International investors are looking to Tuesday’s meeting of the Turkish central bank as a critical test of whether the bank can remain independent of President Recep Tayyip Erdogan, his increasing powers, and what some criticize as his Islamist agenda.

The Turkish currency has fallen sharply as concerns mount on whether he will impose unorthodox economic policies on the bank.

Erdogan, who has called for Islamic banks to make up a quarter of the country’s banking sector, strongly opposes interest rates and has described them as “the mother and father of all evil.” The president rejects economic orthodoxy that increasing rates reduces inflation.

Investors are looking to the Turkish central bank meeting to hike rates to rein in rampant inflation, currently running at over 15 percent — among the highest in the developed world.

“If the central bank cannot find the opportunity to hike, then the markets will take it very negatively,” economist Inan Demir of Nomura Securities said. “If it can hike then the market will see this as the first market-friendly action by the new administration.”

Investors’ concerns saw the Turkish lira plunge about 30 percent since the start of the year. Adding to the unease is Erdogan’s move to assume sweeping executive powers after last month’s presidential elections.

During his campaign, Erdogan pledged to take greater control over the economy, including the independent central bank. The appointment of his son-in-law, Berat Albayrak, as Turkey’s finance minister has further raised international investor concerns.

In the past, Albayrak voiced support for Erdogan’s stance on interest rates. The new cabinet announced earlier this month saw the removal of Mehmet Simsek and Naci Agbal, who investors saw as strong advocates of orthodox economic policies.

Uncertainty over the outcome of Tuesday’s central bank meeting is fueling investors’ fears that Ankara could adopt radical new measures to prevent capital from leaving the country.

“Investors are starting to ask if capital controls will be imposed,” Demir said. “If there is no monetary policy to counter the lira depreciation by the central bank, then investors will start to assume worst case scenario, the capital control scenario.”

“Such a fear,” he continued, “will mean an acceleration of capital outflows out of the country, which would bring capital inflows to the fore, so there is the risk of a self-fulfilling prophecy.”

Analysts warn capital controls would be tantamount to economic suicide, killing Turkey’s credit rating and thus its ability to borrow the $5 billion a month it needs to cover the shortfall of its current account deficit, or the difference between what it imports and exports.

In the past few days, Albayrak has sought to ease investor concerns by stating support for the central bank.

“We aim for an effective central bank. The central bank sees and builds the fiscal life in a correct way. Turkey will never again be this attractive for foreign investors,” he said Sunday.

Albayrak, accompanied by internationally respected economic experts, met Monday with his counterparts from countries at the G20 meeting of finance ministers in Buenos Aires, where he underscored his message that Turkey remains market-friendly.

Erdogan has also refrained from visibly advocating his opposition to interest rates, a move seen as helping investor sentiment. But analysts warn actions, not words, will determine how financial markets will ultimately react towards Turkey.

If the central bank does hike rates it could enhance Albayrak’s reputation among international investors, some analysts say.

“He can correct his own image going forward,” said Demir.

On the other hand, with Turkish interest rates already among the highest in the developed world at over 17 percent, a further hike will likely bring problems.

“[Turkish] private banks are already not adding to their loans because they realize at these rates, repaying will be very difficult,” political analyst Atilla Yesilada of Global Source Partners said. “That is going to hit economic growth.”

Both Turkish consumers and companies are already heavily indebted and economists predict a severe economic slowdown — if not a recession — by the end of the year.

Analysts warn even if the bank were to raise interest rates Tuesday and Erdogan were to abandon his unorthodox economic policies, investors would be looking for Ankara to do more to rein in public spending and avert a dramatic slide.

“The problem now is discretionary spending on mega projects, welfare projects which are simply not bearable, this needs to be corrected,” Yesilada said.
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В.о. міністра фінансів України Оксана Маркарова підписала багатосторонню конвенцію щодо виконання заходів, які стосуються угод про оподаткування, з метою протидії розмиванню бази оподаткування та виведенню прибутку з-під оподаткування (MLI), повідомила прес-служба Міністерства фінансів.

У відомстві пояснили, що через прогалини та неузгодженості у національному та міжнародному податковому законодавстві міжнародні компанії зменшують або уникають зобов’язань зі сплати податку на прибуток. У зв’язку з цим Україна втрачає надходження у бюджет.

У Мінфіні підкреслюють, що через це 1 січня 2017 року Україна приєдналася до Програми розширеного співробітництва в рамках ініціативи Організації економічного співробітництва і розвитку (ОЕСР). Країни-члени цієї організації розробили План дій для боротьби з розмиванням бази оподаткування і виведенням прибутку з-під оподаткування (План дій BESP).

Він включає в себе 15 кроків, з них чотири – обов’язкові для України («удосконалення заходів боротьби з податковими зловживаннями», «недопущення зловживання пільгами, передбаченими двосторонніми угодами», «рекомендації про документації з трансфертного ціноутворення та розкритті інформації по країнам», «удосконалення процедури взаємного узгодження шляхом вирішення спорів»). 

У Міністерстві фінансів розповіли, що з метою надання можливості більш оперативного перегляду міжнародних конвенцій був розроблений 15-й крок Плану дій BEPS – MLI.

Згідно з повідомленням, підписавши та ратифікувавши конвенцію MLI, Україна отримує змогу одночасного внесення змін до всіх або деяких чинних конвенцій про уникнення подвійного оподаткування.

«Імплементація Плану дій BEPS сприятиме гармонізації міжнародних податкових правил із більш як 70 країнами світу та створить більш прозоре податкове середовище. Підписавши конвенцію MLI, ми зможемо внести необхідні зміни до існуючих міжнародних договорів про подвійне оподаткування між Україною та іншими державами», – заявила в.о. міністра фінансів.

Тепер Верховна Рада має ратифікувати багатосторонню конвенцію MLI. У Мінфіні очікують, що конвенція дозволить зменшити переміщення українського капіталу до юрисдикцій з низьким рівнем оподаткування з метою мінімізації податкових зобов’язань, що, у свою чергу, сприятиме збільшенню доходів бюджету.
…

Amid escalating trade friction with the United States, China appears to be courting Europe to fill the gaps in providing opportunities for technology transfers. Analysts, however, are urging Europe to be wary in its dealings with China. They say it will be political and economically unwise for Europe to take advantage of the Sino-U.S. dispute and allow China to continue unfair trade practices that include forced tech transfers and intellectual property theft.

The U.S. has accused China of using “state-led efforts to force, strong-arm and even steal U.S. technology and intellectual property.”

Rob Atkinson, who heads the Washington, D.C.-based Information Technology & Innovation Foundation (ITIF), says Europe should stop cutting deals with China that he says will offset the Trump administration’s efforts to punish Beijing.

In early July, the U.S. launched a first round of tariffs on $34 billion of Chinese goods. China’s tariffs on $34 billion of U.S. imports, including soybeans, also took effect at the same time. U.S. President Donald Trump last week vowed to impose tariffs on all $505 billion worth of Chinese imports. China has vowed to retaliate if the U.S. slaps more tariffs on Chinese goods in the coming months.

The U.S. and China are the world’s two biggest economies.

Made in China 2025

China’s tech ambition, unveiled in its “Made in China 2025” program, is believed to be at the core of its trade war with the U.S.

To avoid upsetting Washington, China has downplayed the initiative, which was first introduced in 2015 with the goal of comprehensively upgrading China’s high-tech industries at home. A recent official report, however, concluded that China is still far from being a global tech leader.

According to the South China Morning Post, China’s Ministry of Industry and Information Technology recently learned that 30 of the country’s largest conglomerates rely heavily on imported components used in industries that produce rockets, large aircraft and even automobiles.

Exaggerated tech prowess

“The Chinese leadership wants to have it both ways. They want to tell their domestic population that they are [tech] leaders and they want to tell the rest of the world that they are not because they are afraid that, if they are seen as really big technology leaders or close to leaders, other countries will more actively push back against its unfair trade practices,” ITIF’s Atkinson said.  

Chris Dong, director of China research at market intelligence firm IDC, called the tech gaps between the two economies “significant” in not only components, but also innovation competency, fundamental engineering and business-sector transformations. Dong says China focuses its IT spending on hardware and infrastructure buildouts while the U.S. spends mostly on software and service in transforming digital technology.  

“The prosperity of China’s Internet economy, fueled by vast consumer technology adoptions, abundant capitals, and government’s policy and financial support, should not mislead domestic perception away from the true fact that China has an overall growing but weak technology strength,” Dong said in an email to VOA.

Forced tech transfer to continue

The U.S. boycott, however, is unlikely to stop China from advancing technological developments, according to an industry insider.

“China for sure will continue its technology development regardless, if [the U.S.] has turned hostile. We still hope to seek cooperation, whether it is cooperation between China and the U.S. or Europe. Collaboration will lead to a win-win situation,” the insider said on condition of anonymity.

“China still keeps a certain level of R&D capacity. [The trade dispute] will only slow down its pace of catching up. The U.S. is unfriendly now. But Europe still looks friendly. China may turn to Europe for [coveted] tech transfer as long as Europe isn’t as hostile as the U.S.,” said Kuo-yuan Liang, president of Taiwan-based Yuanta-Polaris Research Institute.

The economist said he expects China to continue its forced technology transfer practices from foreign investors to Chinese operations, using its market access as an incentive to achieve its technological goal.

Recent statistics released by the Baker McKenzie and Rhodium Groups also supported the trend.

China’s pivot to Europe

The firms’ research found that the value of China’s merger and acquisition activities in Europe reached $22 billion in the first half of this year – nine times of that in North America during the same period.

Adam Dunnett, secretary-general of the European Union Chamber of Commerce in China, believed the sharp ratio has more to do with a decrease in capital flows to the U.S. than an increase into the EU.  

He added that investment intended to acquire technology isn’t problematic, but that what is at issue is the degree of state involvement and the true motivation behind certain investments.

“If these decisions are demonstrably driven by market forces, then Europe welcomes them; however, due to the lack of transparency of many Chinese investments, even perfectly legitimate capital flows are increasingly being scrutinized,” Dunnett wrote in an email to VOA.

He added that European businesses shared similar concerns with the U.S. about China’s “market-distorting actions” including forced tech transfer and infringements of intellectual property rights.

“China has …taken some action to improve the situation, but the overall actual impact has been very limited. Tensions will remain, and potentially worsen, until results are felt by international firms on the ground,” he concluded.

 
…

“Heightened trade and geopolitical tensions” are putting global economic growth at risk, G-20 finance ministers said after two days of meetings in Buenos Aires on Sunday.

In their final communique, the Group of 20 ministers stressed the need to “step up dialogue and actions to mitigate risks and enhance confidence.”

The ministers, representing industrial and emerging-market nations, described the overall world economic growth as “robust,” but expressed concerns over what they call the increased risks of the “short and medium term.”

They did not mention the United States by name in their closing statement. But some decried President Donald Trump’s tough trade rhetoric and tariffs on Chinese and European imports.

European Union finance chief Pierre Moscovici urged the U.S. to act like allies, not foes. French finance minister Bruno Le Marie accused Trump of creating a “survival of the fittest” trade mentality and called on Washington to “de-escalate.”

Trump has imposed tariffs on imports of European steel (25 percent) and aluminum (10 percent) while also slapping billions of dollars in tariffs on Chinese goods and threatening more.

He has also accused China and the EU of keeping their interests rates and currencies low, damaging the U.S. dollar on the world market.

 
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Prime Minister Theresa May’s plans to leave the European Union are overwhelmingly opposed by the British public and more than a third of voters would support a new right-wing political party committed to quitting the bloc, according to a new poll.

May’s political vulnerability was exposed by the survey which found voters would prefer Boris Johnson, who quit as her foreign minister two weeks ago, to negotiate with the EU and lead the Conservative Party into the next election.

Only 16 percent of voters say May is handling the Brexit negotiations well, compared with 34 percent who say that Johnson would do a better job, according to the poll conducted by YouGov for The Sunday Times newspaper.

With a little more than eight months to go before Britain is due to leave the EU on March 29, 2019, May’s government, parliament, the public and businesses remain deeply divided over what form Brexit should take.

May’s plans to keep a close trading relationship with the EU on goods thrust her government into crisis this month and there is speculation she could face a leadership challenge after two of her most senior ministers, including Johnson, resigned in protest.

Only one in 10 voters would pick the government’s proposed Brexit plans if there were a second referendum, according to the poll. Almost half think it would be bad for Britain.

The new Brexit minister Dominic Raab said on Sunday the prime minister was still trying to persuade members of the cabinet that her strategy was the best way forward.

Raab also warned that Britain could refuse to pay a 39 billion pound ($51 billion) divorce bill to the EU if it does not get a trade deal – a threat used before by ministers.

No deal Brexit

Speaking to the BBC, Raab refused to deny reports the government is planning to stockpile food or use a section of motorway in England as a lorry park to deal with increased border checks if Britain leaves the EU without a deal.

Asked about a story in The Sun newspaper that the government was planning to stockpile processed food, Raab initially replied “no” and then added: “That kind of selective snippet that makes it into the media, to the extent that the public pay attention to it, I think is unhelpful.”

The possibility of leaving without a trade deal has increased with May facing rebellions from different factions in her party. She only narrowly won a series of votes on Brexit in parliament last week.

The Sunday Times poll found voters are increasingly polarized, with growing numbers of people alienated from the two main political parties.

Thirty-eight percent of people would vote for a new right-wing party that is committed to Brexit, while almost a quarter would support an explicitly far-right anti-immigrant, anti-Islam party, the poll found.

Brexit campaigner Nigel Farage and U.S. President Donald Trump’s former adviser Steve Bannon are in discussions about forming a new right-wing movement, according to The Sunday Times.

Half of voters would support remaining in the EU if there were a second referendum, the poll found, a level of support found in other surveys this year.

YouGov spoke to 1,668 adults in Britain on July 19 and 20, according to The Sunday Times, which did not provide other details about how the poll was conducted.
…

Prime Minister Theresa May’s plans to leave the European Union are overwhelmingly opposed by the British public and more than a third of voters would support a new right-wing political party committed to quitting the bloc, according to a new poll.

May’s political vulnerability was exposed by the survey which found voters would prefer Boris Johnson, who quit as her foreign minister two weeks ago, to negotiate with the EU and lead the Conservative Party into the next election.

Only 16 percent of voters say May is handling the Brexit negotiations well, compared with 34 percent who say that Johnson would do a better job, according to the poll conducted by YouGov for The Sunday Times newspaper.

With a little more than eight months to go before Britain is due to leave the EU on March 29, 2019, May’s government, parliament, the public and businesses remain deeply divided over what form Brexit should take.

May’s plans to keep a close trading relationship with the EU on goods thrust her government into crisis this month and there is speculation she could face a leadership challenge after two of her most senior ministers, including Johnson, resigned in protest.

Only one in 10 voters would pick the government’s proposed Brexit plans if there were a second referendum, according to the poll. Almost half think it would be bad for Britain.

The new Brexit minister Dominic Raab said on Sunday the prime minister was still trying to persuade members of the cabinet that her strategy was the best way forward.

Raab also warned that Britain could refuse to pay a 39 billion pound ($51 billion) divorce bill to the EU if it does not get a trade deal – a threat used before by ministers.

No deal Brexit

Speaking to the BBC, Raab refused to deny reports the government is planning to stockpile food or use a section of motorway in England as a lorry park to deal with increased border checks if Britain leaves the EU without a deal.

Asked about a story in The Sun newspaper that the government was planning to stockpile processed food, Raab initially replied “no” and then added: “That kind of selective snippet that makes it into the media, to the extent that the public pay attention to it, I think is unhelpful.”

The possibility of leaving without a trade deal has increased with May facing rebellions from different factions in her party. She only narrowly won a series of votes on Brexit in parliament last week.

The Sunday Times poll found voters are increasingly polarized, with growing numbers of people alienated from the two main political parties.

Thirty-eight percent of people would vote for a new right-wing party that is committed to Brexit, while almost a quarter would support an explicitly far-right anti-immigrant, anti-Islam party, the poll found.

Brexit campaigner Nigel Farage and U.S. President Donald Trump’s former adviser Steve Bannon are in discussions about forming a new right-wing movement, according to The Sunday Times.

Half of voters would support remaining in the EU if there were a second referendum, the poll found, a level of support found in other surveys this year.

YouGov spoke to 1,668 adults in Britain on July 19 and 20, according to The Sunday Times, which did not provide other details about how the poll was conducted.
…

German industry groups warned Sunday, ahead of a meeting between European Commission President Jean-Claude Juncker and U.S. President Donald Trump, that tariffs the United States has recently imposed or threatened risk harming the U.S. itself.

The U.S. imposed tariffs on EU steel and aluminum June 1, and Trump is threatening to extend them to EU cars and car parts. Juncker will discuss trade with Trump at a meeting Wednesday.

Dieter Kempf, head of Germany’s BDI industry association, told the Welt am Sonntag newspaper it was wise for the European Union and United States to continue their discussions.

German auto industry

“The tariffs under the guise of national security should be abolished,” Kempf said, adding that Juncker needed to make clear to Trump that the United States would harm itself with tariffs on cars and car parts.

He added that the German auto industry employed more than 118,000 people in the United States and 60 percent of what they produced was exported to other countries from the U.S. 

“Europe should not let itself be blackmailed and should put in a confident appearance in the United States,” he added.

Lowered expectations

EU officials have sought to lower expectations about what Juncker can achieve and downplayed suggestions that he will arrive in Washington with a novel plan to restore good relations.

Eric Schweitzer, president of the DIHK Chambers of Commerce, told Welt am Sonntag he welcomed Juncker’s attempt to persuade the U.S. government not to impose tariffs on cars.

“All arguments in favor of such tariffs are … ultimately far-fetched,” he said.

The German economy had for decades counted on there being open markets and a reliable global trading system, Schweitzer said, but he added of the current situation: “Every day German companies feel the transatlantic rift getting wider.”
…

Fiat Chrysler named on Saturday its Jeep division boss, Mike Manley, to take over immediately for Chief Executive Sergio Marchionne, who is seriously ill after suffering major complications following surgery.

The carmaker said British-born Manley, who also takes responsibility for the North America region, will push ahead with the midterm strategy outlined last month by Marchionne, who had been due to step down next April.

Marchionne, 66, was credited with rescuing Fiat and Chrysler from bankruptcy after taking the Italian carmaker’s wheel in 2004. On Saturday, he was also replaced as chairman and CEO of Ferrari and chairman of tractor maker CNH Industrial — both spun off from Fiat Chrysler Automobiles in recent years.

“FCA communicates with profound sorrow that during the course of this week unexpected complications arose while Mr. Marchionne was recovering from surgery and that these have worsened significantly in recent hours,” the statement said.

FCA disclosed earlier this month that Marchionne, a renowned dealmaker and workaholic, was recovering from a shoulder operation. But his condition deteriorated sharply in recent days when he suffered massive complications that were not divulged.

Ferrari named FCA Chairman and Agnelli family scion John Elkann as new chairman, while board member Louis Camilleri becomes chief executive. CNH appointed Suzanna Heywood to replace Marchionne as chairman. All three companies remain controlled by the Agnellis.

Marchionne had previously said he planned to stay on as Ferrari chairman and CEO until 2021.

Deal focus

One of the auto industry’s longest-serving CEOs, Marchionne has advocated tie-ups to share the growing cost burden of developing cleaner, electrified and autonomous vehicles.

He resisted the comparatively easy option of selling off coveted brands such as Jeep, saying that would leave too big a problem with Fiat as “the stump that is left behind.”

But after being rejected by his preferred partner General Motors, he turned back to the task of cutting FCA’s debt — a goal he achieved last month — while maintaining that a merger for FCA was “ultimately inevitable.”

Investor hopes for a transformative deal had largely dwindled and are unlikely to hit the shares on Marchionne’s departure, according to Evercore analyst George Galliers.

“The valuation doesn’t suggest expectations of a buyout are high,” Galliers said.

Even without Marchionne, FCA will remain “culturally more open to dealmaking and savvy to potential capital market opportunities than much of the competition,” he added.

“A lot of that’s now ingrained, so I don’t think you lose everything he’s brought to the company overnight.”

Yet, Manley will have a tough act to follow.

Marchionne resurrected one of Italy’s biggest corporate names and revitalized Chrysler, succeeding where the U.S. company’s two previous owners — Mercedes parent Daimler and private equity group Carberus — both failed.

He has multiplied Fiat’s value 11 times since taking charge, helped by moves such as the spinoffs of CNH Industrial and Ferrari. The planned separation of parts maker Magneti Marelli, due this year, should further increase that value-generation.

He also flattened an inflexible hierarchy, replacing layers of middle management with a meritocratic leadership style. He slashed costs by reducing the number of vehicle architectures and creating joint ventures to pool development and plant costs.
…

У параді до Дня незалежності України, який відбудеться у Києві 24 серпня, візьме участь близько 200 одиниць військової техніки, повідомив речник Міністерства оборони Дмитро Гуцуляк.

За його словами, підготовка до параду зараз триває, нещодавно готовність до участі у заходах військової техніки перевірив командувач Сухопутних військ генерал-полковник Сергій Попко.

11 квітня Президент України Петро Порошенко доручив на День Незалежності провести військовий парад у центрі Києва, видавши відповідний указ.

Окрім того, як мовиться у документі, також 23 серпня, у День державного прапора, у Києві, інших населених пунктах мають провести офіційну церемонію урочистого підняття держпрапора України.

Останніми роками в Києві з нагоди Дня Незалежності в центрі Києва проводили військові паради, проте деякі користувачі соцмереж критикували цю ідею, називаючи це недоречним в умовах, коли військова техніка потрібна у зоні бойових дій на сході України.
…

Iran’s Supreme Leader Ayatollah Ali Khamenei on Saturday backed President Hassan Rouhani’s suggestion that Iran may block Gulf oil exports if its own exports are stopped and said negotiations with the United States would be an “obvious mistake.”

Rouhani’s apparent threat earlier this month to disrupt oil shipments from neighboring countries came in reaction to looming U.S. sanctions and efforts by Washington to force all countries to stop buying Iranian oil.

“(Khamenei) said remarks by the president … that ‘if Iran’s oil is not exported, no regional country’s oil will be exported,’ were important remarks that reflect the policy and the approach of (Iran’s) system,” Khamenei’s official website said.

Iranian officials have in the past threatened to block the Strait of Hormuz, a major oil shipping route, in retaliation for any hostile U.S. action.

Khamenei used a speech to foreign ministry officials on Saturday to reject any renewed talks with the United States after President Donald Trump’s decision to withdraw from a 2015 international deal over Iran’s nuclear program.

“The word and even the signature of the Americans cannot be relied upon, so negotiations with America are of no avail,” Khamenei said.

It would be an “obvious mistake” to negotiate with the United States as Washington was unreliable, Khamenei added, according to his website.

The endorsement by Khamenei, who has the last word on all major issues of state, is likely to discourage any open opposition to Rouhani’s apparent threat.

Khamenei also voiced support for continued talks with Iran’s European partners in the nuclear deal which are preparing a package of economic measures to offset the U.S. pullout from the

accord.

“Negotiations with the Europeans should not be stopped, but we should not be just waiting for the European package, but instead we should follow up on necessary activities inside the country [against U.S. sanctions],” Khamenei said.

France said earlier this month that it was unlikely European powers would be able to put together an economic package for Iran that would salvage its nuclear deal before November.

Iran’s oil exports could fall by as much as two-thirds by the end of the year because of new U.S. sanctions, putting oil markets under huge strain amid supply outages elsewhere in the world.

Washington initially planned to totally shut Iran out of global oil markets after Trump abandoned the deal that limited Iran’s nuclear ambitions, demanding all other countries to stop buying its crude by November.

But it has since somewhat eased its stance, saying that it may grant sanction waivers to some allies that are particularly reliant on Iranian supplies.

 
…