Imagine if cigarettes were no longer addictive and smoking itself became almost obsolete; only a tiny segment of Americans still lit up. That’s the goal of an unprecedented anti-smoking plan being carefully fashioned by U.S. health officials.

But the proposal from the Food and Drug Administration could have another unexpected effect: opening the door for companies to sell a new generation of alternative tobacco products, allowing the industry to survive — even thrive — for generations to come.

The plan puts the FDA at the center of a long-standing debate over so-called “reduced-risk” products, such as e-cigarettes, and whether they should have a role in anti-smoking efforts, which have long focused exclusively on getting smokers to quit.

“This is the single most controversial — and frankly, divisive — issue I’ve seen in my 40 years studying tobacco control policy,” said Kenneth Warner, professor emeritus at University of Michigan’s school of public health.

The FDA plan is two-fold: drastically cut nicotine levels in cigarettes so that they are essentially non-addictive. For those who can’t or won’t quit, allow lower-risk products that deliver nicotine without the deadly effects of traditional cigarettes.

This month the government effort is poised to take off. The FDA is expected to soon begin what will likely be a years-long process to control nicotine in cigarettes. And next week, the agency will hold a public meeting on a closely watched cigarette alternative from Philip Morris International, which, if granted FDA clearance, could launch as early as February.

The product, called iQOS, is a pen-like device that heats Marlboro-branded tobacco but stops short of burning it, an approach that Philip Morris says reduces exposure to tar and other toxic byproducts of burning cigarettes. This is different from e-cigarettes, which don’t use tobacco at all but instead vaporize liquid usually containing nicotine.

For anti-smoking activists, these new products may mean surrendering hopes of a knockout blow to the industry. They say there is no safe tobacco product and the focus should be on getting people to quit. But others are more open to the idea of alternatives to get people away from cigarettes, the deadliest form of tobacco.

Tobacco companies have made claims about “safer” cigarettes since the 1950s, all later proven false. In some cases the introduction of these products, such as filtered and “low tar” cigarettes, propped up cigarette sales and kept millions of Americans smoking. Although the adult smoking rate has fallen to an all-time low of 15 percent, smoking remains the nation’s leading preventable cause of death and illness, responsible for about one in five U.S. deaths.

Anti-smoking groups also point to Big Tobacco’s history of manipulating public opinion and government efforts against smoking: In 2006, a federal judge ruled that Big Tobacco had lied and deceived the American public about the effects of smoking for more than 50 years. The industry defeated a 2010 proposal by the FDA to add graphic warning labels to cigarette packs. And FDA scrutiny of menthol-flavored cigarettes — used disproportionately by young people and minorities — has been bogged down since 2011, due to legal challenges.

“We’re not talking about an industry that is legitimately interested in saving lives here,” said Erika Sward of the American Lung Association.

But some industry observers say this time will be different.

“The environment has changed, the technology has changed, the companies have changed — that is the reality,” said Scott Ballin, a health policy consultant who previously worked for the American Heart Association.

Under a 2009 law, the FDA gained authority to regulate certain parts of the tobacco industry, including nicotine in cigarettes, though it cannot remove the ingredient completely. The same law allows the agency to scientifically review and permit sales of new tobacco products, including e-cigarettes. Little has happened so far. Last year, the agency said it would delay the deadline for manufacturers to submit their vapor-emitting products for review until 2022.

The FDA says it wants to continue to help people quit by supporting a variety of approaches, including new quit-smoking aids and opening opportunities for a variety of companies, including drugmakers, to help attack the problem. As part of this, the FDA sees an important role for alternative products — but in a world where cigarettes contain such a small amount of nicotine that they become unappealing even to lifelong smokers.

“We still have to provide an opportunity for adults who want to get access to satisfying levels of nicotine,” but without the hazards of burning tobacco, said FDA Commissioner Dr. Scott Gottlieb. He estimates the FDA plan could eventually prevent 8 million smoking-related deaths.

​’Smoke-free future’

Philip Morris International and its U.S. partner Altria will try to navigate the first steps of the new regulatory path next week.

At a two-day meeting before the FDA, company scientists will try and convince government experts that iQOS is less-harmful than cigarettes. If successful, iQOS could be advertised by Altria to U.S. consumers as a “reduced-risk” tobacco product, the first ever sanctioned by the FDA.

Because iQOS works with real tobacco, the company believes it will be more effective than e-cigarettes in getting smokers to switch.

Philip Morris already sells the product in about 30 countries, including Canada, Japan and the United Kingdom.

iQOS is part of an elaborate corporate makeover for Philip Morris, which last year rebranded its website with the slogan: “Designing a smoke-free future.” The cigarette giant says it has invested over $3 billion in iQOS and eventually plans to stop selling cigarettes worldwide — though it resists setting a deadline.

Philip Morris executives say they are offering millions of smokers a better, less-harmful product.

Matthew Myers of the Campaign for Tobacco-Free Kids still sees danger. He says FDA must strictly limit marketing of products like iQOS to adult smokers who are unable or unwilling to quit. Otherwise they may be used in combination with cigarettes or even picked up by nonsmokers or young people who might see the new devices as harmless enough to try.

“As a growing percentage of the world makes the decision that smoking is too dangerous and too risky, iQOS provides an alternative to quitting that keeps them in the market,” Myers says.

It’s unclear whether existing alternatives to cigarettes help smokers quit, a claim often made by e-cigarette supporters. Research from the Centers for Disease Control and Prevention suggests about 60 percent of adult e-cigarette users also smoke regular cigarettes.

The case for lower nicotine

Experts who study nicotine addiction say the FDA plan is grounded in the latest science.

Several recent studies have shown that when smokers switch to very low-nicotine cigarettes they smoke less and are more likely to try quitting. But they also seek nicotine from other sources, underscoring the need for alternatives. Without new options, smokers would likely seek regular-strength cigarettes on the black market.

Crucial to the FDA proposal is a simple fact: Nicotine is highly addictive, but not deadly. It’s the burning tobacco and other substances inhaled through smoking that cause cancer, heart disease and bronchitis.

“It’s hard to imagine that using nicotine and tobacco in a way that isn’t burned, in a non-combustible form, isn’t going to be much safer,” said Eric Donny, an addiction researcher at the University of Pittsburgh.

A study of 800 smokers by Donny and other researchers showed that when nicotine was limited to less than 1 milligram per gram of tobacco, users smoked fewer cigarettes. The study, funded by the FDA, was pivotal to showing that smokers won’t compensate by smoking more if nicotine intake is reduced enough. That was the case with “light” and “low-tar” cigarettes introduced in the 1960s and 1970s, when some smokers actually began smoking more cigarettes per day.

Still, many in the anti-smoking community say larger, longer studies are needed to predict how low-nicotine cigarettes would work in the real world.

Legal risks

Key to the FDA plan is the assumption that the two actions will happen at the same time: as regulators cut nicotine in conventional cigarettes, manufacturers will provide alternative products.

But that presumes that tobacco companies will willingly part with their flagship product, which remains enormously profitable.

Kenneth Warner, the public policy professor, said he would be “astonished” if industry cooperates on reducing nicotine levels.

“I don’t think they will. I think they will bring out all of their political guns against it and I’m quite certain they will sue to prevent it,” he said.

In that scenario, the FDA plan to make cigarettes less addictive could be stalled in court for years while companies begin launching FDA-sanctioned alternative products. Tobacco critics say that scenario would be the most profitable for industry.

“It’s like Coke, you can have regular Coke, Diet Coke, Coke Zero, we’ll sell you any Coke you like,” said Robin Koval, president of the Truth Initiative, which runs educational anti-tobacco campaigns.

But the FDA’s Gottlieb says the two parts of the plan must go together. “I’m not going to advance this in a piecemeal fashion,” he said.

When pressed about whether the industry will sue FDA over mandatory nicotine reductions, tobacco executives for Altria and other companies instead emphasized the long, complicated nature of the regulatory process.

“I’m not going to speculate about what may happen at the end of a multiyear process,” said Jose Murillo, an Altria vice president. “It will be science and evidence-based and we will be engaged at every step of the way.”
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Swiss luxury watchmaker Audemars Piguet said it would launch a second-hand business this year, becoming the first big brand to announce plans to tap into a fast-growing market for pre-owned premium watches.

The company told Reuters it would launch the business at its outlets in Switzerland this year. If this proved successful, it would roll out the operation in the United States and Japan.

“Second-hand is the next big thing in the watch industry,” Chief Executive Francois-Henry Bennahmias told Reuters in an interview at the SIHH watch fair in Geneva this week.

Going to the ‘dark side’

Luxury watchmakers have hitherto eschewed the second-hand trade, fearing diluting the exclusivity of their brands and cannibalizing their sales. They have instead ceded the ground to third-party dealers.

But some are now looking to change tack, driven by an industry-wide sales slowdown combined with a second-hand market that is expanding rapidly, fuelled by online platforms like Chrono24 and The RealReal.

“At the moment, in watches, we leave it to what I call the ‘dark side’ to deal with demand for pre-owned pieces,” added Bennahmias, whose company is known for its octagonal Royal Oak timepieces that sell for 40,000 Swiss francs ($41,680) on average.

“Anybody but the brands (is selling second hand) — it’s an aberration commercially speaking,” he said.

Others may follow

Several smaller brands, including H.Moser & Cie and MB&F, have signaled interest in the second-hand trade.

“It is important to control the sale of second-hand watches to protect the owners and the value of watches already in the market by keeping the grey market in check,” H.Moser & Cie boss Edouard Meylan told Reuters.

MB&F, which plans to launch second-hand sales via its website this year, told Reuters it expected to typically give a 20-30 percent discount on second-hand watches. A spokesman said customers buying from established watch brands could feel confident they were getting genuine products in good working order and with a valid warranty.

Bigger brands Rolex, Patek Philippe, Swatch Group, Richemont and Breitling all declined to comment, when asked whether they planned to enter the second-hand market, while LVMH’s watch division was not immediately available.

Starting small

Audemars Piguet said it would initially allow customers to trade in old watches as part-exchange for new ones, and then sell the second-hand watches. It has not yet decided whether to buy second-hand watches for cash.

Experts say the second-hand luxury watches business, mostly done via online platforms or specialized retailers, is growing rapidly as a new generation of customers that values variety more than permanent ownership enters the luxury world.

In an example of the discounts offered online, a diamond-studded Audemars Piguet Royal Oak “with moderate scratches” sells for $9,450 on The RealReal, about a third of the estimated retail price.

Kepler Cheuvreux analyst Jon Cox said he estimated the size of the second-hand market at $5 billion a year in revenue, including watches sold at auction, and that it had outperformed the market for new pieces in the last couple of years.

That is still dwarfed by a new luxury watch sector worth 37 billion euros ($45.3 billion), according to consultancy Bain & Cie. However Swiss watch exports fell 3.3 percent in 2015 and 9.9 percent in 2016 before posting a modest 2.8 percent rise in the first 11 months of 2017.

US top market for pre-owned

The United States, where sales of new watches have been falling for years, is the No. 1 market for pre-owned watches, followed by Britain and Japan, said U.S. retailer Danny Govberg, who sells new watches for Rolex and other brands, but also an increasing number of second-hand timepieces.

His company said its second-hand sales had grown by 37-40 percent year-on-year over the past five years. In an example of prices, it said it listed a second-hand Audemars Piguet Royal Oak for $24,950 compared with a $32,000 retail price.

Together with a partner in Hong Kong and a Singapore-based investor, Govberg recently launched global e-commerce platform WatchBox for buying and selling pre-owned luxury watches.

“People sell us watches by the bucket,” he said.

He said many people sold watches to buy a new one so the pre-owned market was actually driving new sales, like in the car market. 

“The brands are still trying to figure it out, they don’t have the solution yet,” he said.
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Foreign investors in Vietnam will welcome a fairer, more predictable set of business practices as the government pursues the heads of local firms over corruption, analysts believe.

Some foreign companies might review their own books to ensure clean accounting, as prosecutors investigate executives in Vietnamese firms over suspected graft. Most will laud the crackdown as steps toward transparency, fairness in business and better-run local partner companies, economists predict.

“The corruption cleanup, I think so far, seems to be well received,” said Song Seng Wun, an economist with the private banking unit of CIMB in Singapore. “There is at least on the surface an effort to clean up and be more transparent in the way of doing business as a way to ensure firmer ground.”

Increased confidence among foreign factory investors, who already like Vietnam for its cheap land and labor, would help buoy the Southeast Asian country’s overall economy.

Foreign investment anchors Vietnam’s $202 billion GDP, which the Asian Development Banks expects will expand by 6.5 percent this year.

​Corruption crackdown widens

High-level graft trials swept Vietnam in much of 2017 as citizens complained vociferously about a range of violations, from bribery during traffic stops to illegal land-use deals.

In September, a court in Hanoi handed a death sentence to the former chairman of state-owned gas and oil firm PetroVietnam and sentenced an official from Vietnam-based OceanBank to life imprisonment for “roles in a multimillion-dollar graft case that has riveted the nation,” according to the local media outlet VnExpress International.

Nguyen Xuan Son, who had served as chairman of the board, received the death penalty for misappropriating $13.6 million from the bank, the news outlet said.

This month, former ruling Communist Party Politburo member Dinh La Thang went on trial along with 21 other officials from PetroVietnam and its affiliates. He is accused of causing losses of about $35 million.

Trinh Xuan Thanh, former head of PetroVietnam Construction, faces charges in this case over violating economic management regulations and misappropriating property. He generated international attention in August when the German government accused agents from Hanoi of abducting him in Berlin as he was seeking asylum.

Observers say this trial is part of Communist Party General Secretary Nguyen Phu Trong’s broader campaign against corruption.

The nonprofit advocacy group Transparency International ranked Vietnam 113 of 176 countries and regions evaluated in 2016 for perceptions of corruption. New York-based business compliance consultancy Gan Integrity cites bribery, political interference and “facilitation payments” across industries in Vietnam.

The same year the government told its legislature that numerous officials had been “neglecting their duties and failing to uphold moral standards and political virtues,” VnExpress reported.

​Local-foreign schism

Foreign-owned firms may review in-house accounting or money-handling procedures now to make sure they’re following rules in case a disgruntled employee contacts authorities, business experts say.

Western firms generally follow strict British anti-corruption laws when in Vietnam, though investors from elsewhere in Asia may use different standards, said Ralf Matthaes, managing director of Infocus Mekong Research, a market research company in Ho Chi Minh City.

Ford Motor Co. and Intel are among the best-known foreign investors. But most capital comes from South Korea, Singapore, Japan and Taiwan. Foreign-operated factories usually make goods, from garments to smartphones, for export.

“There are variances between different countries,” said Dustin Daugherty, senior associate in business intelligence with the consultancy Dezan Shira & Associates in Ho Chi Minh City.

Overall, he said, “they are much more compliance-oriented by far. They’re much more concerned about following the rules. There are fewer corners cut.”

In 2017, registered foreign direct investment in Vietnam reached $29.68 billion as of Dec. 20, an increase of 44 percent from the same period of 2016, according to Ministry of Planning and Investment data.

Foreign and local companies often benefit from each other now rather than competing. Local suppliers provide raw material to foreign-owned factories, for example, or offer back-end support. The state gas firm and OceanBank faced no direct competition from foreign investors.

But a clean company could lose out on land deals, subsidies or government procurement if competing with a corrupt one willing to make payoffs.

Eventually state firms may take on foreign ones overseas, said Carl Thayer, emeritus professor with the University of New South Wales in Australia. That shift would raise the urgency for fair play in business.

Vietnamese officials, he said, are “trying to once again a renewed effort to improve the performance of state-owned enterprise, equitize and privatize them, make them more efficient so they can deal with foreign competition and go abroad and perform.”

Corruption “doesn’t seem to affect the flow of foreign investment but it hurts Vietnam,” said Thayer, who specializes in Southeast Asian affairs.
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Widow Ahatho Turuga lost 20 of her goats to drought early last year, but the shopkeeper is planning to reinvest in her herd once she has saved enough money.

“I think I will start with four goats and see how it goes,” she said, rearranging soap on the upper shelf of her shop in Loglogo, a few kilometers from Marsabit town.

She recalled how frequent droughts had left her on the edge of desperation, struggling to care for six of her own children and four others she adopted after their mother died.

But Turuga is finding it easier to cope since taking part in a rural entrepreneurship program run by The BOMA Project, a nonprofit helping women in Kenya’s dry northern areas beat extreme poverty and adapt to climate change.

The U.S. and Kenya-based organization provides two years of business and life-skills training, as well as mentorship.

Groups of three women are each given a startup grant of 20,000 Kenyan shillings ($194.55) and a progress grant of 10,000 shillings to set up a business.

After graduating, they carry on operating their businesses — mainly small shops selling groceries and household goods — either together or on their own.

The women also club together in savings groups of at least 15 people, who put away anything from 400 shillings a month each, and make loans to members at an interest rate of 5 to 10 percent.

Habibo Osman, a mother of five who was in the same group as Turuga, has been able to support her family even after divorcing her husband.

The 1,200 shillings she earns each week from the shop she established as a BOMA business has enabled her to enroll her eldest child, aged five, in nursery school. She is now hoping to save enough to buy her own land.

No more aid

Ahmed “Kura” Omar, BOMA’s co-founder and deputy country director, said his native Marsabit is one of Kenya’s driest counties. It is often hit by prolonged drought, with many families losing livestock in its mainly pastoralist economy, he added.

“Given that there is no foreseeable end to these drought patterns, we need to stop relying on food distribution and aid money, and create more sustainable, life-long solutions,” Kura told Reuters.

BOMA CEO Kathleen Colson said the program aimed to help break the cycle of dependency on aid, giving women power over their lives and the means to move out of extreme poverty.

“People need to be treated with dignity and be empowered to achieve self-sufficiency and effect change on a community level,” she said.

BOMA asks villagers to help identify the poorest women among them to participate in the training. After completing the program, they help other women, a process that raises income levels across the entire area.

Bakayo Nahiro, a widow and mother of six, belongs to the Namayana women’s saving group in Kargi in Marsabit. She has amassed 25,000 shillings in savings, but said profit margins go down in drought periods as people take shop goods on credit when they have no livestock to sell.

Money is power

Jane Naimirdik, a BOMA trainer and mentor, said communities in Marsabit are highly patriarchal, but the program helps women gain a voice in society.

The practice of grouping women in threes creates mutual accountability but also offers protection from husbands who may want to take money from them, she added.

“We once handled a case where the husband tried to take the wife’s savings by force, but we approached [him] and told him the money did not belong to his wife but to the women’s savings group and he understood,” said Naimirdik.

Moses Galore, Kargi’s village chief, said no such incidents had been reported to him, and men appreciated their wives’ financial contribution to the household.

Magatho Mifo, a BOMA business owner, said her husband was happy about her commercial activities as she could now provide for her family while he travels for days in search of pasture for his herd.

Her neighbors’ wives and children buy goods on credit when the men are away looking for grazing, and repay her when they return. This helps the community during lean times and generates more income for her business, she said.

“My husband sometimes gets angry when I attend the women’s group meetings, because they can last a long time, but once I arrive home with a bag of food or something else, all is forgotten,” said Khobobo Gurleyo, another entrepreneurship program member.

Business partnerships

BOMA mentor Naimirdik said the women are also trained in conflict management to strengthen their business partnerships.

Ideally, each group includes women of different ages so as to benefit from the experience of older members and to make the program sustainable as it passes to subsequent generations, she said.

In addition, the women receive information about family planning and the importance of having small families, as well as child and maternal health and hygiene, she added.

The BOMA Project has reported positive results in the communities where it works in Marsabit County and Samburu East, with about 15,700 women enrolled in its program since 2008.

Data collected during a 2016 exit survey of participants found that after two years, 99 percent of BOMA businesses were still open.

Members experienced a 147 percent increase in their income, and a 1,400 percent increase in their savings, alongside a 63 percent drop in children going to bed hungry.

The BOMA Project plans to expand its program across East Africa’s drylands by partnering with governments and other development agencies.

In Kenya, it is undertaking a pilot program with the government involving 1,600 women in Samburu, in addition to its existing work.

The project aims to reach 1 million women and children by 2022, said CEO Colson.
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Turkey’s main business lobby on Thursday called on the government to end the state of emergency as parliament extended it for a sixth time since it was imposed after an attempted coup in 2016.

Emergency rule allows President Tayyip Erdogan and the government to bypass parliament in passing new laws and allows them to suspend rights and freedoms. More than 50,000 people have been arrested since its introduction and 150,000 have been sacked or suspended from their jobs.

The Turkish parliament on Thursday voted to extend the state of emergency, with the ruling AK Party and the nationalist opposition voting in favor.

Rights groups and some of Turkey’s Western allies fear Erdogan is using the crackdown to stifle dissent and crush his opponents. Freedom House, a Washington-based watchdog, downgraded Turkey to “not free” from “partly free” in an annual report this week.

In order to preserve its international reputation, Turkey needs to start normalizing rapidly, Erol Bilecik, the head of the TUSIAD business lobby said.

“The first step in that regard is bringing an end to the state of emergency,” he told a meeting in Istanbul.

Parliament was due to extend emergency rule after the national security council on Wednesday recommended it do so.

The state of emergency has negatively impacted foreign investors’ decisions, another senior TUSIAD executive said.

“As Turkey takes steps towards becoming a state of law, direct investments will increase, growth will accelerate, more jobs will be created,” Tuncay Ozilhan said, adding that he hoped this would be the last extension of emergency rule.

The government says its measures are necessary to confront multiple security challenges and root out supporters of the cleric Fethullah Gulen, whom it blames for the coup attempt. Gulen has denied any involvement.

But critics fear Erdogan is pushing the NATO member towards greater authoritarianism.

Some 30 emergency decrees have been published since the failed coup. They contain 1,194 articles and cover defense, security, the judiciary, education and health, widely restructuring the relationship between the state and the citizen.

A total of 2,271 private educational institutions have been shut down in the crackdown, as well as 19 labor unions, 15 universities, 49 hospitals and 148 media outlets.

The two co-heads of Turkey’s pro-Kurdish opposition party, parliament’s third-largest, are in jail on terrorism charges, as are several of the parties deputies.

The Turkish Journalists’ Association says about 160 journalists are in jail, most held since the failed coup. Last year, the Committee to Protect Journalists called Turkey the world’s top jailer of journalists.
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