A report marking the International Day for Disaster Risk Reduction finds many deaths and economic losses from natural disasters could be averted by investing in preventive risk reduction measures. 

Climate-related disasters have nearly doubled over the past 20 years, with developing countries bearing the brunt of the damage. Though extreme weather events and other emergencies are growing, the U.N. Office for Disaster Risk Reduction says little money is being allocated to help countries prevent or reduce risks. 

The report finds $133 billion of official development assistance was allocated for disaster-related aid between 2010 and 2019, but only $5.5 billion was invested in measures to reduce the risks and lessen the impact of disasters. 

For every $100 spent on disaster-related development aid, only 50 cents goes toward protecting development from the impact of disasters, according to the report. 

Ricardo Mena, director of the Office for Disaster Risk Reduction, said even that low-level funding should be better targeted to address the needs of poorer, more vulnerable countries. 

“One would think that countries that are more prone to disasters and that experience higher mortality rates would be the ones where DRR, disaster risk reduction, financing would be allocated the most. But that is unfortunately not the case,” he said. “Insufficient investment is being provided to prevent future disasters in areas where high mortality is likely.” 

Mena said failure to invest in DRR is like buying a nice car that has no brakes.

“Investing in DRR, we know it makes sense and, in terms of cost-benefit, it is tremendously positive,” he said. “So, yes, we are saying it is better to attack the underlying factors of risk, then having to spend more money at a time when disasters actually happen.” 

Academic studies find every dollar invested in disaster risk reduction prevention can result in savings of $3 to $15 in disaster losses. 

Mena is calling for an increase in funding to help poor countries adapt to climate change and implement national strategies for disaster risk reduction. 

 
…

From the United States to Germany, developed countries are scrambling to source energy supplies and satisfy a booming consumer demand for goods. 

Supply chains disrupted by the COVID-19 pandemic are straining to cope and factories are unable to meet the surge in demand from consumers, who are spending far more than normal, a consequence of governments pumping $10 trillion collectively into their economies, say business analysts.

Shortages in Britain have made headlines with shoppers facing empty food shelves, with fruits and vegetables especially in short supply. Supermarket bosses warned Wednesday they might have to ration meat to prevent panic buying, particularly in the run-up to Christmas. 

 

Britain’s supply challenges have been intensified by its departure from the European Union, its main trading partner. But European neighbors, as well as the United States, are also reporting shortages of clothing and electronic goods. Manufacturers say they are finding it hard to source microchips due to factory shutdowns in Asia. 

Politicians have sought to reassure voters that things will return to normal soon and that shortages are transitory.

But are they? 

 

Some economists and trade analysts fear the developed world may be entering a new era of scarcity partly because of climate action, which will be costly and slow economic growth, and because of a growing trend toward economic protectionism. 

 

While few doubt that carbon reduction in economies is essential, if an existential climate disaster is to be averted, a rise in the imposition of tariffs and quotas and government regulations, aimed at restricting imports, has free market advocates and economists worried. 

Shortage economy 

 

They say turning away from globalization and free trade will slow economic growth, lead to scarcity, reduce productivity, and make the world poorer. Britain’s influential Economist magazine this week warned, “Around the world, economic nationalism is contributing to the shortage economy.” 

 

The magazine’s editors say, “Trade policy is no longer being written with economic efficiency in mind.” They pointed to the recent decision by U.S. President Joe Biden to keep in place tariffs from the prior administration of President Donald Trump, which average around 19%, on Chinese goods. 

 

Free trade opponents welcome the trend, arguing globalization results in job losses in developing countries, leads to increasing and unfair economic disparities and income inequalities, results in the exploitation and underpayment of workers and roils local communities. 

 

Debate aside on the benefits or drawbacks of globalization, economic protectionism has been increasing in recent years. Data compiled by the London-based Center for Economic Policy Research suggests that more than 50% of exports from G-20 countries are subject to trade measures, up from 20% in 2009. 

 

Global cross-border investment has declined dramatically during the past two pandemic years, but even before the emergence of the coronavirus, it was falling according to figures published by the Organization for Economic Cooperation and Development, a Paris-based intergovernmental body with 38 member states. 

 

Since 2015 foreign direct investment by companies has fallen by half relative to world GDP, according to the OECD. 

 

Governments are increasingly showing a reluctance to sign new free trade deals and instead have been talking up the need to boost manufacturing capacity and the economic security of their countries. 

 

Analysts and business leaders also say geopolitical rivalry, where nations see trade as a zero-sum game, meaning there have to be winners and losers, is also playing an increasing role in the policy-making and economic thinking of governments. 

 

Last week, a group of CEOs from some of the world’s biggest companies, brought together by the World Economic Forum, WEF, an independent international organization, called for greater global trade cooperation. In a joint statement, the business leaders drawn from 17 countries highlighted the potential of trade and investment to speed the global economic recovery from the pandemic. 

 

“We believe trade and investment support human development and that global recovery can be built upon a trade recovery. Governments must creatively re-engage on trade reform and refrain from protectionism,” they said. 

And the CEOs added, “Through jointly upholding environmental and social standards, trade cooperation should prevent a race to the bottom and avoid harmful distortions to markets for goods and services. Trade cooperation can improve outcomes for underrepresented members of society, including women and minorities.” 

 

Last month, Biden played down the prospects of a post-Brexit free trade deal between the United States and Britain during bilateral talks with British Prime Minister Boris Johnson at the White House.

Biden said he would discuss the issue “a little bit” with Johnson, who has been eager to strike an agreement with the U.S. in the wake of Britain’s exit from the EU. 

Later, Johnson told British reporters that a U.S.-UK trade deal was “just not a priority” for the Biden administration. 

 

The U.S. is not alone in running shy of new free trade deals and focusing on national self-reliance and boosting manufacturing capacity. When first elected in 2014, India’s prime minister, Narendra Modi, raised the prospect of implementing wide-ranging economic reforms and opening his country much more to free trade. 

Some incremental reforms were introduced, but soon after entering office Modi put a pause on trade deals and adopted policies focused on India supplying the goods and services it needs from within the country, rather than getting them from abroad. 

 

There has been some tempering of Modi’s self-reliance policy since, but his government has been highly cautious in discussing regional trade deals, say analysts.
…

A global deal to ensure large multinational companies pay a minimum tax rate of 15% and make it harder for them to avoid taxation has been recently agreed upon by 136 countries. But as White House bureau chief Patsy Widakuswara reports, the world has a long way to go before the deal is implemented.

Produced by: Mary Cieslak           
…

At a time when the Chinese economy is facing multiple challenges, including an energy shortage and supply chain problems that have disrupted multiple industries, an expanding crisis in the real estate sector threatens even further damage. 

For months, the slow-moving default crisis at China Evergrande Group, one of the country’s largest property developers, has put a spotlight on the real estate sector, which makes up a much larger share of gross domestic product in China – nearly 30% – than it does in most developed countries. 

The crisis has accelerated in recent days, with more real estate companies defaulting on their bond payments, or asking for forbearance from creditors in order to avoid default.

Experts warn that the deterioration of the Chinese real estate sector could lead to reluctance of foreign investors to place bets on Chinese companies in general – bad news at a time when the government in Beijing is struggling to manage multiple problems. 

Energy shortage 

The crisis in the property sector comes at a particularly bad time for China, which is currently facing widespread shortages of coal, which it uses to generate around 70% of its electricity. 

The coal shortage is driven by a number of factors, including a boycott by China of Australian coal put in place last year after officials in Canberra demanded an investigation into the origins of the COVID-19 pandemic, which first appeared in China.

But China has also placed a series of new regulations on coal mines while simultaneously requiring that energy prices be kept artificially low. This led to disinvestment in the coal sector, and lower production. 

This week, Beijing announced that it will allow energy firms to set prices on the open market without a ceiling, which will make electricity significantly more expensive, but will also incentivize more production.

The moves to improve the supply of energy are not expected to achieve real results until sometime next year. Meanwhile, the energy shortage has cascaded through the Chinese economy. The country has faced intermittent blackouts that have impacted everything from heavy industries like steel, aluminum and cement, to the manufacture of electronics and other consumer goods. 

Broader problems in real estate 

At a time when foreign investment could help drive improvement in the country’s energy sector, the struggles of the property development market are making those investments look more and more risky. 

Evergrande’s failure to make payments on a pair of dollar-denominated bonds last month – and the Chinese government’s apparent lack of interest in bailing out the company – has raised questions about the future of the conglomerate, which has more than $300 billion in debt still outstanding.

On Tuesday, investors in Evergrande bonds reported that the company had missed another payment of $148 million. 

Now, the crisis at Evergrande seems to be infecting other firms in the property sector. Last week, Fantasia Holdings Group, a Shenzhen-based property developer, shocked the markets by defaulting on a $206 million payment. Days before, the bonds had been trading at 99 cents on the dollar, suggesting that investors thought it highly likely that the company could service its debt. 

On Tuesday, another firm, Sinic Holdings, announced that it does not expect to be able to make a payment on a $250 million bond coming due next week, and that the failure will cause it to “cross-default” on two other outstanding bonds.

Funding crisis 

Still more firms are showing signs of imminent distress. Modern Land Co., based in Beijing, has asked creditors for a three-month extension on a pending payment, and Xinyuan Real Estate has asked its creditors to trade bonds coming due on Friday for new bonds that won’t mature until 2023, a move rating agencies see as tantamount to default. 

The series of defaults in the property sector has given international investors reason to be extremely leery of the Chinese property market. Moody’s Investors Service, Fitch Ratings and S&P Global Ratings have all slashed credit ratings on a host of Chinese developers.

Bondholders who were willing to accept a 10% interest rate on Chinese junk bonds – securities considered to be below “investment grade” by ratings firms – are now demanding rates above 20%, in some cases. Holders of existing bonds are expecting to take significant “haircuts” on their holdings, meaning that they will be forced to accept less than they are owed. 

A drag on economic growth 

High borrowing costs are likely to be a persistent problem for Chinese companies, Doug Barry, a spokesman for the U.S.-China Business Council, told VOA. 

“A problem for the Chinese economy is that it will cost higher rates of return to sell Chinese debt in world equity markets,” he said.

Barry said that the likely result is that China will receive less investment capital from overseas in the future, which will hamper economic growth.

“The immediate effects could be lower levels of investment and lower levels of growth,” he said. “This, paired with energy shortages, represents a one-two punch. Foreign companies with substantial investments in China are watching closely with an eye toward keeping supply chains intact and costs stable.” 

“The world economy is intertwined with China’s, ‘like lips and teeth,’ to use a Chinese expression,” he added. The hope is that officials will get a grip on the immediate problems and do the work necessary to stabilize for the longer term financial, property and energy markets.” 

Public concern limited 

Tianlei Huang, a research fellow at the Peterson Institute for International Economics, said in an email exchange with VOA that inside China, there doesn’t appear to be broad public concern about the crisis in the real estate sector seeping into other parts of the economy. 

However, he added, “There is no denying that Evergrande’s debt is worrying. Though the overall debt held by financial institutions is limited, certain banks with high exposure to Evergrande and other weak property developers could suffer a heavy blow and see a sharp deterioration in asset quality should there be a cross default.” 

The lack of widespread public concern may be due, in part, to how difficult it is to get a full picture of the indebtedness of large Chinese companies. 

Hidden debt 

“What is equally worrying is that Evergrande also has lots of off-balance-sheet debt and it is unclear how much,” Huang said.

Many Chinese firms supplement bank loans and bond issuances with other sources of funding, including investment capital routed through wealth management firms seeking high returns for their clients. 

“You may have seen videos of gatherings of investors in front of Evergrande’s office buildings asking for repayments,” he said. “Local governments are now on high alert for any large-scale gatherings related to Evergrande.” 

 
…

The U.S. House of Representatives was set Tuesday to extend the government’s borrowing authority into early December, averting a first-ever default next week when the United States says it will run out of money to pay its bills.

The House vote to increase the existing $28.4 trillion debt total by $480 billion through December 3, following approval last week by the Senate, would send the legislation to President Joe Biden for his expected signature.

While the congressional votes and Biden’s approval resolve the immediate financial crisis for the government, the Democratic-controlled Congress and the White House have yet to agree on how to approve a long-term expansion of the borrowing authority, perhaps through almost all of 2022.

Senate Minority Leader Mitch McConnell secured enough votes of his fellow Republican senators last week to help Democrats pass the expanded borrowing authority in the short term but said he would not do so again as the December deadline approaches.

McConnell has called on Democrats to approve the debt ceiling on their own through a legislative process known as reconciliation, for which they would not need any Republican support. But Democrats say the process is cumbersome and time-consuming, leaving it uncertain how they will try to hike the borrowing authority come December.

The U.S., almost alone among world governments, has a debt ceiling, one it has adjusted about 70 times since 1965, either by increasing it to a specific figure or by suspending it for a year or two. The U.S. needs to borrow money, much as individual consumers might, because it chronically spends more than it collects in corporate and individual taxes.

U.S. Treasury chief Janet Yellen warned Sunday that it was “absolutely imperative” that Congress increase the country’s borrowing authority, even as the threat of an immediate default receded.

“It would be a catastrophe” if the United States does not increase the debt ceiling, Yellen told ABC’s “This Week” show.

Yellen had said the U.S. would run out of money to pay its bills next Monday. McConnell and 10 other Republicans voted to clear the path for Democratic senators to increase the government’s borrowing authority on a 50-48 party-line vote.

Senate Majority Leader Chuck Schumer said Republicans should join Democrats in raising the debt ceiling because the country’s long-term debt has increased under both Republican and Democratic control of the White House and Congress.

The borrowing authority provides money to pay bills for debt already incurred, not future spending. But Republicans have balked at helping Democrats raise the debt ceiling this time as a protest against Biden’s proposal to spend $2 trillion or more on the biggest expansion of the country’s social safety net programs in five decades.

Yellen has called for doing away with the debt ceiling, but that is unlikely since both Republican and Democratic lawmakers, thinking it is a winning political tactic, repeatedly blame each other for what they contend is wasteful and unneeded spending by their opponents.

“It should be a shared responsibility [to increase the debt ceiling], not any one party,” Yellen said. “It is Congress’ responsibility.”

“We have to reassure the world that the United States is fiscally responsible,” she said, adding that if the borrowing authority is not increased before December 3, it would amount to “a self-inflicted crisis.”

Yellen said if the debt ceiling is not increased, 50 million older Americans might not receive government pension benefits and that “our troops won’t know when or if they would be paid. The 30 million families that receive a child tax credit, those payments would be in jeopardy,” she said. 

 
…

One reason America’s employers are having trouble filling jobs was starkly illustrated in a report Tuesday: Americans are quitting in droves.

The Labor Department said that quits jumped to 4.3 million in August, the highest on records dating back to December 2000, and up from 4 million in July. That’s equivalent to nearly 3% of the workforce. Hiring also slowed in August, the report showed, and the number of jobs available fell to 10.4 million, from a record high of 11.1 million the previous month.

The data helps fill in a puzzle that is looming over the job market: Hiring slowed sharply in August and September, even as the number of posted jobs was near record levels. In the past year, open jobs have increased 62%. Yet overall hiring, as measured by Tuesday’s report, has actually declined slightly during that time.

The jump in quits strongly suggests that fear of the delta variant is partly responsible for the shortfall in workers. In addition to driving quits, fear of the disease probably caused plenty of those out of work to not look for, or take, jobs.

As COVID-19 cases surged in August, quits soared in restaurants and hotels from the previous month and rose in other public-facing jobs, such as retail and education. Nearly 900,000 people left jobs at restaurants, bars, and hotels in August, up 21% from July. Quits by retail workers rose 6%.

Yet in industries such as manufacturing, construction, and transportation and warehousing, quits barely increased. In professional and business services, which includes fields such as law, engineering, and architecture, where most employees can work from home, quitting was largely flat. 

Other factors also likely contributed to the jump in quits. With many employers desperate for workers and wages rising at a healthy pace, workers have a much greater ability to demand higher pay or go elsewhere to find it. 

The data from August is probably too early to reflect the impact of vaccine mandates. President Joe Biden’s mandate was not announced until Sept. 9. United Airlines announced its mandate in early August, but it was one of the first companies to do so. And layoffs were unchanged in August, the report found.

The government said Friday that job gains were weak for a second straight month in September, with only 194,000 jobs added, though the unemployment rate fell to 4.8% from 5.2%. Friday’s hiring figure is a net total, after quits, retirements, and layoffs are taken into account. Tuesday’s report, known as the Job Openings and Labor Turnover Survey, or JOLTS, includes raw figures, and showed that total hiring in August fell sharply, to 6.3 million from 6.8 million in July.

The data is “highlighting the immense problems businesses are dealing with,” said Jennifer Lee, an economist at BMO Capital Markets, in an email. “Not enough people. Not enough equipment and/or parts. Meantime, customers are waiting for their orders, or waiting to place their orders. What a strange world this is.”

Quits also rose the most in the South and Midwest, the government said, the two regions with the worst COVID outbreaks in August.

When workers quit, it is typically seen as a good sign for the job market, because people usually leave jobs when they already have other positions or are confident they can find one. The large increase in August probably does reflect some of that confidence among workers.

But the fact that the increase in quits was heavily concentrated in sectors that involve close contact with the public is a sign that fear of COVID also played a large role. Many people may have quit even without other jobs to take.

The sharp increase in job openings also has an international dimension: Job vacancies have reached a record level in the United Kingdom, though that is partly because many European workers left the U.K. after Brexit.
…

It was late last Christmas Eve when the European Union and Britain finally clinched a Brexit trade deal after years of wrangling, threats and missed deadlines to seal their divorce.

There was hope that now-separated Britain and the 27-nation bloc would sail their relationship toward calmer waters.

With Christmas closing in again one thing is clear — it wasn’t to be.

Britain’s Brexit minister on Tuesday accused the EU of wishing failure on its former member and of badmouthing the U.K. as a country that can’t be trusted. David Frost said during a speech in Lisbon that the EU “doesn’t always look like it wants us to succeed” or “get back to constructive working together.”

He said a fundamental rewrite of the mutually agreed divorce deal was the only way to fix the exes’ “fractious relationship.” And he warned that Britain could push an emergency override button on the deal if it didn’t get its way.

“We constantly face generalized accusations that we can’t be trusted and that we aren’t a reasonable international actor,” Frost added — a response to EU claims that the U.K. is seeking to renege on the legally binding treaty that it negotiated and signed.

Post-Brexit tensions have crystalized into a worsening fight over Northern Ireland, the only part of the U.K. to share a land border with an EU country, which is Ireland. Under the most delicate and contentious part of the Brexit deal, Northern Ireland remains inside the EU’s single market for trade in goods, in order to avoid a hard border with EU member Ireland.

That means customs and border checks must be conducted on some goods going to Northern Ireland from the rest of the U.K., despite the fact they are part of the same country. The regulations are intended to prevent goods from Britain entering the EU’s tariff-free single market while keeping an open border on the island of Ireland — a key pillar of Northern Ireland’s peace process.

The U.K. government soon complained the arrangements weren’t working, saying the rules impose burdensome red tape on businesses. Never short of a belligerent metaphor, 2021 has already brought a “sausage war,” with Britain asking the EU to drop a ban on processed British meat products such as sausages entering Northern Ireland.

Northern Ireland’s British Unionist community, meanwhile, says the Brexit deal undermines the 1998 Good Friday peace accord — which sought to protect the rights of both Unionist and Irish Nationalist communities — by weakening Northern Ireland’s ties with the rest of the U.K.

The bloc has agreed to look at changes to the Protocol, and is due to present proposals on Wednesday. Before that move, Britain raised the stakes again, with Frost demanding sweeping changes to the way the agreement is governed.

In his speech in the Portuguese capital, Frost said the Protocol “is not working.”

“It has completely lost consent in one community in Northern Ireland,” he said. “It is not doing the thing it was set up to do – protect the Belfast (Good Friday) Agreement. In fact it is doing the opposite. It has to change.”

Most contentiously, he said the EU must also remove the European Court of Justice as the ultimate arbiter of disputes concerning trade in Northern Ireland and instead agree to international arbitration. He said the role of the EU court “means the EU can make laws which apply in Northern Ireland without any kind of democratic scrutiny or discussion.”

The EU is highly unlikely to agree to the change. The bloc’s highest court is seen as the pinnacle of the free trade single market, and Brussels has vowed not to undermine its own order.

Ireland’s Deputy Prime Minister, Leo Varadkar, said Britain’s demand was “very hard to accept.”

“I don’t think we could ever have a situation where we had another court deciding what the rules of the single market are,” he said.

Some EU observers say Britain’s demand to remove the court’s oversight shows it isn’t serious about making the Brexit deal work.

Frost repeated the U.K.’s threat to invoke Article 16, a clause allowing either side to suspend the agreement in exceptional circumstances. That would send already testy relations into a deep chill and could lead to a trade war between Britain and the bloc — one that would hurt the U.K. economy more than its much larger neighbor.

The economically tiny but symbolically charged subject of fish, which held up a trade deal to the final minute last year, is also stoking divisions now.

France wants its EU partners to act as one if London wouldn’t grant more licenses for small French fishing boats to roam close to the U.K. crown dependencies of Jersey and Guernsey, just off France’s Normandy coast.

In France’s parliament last week, Prime Minister Jean Castex accused Britain of reneging on its promise over fishing.

“We see in the clearest way possible that Great Britain does not respect its own signature,” he said.

In a relationship where both sides often fall back on cliches about the other, Castex was harking back to the centuries-old French insult of “Perfidious Albion,” a nation that can never be trusted.

Across the English Channel, U.K. Brexit supporters often depict a conniving EU, hurt by Britain’s departure, doing its utmost to make Brexit less than a success by throwing up bureaucratic impediments.

“The EU and we have got into a low equilibrium, (a) somewhat fractious relationship,” Frost conceded. “(It) need not always be like that, but … it takes two to fix it.”
…

The World Bank on Monday warned of a significant 12% rise in the debt burden of the world’s low-income countries to a record $860 billion in 2020 as a result of the COVID-19 pandemic and called for urgent efforts to reduce debt levels. 

World Bank President David Malpass told reporters the bank’s International Debt Statistics 2022 report showed a dramatic increase in the debt vulnerabilities facing low- and middle-income countries; he also urged for comprehensive efforts to help countries reach more sustainable debt levels. 

“We need a comprehensive approach to the debt problem, including debt reduction, swifter restructuring and improved transparency,” Malpass said in a statement accompanying the new report. 

He said half of the world’s poorest countries were in external debt distress or at high risk of it. 

Malpass said sustainable debt levels were needed to help countries achieve economic recovery and reduce poverty. 

The report said the external debt stocks of low- and middle-income countries combined rose 5.3% in 2020 to $8.7 trillion, affecting countries in all regions. 

It said the rise in external debt outpaced gross national income (GNI) and export growth, with the external debt-to-GNI ratio, excluding China, rising five percentage points to 42% in 2020, while their debt-to-export ratio surged to 154% in 2020 from 126% in 2019. 

Malpass said debt restructuring efforts were urgently needed given the expiration at the end of this year of the Group of 20 major economies’ Debt Service Suspension Initiative (DSSI), which has offered temporary deferral of debt payments. 

The G20 and Paris Club of official creditors launched a Common Framework for Debt Treatments last year to restructure unsustainable debt situations and protracted financing gaps in DSSI-eligible countries, but only three countries — Ethiopia, Chad and Zambia — have applied thus far. 

Malpass said further debt payment freezes could be included as part of Common Framework debt restructurings, but more work was also needed to increase the participation of private sector creditors, who have thus far been reluctant to get involved. 

The report showed that net inflows from multilateral creditors to low- and middle-income countries rose to $117 billion in 2020, the highest level in a decade. 

Net lending to low-income countries rose 25% to $71 billion, also the highest level in a decade, with the International Monetary Fund, or the IMF, and other multilateral creditors providing $42 billion and bilateral creditors $10 billion, it said. 

Carmen Reinhart, the World Bank’s chief economist, said the challenges facing highly indebted countries could get worse as interest rates rose. 

The World Bank said it expanded the 2022 report to boost transparency about global debt levels by providing more detailed and disaggregated data on external debt. 

The data now include a breakdown of a borrowing country’s external debt stock to show the amount owed to each official and private creditor, the currency composition of this debt, and the terms on which loans were extended. 

For DSSI-eligible countries the data also show the debt service deferred in 2020 by each bilateral creditor and the projected month-by-month debt-service payments owed to them through 2021.  
…

Southwest Airlines canceled hundreds more flights Monday following thousands of flight cancellations over the weekend but said it expects to resume normal service this week.

For the third straight day, passengers were left stranded amid confusion about what caused the cancellations.

Southwest blamed the weekend cancellations on bad weather and air traffic control issues in Florida. The Federal Aviation Administration acknowledged some control issues on Friday; however, it noted that no other airlines suffered large-scale cancellations throughout the weekend. 

The union for Southwest’s pilots has denied holding a sickout in response to the airline’s decision to mandate vaccinations. 

The union asked a federal court on Friday to block the airline’s requirement that all employees get vaccinated against COVID-19. It says it does not oppose vaccinations but has argued that Southwest must negotiate with the union over any vaccine mandates before implementing them. 

Southwest said that the initial wave of flight cancellations left aircraft and crew out of place, which in turn made it difficult for the airline to recover its normal schedules and led to more canceled flights. 

In a video message to employees seen by CNBC, Southwest Chief Operating Officer Mike Van de Ven said that staffing shortages have also played a role in the service disruption.

The airline “is still not where we need to be on staffing and, in particular, with flight crews,” he said. 

Southwest is one of several airlines that have been struggling with staffing issues for months, leading to flight cancellations and delays throughout the summer.

Southwest said in a tweet Monday, “While we work to stabilize our operations, we anticipate to resume normal service this week.” 

Some information for this report came from The Associated Press, Reuters and Agence France-Presse. 

 
…

More than 130 countries have agreed on sweeping changes to how big global companies are taxed, including a 15% minimum corporate rate designed to deter multinationals from stashing profits in low-tax countries. 

The deal announced Friday is an attempt to address the ways globalization and digitalization have changed the world economy. It would allow countries to tax some of the earnings of companies located elsewhere that make money through online retailing, web advertising and other activities. 

U.S. President Joe Biden has been one of the driving forces behind the agreement as governments around the world seek to boost revenue following the COVID-19 pandemic. 

The agreement among 136 countries representing 90% of the global economy was announced by the Paris-based Organisation for Economic Co-operation and Development, which hosted the talks that led to it. The OECD said that the minimum tax would reap some $150 billion for governments.

“Today’s agreement represents a once-in-a-generation accomplishment for economic diplomacy,” U.S. Treasury Secretary Janet Yellen said in a statement. She said it would end a “race to the bottom” in which countries outbid each other with lower tax rates. 

“Rather than competing on our ability to offer low corporate rates,” she said, “America will now compete on the skills of our workers and our capacity to innovate, which is a race we can win.” 

The deal faces several hurdles before it can take effect. U.S. approval of related tax legislation proposed by Biden will be key, especially since the U.S. is home to many of the biggest multinational companies. A rejection by Congress would cast uncertainty over the entire project. 

Big U.S. tech companies such as Google and Amazon have supported the OECD negotiations. One reason is that countries would agree to withdraw individual digital services taxes they have imposed on the companies in return for the right to tax part of their earnings under the global scheme.

That means the companies would deal with just the one international tax regime, not a multitude of different ones depending on the country.

“This accord opens the way to a true tax revolution for the 21st century,” said French Finance Minister Bruno Le Maire. “Finally, the digital giants will pay their just share in taxes in the countries — including France — where they produce.” 

On Thursday, Ireland announced that it would join the agreement, ditching a low-tax policy that has led companies such as Google and Facebook to base their European operations there. 

Although the Irish agreement was a step forward for the deal, developing countries have raised objections, and Nigeria, Kenya, Pakistan and Sri Lanka have indicated they will not sign up.

Anti-poverty and tax fairness advocates have said the bulk of new revenue would go to wealthier countries and offer less to developing countries that are more dependent on corporate taxes. The Group of 24 developing countries said that without a bigger share of revenue from reallocated profits, the deal would be “suboptimal” and “not sustainable even in the short run.” 

The deal will be taken up by the Group of 20 finance ministers next week and then by G-20 leaders for final approval at a summit in Rome at the end of October.

Countries would sign on to a diplomatic agreement to implement the tax on companies that have no physical presence in a country but earn profits there, such as through digital services. That provision would affect around 100 global firms.

The second part of the deal, the global minimum of at least 15%, would apply to companies with more than 750 million euros ($864 million) in revenue and be passed into domestic law by countries according to model rules developed at the OECD. A top-up provision would mean tax avoided overseas would have to be paid at home. So long as at least the major headquarters countries implement the minimum tax, the deal would have most of its desired effect. 

 
…

The Italian glassblowers of Murano have survived plagues and pandemics. They transitioned to highly prized artistic creations to outrun low-priced competition from Asia. But surging energy prices are shattering their economic model. 

The dozens of furnaces that remain on the lagoon island where Venetian rulers transferred glassblowing 700 years ago must burn around the clock, otherwise the costly crucible inside the ovens will break. But the price for the methane that powers the ovens has skyrocketed fivefold on the global market since October 1, meaning the glassblowers face certain losses on orders they are working to fill, at least for the foreseeable future.

“People are desperate,” said Gianni De Checchi, president of Venice’s association of artisans Confartigianato. “If it continues like this, and we don’t find solutions to the sudden and abnormal gas prices, the entire Murano glass sector will be in serious danger.” 

A medium-size glassblowing business like that of Simone Cenedese consumes 12,000 cubic meters (420,000 cubic feet) of methane a month to keep his seven furnaces hissing at temperatures over 1,000 degrees Celsius (1,800 degrees Fahrenheit) 24 hours a day. They shut down just once a year for annual maintenance in August.

His monthly bills normally range from 11,000 to 13,000 euros ($12,700 to $15,000), on a fixed-price consortium contract that expired September 30. Now exposed to market volatility, Cenedese is projecting an increase in methane costs to 60,000 euros ($70,000) in October, as the natural gas market is buffeted by increased Chinese demand, uncertain Russian supply and worryingly low European stockpiles.

Artisans like Cenedese now must factor in an insurmountable increase in energy costs as they fill orders that had promised to lift them out of the pandemic crisis that stilled the sector in 2020.

“We cannot increase prices that have already been set. … That means for at least two months we are forced to work at a loss,” said Cenedese, a third-generation glassblower who took over the business his father started. “We sell decorations for the house, not necessities, meaning that if the prices are not accessible, it is obvious that there will be no more orders.” 

Cenedese, like others on the island, is considering shutting down one of his furnaces to confront the crisis. That will cost 2,000 euros ($2,300) for the broken crucible. It also will slow production and imperil pending orders.

His five glassblowers move with unspoken choreographed precision to fill an order of 1,800 Christmas ornaments speckled with golden flakes bound for Switzerland.

One starts the process with a red-hot molten blob on the end of a wand that he rolls over gold leaf, applying it evenly before handing the form to the maestro, who then re-heats it in one oven before gently blowing into the wand to create a perfect orb. It is still glowing red when he cuts it from the wand, and another glassblower grabs it with prongs to add the final flourish, a pointy end created from a dab of molten glass applied by an apprentice.

As that dance progresses, another starts, weaving and bobbing into the empty spaces. Together, they can make 300 ornaments a day, working from 6 a.m. to 2 p.m. 

“No machine can do what we do,” said maestro Davide Cimarosti, 56, who has been working as a glassblower for 42 years.

Murano glassblowers decades ago transitioned from wood ovens, which created uneven results, to methane, which burns at temperatures high enough to create the delicate crystal clarity that makes their creations so highly prized. And it is the only gas that the glassblowers are permitted to use, by law. They are caught in a global commodities Catch-22.

For now, artisans are hoping the international market calms by the end of the year, although some analysts believe volatility could persist into the spring. If so, damage to the island’s economy and the individual companies could run deep. 

The Rome government has offered relief to Italian families confronting high energy prices but so far nothing substantial to the Murano glassblowers, whose small scale and energy intensity make them particularly vulnerable. The artisans’ lobby is meeting with members of parliament this week in a bid to seek direct government aid, which De Checchi said is possible under new EU rules put in place after the pandemic.

Beyond economic losses, the islanders fear losing a tradition that has made their island synonymous with artistic excellence. 

Already, the sector has scaled back from an industry with thousands of workers in the 1960s and 1970s to a network of mostly small and medium-sized artisanal enterprises employing some 300 glassblowers. Venice’s glassblowing tradition dates back 1,200 years, and on Murano it has been passed down from father to son for generations. But even at its reduced size and despite its creative rewards, it struggles to attract young people to toil in workshops where summertime temperatures can reach 60 degrees Celsius (140 degrees Fahrenheit).

“The value of this tradition, this history and this culture is priceless. It goes beyond the financial value of the glass industry in Murano,” said Luciano Gambaro, co-owner of Gambaro & Tagliapietra. “Over 1,000 years of culture can’t stop with a gas issue.” 

 
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