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World

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

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  • 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

Our Standards: The Thomson Reuters Trust Principles.

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World

Biden says no F-16s for Ukraine as Russia claims gains

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  • Russian administrator claims foothold in Vuhledar
  • Kyiv says Russian gains come at huge cost
  • Think-tank says delay in Western arms halted Ukraine’s advance

KYIV, Ukraine/WASHINGTON Jan 30 (Reuters) – The United States will not provide the F-16 fighter jets that Ukraine has sought in its fight against Russia, President Joe Biden said on Monday, as Russian forces claimed a series of incremental gains in the country’s east.

Ukraine planned to push for Western fourth-generation fighter jets such as the F-16 after securing supplies of main battle tanks last week, an adviser to Ukraine’s defence minister said on Friday. A Ukrainian air force spokesman said it would take its pilots about half a year to train on such fighter jets.

Asked if the United States would provide the jets, Biden told reporters at the White House, “No.”

The brief exchange came shortly after Ukrainian President Volodymyr Zelenskiy said that Russia had begun exacting its revenge for Ukraine’s resistance to its invasion with relentless attacks in the east.

Zelenskiy has warned for weeks that Moscow aims to step up its assault on Ukraine 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.

“The next big hurdle will now be the fighter jets,” Yuriy Sak, who advises Defence Minister Oleksiy Reznikov, told Reuters on Friday.

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 Ukrainian forces were continuing to throw reinforcements at Bakhmut, Maryinka and Vuhledar, three 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.”

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 main focus for months.

A day earlier, the head of Wagner said his fighters had secured Blahodatne, a village just north of Bakhmut.

Kyiv said it had repelled assaults on Blahodatne and Vuhledar, and Reuters could not independently verify the situations there. But the locations of the reported fighting indicated clear, though gradual, Russian gains.

Zelenskiy said Russian attacks in the east were relentless despite heavy casualties on the Russian side, casting the assaults as payback for Ukraine’s success in pushing Russian forces back from the capital, northeast and south earlier in the conflict.

[1/7] U.S. Air Force F-16 Fighting Falcon from the 140th Wing of the Colorado Air National Guard during NATO exercise Saber Strike flies over Amari military air base, Estonia June 12, 2018. REUTERS/Ints Kalnins

“I think that Russia really wants its big revenge. I think they have (already) started it,” Zelenskiy told reporters in the southern port city of Odesa.

Mykola Salamakha, a Ukrainian colonel and military analyst, told Ukrainian Radio NV that Moscow’s assault in Vuhledar was coming at huge cost.

“The town is on an upland and an extremely strong defensive hub has been created there,” he said. “This is a repetition of the situation in Bakhmut – one wave of Russian troops after another crushed by the Ukrainian armed forces.”

WESTERN DELAYS

The hundreds of modern tanks and armoured vehicles pledged to Ukraine by Western countries in recent weeks for a counteroffensive to recapture territory are months away from delivery.

This leaves Kyiv to fight through the winter in what both sides have described as a meat grinder of relentless attritional warfare.

Moscow’s Wagner mercenary force has sent thousands of convicts recruited from Russian prisons into battle around Bakhmut, buying time for Russia’s regular military to reconstitute units with hundreds of thousands of reservists.

Zelenskiy is urging the West to hasten delivery of its promised weapons so Ukraine can go on the offensive.

Kremlin spokesman 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.

That allowed Russia to apply pressure at Bakhmut and fortify the front against a future Ukrainian counter-attack, its researchers said in a report, though they said Ukraine could still recapture territory once the promised weapons arrive.

Zelenskiy met Danish Prime Minister Mette Frederiksen on Monday in Mykolaiv, a rare visit by a foreign leader close to the front. The city, where Russia’s advance in the south was halted, had been under relentless bombardment until Ukraine pushed the front line back in November.

Russia’s invasion, which it launched on Feb. 24 last year claiming it was 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.

Additional reporting by Pavel Polityuk, Kevin Liffey, Ronald Popeski and Reuters bureaus; Writing by Peter Graff, Philippa Fletcher and Doina Chiacu; Editing by Gareth Jones, William Maclean and Cynthia Osterman

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Business

German economy unexpectedly shrinks in Q4, reviving spectre of recession

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  • Q4 GDP at -0.2% Q/Q vs forecast of 0.0%
  • Decline due mainly to falling private consumption
  • Economists reckon mild recession is likely

BERLIN, Jan 30 (Reuters) – The German economy unexpectedly shrank in the fourth quarter, data showed on Monday, a sign that Europe’s largest economy may be entering a much-predicted recession, though likely a shallower one than originally feared.

Gross domestic product decreased 0.2% quarter on quarter in adjusted terms, the federal statistics office said. A Reuters poll of analysts had forecast the economy would stagnate.

In the previous quarter, the German economy grew by an upwardly revised 0.5% versus the previous three months.

A recession – commonly defined as two successive quarters of contraction – has become more likely, as many experts predict the economy will shrink in the first quarter of 2023 as well.

“The winter months are turning out to be difficult – although not quite as difficult as originally expected,” said VP Bank chief economist Thomas Gitzel.

“The severe crash of the German economy remains absent, but a slight recession is still on the cards.”

German Economy Minister Robert Habeck said last week in the government’s annual economic report that the economic crisis triggered by the Russian invasion of Ukraine was now manageable, though high energy prices and interest rate rises mean the government remains cautious.

The government has said the economic situation should improve from spring onwards, and last week revised up its GDP forecast for 2023 — predicting growth of 0.2%, up from an autumn forecast of a 0.4% decline.

As far as the European Central Bank goes, interest rate expectations are unlikely to be affected by Monday’s GDP figures as inflationary pressures remain high, said Helaba bank economist Ralf Umlauf.

The ECB has all but committed to raising its key rate by half a percentage point this week to 2.5% to curb inflation.

Monday’s figures showed falling private consumption was the primary reason for the decrease in fourth-quarter GDP.

“Consumers are not immune to an erosion of their purchasing power due to record high inflation,” said Commerzbank chief economist Joerg Kraemer.

Inflation, driven mainly by high energy prices, eased for a second month in a row in December, with EU-harmonized consumer prices rising 9.6% on the year.

However, analysts polled by Reuters predict annual EU-harmonized inflation will enter the double digits again in January with a slight rise, to 10.0%. The office will publish the preliminary inflation rate for January on Tuesday.

Reporting by Miranda Murray and Rene Wagner, editing by Rachel More and Christina Fincher

Our Standards: The Thomson Reuters Trust Principles.

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Business

Unilever names former Heinz exec Schumacher as CEO

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  • To become CEO July 1
  • Activist shareholder says met Schumacher when at Heinz
  • First outsider CEO since Paul Polman appointed in 2008
  • Unilever shares outpace FTSE 100

LONDON, Jan 30 (Reuters) – Unilever on Monday appointed Hein Schumacher to replace Alan Jope as chief executive from July in a move that was welcomed by investors including board member and activist shareholder Nelson Peltz.

Schumacher, 51, rejoined Unilever in October last year as non-executive director and is currently the chief of Dutch dairy business FrieslandCampina.

He worked at Unilever more than 20 years ago before working for retailer Royal Ahold NV and packaged food maker H.J. Heinz in the United States, Europe and Asia.

One of the biggest consumer companies in the world with more than 400 brands ranging from detergent to ice cream, Unilever said in September said that Jope planned to retire at the end of 2023.

Billionaire activist investor Nelson Peltz, who heads investor Trian Partners, said he strongly supports Schumacher “as our new CEO and look(s) forward to working closely with him to drive significant sustainable stakeholder value.”

Peltz become a Unilever board member in July after it was revealed early last year that he had built a stake in the company.

“I first met Hein when I served as a director at the H.J. Heinz Company from 2006 to 2013 and was impressed by his leadership skills and business acumen,” Peltz said.

Peltz, through his Trian Fund, holds a nearly 1.5% stake in Unilever, making him the fourth largest shareholder, according to Refinitiv Eikon data.

Unilever shares were up 0.56% versus a FTSE 100 (.FTSE) index down 0.1% as of 1032 GMT.

The move was also cheered by other investors and analysts, who have felt in recent years that Unilever needed an outsider’s touch.

“Positive that he’s an external appointment,” Jack Martin, a fund manager at Unilever shareholder Oberon Investments, said. “Good CV from what I read, hopefully provides the impetus the company requires.”

‘ESG SAVVY, PRAGMATIC’

Unilever’s shares have underperformed European consumer staples and discretionary indices during CEO Jope’s tenure, which began in January 2019.

Reuters Graphics

His failed bids for GlaxoSmithKline’s (GSK.L) consumer healthcare business last year lost him some good faith among investors, including influential British billionaire Terry Smith, owner of Fundsmith.

Smith said at the time that Jope needed to focus less on sustainbility and more on building Unilever’s core business.

“Hein is ideal for Unilever — he’s got roots at the company but at the same time he’s external,” Allan Leighton, former CEO of British food retailer Asda and ex-chair of Britain’s Royal Mail, told Reuters.

Leighton, who worked with Schumacher on the board of C&A AG, described him as “ESG savvy but in a pragmatic and commercial way.”

Tineke Frikee, a fund manager at Unilever shareholder Waverton Investment Management, said: “It is good Schumacher has plenty of industry experience outside Unilever, particularly international.”

“I note though that his background is mainly in food, rather than beauty and personal care. This may lead the market to reduce the probability of a potential food spin-off.”

Unilever’s food business includes Ben & Jerry’s ice cream, Colman’s mustard, Hellman’s mayonnaise and Knorr stock cubes.

Some investors and analysts have speculated over the past year that Unilever might spin off what they feel is a weaker food business to focus on personal goods, beauty and home care.

“Why hire a food exec, if you are planning to sell the food business?” Bernstein analyst Bruno Monteyne said, adding that selling the food business “will always be on the cards, but I doubt that it is top priority in the short term.”

But Monteyne pointed out that some investors were hoping Unilever would name someone more well-established, globally.

“Investors we spoke to in recent weeks were hopeful for a more familiar name from a successful U.S.-based FMCG (fast-moving consumer goods) turnaround.”

Unilever had been considering internal and external candidates for the role.

Sources told Reuters in October that the candidates included finance chief Graeme Pitkethly, personal care division boss Fabian Garcia and Hanneke Faber, who heads the company’s nutrition group.

Reporting by Yadarisa Shabong and Richa Naidu; editing by Matt Scuffham and Jason Neely

Our Standards: The Thomson Reuters Trust Principles.

Richa Naidu

Thomson Reuters

London-based reporter covering retail and consumer goods, analysing trends including coverage of supply chains, advertising strategies, corporate governance, sustainability, politics and regulation. Previously wrote about U.S. based retailers, major financial institutions and covered the Tokyo 2020 Olympic Games.

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Business

Shares and bonds nervy as rate-hike week looms

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  • Fed seen hiking 25 bps, ECB and BOE by 50 bps
  • Technology giants lead host of earnings results
  • Shares edge down after robust January rally

LONDON, Jan 30 (Reuters) – Stock markets worldwide halted their January rally on Monday, pausing for breath at the start of an agenda-setting week of central bank rate hikes and data releases that will clarify if progress has been made in the battle against inflation.

Investors expect the Federal Reserve will raise rates by 25 basis points on Wednesday, followed the day after by half-point hikes from the Bank of England and European Central Bank, and any deviation from that script would be a real shock.

Europe’s benchmark STOXX index fell 0.8% on Monday morning, echoing a slight dip in MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), which has surged 11% in January so far as China’s reopening bolsters sentiment.

The U.S. Nasdaq index is likewise on course for its best January since 2001, a rally that will be tested by earnings updates from tech giants this week.

U.S. stocks were set to follow the nervous Monday mood with S&P 500 futures down 1% and Nasdaq futures falling 1.3%, as investors await guidance later in the week on the Federal Reserve’s policy.

Analysts expect a hawkish tone suggesting that more needs to be done to tame inflation. read more

“With U.S. labour markets still tight, core inflation elevated and financial conditions easing, Fed Chair Powell’s tone will be hawkish, stressing that a downshifting to a 25bp hike doesn’t mean a pause is coming,” said Bruce Kasman, chief economist at JPMorgan, who expects another rise in March.

“We also look for him to continue to push back against market pricing of rate cuts later this year.”

There is a lot of pushing to do given futures currently expect rates to peak at 5% in March and to fall back to 4.5% by year end.

Europe offered a brisk reminder that the fight against rising prices is far from over, as bond yields in the region rose sharply on Monday in the wake of stronger-than-expected Spanish inflation data.

The data showing inflation rose 5.8% year-on-year in January, against expectations of 4.7%, pushed up the zone’s benchmark German 10-year government bond yield 7 basis points (bps) to 2.3190%, its highest since Jan. 10.

Italian and Spanish yields also inched up.

The dollar index was flat ahead of the week’s key data, on course for a fourth straight monthly loss of more than 1.5% on growing expectations that the Fed is nearing the end of its rate-hike cycle.

APPLE’S CORE

Yields on 10-year notes have fallen 33 basis points so far this month to 3.50%, essentially due to easing financial conditions even as the Fed talks tough on tightening.

That dovish outlook will also be tested by data on U.S. payrolls, the employment cost index and various ISM surveys.

Reading on EU inflation could be important for whether the ECB signals a half-point rate rise for March, or opens the door to a slowdown in the pace of tightening. read more

As for Wall Street’s recent rally, much will depend on earnings from Apple Inc (AAPL.O), Amazon.com (AMZN.O), Alphabet Inc (GOOGL.O) and Meta Platforms (META.O), among many others.

“Apple will give a glimpse into the overall demand story for consumers globally and a snapshot of the China supply chain issues starting to slowly abate,” wrote analysts at Wedbush.

“Based on our recent Asia supply chain checks we believe iPhone 14 Pro demand is holding up firmer than expected,” they added. “Apple will likely cut some costs around the edges, but we do not expect mass layoffs.”

Market pricing of early Fed easing has been a burden for the dollar, which has lost 1.6% so far this month to stand at 101.85 against a basket of major currencies.

The euro is up 1.5% for January at $1.0878 and just off a nine-month top. The dollar has even lost 1.3% on the yen to 129.27 despite the Bank of Japan’s dogged defence of its ultra-easy policies.

The drop in the dollar and yields has been a boon for gold, which is up 5.8% for the month so far at $1,930 an ounce .

The precious metal was flat on Monday ahead of the slew of key central bank moves and data releases.

China’s rapid reopening is seen as a windfall for commodities in general, supporting everything from copper to iron ore to oil prices.

Oil steadied on Monday after earlier losses, with prices bolstered by rising Middle East tension over a drone attack in Iran and hopes of higher Chinese demand.

Brent crude rose 10 cents, or 0.12%, to $86.76 a barrel by 1200 GMT while U.S. West Texas Intermediate crude added 4 cents, or 0.05%, to $79.72.

Reporting Lawrence White and Wayne Cole; Editing by Christopher Cushing, Arun Koyyur and Christina Fincher

Our Standards: The Thomson Reuters Trust Principles.

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Business

Oil falls ahead of OPEC+, U.S. Federal Reserve meetings

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SINGAPORE, Jan 30 (Reuters) – Oil prices fell on Monday, giving up earlier gains, as global producers this week will likely keep output unchanged during a meeting this week and investors are cautious ahead of a U.S. Federal Reserve meeting that may spur market volatility.

Brent crude futures fell 20 cents, or 0.2%, to $86.46 a barrel by 0435 GMT while U.S. West Texas Intermediate crude was at $79.57 a barrel, down 11 cents, or 0.1%.

Ministers from the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known collectively as OPEC+, are unlikely to tweak their current oil output policy when they meet virtually on Feb. 1.

Still, an indication of a rise in crude exports from Russia’s Baltic ports in early February caused Brent and WTI to post their first weekly loss in three last week.

“No change to the OPEC+ output is expected to be announced at this week’s meeting and we expect outlook commentary from the U.S. Fed to be the key driver of the outlook in the near term,” said National Australia Bank analysts in a research note.

Ahead of the Federal Reserve’s policy meeting scheduled on Jan. 31-Feb. 1, the market broadly expects the U.S. central bank to scale back rate hikes to 25 basis points (bps) from 50 bps announced in December, which may ease concerns of an economic slowdown that would curb fuel demand in the world’s biggest oil consumer.

Oil prices earlier gained amid tensions in the Middle East following a drone attack in oil producer Iran and as China, the world’s biggest crude importer, pledged over the weekend to promote a consumption recovery which would support fuel demand.

“It is not really clear yet what’s happening in Iran, but any escalation there has the potential to disrupt crude flow,” said Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore.

“We have Russia on the supply side and China on the demand side. Both can swing by more than 1 million barrels per day above or below expectation,” said Grasso, formerly an oil trader with Italy’s Eni.

“China seems to have surprised the market in terms of how fast they are coming out of zero COVID while Russia has surprised in terms of resilience of export volume despite the sanctions.”

China resumes business this week after its Lunar New Year holidays. The number of passengers travelling prior to the holidays rose above levels in the past two years but is still below 2019, Citi analysts said in a note, citing data from the Ministry of Transport.

“Overall international traffic recovery remains gradual, with high-single to low-teens digits to 2019 level, and we expect further recovery when outbound tour group travel resumes on Feb. 6,” the Citi note said.

Reporting by Florence Tan and Emily Chow; Editing by Muralikumar Anantharaman and Christian Schmollinger

Our Standards: The Thomson Reuters Trust Principles.

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Science

Asteroid’s sudden flyby shows blind spot in planetary threat detection

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WASHINGTON, Jan 29 (Reuters) – The discovery of an asteroid the size of a small shipping truck mere days before it passed Earth on Thursday, albeit one that posed no threat to humans, highlights a blind spot in our ability to predict those that could actually cause damage, astronomers say.

NASA for years has prioritized detecting asteroids much bigger and more existentially threatening than 2023 BU, the small space rock that streaked by 2,200 miles from the Earth’s surface, closer than some satellites. If bound for Earth, it would have been pulverized in the atmosphere, with only small fragments possibly reaching land.

But 2023 BU sits on the smaller end of a size group, asteroids 5-to-50 meters in diameter, that also includes those as big as an Olympic swimming pool. Objects that size are difficult to detect until they wander much closer to Earth, complicating any efforts to brace for one that could impact a populated area.

The probability of an Earth impact by a space rock, called a meteor when it enters the atmosphere, of that size range is fairly low, scaling according to the asteroid’s size: a 5-meter rock is estimated to target Earth once a year, and a 50-meter rock once every thousand years, according to NASA.

But with current capabilities, astronomers can’t see when such a rock targets Earth until days prior.

“We don’t know where most of the asteroids are that can cause local to regional devastation,” said Terik Daly, a planetary scientist at the Johns Hopkins Applied Physics Laboratory.

The roughly 20-meter meteor that exploded in 2013 over Chelyabinsk, Russia is a once-every-100-years event, according to NASA’s Jet Propulsion Laboratory. It created a shockwave that shattered tens of thousands of windows and caused $33 million in damage, and no one saw it coming before it entered Earth’s atmosphere.

Some astronomers consider relying only on statistical probabilities and estimates of asteroid populations an unnecessary risk, when improvements could be made to NASA’s ability to detect them.

“How many natural hazards are there that we could actually do something about and prevent for a billion dollars? There’s not many,” said Daly, whose work focuses on defending Earth from hazardous asteroids.

AVOIDING A REALLY BAD DAY

One major upgrade to NASA’s detection arsenal will be NEO Surveyor, a $1.2 billion telescope under development that will launch nearly a million miles from Earth and surveil a wide field of asteroids. It promises a significant advantage over today’s ground-based telescopes that are hindered by daytime light and Earth’s atmosphere.

That new telescope will help NASA meet a goal assigned by Congress in 2005: detect 90% of the total expected amount of asteroids bigger than 140 meters, or those big enough to destroy anything from a region to an entire continent.

“With Surveyor, we’re really focusing on finding the one asteroid that could cause a really bad day for a lot of people,” said Amy Mainzer, NEO Surveyor principal investigator. “But we’re also tasked with getting good statistics on the smaller objects, down to about the size of the Chelyabinsk object.”

NASA has fallen years behind on its congressional goal, which was ordered for completion by 2020. The agency proposed last year to cut the telescope’s 2023 budget by three quarters and a two-year launch delay to 2028 “to support higher-priority missions” elsewhere in NASA’s science portfolio.

Asteroid detection gained greater importance last year after NASA slammed a refrigerator-sized spacecraft into an asteroid to test its ability to knock a potentially hazardous space rock off a collision course with Earth.

The successful demonstration, called the Double Asteroid Redirection Test (DART), affirmed for the first time a method of planetary defense.

“NEO Surveyor is of the utmost importance, especially now that we know from DART that we really can do something about it,” Daly said.

“So by golly, we gotta find these asteroids.”

Reporting by Joey Roulette; Editing by Andrea Ricci

Our Standards: The Thomson Reuters Trust Principles.

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Business

Rheinmetall eyes boost in munitions output, HIMARS production in Germany

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DUESSELDORF, Jan 29 (Reuters) – German arms-maker Rheinmetall is ready to greatly boost the output of tank and artillery munitions to satisfy strong demand in Ukraine and the West, and may start producing HIMARS multiple rocket launchers in Germany, CEO Armin Papperger told Reuters.

He spoke days before Germany’s defence industry bosses are due to meet new defence minister Boris Pistorius for the first time, though the exact date has yet to be announced.

With the meeting, Pistorius aims to kick off talks on how to speed up weapons procurement and boost ammunitions supplies in the long term after almost a year of arms donations to Ukraine has depleted the German military’s stocks.

Rheinmetall (RHMG.DE) makes a range of defence products but is probably most famous for manufacturing the 120mm gun of the Leopard 2 tank.

“We can produce 240,000 rounds of tank ammunition (120mm) per year, which is more than the entire world needs,” Papperger said in an interview with Reuters.

The capacity for the production of 155mm artillery rounds can be ramped up to 450,000 to 500,000 per year, he added, which would make Rheinmetall the biggest producer for both kinds of ammunition.

In 2022, Rheinmetall made some 60,000 to 70,000 rounds each of tank and artillery shells, according to Papperger, who said production could be boosted immediately.

Demand for these munitions has soared since Russia’s invasion of Ukraine last February, not only due to their massive use on the battlefield but also as Western militaries backfill their own stocks, bracing for what they see as a heightened threat from Moscow.

Papperger said a new production line for medium calibre ammunition, used by German-built Gepard anti-aircraft tanks in Ukraine for example, would go live by mid-year.

Germany has been trying for months to find new munitions for the Gepard that its own military had decomissioned in 2010.

HIMARS PRODUCTION LINE IN GERMANY?

At the same time, Rheinmetall is in talks with Lockheed Martin(LMT.N), the U.S. company manufacturing the HIMARS (High Mobility Artillery Rocket System) multiple rocket launchers in heavy use with Ukrainian troops, Papperger said.

“At the Munich Security Conference, we aim to strike an agreement with Lockheed Martin to kick off a HIMARS production (in Germany),” he said, referring to an annual gathering of political and defence leaders in mid-February.

“We have the technology for the production of the warheads as well as for the rocket motors – and we have the trucks to mount the launchers upon,” Papperger said, adding a deal may prompt investments of several hundred million euros of which Rheinmetall would finance a major part.

Rheinmetall also eyes the operation of a new powder plant, possibly in the eastern German state of Saxony, but the investment of 700 to 800 million euros would have to be footed by the government in Berlin, he said.

“The state has to invest, and we contribute our technological know-how. In return, the state gets a share of the plant and the profits it makes,” Papperger suggested.

“This is an investment that is not feasible for the industry on its own. It is an investment into national security, and therefore we need the federal state,” he said.

The plant is needed as shortages in the production of special powders could turn out to be a bottleneck, hampering efforts to boost the output of tank and artillery shells, he noted.

A few days before the meeting with the new defence minister, Papperger pushed for an increase of Germany’s defence budget.

“The 51 billion euros in the defence budget will not suffice to purchase everything that is needed. And the money in the 100 billion euro special funds has already been earmarked – and partially been eaten up by inflation,” he said.

“100 billion euros sounds like a giant sum but we would actually need a 300 billion euro package to order everything that’s needed,” he added, noting that the 100 billion special fund does not include ammunitions purchases.

Even before Russia’s invasion of Ukraine, Germany was 20 billion euros short of reaching NATO’s target for ammunitions stockpiling, according to a defence source.

To plug the munitions gap alone, Papperger estimates the Bundeswehr (German armed forces) would need to invest three to four billion euros per year.

In the talks with the minister, the defence boss hopes for a turn towards a more sustainable long-term planning in German procurement, stretching several years into the future, as the industry needed to be able to make its arrangements in time.

“What we are doing at the moment is actually war stocking: Last year, we prefinanced 600 to 700 million euros for goods,” Papperger said. “We must move away from this crisis management – it is crisis management when you buy (raw materials and other things) without having a contract – and get into a regular routine.”

Reporting by Sabine Siebold, Editing by Angus MacSwan

Our Standards: The Thomson Reuters Trust Principles.

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World

Ukraine in talks with allies about getting long-range missiles, Zelenskiy aide says

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Jan 28 (Reuters) – Expedited talks are under way among Kyiv and its allies about Ukraine’s requests for long-range missiles that it says are needed to prevent Russia from destroying Ukrainian cities, a top aide to President Volodymyr Zelenskiy said on Saturday.

Ukraine has won promises of Western battle tanks and is seeking fighter jets to push back against Russian and pro-Moscow forces, which are slowly advancing along part of the front line.

“To drastically reduce the Russian army’s key weapon – the artillery they use today on the front lines – we need missiles that will destroy their depots,” presidential adviser Mykhailo Podolyak told Ukraine’s Freedom television network. He said on the Russian-occupied Crimean Peninsula there were more than 100 artillery warehouses.

“Therefore, firstly, negotiations are already under way. Secondly, negotiations are proceeding at an accelerated pace,” he said without giving details.

Zelenskiy, speaking separately, said Ukraine wanted to preempt Russian attacks on Ukrainian urban areas and civilians.

“Ukraine needs long-range missiles … to deprive the occupier of the opportunity to place its missile launchers somewhere far from the front line and destroy Ukrainian cities,” he said in an evening video address.

Zelenskiy said Ukraine needed the U.S.-made ATACMS missile, which has a range of 185 miles (297km). Washington has so far declined to provide the weapon.

Earlier in the day, the Ukrainian air force denied a newspaper report that it intended to get 24 fighter jets from allies, saying talks were continuing, Ukraine’s Babel online outlet said.

Spain’s El Pais newspaper, citing Ukrainian air force spokesperson Yuri Ihnat, said Ukraine initially wanted two squadrons of 12 planes each, preferably Boeing F-16 jets.

But in a statement to Babel, Ihnat said his comments to a media briefing on Friday had been misinterpreted.

“Ukraine is only at the stage of negotiations regarding aircraft. Aircraft models and their number are currently being determined,” he said.

Ihnat told the Friday briefing that F-16s might be the best option for a multi-role fighter to replace the country’s current fleet of ageing Soviet-era warplanes.

He also told Ukrainian national television that allied nations did not like public speculation about jets, Interfax Ukraine news agency said.

Deputy White House national security adviser Jon Finer on Thursday said United States would be discussing the idea of supplying jets “very carefully” with Kyiv and its allies.

Germany’s defence minister this week ruled out the idea of sending jets to Ukraine.

Reporting by David Ljunggren; Editing by Daniel Wallis and Cynthia Osterman

Our Standards: The Thomson Reuters Trust Principles.

David Ljunggren

Thomson Reuters

Covers Canadian political, economic and general news as well as breaking news across North America, previously based in London and Moscow and a winner of Reuters’ Treasury scoop of the year.

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World

Pro-Western, retired general Pavel sweeps Czech presidential vote

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  • Pavel wins in runaway vote over ex-PM Babis
  • Pavel gives clear support backing Ukraine, West
  • Pledges to end divisions brought by Babis, incumbent Zeman
  • Voter turnout record high in presidential election

PRAGUE, Jan 28 (Reuters) – Former army chief and high NATO official Petr Pavel won the Czech Republic’s presidential election on Saturday with a pledge to keep the country firmly anchored in the West and bridge society’s political differences.

Pavel, a 61-year-old retired general running for office for the first time, won 58.3% of the vote with all voting districts reporting final results, defeating billionaire ex-premier Andrej Babis, a dominant but polarising force in Czech politics for a decade.

Pavel, a social liberal who had campaigned as an independent and gained the backing of the centre-right government, conveyed a message of unity when addressing his supporters and journalists at a Prague concert venue on Saturday as results showed he had won.

“Values such as truth, dignity, respect and humility won,” he said.

“I am convinced that these values are shared by the vast majority of us, it is worth us trying to make them part of our lives and also return them to the Prague Castle and our politics.”

Pavel has also fully backed continued support for Ukraine in its defence against Russia’s invasion.

Czech presidents do not have many day-to-day duties but they pick prime ministers and central bank heads, have a say in foreign policy, are powerful opinion makers, and can push the government on policies.

Pavel will take office in March, replacing outgoing Milos Zeman, a divisive figure himself during his two terms in office over the past decade who had backed Babis as his successor.

Zeman had pushed for closer ties with Beijing and also with Moscow until Russia invaded Ukraine, and Pavel’s election will mark a sharp shift.

Turnout in the runoff vote that ended on Saturday was a record high 70.2%.

The result of the election will only become official when published in a legal journal on Tuesday, but the outcome of the poll was already clear on Saturday.

Babis, 68, a combative business magnate who heads the biggest opposition party in parliament, had attacked Pavel as the government’s candidate. He sought to attract voters struggling with soaring prices by vowing to push the government do more to help them.

Babis and Prime Minister Petr Fiala congratulated Pavel on his victory. Slovakia’s liberal President Zuzana Caputova appeared at Pavel’s headquarters to congratulate him, a demonstration of their close political positions.

Ukrainian President Volodymyr Zelenskiy congratulated Pavel on his election on Twitter and said he looked forward to close cooperation.

Reuters Graphics

EU AND NATO TIES

Pavel has backed keeping the central European country of 10.5 million firmly in the European Union and NATO military alliance, and supports the government’s continued aid to Ukraine.

He supports adopting the euro, a topic that successive governments have kept on the back burner, and supports same-sex marriage and other progressive policies.

A career soldier, Pavel joined the army in Communist times, was decorated with a French military cross for valour during peacekeeping in former Yugoslavia in the 1990s, and later rose to lead the Czech general staff and become chairman of NATO’s military committee for three years before retiring in 2018.

“I voted for Mr. Pavel because he is a decent and reasonable man and I think that the young generation has a future with him,” said Abdulai Diop, 60, after voting in Prague on Saturday.

Babis had campaigned on fears of the war in Ukraine spreading, and sought to offer to broker peace talks while suggesting Pavel, as a former soldier, could drag the Czechs into a war, a claim Pavel rejected.

Reporting by Robert Muller, Jason Hovet and Jan Lopatka; Additional reporting by Jiri Skacel and Fedja Grulovic; Editing by Hugh Lawson, David Holmes and Helen Popper

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