Bloomberg News - An Oil-Rich State Seeks Hope in the Ashes of Africa's Worst War

By 

Okech Francis

Torched homes, gutted shopfronts and fields of rotting corn greeted Laker Betty as she returned to the town in South Sudan’s breadbasket she fled in terror a year ago.

She’s one of thousands of civilians tentatively returning to the East African nation after a war that at its height rivaled Syria for the dubious title of the world’s worst conflict, claiming almost 400,000 lives. As President Salva Kiir prepares to welcome rebels into a new government, South Sudan’s pillaged towns and villages show the scale of the challenge in rebuilding even a country endowed with sub-Saharan Africa’s third-biggest oil reserves.

Refugees from South Sudan receive food in Uganda.

Photographer: Isaac Kasamani/AFP via Getty Images

“There is nothing to eat here, the soldiers cleaned up everything,” said Betty, a 30-year-old mother of three whose looted home in Pajok once sported the relative luxuries of a solar-power system, TV and refrigerator. “What they did here in Pajok has reduced us to zero.”

Spared for much of the half-decade civil war that unleashed a refugee crisis, Pajok was overwhelmed by the violence last April, with soldiers rampaging through its streets and residents racing for shelter in nearby Uganda. What they left behind is little more than ashes and ruins -- testimony to a scorched-earth policy waged mostly by pro-government forces.

Not Safe Yet

As many as 125,000 South Sudanese are reported as returning in the past year from neighbors including Uganda, Kenya and Ethiopia, according to the United Nations Refugee Agency, although the organization has verified only a 10th of that figure. While the influx increased after August’s peace deal, the UN doesn’t yet consider the country safe.

You don’t have to stray far from Pajok to see why. Rebels are camped less than 2 miles away, though -- unlike in the country’s north -- fighting hasn’t been reported since the peace deal. The main insurgent leader, Riek Machar, is due to join South Sudan’s transitional government in May.

The president is seeking to build an inclusive government to help the transition to peace. Machar will be one of five vice presidents; the cabinet will be expanded to 45 ministers and deputies, and the parliament in the capital Juba will grow to 550 lawmakers, all for a population of some 13 million.

Big government comes at a price, and much of the cost will come from pumping more oil. South Sudan took three-quarters of the oil reserves when it seceded from Sudan in 2011, but the civil war that uprooted some 4 million people also took a toll on output: BP Plc estimates the country pumped about 40 million barrels in 2017. That figure would have brought slightly more than half the revenue of 2013, the year the war began.

‘Zero Development’

With government poised to expand -- amid a collapse in crude prices -- there’s likely to be little left for rebuilding public services, according to Marial Awou Yol, dean of the school of economics at the University of Juba.

Amalgamating opposition forces and demobilizing others, on top of the government’s running costs, will mean “almost zero development activities,” Yol said. Even so, the picture will improve after the three-year transition. “We forego services today in order to have better and even peaceful services in the future,” he said.

Kiir last week said corruption in government institutions has robbed public services of funding. “I didn’t get people who work, but I got those who eat,” he said in an address broadcast on state radio.

For now, the plight of Pajok, about 185 kilometers (115 miles) southeast of Juba, shows the dire straits some of South Sudan’s most productive areas have fallen into. Once home to 50,000 people, the farming town produced corn and beans that were sold across the country. Now it needs food aid, and urgently.

The main street is all-but abandoned; overgrown bushes sprout from single-story shacks whose iron sheeting, doors and windows have been ripped out.

Many returnees recount a wave of indiscriminate attacks by government forces in April 2017, violence also reported by the UN and Human Rights Watch. The army denies targeting non-combatants, although Kiir himself has urged the police and army to stop killing civilians.

Some 6,500 of Pajok’s residents fled to Uganda, others to the nearby bush. The town’s main chief, Simon John Otto, says 2,000 have since returned, many of them heads of households preparing for families.

Multiple Challenges

“The challenges here right now are many -- people can’t get things to eat, there are no medical personnel and teachers are lacking,” he said.

When Lucy Acan returned in September she found her home in charred ruins and spent days scouring neglected farmland for food. “I basically have nothing left,” said the 27-year-old, who left her three children in a Uganda refugee camp. “The security situation is better now, but our prayers are that this peace deal holds so that we can rebuild our lives.”

Charles Okumu -- a corn-farmer before his homestead was razed -- runs a shop in an abandoned building, selling sodas, cookies and soap. He can afford one meal a day.

Yet the 30-year-old, who lives in the home of a friend he says was killed, remains optimistic about his future, and plans to rebuild his farm.

“Even with this state of things, I won’t give up in my life,” he said. “I can’t give up.”

(Updates with comment from president in third paragraph after Zero Development subheadline. An earlier version of this story corrected oil production estimates.)

BBC - Italy budget 'sleepwalking into instability' - Commission

Image copyrightAFP

Image captionItaly's PM Giuseppe Conte and his two deputies are facing pressure from Brussels

The European Commission has taken the first step towards sanctioning Italy over its national budget in an ongoing row over the country's finances.

In October, the EU executive body rejected Italy's draft budget and told it to make changes - an unprecedented event in European politics.

Italy, however, said it would stick to its high-spending goals.

On Wednesday, the Commission said formal proceedings that could bring financial sanctions were "warranted".

Its report cited a "particularly serious non-compliance with the fiscal recommendation for 2019", and Commission Vice-President Valdis Dombrovskis said: "With what the Italian government has put on the table, we see a risk of the country sleepwalking into instability."

He said that the EU's disciplinary measure known as "excessive deficit procedure" (EDP) was now appropriate.

Italy's populist-led government had already been told by the Commission to revise its budget, because of the high level of national debt, which eurozone officials worry could cause instability for the entire bloc.

But the Rome government failed to make significant changes, putting the country on a collision course with Brussels.

• Italy's populists agree new budget
• Italy defies EU demand to cut budget
• EU rejects debt-hit Italy's budget

Under the rules of the sanction procedure, potential consequences include a fine of 0.2% of GDP - which for Italy's economy would cost billions of euros - and a halt on the payment of any development funds.

However, the process could take a long time, and Mr Dombrovskis said he was still open to talks with Italy on how to address the disagreement.

Italy's deputy prime minister, Matteo Salvini, told reporters he remained convinced about his government's budget plans. Prime Minister Giuseppe Conte said he would meet Commission President Jean-Claude Juncker on Saturday to highlight the budget's "solidity and effectiveness".

How did we get here?

Italy's current government took office in June 2018 and is a coalition of the anti-establishment Five Star Movement and right-wing League.

Widely seen as a populist coalition, the first national budget of new government was hammered out in September,

The problem for EU officials was its high cost for a country facing massive debts. The government planned to rack up a budget deficit of 2.4% of GDP to finance its plans.

The Commission had hoped for a lower budget cost as the previous government's plans were for a 0.8% deficit.

Italy is the third-largest economy in the eurozone, but has more than two trillion euros in debt - which is 131% of the country's entire economic output.

To put that in context, it is second only to Greece (178%), and far higher than the UK (88%) or Germany (64.1%). The debt is equivalent to about €37,000 for every person in Italy.

The government argues that additional investment is needed to kick-start the sluggish Italian economy, which has still not recovered from the financial crisis of a decade ago.

Italy's statistics agency Istat forecast on Wednesday that the economy would grow by 1.3% in 2019, and 1.1% in 2018.

While it said the budget would help boost demand in the Italian economy, its 2019 estimate is below the government's figure of 1.5%.

Shortly before the League-Five Star government came to power, Istat forecast a growth figure of 1.4% for 2018, and it said on Wednesday that growth was slowing in comparison with 2017.

Why is Italy's budget so expensive?

Italy's government hailed the budget as one that would "end poverty".

The draft budget included the fulfilment of election promises, such as reversing plans to raise the retirement age and a guaranteed basic income of €780 (£700; $890) for poor families. Those two plans alone were expected to total about 0.7% of Italy's GDP.

It also included tax cuts and reforms.

Recent bad weather in Italy has also added major infrastructure projects to the government's priorities - including the aftermath of the Genoa bridge collapse in August, which raised concerns over the country's ageing public works.

BBC News - Government borrowing worse than expected in October

Image copyrightGETTY IMAGES

The government borrowed far more than analysts expected in October, the first figures to be published since Philip Hammond's Budget last month show.

The deficit rose to £8.8bn from £7.2bn last year, marking the biggest October figure for three years, and well above the £6.1bn forecast.

However, the amount borrowed so far this financial year is the lowest for 13 years.

The figures come after the chancellor said austerity was coming to an end.

The Office for National Statistics said the current year-to-date borrowing was £26.7bn, which is £11.2bn less than the same period last year and the lowest since 2005.

During his budget announcement the Chancellor also said borrowing is likely to fall over the next five years.

A Treasury spokesperson said it was the government's best year-to-date performance since 2005, adding "our balanced approach is getting debt falling while supporting our vital public services, keeping taxes low, and investing in Britain's future".

Why is borrowing rising in October?

The ONS said there had been "notable" growth in expenditure on goods and services, as well as social benefits.

Interest payments on government debt also increased.

"The increase in borrowing compared to last year was due to a £2.2bn rise in "other" (most likely departmental) spending," said Andrew Wishart, UK economist at Capital Economics.

Should we be worried?

Mr Wishart said the October figures could be a "worrying sign for the Chancellor" if the trend continued.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said it was to soon to conclude that the Chancellor would miss the official forecast for borrowing this year.

He points out that the data is often revised and "the Chancellor won't need to respond to a modest overshoot".

What about Brexit?

The nature of the UK's exit from the European Union, is likely to have an impact on the nation's finances.

In October, the Chancellor said that a good Brexit agreement would enable the Treasury to spend a "double deal dividend".

However, a no deal scenario could upset government spending plans, economists say.

"If there is a no deal Brexit, the resulting economic slowdown would probably cause the public finances to deteriorate further," Mr Wishart said.

Reuters News - U.S. judge blocks Trump asylum restrictions

by Dan Levine
SAN FRANCISCO - A U.S. judge on Monday temporarily blocked an order by President Donald Trump that barred asylum for immigrants who enter the country illegally from Mexico, the latest courtroom defeat for Trump on immigration policy.

U.S. District Judge Jon Tigar in San Francisco issued a temporary restraining order against the asylum rules. Tigar’s order takes effect immediately, applies nationwide, and lasts until at least Dec. 19 when the judge scheduled a hearing to consider a more long-lasting injunction.

Representatives for the U.S. Department of Justice could not immediately be reached for comment.

Trump cited an overwhelmed immigration system for his recent proclamation that officials will only process asylum claims for migrants who present themselves at an official entry point. Civil rights groups sued, arguing that Trump’s Nov. 9 order violated administrative and immigration law.

In his ruling, Tigar said Congress clearly mandated that immigrants can apply for asylum regardless of how they entered the country. The judge called the latest rules an “extreme departure” from prior practice.

“Whatever the scope of the President’s authority, he may not rewrite the immigration laws to impose a condition that Congress has expressly forbidden,” Tigar wrote.

Tigar was nominated to the court by President Barack Obama.

Previous Trump immigration policies, including measures targeting sanctuary cities, have also been blocked by the courts.

The asylum ruling came as thousands of Central Americans, including a large number of children, are traveling in caravans toward the U.S. border to escape violence and poverty at home. Some have already arrived at Tijuana, a Mexican city on the border with California.

“IT IS TOO MUCH”

Rights groups have said immigrants are being forced to wait days or weeks at the border before they can present themselves for asylum, and the administration has been sued for deliberately slowing processing times at official ports.

At a hearing earlier on Monday, American Civil Liberties Union attorney Lee Gelernt said the order clearly conflicted with the Immigration and Nationality Act, which allows any person present in the United States to seek asylum, regardless of how they entered the country.

Gelernt said the ACLU had recently learned Mexican authorities have begun barring unaccompanied minors from applying at U.S. ports of entry.

Mexico’s migration institute said in a statement to Reuters that there was “no basis” for the ACLU’s claims, noting that there had been no such reports from the United Nations or human rights groups that are monitoring the situation at the border.

Uriel Gonzalez, the head of a YMCA shelter for young migrants in Tijuana, said he had not heard of any new measures directed at unaccompanied minors. He noted there were already long lines to get a turn with U.S. authorities.

“This can take a while because the number of migrants has overwhelmed capacity. It is too much,” he said.

The judge on Monday wrote that Trump’s refugee rule would force people with legitimate asylum claims “to choose between violence at the border, violence at home, or giving up a pathway to refugee status.”

Caravan participants began to arrive last week in Tijuana on the Mexican side of the U.S. border, which has put a strain on shelters where many will wait to seek asylum. Their presence has also strained Tijuana’s reputation as a welcoming city, with some residents screaming at the migrants, “Get out!”

Trump sent more than 5,000 soldiers to the 2,000-mile (3,100 km) frontier with Mexico to harden the border, although critics dismissed the move as a political stunt ahead of congressional elections on Nov. 6.

Reporting by Dan Levine in San Francisco; Additional reporting by Tom Hals in Wilmington, Delaware and Lizbeth Diaz in Tijuana; Editing by Leslie Adler, Tom Brown and Andrew Heavens

Our Standards:The Thomson Reuters Trust Principles.

BBC News - 'Wrecking ball' Brexit must be avoided, urges CBI

by Simon Jack

Image copyrightGETTY IMAGES

Businesses, of course, cannot vote.

But the CBI employers' group is urging MPs to consult the business leaders in their constituencies when THEY come to vote on Theresa May's Brexit deal.

CBI President John Allan will open Monday's annual conference by admitting that while the Prime Minister's deal is not perfect, it is a lot better than leaving with no deal - an outcome he will describe as a "wrecking ball".

Mrs May, speaking later, will have the chance to sell the deal herself.

She is expected to focus on how immigration will change after the UK leaves the EU, which is an area of concern for many businesses.

Competition for workers

She will say that EU nationals will no longer be able to "jump the queue" ahead of skilled workers from India or Australia.

While business approves of the government's plans to make it easier for more high-skilled workers to come to the UK from outside the EU, business leaders are worried about her plans to make it much harder to access workers of lower skill levels.

Unemployment is at historic lows and 130,000 EU nationals left the UK in the last 12 months.

Competition for workers has seen welcome rises in average pay in recent months but businesses are reporting acute skills shortages in some areas, including construction.

While most businesses will support Mrs May for fear of a no deal - in picking immigration as a focus, she's chosen one subject this audience has serious doubts about.

BBC News - Pound dives after Brexit resignations

Image copyrightAFP

The pound has fallen sharply after Cabinet ministers Dominic Raab and Esther McVey quit over Prime Minister Theresa May's draft Brexit deal.

Sterling fell more than 1% against the dollar to $1.2778 and also sank more than 1% against the euro to €1.1309.

On Wednesday, Theresa May had secured Cabinet backing for the draft Brexit agreement with Brussels.

Business had generally welcomed the agreement, as it avoided the prospect of a cliff-edge Brexit.

What has happened to the pound?

Initially the pound had rallied on Wednesday after the Prime Minister announced she had the backing of the cabinet for her Brexit withdrawal plan.

Wednesday's trading had been volatile, while the outcome of Theresa May's five-hour meeting with cabinet colleagues remained unclear.

Sterling had fallen to $1.28 at one point, but then rose to $1.30 following the announcement, before falling back slightly.

However, on Thursday morning sterling fell after Junior Northern Ireland Minister Shailesh Vara quit in protest over the agreement, and then dropped sharply when Brexit Secretary Dominic Raab resigned.

Shortly afterwards, Work and Pensions Secretary Esther McVey also stepped down. Junior Brexit Minister Suella Braverman, and Parliamentary Private Secretary Anne-Marie Trevelyan were next to go, followed by Ranil Jayawardena, another Parliamentary Private Secretary.

Pound vs US dollar

How has Brexit affected the pound's volatility?

The Brexit process has been punctuated by big movements in the pound's relationship with the dollar, something which can lead to big gains or losses for investors.

In the run up to and immediate aftermath of the Brexit referendum on 23 June 2016, for example, the pound hit a peak of volatility against the dollar amid enormous uncertainty about the future.

And as the graphic below shows, the events surrounding Wednesday's draft agreement has triggered the greatest volatility for sterling since the referendum.

What do the currency strategists make of it?

Jane Foley, head of currency strategy at Rabobank, said the pound's plunge was "firmly tied" to the perception that Mrs May will have difficulty in pushing the Brexit plan through Parliament.

In addition, Ms Foley said the government resignations had emphasised speculation that Mrs May could face a no-confidence vote.

"Although [Mrs] May has appeared defiant in Parliament this morning, the next few days will clearly be crucial with respect to whether [she] is likely to gain Parliamentary approval for her Brexit deal, but also in determining whether she can hold on to office.

"A lack of Parliamentary approval for the deal or a hard Brexit would both weigh heavily on the pound. Any turn of events that could raise the risk of a general election would also punish the pound, given the risk of a market-unfriendly far-left government."

Chris Turner, head of foreign exchange at ING, said Mr Raab's resignation had increased the chances of a leadership challenge and a no-deal Brexit.

Even though it was "very hard" to make forecasts about the pound's direction, he said it "could fall another 3-4% unless the threat of a leadership election is quashed or there are clearer signs that the withdrawal agreement can garner more support in parliament".

How did the government sell the agreement to business?

Sir Roger Carr is chairman of BAE Systems. He also chairs one of the prime minister's five new business councils set up to advise on how to create the best business conditions in the UK after Brexit.

He was on the conference call that Chancellor Philip Hammond and Business Secretary Greg Clark held with bosses on Wednesday night following the agreement.

He said Mr Hammond and Mr Clark were trying to be clear "that this had been a long and hard process in persistence and resilience, but it had reached a conclusion which would be much much better than the chaos of no decision".

"It had the key elements in it that people were looking for particularly in the sense of a pathway to frictionless trade and control over our borders, the preservation of the United Kingdom, and in those circumstances they were recommending that business leaders support it, and I have to say the response on the call was a positive one."

So what does big business make of the agreement?

The agreement includes a 21-month transition period, with a unilateral right for the UK to extend it, which was described as "very positive for business" by James Stewart, head of Brexit at KPMG UK.

Northern Ireland also has the guarantee of a "friction-free" customs border with the Republic of Ireland.

The CBI described the agreement as a "compromise, including for business" but it unreservedly welcomed the "step back from the cliff-edge".

Director general Carolyn Fairbairn told the BBC: "The second plus of where we got to yesterday is there is a possible path to frictionless trade now in terms of negotiating the final deal.

"I don't think anyone thinks the transition or the backstop is the answer, so this has to be used as a route to a final deal with frictionless trade and access for services."

However, she did sound a note of caution. "It's not the end of the road - there's a hard slog ahead to get that final deal that will work for the country,"

Image copyrightGETTY IMAGES

So is everyone happy?

Dr Gerard Lyons, chief economic strategist at Netwealth Investment and chief economic adviser to Boris Johnson while he was Mayor of London, says the draft Brexit withdrawal deal is not something to cheer about.

"Whilst it has avoided the cliff edge, I think it's important we don't bury our heads in the sands here and view this as a 'good' deal - this is still disappointing," he said.

"To make a success of Brexit, we've got to get three things right - our relationship with the EU, our position with the rest of the world and our domestic economic and financial agenda.

"The biggest single problem with this divorce settlement is it ties our hands on two of those three areas - our ability to position ourselves globally and our domestic economic agenda.

Reuters News - British PM May tries to sell Brexit deal to ministers

LONDON (Reuters) - Prime Minister Theresa May will try to convince senior ministers on Wednesday to accept a draft European Union divorce deal that opponents say threatens both her government and the unity of the United Kingdom.

The weakest British leader in a generation, she has to try to get the deal approved by parliament before exiting the bloc on March 29, 2019.

Brexit campaigners in May’s Conservative Party accused her of surrendering to the EU and said they would vote down the deal. The Northern Irish Democratic Unionist Party (DUP) which props up May’s minority government questioned whether she would be able to get parliamentary approval.