Economy

NEW YORK (Reuters) -A U.S. judge decided on Tuesday that victims of the Sept. 11, 2001, attacks are not entitled to seize $3.5 billion of assets belonging to Afghanistan’s central bank to satisfy court judgments they obtained against the Taliban.U.S. District Judge George Daniels in Manhattan said he was “constitutionally restrained” from finding that the Taliban was Afghanistan’s legitimate government, a precursor for attaching assets belonging to Da Afghanistan Bank, or DAB.Daniels said letting victims seize those assets would amount to a ruling that the Taliban are Afghanistan’s legitimate government.He said U.S. courts lack power to reach that conclusion, noting that Biden administration does not recognize the Taliban as Afghanistan’s government.”The judgment creditors are entitled to collect on their default judgments and be made whole for the worst terrorist attack in our nation’s history, but they cannot do so with the funds of the central bank of Afghanistan,” Daniels wrote.”The Taliban – not the former Islamic Republic of Afghanistan or the Afghan people – must pay for the Taliban’s liability in the 9/11 attacks,” he added.Daniels’ decision is a defeat for four groups of judgment creditors that claimed some of the $7 billion of DAB funds that had been frozen at the Federal Reserve Bank in New York.”This decision deprives over 10,000 members of the 9/11 community of their right to collect compensation from the Taliban,” said Lee Wolosky, a lawyer for one creditor group known as the Havlish plaintiffs. “We believe it is wrongly decided and will appeal.”The other creditor groups are also planning an appeal, a separate Tuesday court filing shows.In an executive order last February, U.S. President Joe Biden ordered $3.5 billion of the DAB funds set aside to benefit the Afghan people.Last September, the U.S. Treasury said it would move that money to a Swiss-based trust beyond the Taliban’s reach.NOT THE TALIBAN’S MONEYThe creditor groups had sued many defendants, including al-Qaeda, over the Sept. 11 attacks, and obtained default judgments after the defendants failed to show up in court.At the time of the attacks, the Taliban had allowed al-Qaeda to operate within Afghanistan.The United States ousted the Taliban and al-Qaeda in late 2001, but the Taliban returned to power in 2021 when Western forces pulled out of the country.In his 30-page decision, Daniels adopted findings of U.S. Magistrate Judge Sarah Netburn, who last August also recommended no recovery for the creditor groups.Daniels said he lacked jurisdiction over DAB under federal law because the bank was an instrumentality of a foreign government and thus had immunity.He also said Afghanistan, as opposed to the Taliban, neither qualified as a “terrorist party” nor had been designated a state sponsor of terrorism.”Neither the Taliban nor the judgment creditors are entitled to raid the coffers of the state of Afghanistan to pay the Taliban’s debts,” Daniels wrote.Other countries recently held about $2 billion of Afghan reserves.Nearly 3,000 people died on Sept. 11, 2001, when planes were flown into New York’s World Trade Center, the Pentagon in northern Virginia, and a Pennsylvania field.U.S. sanctions ban doing financial business with the Taliban but allow humanitarian support for the Afghan people.The case is In re Terrorist Attacks on Sept. 11, 2001, U.S. District Court, Southern District of New York, No. 03-md-01570. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.U.S. economic activity indicators on Tuesday accelerated the relentless march higher in U.S. interest rate expectations and confirmed that, for financial markets at least, good news is most definitely bad news.Wall Street and world stocks had their worst day this year after purchasing managers index data showed that the U.S. services sector is roaring back to life. Asian markets are likely to follow when they open on Wednesday.Not one of the 18 economists polled by Reuters expected the services PMI to bounce back above the 50.0 threshold between contraction and expansion, and the shockwaves were felt across all asset classes.Stocks slumped, volatility and the dollar rose, the two-year Treasury yield neared November’s post-2007 peak, the implied U.S. terminal rate rose to a new high of 5.36%, and a potential 50 basis point rate hike next month is coming on traders’ radar.As analysts at Schroders (LON:SDR) put it: “A new regime in policy and market behavior is unfolding before our eyes.” This is not an emerging market-friendly mix. If the dollar and U.S. yields continue to rise, one of this year’s consensus trades and the allocation of hundreds of billions of dollars to emerging markets will have to be revised. The geopolitical backdrop is not improving either. Days from the one-year anniversary of Russia’s invasion of Ukraine, Vladimir Putin announced Moscow will suspend a nuclear arms treaty, and the United States and its allies prepared to impose new sanctions on Moscow.China appeared to signal support for Russia and the Wall Street Journal reported that Chinese leader Xi Jinping is preparing to visit Moscow for a summit with Russia’s president Vladimir Putin in the coming months. Back to the economics and policy, and the Reserve Bank of New Zealand is expected to slow the pace of its tightening campaign on Wednesday, and deliver a 50 bps hike to 4.75%. That’s the view of 20 out of 25 economists polled by Reuters, and the other five are going for a second successive 75 bps move.If the Fed is as hawkish as markets think it will be it is difficult to see other central banks – developed and emerging market alike – keeping pace. This would cast major doubt over another of this year’s consensus ideas – a weaker dollar.Here are three key developments that could provide more direction to markets on Wednesday:- New Zealand central bank rate decision- Australia hourly wages (Q4)- Hong Kong GDP (Q4 final) (By Jamie McGeever; Editing by Deepa Babington) More

Jeffrey Donaldson, leader of the Democratic Unionist Party, told members of Britain’s governing Conservative Party that while progress had been made in finding solutions, his party was still concerned with the application of some EU regulations or laws to goods produced in the British-governed province.Britain and the EU are edging closer to resolving their dispute over the so-called Northern Ireland protocol, which sets out the conditions for post-Brexit trade with the province to avoid creating a hard border with EU member Ireland and to help protect the bloc’s single market.”He said he was extremely pleased with the progress that had been made so far but there was further to go,” a person who attended the meeting said on condition of anonymity.”Essentially, the most important thing was the continued application of EU law to product standards in Northern Ireland, which was hugely problematic for Northern Ireland in terms of its biggest market, mainland GB (Great Britain).”Donaldson told Conservatives it was “quite wrong” for goods produced in Northern Ireland and destined for Britain to be subject to EU rules, especially when those rules might change over time and the province would still have to adhere to them without having any input in their creation, the person said. Donaldson also urged British Prime Minister Rishi Sunak to take his time to solve such issues rather than working to any timetable, a reference to suggestions that London wants a deal to be done before the April anniversary of the Good Friday Agreement, which largely ended three decades of sectarian violence.The protocol was long the thorniest issue in Britain’s negotiations to leave the EU but has also hampered ties since then. Sunak is staking much of his reputation on finding a resolution with the EU, but he faces resistance from not only some unionists in Northern Ireland, but also from Brexit-supporting Conservatives. (This story has been refiled to change ‘North’ to ‘Northern’ in headline) More

Joe Biden heaped blame on Vladimir Putin for waging a war of “choice” in Ukraine that Russia will “never” win, as the US president sought to rally the west for a long and bloody campaign to defend democracy in Kyiv. Speaking against the backdrop of Warsaw’s Royal Castle, Biden delivered a keynote speech that directly challenged claims of US belligerence made by Russia’s president earlier on Tuesday. In his own televised address, Vladimir Putin said Russia would suspend its remaining nuclear weapons treaty with the US, a move western officials said spelt the end of the post-cold war arms control regime.“The west was not plotting to attack Russia, as Putin said today . . . this war was never a necessity, it’s a tragedy,” Biden said. “Every day the war continues is his choice.” Meanwhile, China warned western countries against “adding fuel to the fire” in Ukraine and reiterated calls for peace talks ahead of an expected visit to Moscow by Beijing’s most senior diplomat Wang Yi.The FT will hold an exclusive webinar this Thursday for subscribers to discuss the future of Russia’s brutal war on Ukraine with FT correspondents and special guests. Register here for free.Five more stories in the news1. US stocks record worst day in two months Investors were unnerved on Tuesday by economic data suggesting interest rates have further to rise after months of increases by the Federal Reserve. The blue-chip S&P 500 index ended down 2 per cent, with declines in every sector. The tech-heavy Nasdaq Composite slid 2.5 per cent. Both indices had their steepest daily losses since December 15.2. HSBC boosts dividend to counter Ping An break-up pressure HSBC raised its dividend to the highest level in four years and said it might make a special payout next year, as it seeks to fend off break-up calls from its largest shareholder Ping An. The moves came as the UK and Hong Kong-listed bank reported fourth-quarter pre-tax profits almost doubled to $5.2bn.3. Vanguard chief defends pulling out of climate alliance Tim Buckley of Vanguard has defended his decision to pull the world’s second largest asset manager out of the Net Zero Asset Managers initiative, a coalition of 301 asset managers committed to reducing greenhouse gas emissions, saying the group’s “voice was being drowned out”.4. Israeli MPs vote through judicial reforms despite protests Israel’s parliament has voted to advance a bitterly contested judicial overhaul that has sparked mass protests across the country and drawn concern from US officials. Tens of thousands of Israelis rallied outside the parliament against the plans ahead of the vote, which finally took place yesterday.5. Hong Kong unveils plans to let retail investors trade crypto The territory has pushed ahead with plans to let retail investors trade cryptocurrencies as it vies with Singapore for supremacy as a digital assets hub. Under plans launched by the Hong Kong Securities and Futures Commission, the industry’s two largest crypto tokens would be opened up to retail customers.Do you think Hong Kong should let retail investors trade cryptocurrencies? Tell us in our poll below.

The day aheadG20 finance summit Finance ministers of G20 countries and their central bank chiefs will begin a summit in Bengaluru today until Saturday.China foreign minister in Indonesia Qin Gang is set to hold meetings in Jakarta today for his first foreign visit since taking his post. (Jakarta Post) Federal Reserve minutes Investors will watch the release today of the Federal Reserve’s minutes from its February meeting for insight into how much dissent there was over the latest decision to slow the pace of interest rate increases.Earnings Results are expected from Lloyds, Nvidia, Stellantis, Baidu, Danone, Ebay and Rio Tinto.Join us today for the Future of Business Education: Spotlight on MBA, today. Thinking about continuing your education? Sign up to MBA 101, our guide to getting into business school.What else we’re reading How long can Russia keep waging its war? To assess how long Russia can sustain its war against Ukraine, the FT examines four areas: the forces on the battlefield, Russia’s stock of munitions, the Kremlin’s economic war chest and ordinary Russians’ feelings about the war.An FT investigation has found that years of western sanctions against the Wagner group founder Yevgeny Prigozhin have failed to stop hundreds of millions of dollars flowing to the mercenary leader.

Singapore’s soaring rents dent finance hub ambitions Residential rents in the city-state have reached their highest on record, as a wave of new arrivals have pushed up prices on a limited supply of housing. The situation underscores the cost of Singapore’s campaign to replace Hong Kong as the Asian destination for money and investment.How likely is a human bird flu pandemic? Though bird flu has infected relatively few humans, its fatality rate is about 50 per cent, according to the European Centre for Disease Prevention and Control. Now, scientists are urging more vigorous action to reduce circulation of highly contagious H5N1 strain.China no longer viable as world’s factory, says Kyocera US curbs on China’s access to advanced technology are killing its viability as a manufacturing base for exports, according to the head of Japan’s Kyocera, as one of the world’s largest makers of chip components shifts its production elsewhere and invests heavily in facilities at home.World Bank prepares for greener mission With the departure of Donald Trump appointee David Malpass, shareholders expect the World Bank to put climate at its centre. Less wealthy nations have been pushing for better lending terms and other support to help them adapt to extreme weather. Some fear the new mission might distract from the bank’s traditional development mandate.Take a break from the newsHong Kong might not be at the forefront of environmental friendliness, but some of its leading chefs are seeking to redress that — to delicious effect. Check out five of the city’s best sustainable restaurants.

Chef Michael Smith of Hong Kong’s Moxie restaurant  © Mike Pickles | Chef Michael Smith of Hong Kong’s Moxie restaurant More

BRUSSELS (Reuters) – The European Union is close to a 10th sanctions package against Russia for its invasion of Ukraine and EU governments hope to reach a deal on Wednesday if they can overcome differences about a ban on Russian rubber and diamond imports, EU diplomats said.Among those the bloc is seeking to target are Russians it says are involved in the illegal deportation of some 6,000 Ukrainian children. The package, worth 11 billion euros ($11.70 billion), is also likely to include, for the first time, a ban on all exports to seven Iranian entities believed to be making items used by Russia in the war. “We were discussing today the 10th sanctions package against Russia,” Polish ambassador to the EU Andrzej Sados said after talks by ambassadors of the EU’s 27 governments in Brussels. “We will restart the discussion tomorrow afternoon in the hope that we can find a common denominator,” he said.The EU wants to have the package, including against those accused of the deportation of children, ready in time for the anniversary of the invasion on Feb. 24. “At least 34 Russian institutions are involved in systemic stealing of Ukrainian children, including the Russian children’s ombudsman,” Sados said.The U.N. refugee agency said last month Russia was giving the children Russian passports and putting them up for adoption.A U.S.-backed report this month said Russia had held at least 6,000 Ukrainian children in sites in Russian-held Crimea and Russia whose primary purpose appeared to be political re-education. Russia’s embassy in Washington said Russia accepted children who were forced to flee Ukraine.In response to the UNHCR, Russia’s foreign ministry accused its chief of being silent when children died as a result of what she said was Ukrainian shelling in the Donbas region after pro-Moscow separatists declared independence in 2014.DIAMOND TRADESados said there was some progress on setting an embargo on imports of Russian diamonds, either polished or rough, because Belgium was easing its opposition to it even though it would hurt Europe’s biggest diamond trading centre in Antwerp.But he and other diplomats said diamonds were unlikely to be part of this package because such a measure still needed to be coordinated with G7 countries, whose leaders were likely to mention the issue in a statement on Friday.Neither would the package include sanctioning Russia’s nuclear energy sector and putting Rosatom on the sanctions list, diplomats said, because several European countries, including France, buy uranium from Russia for their reactors.But the EU was close to a compromise on banning Russian synthetic rubber, diplomats said, even though Germany and Italy opposed a complete embargo which Poland and the Baltic countries are calling for. The solution could be a quota and the talks were focusing on how much could be allowed, diplomats said.The EU will also ban sales to Russia of all dual-use and electronic components used in Russian armed systems such as drones and missiles and helicopters — basically anything that can be found in Russian weapons on Ukrainian battlefields.The EU is also likely to cut more Russian banks, including the private Alfa-Bank, the online bank Tinkoff and the commercial lender Rosbank (ROSB.MM) from the global messaging system SWIFT.The EU is likely to ban Russia Today’s Arabic service from its territory and prohibit sales to Russia of electronic circuits and components, thermal cameras, radios and heavy vehicles, as well as steel and aluminium used in construction and machinery serving industrial and construction purposes.($1 = 0.9398 euros) More

The package was more modest than the 4 billion euros introduced last September as inflation took off, and the government also outlined on Tuesday how it would unwind some supports, including cuts to excise duty on petrol and diesel.The latest round includes one-off payments for pensioners, parents and social welfare recipients. The 9% VAT rate for the hospitality sector – reintroduced during the COVID-19 pandemic – will now not return to 13.5% until the end of August.Prime Minister Leo Varadkar said the measures would broadly be funded within the parameters of the budget already announced for 2023, leaving more “financial firepower” to act again later this year if needed thanks to the 5 billion euro, or 2% of gross national income, budget surplus recorded last year.This year’s budget included a 1.25 billion euro business energy support scheme that has so far been largely unspent, although the government expanded the scheme on Tuesday in a bid to help more businesses with higher energy bills.($1 = 0.9383 euros) More

British business activity rebounded in February after six months of declining output, pointing to resilience in the UK economy, a closely watched survey showed on Tuesday. The S&P Global/Cips flash composite purchasing managers’ index (PMI), which tracks monthly changes in manufacturing and services activity, rose to 53 this month, up from 48.5 in January. That is the highest level in eight months and well above analyst forecasts of 49. The reading was above the neutral 50 mark, which indicates a majority of businesses reporting an expansion in activity, for the first time since July 2022. “The sun broke through in February after six months of gloom with a swift and significant jump in output for private sector business,” said John Glen, Cips chief economist.Respondents to the survey, which ran February 10-17, highlighted rising customer demand and a more positive business outlook compared with the final months of 2022, as economic uncertainty fell and inflation eased. Daniel Mahoney, UK economist at Handelsbanken, said the “much better than anticipated PMI readings could signal that forecasters are currently being too downbeat on short-term growth prospects for the UK economy”.Service providers reported a particularly strong upturn in business activity, with the index rising to 53.3, up from 48.7 in the previous month, as demand for services remained strong despite the squeeze on consumer spending.Client demand, as well as improving supply chains, also helped to boost factory production, with the manufacturing output index rising to a nine-month high of 51.6 in February. Chris Williamson, chief business economist at S&P Global Market Intelligence, said Tuesday’s data “indicate encouraging resilience of the economy in the face of headwinds”. “The stress created by last autumn’s ‘mini’ Budget is also continuing to work its way out of the financial system.” The survey follows a string of encouraging official data showing that the UK economy narrowly avoided a recession in the final quarter of 2022, while inflation declined and the labour market remained resilient despite headwinds. This trend was further boosted on Tuesday when the Office for National Statistics said the public finances had registered a surprise £30bn windfall in the fiscal year to January, much of which came from higher than expected tax receipts.Sam Cooper, director of market risk solutions at Silicon Valley Bank UK, said: “The upside surprise in UK manufacturing and services PMI data is a welcome bellwether for the UK economy, particularly after public sector net borrowing showed an improvement in government finances.”According to the PMI survey, businesses’ input costs — which affect consumer price inflation — eased for the third consecutive month in February, with manufacturers registering a particularly marked slowdown in price pressures.

Headline inflation declined to 10.1 per cent in January, down from its 41-year peak of 11.1 per cent in October, the ONS said last week, boosting expectations that the Bank of England could soon stop raising interest rates.But Williamson said: “The resilience of the economy and the stickiness of the survey’s inflation gauges add to the likelihood of the BoE tightening policy further, and potentially more aggressively.” This may dampen future growth expectations and “suggests that the possibility of recession later in the year should not be ruled out”, he added. The BoE this month increased interest rates by half a percentage point to 4 per cent, a 15-year high. More

WHICH RULES WILL BE REFORMED? The EU is discussing how to adjust rules that govern national budgets, known as the Stability and Growth Pact. According to the Maastricht Treaty, a country’s budget deficit should not exceed 3% of gross domestic product and the overall government debt should not exceed 60% of GDP.The rules will remain suspended until the end of the year after first being paused in 2020 in response to the COVID-19 pandemic. WHY DO THEY NEED TO BE REFORMED?If a government does not respect these rules, it can be fined, but this has never happened and is unlikely to. Most countries were not complying with the rules before they were suspended in 2020. Some countries argue that these rules are not realistic, particularly in the post-pandemic reality of high public debt and moves towards a zero-emissions economy against the backdrop of a cost-of-living crisis.WHAT IS THE EU PROPOSING?The EU Commission has proposed individual debt reduction paths. This means that the Commission would negotiate with a plan to reduce debt with each individual country. Instead of implementing one-size-fits-all rules, the Commission will take a more flexible approach, taking into account the current and future conditions of each country to find a feasible path towards the debt reduction goals. The Commission proposed that countries would have four years to put debt on a robust downward path through an appropriate setting of net primary expenditure every year. This would ease the burden of quick adjustment on countries like Italy, which has a public debt of 148% of GDP, or Greece with 186%. The four years could be extended to seven if justified by investment in areas that are a priority for the EU, like fighting climate change, or reforms that improve debt sustainability.WHY DOES GERMANY REJECT THIS PROPOSAL? German Finance Minister Christian Lindner is in favour of a “multilateral rules-based approach.” Germany is critical of bilateral negotiations between the European Commission and individual countries, arguing that tailored rules will mean that not all countries are equal. Germany wants clear rules, with numerical references and benchmarks, applicable to all countries so that comparisons are feasible. The second argument is that longer and individually negotiated debt reduction paths would encourage governments to postpone difficult decisions to near the end of the timeframe. For Lindner, it is essential that deficits and debt ratios are reduced at the same time in every adjustment phase.DOES GERMANY HAVE ANY ALLIES? Countries such as Denmark and the Netherlands consider poorer southern countries to lack fiscal discipline. Last week, as negotiations for the reforms started, the German finance minister visited Finland and Austria, countries with a similar stance on fiscal rules. IS THERE ROOM FOR COMPROMISE?”Germany recognises that some member states need slightly more flexible adjustment paths in terms of time,” Lindner told Reuters, adding that monitoring of the rules should become more binding. For countries with public debt higher than 60% of GDP, the rules stipulate that debt should be reduced by 1/20th of the excess, as an average over three years. “It doesn’t do us any good if we have very ambitious timeframes, but in reality we arrive at ever higher debt levels,” Lindner told Reuters. WHAT DOES THIS MEAN FOR FINANCIAL MARKETS?Anything perceived as strengthening the euro zone’s infrastructure and favouring cohesion is welcomed by financial markets, as was the case with the Next Generation EU pandemic response fund. The debt reform would likely strengthen the euro and narrow government bond yield spreads over Germany. Once agreements are reached, the reform of the Stability and Growth Pact to adapt to post-pandemic realities could help avoid fragmentation within the bloc. More