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India hikes spending, shuns ‘outright populism’ in last pre-election budget

  • Capex to rise 33% to 10 trillion rupees in 2023/24
  • Govt targets gross borrowing of 15.43 trillion rupees
  • Eyes fiscal deficit of 5.9% in 2023/24, 4.5% by 2025/26

NEW DELHI, Feb 1 (Reuters) – India announced on Wednesday one of its biggest ever increases in capital spending for the next fiscal year to create jobs but targeted a narrower fiscal deficit in its last full budget ahead of a parliamentary election due in 2024.

Prime Minister Narendra Modi’s party has been under pressure to create jobs in the populous country where many have struggled to find employment, although the economy is now one of the world’s fastest-growing.

“After a subdued period of the pandemic, private investments are growing again,” Finance Minister Nirmala Sitharaman said as she presented the 2023/24 budget in parliament.

“The budget makes the need once again to ramp up the virtuous cycle of investment and job creation. Capital investment is being increased steeply for the third year in a row by 33% to 10 trillion rupees.”

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The capital spending increase to about $122.3 billion, which would amount to 3.3% of gross domestic product (GDP), will be the biggest such jump after an increase of more than 37% between 2020/21 and 2021/22.

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Total spending will rise 7.5% to 45.03 trillion rupees ($549.51 billion) in the next fiscal year starting on April 1.

Sitharaman said the government would target a fiscal deficit of 5.9% of GDP for 2023/24 compared with 6.4% for the current fiscal year and slightly lower than a Reuters poll of 6%. The aim is to lower the deficit to 4.5% by 2025/26.

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STEADY ‘MACRO BOAT’

Brokerage Nomura said the budget “prudently pushes for growth, without rocking the macro boat”.

“In the event, the government has presented a good budget. It has pushed for growth via public capex and continued on the path towards fiscal consolidation, without offering much in terms of outright populism.”

Capital Economics said the “absence of a fiscal blowout”, a recent drop in inflation and signs of moderating growth could convince India’s central bank to slow the pace of rate hikes next week.

It said there was still a chance of fiscal slippage as campaigning kicks off for the election, in which Modi is widely projected to win a third straight term.

The finance ministry’s annual Economic Survey, released on Tuesday, forecast the economy could grow 6% to 6.8% next fiscal year, down from 7% projected for the current year, while warning about the impact of cooling global demand on exports.

Sitharaman said India’s economy was “on the right track, and despite a time of challenges, heading towards a bright future”.

India’s real GDP is forecast to grow in the range of 6-6.8% in FY24

Her deficit plan will be aided by a 28% cut in subsidies on food, fertiliser and petroleum for the next fiscal year at 3.75 trillion rupees. The government cut spending on a key rural jobs guarantee programme to 600 billion rupees – the smallest in more than five years – from 894 billion rupees for this fiscal year.

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The government’s gross market borrowing is estimated to rise about 9% to 15.43 trillion rupees next fiscal year.

Reuters Graphics Reuters Graphics

CONSTRAINTS

Moody’s Investors Service said the narrower fiscal deficit projection pointed to the government’s commitment to longer-term fiscal sustainability, but that a “high debt burden and weak debt affordability remain key constraints that offset India’s fundamental strengths”.

Among other moves to stimulate consumption, the surcharge on annual income above 50 million rupees was cut to 25% from 37%.

Indian shares reversed earlier gains to close lower on Wednesday, led by a fall in insurance companies after the budget proposed to limit tax exemptions for insurance proceeds, while Adani Group shares tumbled again as it struggles to repel concerns raised by a U.S. short seller.

Since taking office in 2014, Modi has ramped up capital spending including on roads and energy, while wooing investors through lower tax rates and labour reforms, and offering subsidies to poor households to clinch their political support.

A lack of jobs for young people, and meagre wages for those who do find work, has been one of the main criticisms of Modi.

Sitharaman also said the government was allocating 350 billion rupees for energy transition, as Modi focuses on green hydrogen and other cleaner fuels to meet India’s climate goals.

($1 = 81.7725 Indian rupees)

Reporting by Shubham Batra, Nikunj Ohri, Shivangi Acharya, Sarita Singh, Nigam Prusty, Manoj Kumar, Rupam Jain and Indian bureaux; Writing by Krishna N. Das; Editing by Kim Coghill, Jacqueline Wong and Gareth Jones

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Adani loses Asia’s richest crown as stock rout deepens to $84 billion

BENGALURU, Feb 1 (Reuters) – Shares in Indian tycoon Gautam Adani’s conglomerate plunged again on Wednesday as a rout in his companies deepened to $84 billion in the wake of a U.S. short-seller report, with the billionaire also losing his title as Asia’s richest person.

Wednesday’s stock losses saw Adani slip to 15th on Forbes rich list with an estimated net worth of $76.8 billion, below rival Mukesh Ambani, the chairman of Reliance Industries Ltd (RELI.NS) who ranks ninth with a net worth of $83.6 billion.

Before the critical report by U.S. short-seller Hindenburg, Adani had ranked third.

The losses mark a dramatic setback for Adani, the school-dropout-turned-billionaire whose business interests stretch from ports and airports to mining and cement. Now, the tycoon is fighting to stabilise his businesses and defend his reputation.

It comes just a day after the group managed to muster support from investors for a $2.5 billion share sale for flagship firm Adani Enterprises on Tuesday, in what some saw as a stamp of investor confidence.

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The report by Hindenburg Research last week alleged improper use by the Adani Group of offshore tax havens and stock manipulation. It also raised concerns about high debt and the valuations of seven listed Adani companies.

The group has denied the allegations, saying the short-seller’s narrative of stock manipulation has “no basis” and stems from an ignorance of Indian law. It has always made the necessary regulatory disclosures, it added.

Shares in Adani Enterprises (ADEL.NS), often described as the incubator of Adani businesses, plunged 30% on Wednesday. Adani Power (ADAN.NS) fell 5%, while Adani Total Gas (ADAG.NS) slumped 10%, down by its daily price limit.

Adani Transmission (ADAI.NS) was down 6% and Adani Ports and Special Economic Zone (APSE.NS) dropped 20%.

Adani Total Gas, a joint venture with France’s Total (TTEF.PA), has been the biggest casualty of the short seller report, losing about $27 billion.

“There was a slight bounce yesterday after the share sale went through, after seeming improbable at a point, but now the weak market sentiment has become visible again after the bombshell Hindenburg report,” said Ambareesh Baliga, a Mumbai-based independent market analyst.

“With the stocks down despite Adani’s rebuttal, it clearly shows some damage on investor sentiment. It will take a while to stabilise,” Baliga added.

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SCRUTINY

Underscoring the nervousness in some quarters, Bloomberg reported on Wednesday that Credit Suisse (CSGN.S) had stopped accepting bonds of Adani group companies as collateral for margin loans to its private banking clients.

Deven Choksey, managing director of KRChoksey Shares and Securities, said this was a big factor in Wednesday’s share slides.

Credit Suisse had no immediate comment.

Scrutiny of the conglomerate is stepping up, with an Australian regulator saying on Wednesday it would review Hindenburg’s allegations to see if further enquiries were warranted.

Data also showed that foreign investors sold a net $1.5 billion worth of Indian equities after the Hindenburg report – the biggest outflow over four consecutive days since Sept. 30.

Headaches for the Adani Group are expected to continue for some time.

India’s markets regulator, which has been looking into deals by the conglomerate, has said it will add Hindenburg’s report to its own preliminary investigation.

State-run Life Insurance Corporation (LIC) (LIFI.NS)said on Monday it would seek clarifications from Adani’s management on the short seller report. The insurance giant was, however, a key investor in the Adani Enterprises share sale.

Hindenburg said in its report it had shorted U.S.-bonds and non-India traded derivatives of the Adani Group.

Reporting by Chris Thomas in Bengaluru and Aditi Shah in New Delhi; Additional reporting by Bharath Rajeshwaran and Aditya Kalra; Editing by Edwina Gibbs and Mark Potter

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Suspects arrested over Pakistan mosque blast, police focus on how bomber got in

PESHAWAR, Pakistan, Feb 1 (Reuters) – Police investigating a suicide bombing that killed more than 100 people at a Pakistan mosque said on Tuesday that several people had been arrested, and they could not rule out the possibility that the bomber had internal assistance evading security checks.

The bombing was the most deadly in a decade to hit Peshawar, a restive northwestern city near the Afghan border, and all but three of those killed were police, making it most suffered by Pakistan’s security forces in a single attack in recent history.

The bomber struck on Monday as hundreds of worshippers gathered for noon prayers in a mosque that was purpose built for the police and their families living in a highly fortified area.

“We have found some excellent clues, and based on these clues we have made some major arrests,” Peshawar Police Chief Ijaz Khan told Reuters.

“We can’t rule out internal assistance but since the investigation is still in progress, I will not be able to share more details.”

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Investigators, who include counter-terrorism and intelligence officials, are focusing on how the attacker managed to breach the military and police checkpoints leading into the Police Lines district, a colonial-era, self-contained encampment in the city centre that is home to middle- and lower-ranking police personnel and their families.

Defence Minister Khawaja Asif had said the bomber was in the first row in the prayer hall when he struck. Remains of the attacker had been recovered, provincial Police Chief Moazzam Jah Ansari told Reuters.

“We believe the attackers are not an organised group,” he added.

The most active militant group in the area, the Pakistani Taliban, also called Tehreek-e-Taliban Pakistan (TTP), has denied responsibility for the attack, which no group has claimed so far. Interior Minister Rana Sanaullah had told parliament a breakaway faction of the TTP was to blame.

The blast demolished the upper storey of the mosque. It was is the deadliest in Peshawar since twin suicide bombings at All Saints Church killed scores of worshippers in September 2013, in what remains the deadliest attack on the country’s Christian minority.

Peshawar sits on the edge of the Pashtun tribal lands, a region mired in violence for the past two decades.

The TTP is an umbrella group for Sunni and sectarian Islamist factions opposed to the government in Islamabad. The group has recently stepped up attacks against police.

Reporting by Jibran Ahmad in Peshawar and Asif Shahzad in Islamabad; Writing by Miral Fahmy; Editing by Simon Cameron-Moore

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Austin’s Manila visit to bring deal on expanded base access – Philippines official

WASHINGTON/MANILA, Feb 1 (Reuters) – U.S. Defense Secretary Lloyd Austin’s visit to the Philippines this week is expected to bring an announcement of expanded U.S. access to military bases in the country, a senior Philippines official said on Wednesday.

Washington is eager to extend its security options in the Philippines as part of efforts to deter any move by China against self-ruled Taiwan, while Manila wants to bolster defense of its territorial claims in the disputed South China Sea.

Austin arrived in Manila on Tuesday night, and will meet his Philippine counterpart and other officials on Thursday “to build on our strong bilateral relationship, discuss a range of security initiatives, and advance our shared vision of a free and open Pacific,” he said on Twitter.

On Wednesday morning, Austin visited U.S. troops stationed at a Philippine military camp in the southern city of Zamboanga, according to Roy Galido, commander of the Western Mindanao Command.

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“Our working relationship to them is very strong,” Galido told reporters, adding that U.S. troops help in counter terrorism, and humanitarian and disaster response missions.

U.S. officials have said Washington hopes for an access agreement during Austin’s visit, which began on Tuesday, and that Washington has proposed additional sites under an Enhanced Defense Cooperation Agreement (EDCA) dating back to 2014.

“There’s a push for another four or five of these EDCA sites,” the a senior Philippines official said. “We are going to have definitely an announcement of some sort. I just don’t know how many would be the final outcome of that.”

The official declined to be named because of the sensitivity of the matter.

Manila and Washington have a mutual defense treaty and have been discussing U.S. access to four additional bases on the northern land mass of Luzon, the closest part of the Philippines to Taiwan, as well as another on the island of Palawan, facing the disputed Spratly Islands in the South China Sea.

EDCA allows U.S. access to Philippine bases for joint training, pre-positioning of equipment and building of facilities such as runways, fuel storage and military housing, but not a permanent presence. The U.S. military already has access to five such sites.

The Philippines official said increased U.S. access needed to benefit both countries.

“We don’t want it to be directed to just for the use of the United States purely for their defense capabilities … it has to be mutually beneficial,” he said.

“And obviously, we want to make sure that no country will see … anything that we’re doing … was directed towards any conflict or anything of that sort,” he added.

Manila’s priorities in its agreements with Washington were to boost its defense capabilities and interoperability with U.S. forces and to improve its ability to cope with climate change and natural disasters, the official said.

He said that after cancelling an agreement for the purchase of heavy-lift helicopters from Russia last year, Manila had reached a deal with Washington to upgrade “a couple” of Blackhawk helicopters that could be used for disaster relief.

“The deal with Russia was very attractive because for a certain budget we were able to get something like 16 of these heavy-lift helicopters,” the official said. “Now with the United States, obviously their helicopters are more expensive, so we’re looking at how we can fit in the budget that we’ve had.”

Gregory Poling, a Southeast Asia expert at Washington’s Center for Strategic and International Studies think tank, said access to sites in northern Luzon would help U.S. efforts to deter any Chinese move against Taiwan by putting the waters to the south of the island within range of shore-based missiles.

He said the U.S. and Philippine marines were pursuing similar capabilities with ground-based rockets, with Manila’s particular interest being to protect its South China Sea claims.

The Philippines is among several countries at odds with China in the South China Sea and has been angered by the constant presence of vessels in its exclusive economic zone it says are manned by Chinese militia. China is also Manila’s main trading partner.

Reporting by David Brunnstrom; additional reporting by Idrees Ali in Washington and Neil Jerome Morales and Karen Lema in Manila; Editing by Gerry Doyle

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‘Hands off Africa,’ Pope Francis tells rich world

  • Pope begins trip to DR Congo and South Sudan
  • Francis to meet victims of war in Congo
  • Trip postponed from July due to pope’s knee ailment

KINSHASA, Jan 31 (Reuters) – Pope Francis denounced the “poison of greed” driving conflicts in Africa as he began a visit to Democratic Republic of Congo on Tuesday, saying the rich world had to realise that people were more precious than the minerals in the earth beneath them.

Many tens of thousands of people cheered as he travelled from the airport into the capital Kinshasa in his popemobile, with some breaking away to chase it while others chanted and waved flags.

But the joyous mood, one of the most vibrant welcomes of his foreign trips, turned sombre when the 86-year-old pope spoke to dignitaries at the presidential palace. He condemned “terrible forms of exploitation, unworthy of humanity” in Congo, where vast mineral wealth has fuelled war, displacement and hunger.

“Hands off the Democratic Republic of the Congo. Hands off Africa. Stop choking Africa: it is not a mine to be stripped or a terrain to be plundered,” Francis said.

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Congo has some of the world’s richest deposits of diamonds, gold, copper, cobalt, tin, tantalum and lithium, but those have stoked conflict between militias, government troops and foreign invaders. Mining has also been linked to inhumane exploitation of workers, including children, and environmental degradation.

“It is a tragedy that these lands, and more generally the whole African continent, continue to endure various forms of exploitation,” the pope said, reading his speech in Italian while seated. People listening to a French translation applauded repeatedly.

“The poison of greed has smeared its diamonds with blood,” he said, referring to Congo specifically.

Compounding the country’s problems, eastern Congo has been plagued by violence connected to the long and complex fallout from the 1994 genocide in neighbouring Rwanda.

Congo accuses Rwanda of backing the M23 rebel group fighting government troops in the east. Rwanda denies this.

“As well as armed militias, foreign powers hungry for the minerals in our soil commit, with the direct and cowardly support of our neighbour Rwanda, cruel atrocities,” Congolese President Felix Tshisekedi said, speaking just before the pope on the same stage on a hot, muggy afternoon.

The pope did not name Rwanda in his address or take sides in the dispute.

Rwandan government spokesperson Yolande Makolo rebuffed Tshisekedi’s comments. “It’s obvious that this ridiculous obsession with scapegoating Rwanda is President Tshisekedi’s electoral strategy – a distraction from the poor performance of his government, and failure to deliver to their citizens,” she told Reuters.

‘DEVOURED BY VIOLENCE’

An estimated 5.7 million people are internally displaced in Congo and 26 million face severe hunger, largely because of the impact of armed conflict, according to the United Nations.

About half of Congo’s population of 90 million are Roman Catholics and the Church plays a crucial role in running schools and health facilities in the sprawling central African country, as well as promoting democracy.

The pope criticised rich countries for ignoring the tragedies unfolding in Congo and elsewhere in Africa.

“One has the impression that the international community has practically resigned itself to the violence devouring it (Congo). We cannot grow accustomed to the bloodshed that has marked this country for decades, causing millions of deaths,” he said.

Tshisekedi made a similar point: “While the international community has remained passive and silent, more than 10 million people have been horribly killed.”

First scheduled for last July, the pope’s trip was postponed because of a flare-up of a chronic knee ailment. Francis had originally planned to travel to Goma, in eastern Congo, but that stop was scrapped because of a resurgence in fighting between M23 rebels and government troops.

In an apparent reference to the M23 and other militias active in Congo’s eastern regions, the pope said the Congolese people were fighting to preserve their territorial integrity “against deplorable attempts to fragment the country”.

On Wednesday, Francis will celebrate Mass at a Kinshasa airport that is expected to draw more than a million people. He also will meet victims of violence from the east.

Francis will stay in Kinshasa until Friday morning, when he will fly to South Sudan, another African country grappling with conflict and poverty.

In a first, he will be accompanied for that leg of his journey by the Archbishop of Canterbury, leader of the global Anglican Communion, and by the Church of Scotland Moderator. The religious leaders have described their joint visit as a “pilgrimage of peace” to the world’s youngest nation.

South Sudan gained independence in 2011 from predominantly Muslim Sudan after decades of conflict. Two years later inter-ethnic conflict spiralled into a civil war that killed 400,000 people. A 2018 deal stopped the worst of the fighting.

Additional reporting by Justin Makangara, Benoit Nyemba, Sonia Rolley and Stanis Bujakera, and Philbert Girinema in Kigali; Writing by Estelle Shirbon and Philip Pullella; Editing by Alexandra Hudson, Barbara Lewis and Mark Heinrich

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Adani’s $2.5 bln share offer backed by investors, despite short-seller attack

MUMBAI, Jan 31 (Reuters) – Indian billionaire Gautam Adani’s $2.5 billion share sale inched closer to full subscription on Tuesday as investors pumped in funds after a tumultuous week for his group in which its stocks were pummeled by a scathing short-seller report.

The secondary share sale of flagship Adani Enterprises (ADEL.NS) was subscribed 93% on Tuesday, including the anchor investor portion, Indian stock exchange data showed. The share sale needed at least 90% subscription to go through.

By Monday, the book building process of the country’s largest share sale had received only 3% in bids, amid swirling concerns that the share sale could struggle due to a market rout in Adani’s stocks in recent days.

The share sale is critical for Adani, not just because it is India’s largest follow-on offering and will help cut debt, but also because its success will be seen as a stamp of confidence by investors at a time the tycoon faces one of his biggest business and reputational challenges of recent times.

The offer closes days after Adani’s public faceoff with Hindenburg Research, which on Jan. 24 flagged concerns about the use of tax havens and “substantial debt” at the group. It added that shares in seven Adani listed companies have an 85% downside due to what it called “sky-high valuations”.

That has since sparked $65 billion in cumulative losses for stocks of the Adani group, which called the report baseless.

The support for Adani’s share sale came even as the flagship’s shares were trading at 2,967 rupees, up nearly 2.5% but below the lower end of the share sale price band of 3,112 rupees.

“It looks down to the wire with just a few hours remaining on the last day, but the offering should go through. Institutions seem to be subscribing to capitalise on opportunity to buy in bulk quantities outside the open market,” said Dipan Mehta, founder director of Elixir Equities.

Adani Group’s total gross debt in the financial year ended March 31, 2022, rose 40% to 2.2 trillion rupees ($26.83 billion). Adani said on Sunday – while responding to Hindenburg’s allegations – that over the past decade the group has “consistently de-levered”. Hindenburg later said Adani’s “response largely confirmed our findings and ignored our key questions.”

Reuters Graphics

The group had in recent days repeatedly said investors were standing by its side and the share offering would go through, amid rising concerns that may not happen. Bankers at one point had considered tweaking the pricing of the issue, or extending the sale, Reuters had reported.

Adani even said the Hindenburg report was a “calculated attack” on the country and its institutions while its CFO compared the market rout of its stocks to a colonial-era massacre.

Demand from retail investors remained muted, garnering bids only worth around 10% of the shares on offer for that segment. On Tuesday, demand mostly came from foreign institutional investors, as well as corporates who bid in excess of 1 million rupees each, data showed.

Over the weekend and through Monday, Adani’s firm held extensive discussions with investment bankers and institutional investors to attract subscriptions, according to two sources with direct knowledge of the talks.

Abu Dhabi conglomerate International Holding Company (IHC.AD) said it will invest $400 million in the issue.

“The follow-on public offering has to go through to restore investor confidence,” said V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The Hindenburg report and its fallout have drawn global attention. Adani is now the world’s eighth richest person, down from third ranking on Forbes’ rich list last week.

Adani Transmission (ADAI.NS) rose 1.6% on Tuesday, after losing 38% since the Hindenburg report, while Adani Ports and Special Economic Zone (APSE.NS) climbed 3.2%.

Adani Total Gas (ADAG.NS) languished at its 10% lower price limit, while Adani Power (ADAN.NS) and Adani Wilmar (ADAW.NS) were down 5% each.

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Global index publisher FTSE Russell said on Tuesday it continues to monitor publicly available information on the group, in particular from the Indian regulatory authorities.

Hindenburg said in its report it had shorted U.S.-bonds and non-India traded derivatives of the Adani Group. On Tuesday, U.S. dollar-denominated bonds issued by Adani Ports and Special Economic Zone continued their fall into a second week.

($1 = 82.0025 Indian rupees)

Reporting by M. Sriram and Chris Thomas; Editing by Aditya Kalra and Muralikumar Anantharaman

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Western allies differ over jets for Ukraine as Russia claims gains

  • Biden says ‘no’ when asked about F-16s for Ukraine
  • Zelenskiy says Moscow seeks ‘big revenge’
  • Russian administrator claims foothold in Vuhledar
  • Kyiv could recapture ground when Western weapons arrive – group

KYIV, Jan 31 (Reuters) – Ukraine’s defence minister is expected in Paris on Tuesday to meet President Emmanuel Macron amid a debate among Kyiv’s allies over whether to provide fighter jets for its war against Russia, after U.S. President Joe Biden ruled out giving F-16s.

Ukraine planned to push for Western fourth-generation fighters like F-16s after securing supplies of main battle tanks last week, an adviser to Defence Minister Oleksiy Reznikov said on Friday.

Asked at the White House on Monday if the United States would provide F-16s, Biden told reporters: “No.”

But France and Poland appear to be willing to entertain any such request from Ukraine, with Macron telling reporters in The Hague on Monday that “by definition, nothing is excluded” when it comes to military assistance.

In remarks carried on French television before Biden spoke in Washington, Macron stressed any such move would depend on several factors including the need to avoid escalation and assurances that the aircraft would not “touch Russian soil.” He said Reznikov would also meet his French counterpart Sebastien Lecornu in Paris on Tuesday.

In Poland on Monday, Prime Minister Mateusz Morawiecki also did not rule out a possible supply of F-16s to neighbouring Ukraine, in response to a question from a reporter before Biden spoke.

Morawiecki said in remarks posted on his website that any such transfer would take place “in complete coordination” with NATO countries.

Andriy Yermak, head of the Ukraine president’s office, noted “positive signals” from Poland and said France “does not exclude” such a move in separate posts on his Telegram channel.

NATO Secretary-General Jens Stoltenberg was in Japan on Tuesday where he thanked Tokyo for the “planes and the cargo capabilities” it is providing Ukraine. A day earlier in South Korea he urged Seoul to increase its military support to Ukraine.

Biden’s comment came shortly after Ukrainian President Volodymyr Zelenskiy said Russia had begun exacting its revenge for Ukraine’s resistance to its invasion with relentless attacks in the east, where it appeared to be making incremental gains.

Zelenskiy has warned for weeks that Moscow aims to step up its assault after about two months of virtual stalemate along the front line that stretches across the south and east.

Ukraine won a huge boost last week when Germany and the United States announced plans to provide heavy tanks, ending weeks of diplomatic deadlock on the issue.

While there was no sign of a broader new Russian offensive, the administrator of Russian-controlled parts of Ukraine’s eastern Donetsk province, Denis Pushilin, said Russian troops had secured a foothold in Vuhledar, a coal-mining town whose ruins have been a Ukrainian bastion since the outset of the war.

Pushilin said that despite “huge losses” Ukrainian forces were consolidating positions in industrial facilities.

‘BATTLE FOR EVERY METER’

Pushilin said Ukrainian forces were throwing reinforcements at Bakhmut, Maryinka and Vuhledar, towns running from north to south just west of Donetsk city. The Russian state news agency TASS quoted him as saying Russian forces were making advances there, but “not clear-cut, that is, here there is a battle for literally every meter.”

Ukrainian military analyst Oleh Zhdanov said Ukraine still controlled Maryinka and Vuhledar, where Russian attacks were less intense on Monday.

Pushilin’s adviser, Yan Gagin, said fighters from Russian mercenary force Wagner had taken partial control of a supply road leading to Bakhmut, a city that has been Moscow’s focus for months.

A day earlier, the head of Wagner said his fighters had secured Blahodatne, a village just north of Bakhmut, although Kyiv said it had repelled assaults on Blahodatne.

Reuters could not independently verify the battlefield reports. But the locations of the reported fighting indicated clear, though gradual, Russian gains.

In central Zaporizhzhia region and in southern Kherson region, Russian forces shelled more than 40 settlements, Ukraine’s General Staff said. Targets included the city of Kherson, where there were casualties.

The Russians also launched four rocket attacks on Ochakiv in southern Mykolaiv, the army said, on the day Zelenskiy met the Danish prime minister in Mykolaiv city, to the northeast.

WESTERN DELAYS

Zelenskiy is urging the West to hasten delivery of its promised weapons so Ukraine can go on the offensive, but most of the hundreds of tanks pledged by Western countries are months away from delivery.

British Defence Minister Ben Wallace said the 14 Challenger tanks donated by Britain would be on the front line around April or May, without giving an exact timetable.

Kremlin spokesperson Dmitry Peskov said Western countries supplying arms leads “to NATO countries more and more becoming directly involved in the conflict – but it doesn’t have the potential to change the course of events and will not do so.”

The U.S.-based Institute for the Study of War think-tank said “the West’s failure to provide the necessary materiel” last year was the main reason Kyiv’s advances had halted since November.

The researchers said in a report that Ukraine could still recapture territory once the promised weapons arrive.

The Belarusian defence ministry said on Tuesday that Russia and Belarus had started a week-long session of staff training in preparation for joint drills in Russia in September.

The Russian invasion of Ukraine, which Moscow justifies as necessary to protect itself from its neighbour’s ties with the West, has killed tens of thousands of people and driven millions from their homes.

Reporting by Reuters bureaus; Writing by Doina Chiacu and Stephen Coates; Editing by Cynthia Osterman & Simon Cameron-Moore

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U.S. stops granting export licenses for China’s Huawei – sources

Jan 30 (Reuters) – The Biden administration has stopped approving licenses for U.S. companies to export most items to China’s Huawei, according to three people familiar with the matter.

Huawei has faced U.S. export restrictions around items for 5G and other technologies for several years, but officials in the U.S. Department of Commerce have granted licenses for some American firms to sell certain goods and technologies to the company. Qualcomm Inc (QCOM.O) in 2020 received permission to sell 4G smartphone chips to Huawei.

A Commerce Department spokesperson said officials “continually assess our policies and regulations” but do not comment on talks with specific companies. Huawei and Qualcomm declined to comment. Bloomberg and the Financial Times earlier reported the move.

One person familiar with the matter said U.S. officials are creating a new formal policy of denial for shipping items to Huawei that would include items below the 5G level, including 4G items, Wifi 6 and 7, artificial intelligence, and high-performance computing and cloud items.

Another person said the move was expected to reflect the Biden administration’s tightening of policy on Huawei over the past year. Licenses for 4G chips that could not be used for 5g, which might have been approved earlier, were being denied, the person said. Toward the end of the Trump administration and early in the Biden administration, officials had still granted licenses for items specific to 4G applications.

American officials placed Huawei on a trade blacklist in 2019 restricting most U.S. suppliers from shipping goods and technology to the company unless they were granted licenses. Officials continued to tighten the controls to cut off Huawei’s ability to buy or design the semiconductor chips that power most of its products.

But U.S. officials granted licenses that allowed Huawei to receive some products. For example, suppliers to Huawei got licenses worth $61 billion to sell to the telecoms equipment giant from April through November 2021.

In December, Huawei said its overall revenue was about $91.53 billion, down only slightly from 2021 when U.S. sanctions caused its sales to fall by nearly a third.

Reporting by Chavi Mehta in Bengaluru, Stephen Nellis in San Francisco, and Alexandra Alper and Karen Freifeld in Washington; Additional reporting by David Kirton in Shenzhen; Editing by Shailesh Kuber and Stephen Coates

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Bolsonaro, Brazil’s former president, has applied for U.S. tourist visa

WASHINGTON, Jan 30 (Reuters) – Former Brazil President Jair Bolsonaro has applied for a six-month tourist visa to remain in the United States, his lawyer said on Monday, despite calls for any U.S. visas held by Bolsonaro to be revoked following violent protests in Brasilia.

The United States received his application on Friday, his lawyer, Felipe Alexandre, said, adding that Bolsonaro will remain in the United States while his application is pending.

“He would like to take some time off, clear his head, and enjoy being a tourist in the United States for a few months before deciding what his next step will be,” Alexandre said in an email response to Reuters.

“Whether or not he will use the full six months will be up to him and whatever strategy we agree to embark on based on his plans as they develop,” Alexandre added.

The Financial Times first reported that Bolsonaro had requested a tourist visa.

A State Department spokesperson said visa records are confidential under U.S. law, adding that the department cannot discuss details of individual visa cases.

Far-right Bolsonaro flew to Florida two days before his term ended on Jan. 1 and leftist President Luiz Inacio Lula da Silva took office, before the former president’s supporters stormed the country’s capital.

Supporters of Bolsonaro ransacked Brazil’s Congress, Supreme Court and presidential palace, calling for a military coup to overturn the October election that Lula won.

Brazil’s Supreme Court has agreed to open an investigation into Bolsonaro for allegedly encouraging anti-democratic protests that ended in the storming of government buildings by his supporters in Brasilia.

Earlier this month, 41 Democratic members of the U.S. House of Representatives asked U.S. President Joe Biden’s administration on Thursday to cooperate with Brazil’s investigation into violent protests in Brasilia and revoke any U.S. visas held by Bolsonaro.

The State Department has said repeatedly its policy is not to discuss specific visa cases.

The State Department has said it was incumbent on an individual who entered the United States on a so-called “A” visa reserved for diplomats and heads of state to depart the country within 30 days or apply for a change of immigration status if they are no longer engaged in official business. Bolsonaro is believed to have entered on such a visa.

Reporting by Daphne Psaledakis; Editing by Aurora Ellis

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In diplomatic coup, Taiwan president speaks to Czech president-elect

  • Pavel won Czech presidential election on Saturday
  • Pavel, Taiwan’s Tsai stress their shared values in call
  • China opposes other countries dealing with Taiwan
  • Beijing views Taiwan as renegade province

TAIPEI/PRAGUE, Jan 30 (Reuters) – Taiwan President Tsai Ing-wen held a telephone call with Czech President-elect Petr Pavel on Monday, a highly unusual move given the lack of formal ties between their countries and a diplomatic coup for Taipei that is sure to infuriate China.

The two leaders stressed their countries’ shared values of freedom, democracy and human rights during their 15-minute call, their offices said, and Pavel said he hoped to meet Tsai in the future.

Most countries avoid high-level public interactions with Taiwan and its president, not wishing to provoke China, the world’s second largest economy.

Beijing views Taiwan as being part of “one China” and demands other countries recognise its sovereignty claims, which Taiwan’s democratically-elected government rejects.

In 2016, U.S. President-elect Donald Trump spoke by telephone with Tsai shortly after winning the election, setting off a storm of protest from Beijing.

Tsai said she hoped that under Pavel’s leadership the Czech Republic would continue to cooperate with Taiwan to promote a close partnership, and that she hoped to stay in touch with him.

“Bilateral interaction between Taiwan and the Czech Republic is close and good,” her office summarised Tsai as having said.

Pavel, a former army chief and high NATO official who won the Czech presidential election on Saturday, said on Twitter that the two countries “share the values of freedom, democracy, and human rights”.

‘ONE-CHINA’ PRINCIPLE

Earlier, China’s foreign ministry had said it was “seeking verification with the Czech side” on media reports that the call was to take place.

“The Chinese side is opposed to countries with which it has diplomatic ties engaging in any form of official exchange with the Taiwan authorities. Czech President-elect Pavel during the election period openly said that the ‘one-China’ principle should be respected,” the ministry said.

Pavel will take office in early March, replacing President Milos Zeman, who is known for his pro-Beijing stance.

Zeman spoke with Chinese President Xi Jinping this month and they reaffirmed their “personal friendly” relationship, according to a readout of their call from Zeman’s office.

The Czech Republic, like most countries, has no official diplomatic ties with Taiwan, but the two sides have moved closer as Beijing ratchets up military threats against the island and Taipei seeks new friends in Eastern and Central Europe.

The centre-right Czech government has said it wants to deepen cooperation with democratic countries in the India-Pacific region, including Taiwan, and has also been seeking a “revision” of ties with China.

In 2020, the head of the Czech Senate visited Taiwan and declared himself to be Taiwanese in a speech at Taiwan’s parliament, channelling the late U.S. President John F. Kennedy’s defiance of communism in Berlin in 1963.

Reporting by Robert Muller and Jason Hovet; Additional reporting by Ben Blanchard and Yimou Lee in Taipei; editing by Gareth Jones

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