 

They will also play basketball and soccer games with locals, while the navy band will give concert performances.

The visit comes at a time when neighboring China, which claims most of the South China Sea, is increasing its military buildup in the Paracel islands and has built seven artificial islands in the Spratlys, maritime territory also claimed by Vietnam. 

Vietnamese envoys have been working to ease Chinese concerns over the visit and the prospect of broader security cooperation between Hanoi and Washington, according to diplomats and others familiar with the talks.
…