US Business

Russia’s strategic forces carried out drills Wednesday, including a test launch of a ballistic missile from a submarine, further stoking concerns that a nuclear weapon could be deployed in the Ukraine war.

Russian President Vladimir Putin surveyed the drills carried out by his nuclear-capable forces as Moscow persisted in claiming, without offering evidence, that Kyiv was developing a “dirty bomb.”

On Monday the Russian foreign ministry posted photographs of ostensible nuclear materials on social media it said depicted “Ukraine’s capacities to create the ‘dirty bomb.'”

But on Wednesday Slovenia said the photo came from its own nuclear waste management agency and dated to 2010.

According to Dragan Barbutovski, an advisor of Slovenian Prime Minister Robert Golob, it depicted smoke detectors.

– Heavy fighting on main fronts – 

Ukraine President Volodymyr Zelensky said fighting remained intense in the eastern Donbas region near Bakhmut, a town Russia’s elite Wagner troops have made a concerted push to seize.

“The situation on the front line hasn’t changed significantly,” Zelensky said in his daily address to the nation. “The fiercest battles are in the Donetsk region, towards Bakhmut and Avdiyivka.”

In the main southern front, Russians were apparently fortifying their positions in Kherson city as civilians were evacuating the region. 

At least 70,000 people have left their homes in Kherson province in the space of a week, a Moscow-installed official, Vladimir Saldo, told a regional TV channel.

Pro-Kremlin authorities have sought to move residents to the Russian-controlled areas on the left bank of the Dnipro river, as Ukraine troops are expected to make a bid for the main urban area on the right bank.

Saldo banned entry to the right bank area of the region for a period of seven days “due to the tense situation on the contact line.”  

“The Russians do appear to be digging in to defend that region,” said Pentagon spokesman Pat Ryder on Tuesday.

– Submarine missile launch –

Western officials downplayed the Kremlin’s war games, a regular event for which Moscow gave foreign counterparts advance warning.

“Under the leadership of… Vladimir Putin, a training session was held with ground, sea and air strategic deterrence forces, during which practical launches of ballistic and cruise missiles took place,” the Kremlin said in a statement.

Russian state-run media ran footage of a submarine crew preparing the launch of a Sineva ballistic missile from the Barents Sea in the Arctic.

The drills also included launching test missiles from the Kamchatka peninsula in the Russian Far East. 

In calls to Chinese and Indian correspondents, Russia’s Defence Minister Sergei Shoigu continued to press his allegations that Ukraine planned to detonate “dirty bomb” — a crude, small weapon filled with radioactive, biological or chemical materials — which it would blame on Russia.

Indian Defense Minister Rajnath Singh said that in his call with Shoigu, he “pointed out that the nuclear option should not be resorted to by any side as the prospect of the usage of nuclear or radiological weapons goes against the basic tenets of humanity.”

– Cultural damage studied  – 

Meanwhile the UN culture agency UNESCO said it is using before-and-after satellite imagery to monitor the cultural destruction inflicted by Russia’s war in Ukraine, and would make its tracking platform public soon.

UNESCO said it had verified damage to 207 cultural sites in Ukraine since the Russian invasion began on February 24, including religious sites, museums, buildings of historical and or artistic interest, monuments and libraries.

“Our conclusion is it’s bad, and it may continue to get even worse,” UNESCO’s cultural and emergencies director Krista Pikkat told reporters at a briefing in Geneva.

“Cultural heritage is very often collateral damage during wars but sometimes it’s specifically targeted as it’s the essence of the identity of countries,” said Pikkat.

Earlier this month, Zelensky requested that UNESCO add the historic port city of Odessa to its World Heritage List in a bid to protect it from Russian air strikes.

UNESCO is working with the Odessa authorities to make sure that its main monuments and cultural sites are marked with a blue shield — the emblem used during armed conflicts to denote cultural property that should be protected.

Facebook-parent Meta reported Wednesday that its profit more than halved to $4.4 billion in the third quarter from $9.2 billion a year earlier, and said it plans “significant changes” to bolster efficiency in a tough economic environment.

The social networking giant, which faces stagnating user numbers and cuts in advertising budgets, also said revenue slipped to $27.7 billion from $29 billion a year earlier.

“We’re approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company,” said Meta chief Mark Zuckerberg.

Meta shares plunged 19.1 percent to $105 in after-market trades, the price less than a third of what it was at the start of this year.

“While we continue to navigate some challenging dynamics – a volatile macro economy, increasing competition, ad signal loss and growing costs from our long term investments — I have to say that our product trends look better from what I see then some of the commentary I’ve seen suggests,” Zuckerberg told analysts on an earnings call.

The number of monthly active users at Facebook was up just two percent to 2.96 billion at the end of September, Meta reported.

Meanwhile, the number of employees at the tech titan tallied 87,314, a 28 percent increase from a year earlier, the earnings report stated.

“We are making significant changes across the board to operate more efficiently,” Meta said in the release.

The Silicon Valley-based tech firm said that it expects to hold headcount levels in check over the next year.

Zuckerberg said that while tightening its belt, Meta will focus on its artificial intelligence that powers recommendations at offerings such as short-form video feature Reels, as well as ad messaging platforms and its vision for the metaverse.

– Apple squeeze –

Big tech platforms have been suffering from the economic climate, which is forcing advertisers to cut back on marketing budgets, and Apple’s data privacy changes, which have reduced leeway for ad personalization.

“Meta is on shaky legs when it comes to the current state of its business,” said Insider Intelligence principal analyst Debra Aho Williamson.

“Mark Zuckerberg’s decision to focus his company on the future promise of the metaverse took his attention away from the unfortunate realities of today.”

Those realities include Meta being under pressure due to global economic conditions, competition including TikTok, and Apple letting iPhone users curb collection of data “signals” for targeting money-making ads, according to the analyst.

Apple last year began letting iPhone users decide whether to allow their online activity to be tracked for the purpose of targeting ads — a change which it said shows its focus is on privacy, but which critics note does not prevent the company itself from tracking.

Meta expected that policy, which impacts the precision of the ads it sells and thus their price, to cost the social media giant $10 billion in lost revenue this year.

This week, Apple updated its App Store rules to require that apps offered there use its payment system for sales of “boosted” posts, which are essentially ad messages promoted to the top of social media feeds for a price.

The App Store is the lone gateway for digital content to get onto iPhones or iPads.

The change means that Apple will be able to collect its 30 percent commission on that type of advertising at Facebook and Instagram, where all the money made previously had gone to Meta because they used their own payment system.

“Apple continues to evolve its policies to grow their own business while undercutting others in the digital economy,” Meta said in reply to an AFP inquiry.

“Apple previously said it didn’t take a share of developer advertising revenue, and now apparently changed its mind.”

Meta had long delivered seemingly endless upward growth, but reported early this year its first decline in global daily users.

In July, Meta reported its first quarterly revenue drop and a plunging profit.

US President Joe Biden and Israel’s President Isaac Herzog on Wednesday discussed the growing threat to Ukraine from Russia’s Iranian-supplied war drones, as Israel comes under pressure to help Kyiv.

Herzog told reporters at the White House after his talks that they “mainly” discussed Iran’s nuclear program, the crushing of protesters demonstrating against strict Iranian religious laws, and the issue of Tehran’s drone sales to Russia.

The weapons are “killing innocent Ukrainian citizens,” Herzog said.

Israel has been reluctant to get involved in a US-led alliance helping pro-Western Ukraine to repel a bloody Russian invasion. 

But Herzog’s trip to Washington underlined Israeli concern at the growing role of Iran in the conflict, with Tehran accused of supplying fleets of deadly drones used by Russia against Ukrainian civilian targets.

On Tuesday, Herzog met with US Secretary of State Antony Blinken and announced he was sharing intelligence to prove that Iran has been supplying military drones to the Russians.

Ukrainian President Volodymyr Zelensky welcomed this Wednesday, saying “this is a positive trend in relations with Israel…. After a long pause, I see us moving forward.”

Biden and Herzog also discussed Iran’s ongoing tussle with the international community over its nuclear program, which it insists has only civilian goals. Israel opposes a push by the Biden administration to salvage a deal that would reinstate international inspections in Iran in exchange for sanctions relief.

“They consulted on a wide range of global and regional issues of mutual concern, including the threats posed by Iran and its proxies. The president emphasized his administration’s pledge to ensure Iran will never acquire a nuclear weapon,” the White House said in a statement after the talks.

– Maritime border ‘breakthrough’ –

Sitting alongside Herzog in the White House Oval Office, Biden praised Israel for reaching a long-delayed accord with Lebanon on their sea border. The deal was brokered by the United States.

Biden hailed the “historic breakthrough.”

“It took a lot of courage for you to step up and step into it,” he told Herzog. “It took some real guts. It took principled and persistent diplomacy to get it done.”

Biden said the newly agreed border would allow both countries to develop energy fields, and it would “create new hope and economic opportunities.”

However he pressed the Israeli president on the need to “deescalate” the violent standoff in the Palestinian West Bank and “underscored that a negotiated two-state solution remains the best avenue to achieve a lasting peace” with the Palestinians, the White House readout said.

Biden “underlined the need to take continued steps to improve the lives of Palestinians, which are critical to peace, security and prosperity.”

Herzog indicated that Biden would be attending the COP27 climate summit in Egypt next month — something not yet confirmed by the White House — and said the climate crisis “can serve as a common denominator for so many nations.”

Herzog’s visit comes days ahead of Israel’s fifth election in less than four years. Hawkish ex-prime minister Benjamin Netanyahu, who has had tense relations with Democratic US administrations, is seeking a comeback.

It also comes less than two weeks before Americans vote in the midterm elections that are predicted to strip Biden’s Democrats of their control of Congress.

“We have elections in Israel and you’re having midterm elections in the United States but one thing is clear — I think this visit epitomizes that our friendship, our strong bond transcends all political differences,” Herzog told Biden.

Aerospace giant Boeing reported a surprise $3.3 billion third-quarter loss Wednesday as it struggled with swelling costs on several defense programs, including the US presidential jet Air Force One.

The performance woes in defense — which also affected the KC-46 refueling and military transport aircraft and the T-7A Air Force pilot training system — reflect the drag from supply chain problems that have plagued the broader economy, as well as the restrictive nature of government contracts.

Investors initially took the disappointing news in stride, but shares fell sharply after a conference call in which Boeing executives predicted a very slow ramp-up of commercial plane output and expressed doubts about resuming plane deliveries to China anytime soon.

Locking Boeing into fixed-price government contracts was unwise, Chief Executive Dave Calhoun acknowledged in an interview with CNBC that touched on the company’s troubled execution of an Air Force One procurement revamp negotiated with Donald Trump.

“The biggest, probably, mistake on… Air Force One was the fixed price nature of it,” Calhoun said, adding that a “cost-incentive” type contract would have been better for such a project.

The difficulties in Boeing’s defense program came as the company saw a jump in revenues in its commercial airplane division following the resumption of deliveries of the 787 Dreamliner and an increase in deliveries in the 737 MAX. 

The aviation giant reported a four-percent rise in revenues to $16 billion, which also missed analyst estimates. 

On the up side, Boeing reaffirmed it is on track for positive free cash flow in 2022, a statement that temporarily boosted shares. The company also described demand for commercial planes as robust in spite of worries about the broader global economy.

– Engine supply crunch –

But executives offered a cautious timetable on ramping up commercial jet production, noting that engine suppliers continued to struggle to lift output.

“I am confident that the industry will step up, but it will take more time than I probably had hoped,” Calhoun told financial analysts. “And I suspect it won’t be until we get to the sort of end of next year before we can really make sizable rate increases.”

Separately, Boeing announced that Alaska Airlines had exercised options for an additional 52 737 MAX planes.

The Alaska Airlines order includes 42 of Boeing’s latest MAX plane, the 737 MAX 10, which has still not been certified by US authorities.

Because of a change in Federal Aviation Administration certification requirements enacted by Congress and which takes effect in late December, Boeing would likely need US lawmakers to pass new legislation.

The earlier 2020 law required the FAA to only certify planes equipped with a flight crew alerting system designed to help pilots prioritize warnings and advisories activated during flight.

The alerting system in the 737 MAX 10 shares the traits in the earlier MAX planes and does not meet the new standards. Boeing has argued the benefit of the MAX 10’s “commonality” with earlier versions of the jets, which enables pilots experienced in earlier version of the MAX to easily transition to the MAX 10.

Boeing executives have expressed confidence in winning an extension on Capitol Hill.

– China ‘de-risk’ –

Another question concerns Boeing’s presence in China, the only major market where the 737 MAX has not returned to service following two fatal crashes that grounded the jet globally for more than a year and a half.

China was the last major Boeing market to deem the jet airworthy, in December 2021. But the plane still needs to clear a few final hurdles with Chinese regulators.

In light of strong demand from airlines, Boeing executives have begun “active discussions” with other customers about 138 planes in inventory ordered by Chinese companies, said Chief Financial Officer Brian West.

Executives described the outreach as part of an effort to “de-risk” Boeing’s finances given the murky outlook for the company’s China business.

China’s zero-tolerance Covid-19 policies “have reduced demand for airplanes in general,” Calhoun said on the conference call, expressing hope that free trade could be realized.

“But we also are clear-eyed about the geopolitical risks that are out there and we are not going to impart new risks on our investors,” said Calhoun, adding, “I have not gotten a single signal … they’re going to take deliveries in the near term.”

CFRA Research analyst Colin Scarola cited the gloomy China outlook and the supply chain constraints in trimming his 12-month target price for Boeing shares to $215 from $252, saying Boeing will need more time to boost its financial performance.

But Scarola still has a “strong buy” rating on the shares based on a strong improvement in 2024.

Boeing shares finished down 8.8 percent at $133.79.

US Secretary of State Antony Blinken said Wednesday that China has rejected the longstanding status quo on Taiwan, reiterating an assessment that Beijing is speeding up its timeline to take the island.

His remarks came after Chinese President Xi Jinping secured a historic third term and Taiwan predicted intensifying pressure on the diplomatic front.

Blinken said that the four-decade status quo — in which the United States recognizes only Beijing but offers the island weapons for its own defense — has “helped to make sure there wouldn’t be a conflict between the United States and China over Taiwan.”

“What’s changed is this — a decision by the government in Beijing that that status quo was no longer acceptable, that they wanted to speed up the process by which they would pursue reunification,” Blinken told an event at Bloomberg News.

China has decided on “coercion and making life difficult in a variety of ways on Taiwan in the hopes that that would speed reunification, but also holding out the possibility, if that didn’t work, of using force to achieve their goals,” Blinken said.

Blinken, who gave a similar assessment in a recent appearance at Stanford University, pointed to Beijing’s deployment of forces and major military drills in August following a visit to Taiwan by US House Speaker Nancy Pelosi.

The top US diplomat said the status quo has also allowed the flourishing of Taiwan, which has become the dominant global power in the manufacture of advanced semiconductors vital for cars, appliances and consumer electronics.

“If that were for any reason disrupted, it would have deeply significant consequences for the global economy,” Blinken said.

Pressure on Taiwan “should be a concern for not just the United States, but for countries not only in the region, but around the world,” he said.

Beijing has vowed to take control of self-ruling Taiwan, where the mainland’s defeated nationalists fled in 1949 but which has since flourished into a vibrant democracy.

The United States switched recognition from Taipei to Beijing in 1979 and now just 14 nations recognize Taiwan.

Taiwan’s foreign minister, Joseph Wu, said earlier Wednesday that he expected Chinese officials under Xi to make greater efforts to pick off the final allies of Taipei.

“It is conceivable that our diplomatic situation will become grimmer,” Wu said.