Aurelia Butler

WASHINGTON (Reuters) -President Joe Biden’s administration and congressional Republicans traded barbs on Saturday over raising the federal $31.4 trillion debt ceiling, with both sides casting the other’s proposals as too extreme.Officials did not meet on Saturday, after two meetings ended on Friday with no progress cited by either side and negotiators saying they were not sure when fresh talks would take place.There are less than two weeks before June 1, when the U.S. Treasury Department has warned that the federal government could be unable to pay all its debts. That would trigger a default that could cause chaos in financial markets and spike interest rates.White House Press Secretary Karine Jean-Pierre noted in a statement that Biden and Republican House of Representatives Speaker Kevin McCarthy had agreed that any budget agreement would need to be bipartisan and accused Republicans of offering proposals too far to the right to pass Congress.”And let’s be serious about what can pass in a bipartisan manner, get to the president’s desk and reduce the deficit,” she said. The Saturday evening statement said Biden’s team was willing to meet any time. Biden has said he still believes a default can be avoided.Late Saturday afternoon, McCarthy told reporters at the Capitol that he did not think talks could move forward until Biden was back in the country from the G7 meeting in Japan. He accused Democrats of taking a position that was too extreme toward the left.”Unfortunately, the White House moved backwards,” McCarthy said, adding that the “socialist wing” of the Democratic Party appeared to be in control.McCarthy’s office did not immediately respond to a request for comment on the White House statement. McCarthy’s Republican-led House last month passed legislation would cut a wide swath of government spending by 8% next year. Democrats say that would force average cuts of at least 22% on programs like education and law enforcement, a figure top Republicans have not disputed.DIVIDED CONGRESSRepublicans hold a slim majority of seats in the House and Biden’s fellow Democrats have narrow control of the Senate, so no deal can pass without bipartisan support.A source familiar with the negotiations said Republicans had proposed an increase in defense spending, while cutting overall spending. The source also said House Republicans want to extend tax cuts passed under former President Donald Trump, which would add $3.5 trillion to the federal debt.The source said the Biden administration had proposed keeping non-defense discretionary spending flat for the next year, which would cut spending when adjustments are made for inflation.U.S. Representative Patrick McHenry, a Republican negotiator, had said Republicans leaders were “going to huddle as a team and assess” where things stood. He did not comment on whether there would be talks on Sunday.Republicans are pushing for sharp spending cuts in many domestic programs in exchange for the increase in the government’s self-imposed borrowing limit, which is needed regularly to cover costs of spending and tax cuts previously approved by lawmakers.Congressional Republicans voted to raise the debt ceiling three times, with no budget cut pre-conditions, when Republican President Donald Trump was in the White House. More

Bhutan is investing in everything from bitcoin mining to drone technology as the Himalayan kingdom turns to new-age businesses in search of fast growth and returns.Druk Holding & Investments, the state-owned commercial holding company, will start pitching to investors this month to raise up to $500mn for a crypto mining business after partnering with Singaporean group Bitdeer, one of the world’s largest bitcoin miners.Bhutan’s bet on crypto, which follows that of other countries such as El Salvador and the Central African Republic, comes despite the sell-offs, contagion and scandals that have rocked the sector. The isolated country of 800,000 only allowed television and internet in 1999 and is known for its gross national happiness metric, which prioritises wellbeing over economic growth.Ujjwal Deep Dahal, DHI’s chief executive, said the tech push would help speed up innovation in the largely rural economy. DHI is also in the early stages of a project to deploy drones in the power sector and in February launched a biometric digital identity system.DHI is “focusing on the new generation of industries”, he said. These technologies would “provide platforms to solve problems and also provide platforms to create industry and to create a diversified portfolio of investments for us”.DHI’s core portfolio, which had assets of about $3bn in 2021, consists of Bhutan’s main telecom, power and aviation companies, among others.Together with Bitdeer, it will approach international institutional investors for funds. Bitdeer said it planned to build a 100-megawatt crypto mining data centre in the country.Mountainous Bhutan has abundant sources of hydropower, a crucial industry in the country. The companies argue hydropower provides an easy, renewable electricity source for bitcoin mining, an energy-intensive process in which computers solve mathematical problems to create new coins.Long an absolute monarchy, Bhutan adopted a democratic constitution in 2008 and has averaged 7.5 per cent annual growth since the 1980s, according to the World Bank. The country, which depends on trade with neighbouring India, is also one of the world’s few carbon negative countries, meaning that it absorbs more carbon from the atmosphere than it releases. High-end tourism is an important source of revenue, with visitors charged a $200-a-day levy.Jaran Mellerud, a Norway-based analyst at bitcoin mining data provider Hashrate Index, said bitcoin mining could help Bhutan diversify revenues from hydropower, most of which is exported to India.Bhutan could become “the biggest bitcoin miner per capita in the world”, he said.But he expected the country to struggle to raise $500mn given the turmoil in the industry. “In 2021, every week a miner was raising $50mn, $100mn,” Mellerud said. “Now it’s big if a miner is able to raise $50mn . . . So $500mn in a bear market for a bitcoin mining operation? I think it’s a bit too much.”

Both companies have been exposed to the turbulence in crypto. Bitdeer suffered heavy losses last year and its Nasdaq-listed shares are down about a third since it listed through a special purpose acquisition vehicle last month. Forbes reported last month that DHI held tens of millions in cryptocurrencies with bankrupt lenders BlockFi and Celsius, though DHI denied that it lost money in the deals.Dahal argued that mining represented the safest part of the industry. “We’re sticking largely to the mining sector which seems to be the least risky vertical.”Mellerud cautioned that miners were “extremely impacted” by the bear market in crypto, nonetheless.DHI is also piloting a project to use drones to inspect and maintain infrastructure in the country’s power sector. DHI last year said it was in talks with Japanese drone company Sora to develop technology and even manufacture in the country. “Because we are in very hilly terrain, drones have difficulty flying,” Dahal said. “So it’s a very interesting space for drone researchers to test at 4,000 metres.” More

Kevin McCarthy, the Republican House speaker, said there would be no progress in debt ceiling talks until US president Joe Biden returns from the G7 summit in Japan late on Sunday, as tensions flared in the fiscal stand-off threatening the world’s largest economy. Speaking to reporters in the US Capitol on Saturday afternoon, McCarthy accused the White House of moving “backwards” in the negotiations over a budget pact, dashing hopes of a breakthrough that could soothe markets before they open on Monday. “I don’t think we’re going to be able to move forward until the president can get back in the country,” McCarthy said. Biden is not expected to be back at the White House until 11pm on Sunday local time. The lack of any movement in the talks will be of concern because the limit on government borrowing needs to be raised by June 1 or Washington faces an unprecedented default on US debt. Such an eventuality could plunge global markets into turmoil and the US economy into recession. Any deal on the debt ceiling would take several days to pass both houses of Congress and be signed by the president. Even getting close to the deadline could spook investors and trigger economic disruptions.McCarthy’s downbeat tone was matched by pessimism from the White House, who blamed the state of the negotiations on Republican hardliners currying favour from Donald Trump’s Make America Great Again movement. “It is only a Republican leadership beholden to its Maga wing — not the President or Democratic leadership — who are threatening to put our nation into default for the first time in our history unless extreme partisan demands are met,” White House press secretary Karine Jean-Pierre said in a statement on Saturday. Given the negative economic repercussions of a default, as well as the unpredictable political impact, Biden and congressional Republicans are still expected to ultimately reach an agreement. The setback in the talks, which has been accompanied by pressure not to concede from factions within both the Democratic and Republican parties, could be a necessary precursor to an eventual deal, rather than a sign that the talks are veering off course dangerously. To approve a debt ceiling increase, Republicans have been pushing for deep spending cuts over 10 years, while Democrats would accept much more limited budgetary cuts over a shorter period of time. They have also clashed over imposing new work requirements for social spending programmes. Both sides had expressed more optimism about the talks last week until Friday, when the negotiations broke up for several hours before resuming again. In Japan early on Saturday, Biden said he still thought default could be avoided and “something decent” could get done — but he also said the talks were moving through “stages”. “The first meetings weren’t all that progressive. The second ones were. The third one was,” Biden said. “And then what happens is . . . the carriers go back to the principals and say: ‘This is what we’re thinking about’. And then, people put down new claims,” the US president said. More

WASHINGTON (Reuters) – The United States will sign new strategic pacts with the Pacific island states of Palau and Micronesia early next week and hopes to do so with the Marshall islands in coming weeks, the U.S. presidential envoy negotiating the deals said.Joseph Yun told Reuters the Palau agreement would be formally signed in the presence of U.S. Secretary of State Antony Blinken and Palau President Surangel Whipps Jr. in Papua New Guinea on Monday, while the Micronesia pact would be signed on Tuesday in Micronesia.Yun initialed the agreements, part of U.S. efforts to shore up support among Pacific island states to counter competition from China, during visits to Micronesia and Palau in the past week. As anticipated, he was unable to conclude the deal with the Marshall Islands.”We have made progress over my three-day visit to Marshall Islands and we hope to sign an agreement with the Marshall Islands in the coming weeks,” he said.Washington first reached what are known as Compact of Free Association (COFA) accords with the three island states in the 1980s, under which it retains responsibility for their defense and provides economic assistance while gaining exclusive access to huge strategic swathes of the Pacific in return.Renewing them has become a key part of U.S. efforts to push back against China’s bid to expand its influence in the Pacific. Chinese diplomats have been courting the region and China’s construction and mining companies have expanded their business in many Pacific island nations. U.S. President Joe Biden had been due to attend the signing ceremonies in Port Moresby, but on Tuesday called off what was to have been a brief stopover there due to the U.S. debt-ceiling crisis.Blinken will take his place and also sign bilateral defense and maritime security agreements with PNG and meet with leaders of the Pacific Islands Forum. Biden’s national security adviser said on Wednesday the president would arrange another summit of Pacific island leaders this year after the disappointment caused by his cancellation.Yun said Micronesia preferred to formalize its agreement on home territory. Earlier he said both Palau and Micronesia would sign their COFAs in PNG.The Marshall Islands’ COFA is due to expire this year. Yun gave no reason for the hold-up in renewing that, but a parliamentary election is expected there in November.Yun called the deals “strategically important.” “We’ve achieved two out of three,” he said. “Compacts are very important for the United States. It defines the relationship between us and northern half of the Pacific.”Yun said last month “topline” agreements would provide the three COFA states with a total of about $6.5 billion over 20 years.Last year, more than 100 arms-control, environmental and other activist groups urged the Biden administration to formally apologize to the Marshall Islands for the impact of massive U.S. nuclear testing there and to provide fair compensation.Marshall Islanders are still plagued by health and environmental effects of the 67 U.S. nuclear bomb tests from 1946 to 1958, which included “Castle Bravo” at Bikini Atoll in 1954 – the largest U.S. bomb ever detonated. More

The G7 has issued its strongest condemnation of China as the world’s most advanced economies step up their response to what they say are rising military and economic security threats posed by Beijing.Criticising China over everything from its militarisation of the South China Sea to its use of “economic coercion”, the G7 urged Beijing to push Russia to withdraw its troops from Ukraine.The G7 members said they were “seriously concerned” about events in the East and South China Seas, and “strongly oppose any unilateral attempts to change the status quo by force or coercion”. They also called for a “peaceful solution” to tensions across the Taiwan Strait.The group stressed that they “were prepared to build constructive and stable relations” with Beijing but recognised the importance of “engaging candidly . . . and expressing our concerns directly to China”.The statement marks the strongest criticism of Beijing by the G7. At the three-day summit in Hiroshima, the US and its democratic allies have sought to project a unified front in the face of global division caused by the war in Ukraine, the US-China dispute, climate change and the expansion of artificial intelligence.Volodymyr Zelenskyy, Ukraine’s president, landed in Hiroshima on Saturday, ahead of his participation in Sunday’s sessions devoted to the war in Ukraine.Zelenskyy, whose attendance was kept secret until yesterday, wrote on arrival on Twitter: “Japan. G7. Important meetings with partners and friends of Ukraine. Security and enhanced co-operation for our victory. Peace will become closer today.”A Ukrainian official travelling with Zelenskyy told the Financial Times that the main Ukrainian goals at the summit were to gain support for Kyiv’s peace plan; secure greater military aid and co-operation; convince allies to ratchet up sanctions on Russia; and discuss further measures to hold Moscow accountable for its invasion.Downing Street said it would start training Ukrainian pilots “this summer” after the US gave the green light for the transfer of jets from countries including the Netherlands to the administration in Kyiv.Britain has pledged to deliver a “basic programme” jet pilot training for Ukrainians although they will then need to take further advanced lessons. “Obviously there will need to be further training with regards to F16s, specifically, which the UK doesn’t have as a capability,” said a Number 10 spokesperson. On Saturday evening, Zelenskyy held bilateral meetings with Rishi Sunak of the UK, India’s Narendra Modi, European Council president Charles Michel and France’s Emmanuel Macron. Macron described the decision by the Ukrainian leader to attend the summit as “a game-changer.”Zelenskyy invited Modi, whose country has vastly expanded its purchases of Russian oil over the past 16 months and abstained on UN votes to condemn the invasion, to back Kyiv’s peace proposal, and thanked him for providing humanitarian aid, his office said.The increasingly tough stance on Beijing comes after two years of the US and Japan working with the other G7 countries to strike a harsher tone against China’s military activity around Taiwan and its use of economic pressure.The leaders of Japan, Canada, France, Germany, Italy, US and UK also warned of “heightened uncertainty about the global economic outlook”, pledging to remain vigilant and flexible in their macroeconomic policy as global inflationary pressure continues.On economic policy towards Beijing, the G7 said its approach was “not designed to harm China” nor “to thwart China’s economic progress and development”. Member nations said the group was not interested in decoupling from China and was simply engaging in “de-risking”.But they said they would tackle “challenges posed by China’s non-market policies and practices, which distort the global economy” and “foster resilience to economic coercion”.

In a separate statement, the G7 said the world had witnessed “a disturbing rise in incidents of economic coercion”. It said they would create a mechanism to “increase our collective assessment, preparedness, deterrence and response to economic coercion” and would step up co-ordination on detecting and responding to economic coercion.China’s foreign ministry on Friday said a “de-risking” strategy by G7 was unnecessary: “China brings to the world opportunities, stability and assurance, not challenges, turmoil and risks.”On climate policy the leaders agreed that, given the exceptional impacts of Russia’s war against Ukraine, “publicly supported investment in the gas sector can be appropriate as a temporary response”, in a victory for Germany.Berlin had pushed for such an endorsement despite opposition from countries including the UK and France, which said it undermined the G7’s aim to shift away from fossil fuels.Regarding the rapidly developing artificial intelligence industry, the leaders agreed to “commit to further advancing multi-stakeholder approaches to the development of standards for AI” and to develop international standards for the sector.Follow Henry Foy, Kana Inagaki and Demetri Sevastopulo on Twitter. More