Day: April 15, 2017

Steeped in centuries of seemingly impenetrable tea tradition, Afghanistan’s capital is getting a little coffee buzz.

Nargis Aziz Shahi says business has been increasing day by day since she opened iCafe a couple of weeks ago. Looking a little like a brick-walled Starbucks with a distinctively homey Afghan feel, it’s attracting a mostly youthful clientele drawn by free internet service and books to peruse over a cup or two.

“There were three key objectives that led me open the cafe: 1) to introduce coffee to Afghans who mostly don’t know coffee and its taste and benefits; 2) to provide a place for our youth to carry out social activities; and 3) to provide job opportunities for young people,” Shahi told VOA’s Afghan service.

Tea came to Afghanistan early

Afghanistan was introduced to tea early because of its location on ancient trade routes. The Chinese traded silk and tea for other commodities. Tea became part of the country’s hospitality for guests. Just about every family has its own recipe.

Today, Afghanistan is the world’s largest tea consumer, with each person consuming an average of almost 4.5 kilograms — more than 1,500 cups — per year in 2012. By comparison, the U.S. ranked 72nd at 0.4 kilograms per person.

Only the Russian Federation and Britain, with much larger populations, import more tea.

Coffee culture gets a start

Dr. Nabi Misdaq, adviser to President Ashraf Ghani, has visited iCafe. He regards coffee drinking as a new, enlightening culture in Afghanistan.

“It is a good beginning,” Misdaq said. “It is a profitable business, because many young people come here to read books and exchange ideas. I am sure that this will also lead to the opening of new shops.”

The cafe also serves as a place for young Afghans to carry out social and cultural activities. They come to iCafe to attend literary programs and poetry contests.

The female customers say there are few other places where they can get together and entertain themselves, but they maintain that they come to the shop to relax and enjoy.

“I am very happy that we have a coffee shop in Kabul,” said customer Samira Seerat. “It is a very good place for women to visit. There are in fact no appropriate places for women in Kabul, and Afghanistan as a whole, to visit, because our people believe that women cannot go to restaurants.”
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Steeped in centuries of traditional tea drinking, Afghanistan is getting a little coffee buzz for a change. Hikmat Sorosh has more on this popular new trend from the Afghan capital, Kabul, in this story narrated by Michael Lipin, with additional reporting by Khalil Noorzaie in Herat.
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U.S. President Donald Trump’s administration declined to name any major trading partner as a currency manipulator in a highly anticipated report on Friday, backing away from a key Trump campaign promise to slap such a label on China.

The semi-annual U.S. Treasury currency report did, however, keep China on a currency “monitoring list” despite a lower global current account surplus, citing China’s unusually large, bilateral trade surplus with the United States.

Five other trading partners who were on last October’s monitoring list – Japan, South Korea, Taiwan, Germany and Switzerland – also remain on the list, ensuring that the Treasury would apply extra scrutiny to their foreign exchange and economic policies.

The Treasury report recognized what many analysts have said over the past year, namely that China has recently intervened in foreign exchange markets to prop up the value of its yuan currency, not push it lower to make Chinese exports cheaper.

Foreign exchange experts told Reuters last week that a manipulator label was unlikely for Beijing.

Trump, who on the campaign trail blamed China for “stealing” U.S. jobs and prosperity by cheapening its currency, repeatedly promised to label the country as a currency manipulator on “day one” of a Trump administration – a move that would require special negotiations and could lead to punitive duties and other action.

The report did call out China’s past efforts to hold down the yuan’s value, saying this created a long-term “distortion” in the global trading system that “imposed significant and long-lasting hardship on American workers and companies.”

The Treasury also warned that it will scrutinize China’s trade and currency practices very closely and called for faster opening of China’s economy to U.S. goods and services and a shift away from exports to more domestic consumption.

“China will need to demonstrate that its lack of intervention to resist appreciation over the last three years represents a durable policy shift by letting the RMB (yuan) rise with market forces once appreciation pressures resume,” the report said.

The report shows the Trump administration is taking an approach to foreign exchange based on data rather than politics, said Nathan Sheets, a former U.S. Treasury under secretary for international affairs during the Obama administration.

“This isn’t the report that Donald Trump had in mind on Nov. 8,” said Sheets, who is now with the Peterson Institute for International Economics in Washington. “But it lays out legitimate complaints. It’s a clear statement to the Chinese that they need progress.”

The Treasury did not alter its three major thresholds for identifying currency manipulation put in place last year by the Obama administration: a bilateral trade surplus with the United States of $20 billion or more; a global current account surplus of more than 3 percent of gross domestic product, and persistent foreign exchange purchases equal to 2 percent of GDP over 12 months.

No countries were determined to have met all three of these criteria, but Japan, South Korea, Taiwan, Germany and Switzerland all met two of them.

The Treasury warned Japan against resuming currency interventions, saying that these “should be reserved only to very exceptional circumstances with appropriate prior consultations, consistent with Japan’s G-7 and G-20 commitments.”
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U.S. President Donald Trump nominated former Republican lawmaker Scott Garrett as president of the Export-Import Bank of the United States on Friday, completing an about-face over an institution he had denounced as “featherbedding” for big business.

A White House statement also named Spencer Bachus, another Republican former congressman, to be a member of the board of directors of the bank. Both were named for four-year terms.

Trump told the Wall Street Journal on Wednesday he would fill the two vacancies on the bank’s five-member board that have prevented it from having a quorum and being able to act on loans over $10 million.

His picks must gain approval from the Senate, which blocked nominees by former President Barack Obama.

The Export-Import Bank, an independent government agency, provides loans to foreign entities that enable them to purchase American-made goods. For example, it has been used by foreign airlines to purchase planes from Boeing and farmers in developing nations to acquire equipment.

The bank has become a popular target for conservatives, who worked in Congress to kill the institution, arguing that it perpetuates cronyism and does little to create American jobs.

Trump’s backing of the bank represents a victory for manufacturers like Boeing and General Electric, which have overseas customers that use the agency’s government-backed loans to purchase their products.

Trump told the Journal the bank benefits small businesses and creates jobs, a reversal of his earlier criticism of the bank as being “featherbedding” for wealthy corporations.

Trump’s about-face followed a meeting on Tuesday with former Boeing Chief Executive Jim McNerney, who left the company last year but oversaw the corporation’s aggressive lobbying effort in support of the bank in 2015.

Large American corporations that do significant amounts of exports say other countries have similar agencies and the export bank levels the playing field.

A 2015 fight to shutter the bank led by conservatives in Congress allowed the bank’s charter to expire for five months.

After overwhelming bipartisan support emerged to renew the bank’s charter, which is needed for it to operate, conservatives blocked nominees to the board, preventing it from financing large exports like aircraft and power turbines.
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China is rushing to complete billions of dollars in construction deals ahead of an international conference for its One Belt, One Road (OBOR) project next month. The agreements in several countries are aimed at creating a picture of success for the project, which has become a cornerstone of Chinese President Xi Jinping’s administration.

The heads of at least 20 countries are expected to attend the OBOR conference in mid-May, one of the biggest diplomatic events on Beijing’s political calendar this year.

Since March, Chinese ministers have been flying around the globe to sign major construction contracts. Those include a $65 billion investment deal with Saudi Arabia, a $4.7 billion agreement for building a Jakarta-Bandung high-speed railway line, and $3.75 billion worth of infrastructure projects in western Australia. China also reached an $850 million biorefinery deal with Finland when Xi visited the country this month.

Contradictory moves

The aim of China’s OBOR project is to open up and expand old Silk Road trade routes through Central Asia and on to Europe, as well as Southeast Asian maritime links through the Strait of Malacca and around India to the Middle East.

The grand picture that China is painting of its ability to promote enhanced trade and diplomatic links, however, is only part of the plan, analysts say.

For the most part, China is relying on its state-owned enterprises (SOEs) to advance the OBOR project. Some say that contradicts Beijing’s pledge to revamp and reform these companies, which are already burdened with overcapacity, huge debt and losses.

Xu Chenggang, a professor of economics at Cheung Kong Graduate School of Business, said that SOE debt is a major burden on the Chinese economy, and the OBOR program will only accentuate the problem as Beijing bankrolls projects in several countries.

“The so-called One Belt, One Road means infrastructure,” Xu said. “If certain countries join this, then the Chinese would say, ‘Look, we lend you money, you borrow from us.’ ”

With so much focus on infrastructure, the project may lead to the shelving of plans to shut down money-losing companies, including steel plants.

Xu said that with its OBOR push, China is not only putting diplomacy ahead of economic reforms, but it also risks making SOEs even larger, and hence more difficult to reform or privatize.

Stalled reforms

More than three years ago, Xi announced sweeping plans to reform the economy and SOEs, but it has been an uphill task for the Chinese Communist Party, given the tough choices and vested interests it involves.

Reform of SOEs means integrating weak and strong companies, breaking large, unmanageable companies into smaller entities, and closing those that are heavily indebted and unable to continue without outside support.

The biggest obstacle to SOE reform, however, is politics, said David Dollar, a senior fellow at the Brookings Institution.

“Many senior Communist Party officials are running state enterprises, or local government officials with local state enterprises, and they like having these sources of income and employment. So, it is hardly easy to get them to give them up,” Dollar told VOA.

Exporting ills

Through OBOR, China will also be exporting its system of funding projects that make political sense at contract-signing time, but are in many cases incapable of generating sufficient revenue to repay the loans, analysts said.

Economists and political factions in many countries have begun to question Chinese investments in major infrastructure projects, leading to the cancellation of some of the deals. Thailand last year canceled a Chinese contract for a high-speed rail project, and replaced it with a project about one-third the size.

Dollar, also a former financial emissary to China for the U.S. Treasury, said China has invested in both well- and badly managed countries.

Chinese officials “are also lending money to some countries with very poor governance, like Angola in Africa or Venezuela in Latin America,” Dollar said. “And where the projects are not working out well, there will not be a benefit, but the countries [are] still going to have debt, and probably China will have to forgive some of these debts in future.”

Exporting corruption

Some analysts are asking whether OBOR will give Chinese SOEs an opportunity to export their own brand of corruption.

Major political controversies have already arisen in Sri Lanka and the Philippines, while Myanmar has held up construction of a major hydroelectric dam project despite persistent pressure from its much bigger neighbor. Nepal signed several construction deals with China but did nothing to move them forward.

A large number of SOE executives are either in jail or facing investigations by the government’s anti-corruption bureau at home.

Andrew Wedeman, a political scientist and head of the China Studies Initiative at Georgia State University, said Chinese companies going to Pakistan, India or Bangladesh will not be teaching the locals anything new.

“Certainly One Belt, One Road will produce new corruption. But it will not create corruption that did not exist before. It will only increase the amounts of money. It probably would increase the rank of people involved, but it will be change in terms of quantity, not in terms of quality.”
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