US Business

Faced with a Russian blockade of its own ports, Ukraine is seeking to export the farm goods that many countries depend on via the Romanian Black Sea port of Constanta.

The solution is crucial both to Ukraine’s economy and to entire populations that rely heavily on its wheat and sunflower oil.

Bucharest has confirmed that discussions are underway with Kyiv, pointing out that Constanta already handles some imports to Ukraine and exports from it.

Before the war, Ukraine accounted for 12 percent of global wheat exports, 15 percent of maize and 50 percent of world sunflower oil.

“We and our partners are looking for alternative logistical routes to export our goods via European ports, including Constanta,” Ukrainian Agricultre Minister Mykola Solsky said recently.

– Ukraine ports blockaded –

The presence of Russian battleships and mines in Ukrainian waters renders commercial shipping there nearly impossible.

Since the start of the war, Russian forces have been blocking access to the southeastern Ukrainian ports of Berdiansk and Mariupol on the Sea of Azov, which opens into the Black Sea.

In the southwest, the crucial Black Sea port of Odessa lies perilously close to the frontline at Mykolaiv.

Odessa handles 90 million tonnes of shipments a year — 60 percent of the country’s total port traffic — and is in the Krelmin’s sights.

The Marine Traffic website, which tracks the position of all seagoing vessels, clearly shows the de facto blockade of these waters. 

Commercial ships have been absent from the zone since missile attacks on vessels sent their insurance premiums rocketing.

According to the agriculture ministry, Ukraine is currently losing $1.5 billion (1.4 billion euros) a month because of the stranglehold on port exports.

Meanwhile countries that depend on Ukrainian farm exports, particularly on the southern coasts of the Mediterranean, are seeing a food crisis start to develop.

Kyiv says it has sufficient stocks to meet Ukraine’s own food needs for the next two years. But it is equally keen to ensure exports continue as normal.

“Ukraine wants to show it is defending its export markets as well as its territory and is conscious of its importance as a supplier of both foodstuffs and industrial goods,” said Paul Tourret, head of France’s Isemar Institute, which specialises in the maritime economy.

– Alternative options – 

Kyiv is seeking to increase grain exports to Poland, Romanian and Slovakia by rail and, to a lesser extent, by lorry.

The Romanian and Ukrainian rail companies are discussing ways of cooperating, the Bucharest government said.

The goal is to export 600,000 tonnes per month, which nonetheless remains “marginal” compared to the export capacity of Ukraine’s sea ports, said Agritel analyst Gautier Le Molgat.

Tourret said Constanta represents the best option. Romania is a member of NATO, meaning its waters are protected. And as the EU’s second largest wheat exporter after France, it has the necessary infrastructure.

Constanta is the largest port on the Black Sea. It handled more than 67 million tonnes of exports in 2021, including more than 25 million tonnes of grains. It has a total capacity of 100 million tonnes.

The port is in a position to accept Ukrainian stocks because by this time of year, Romanian grain shipments have already left for their destinations.

However, if the blockade of Ukraine’s own ports were to last until the forthcoming harvests, Constanta’s storage capacity could be stretched to the limit.

“Romania also has something to gain from this … a moral benefit,” Romanian Defence Minister Vasile Dincu said recently.

The speaker of the Romanian parliament and the transport ministry announced earlier this week that new investments were planned for Constanta port.

– Getting to Constanta –

The crucial element is getting merchandise out of Ukraine and into Constanta.

There are several potential routes, Tourret said.

The most dangerous option is to transport goods by lorry from Odessa, along the Black Sea coast as far as the Danube river port of Galati and then by boat to the canal which links the river to Constanta. That takes one or two days.

A second possibility is to transport goods via Moldova, avoiding the border region of Transdniestr, which seceded in 1990 and hosts a Russian military base. 

Avoiding this region under de facto Russian control can involve a detour of several hundred kilometres, depending on the starting point.

The third choice is the longest but currently the least hazardous. It entails crossing Ukraine’s western border, the area least affected by the war, straight into northern Romania.

This route is currently used, in the other direction, to supply Ukraine with essential goods.

The US labor market has almost recovered from the mass joblessness caused by the pandemic, adding hundreds of thousands of positions last month and sending the unemployment rate nearly to where it was before Covid-19 broke out nationwide.

The Labor Department reported Friday that the unemployment rate fell more than analysts had predicted in March to 3.6 percent, a hair above its February 2020 level of 3.5 percent, while the economy added 431,000 jobs in the month.

Though the hiring total was slightly below analysts’ forecasts, it was nonetheless a strong figure that underscored how far the economy has come since the pandemic started two years ago.

The economy has “gone from being on the mend to being on the move,” President Joe Biden said at the White House, as his administration grapples with low approval ratings driven in part by inflation that has hit record levels under his presidency.

The economy has also added millions of jobs since Biden took office last year, but analysts said they doubted that the robust pace of hiring could be maintained.

“Today’s job report is great news as it means the economy has almost fully recovered from the blow caused by the pandemic,” Mark Zandi of Moody’s Analytics wrote on Twitter. 

“But it is somewhat disquieting in that the job market must cool off quickly, or inflation, our number one economic problem, will soon be a much bigger one.”

The data was released as the Federal Reserve undergoes the delicate process of fighting the price increases by raising interest rates from the zero level they held them at when the pandemic was at its worst, while simultaneously trying not to harm the recovery.

Ian Shepherdson of Pantheon Macroeconomics said the report contains signs that wage growth — a driver of the price increases — is moderating, while workforce participation is increasing, trends that could convince the Fed to be less aggressive in tightening policy.

“Rates still need to rise substantially, but the Fed won’t need to go overboard this year if the labor market is normalizing,” he said.

– Back to normal –

The latest report showed key markers of labor market health had made a full recovery after the catastrophe brought on by the pandemic, which cost more than 20 million people their jobs and sent the unemployment rate up to 14.7 percent in April 2020.

Last month, the number of unemployed people fell to six million, just above its 5.7 million level before the pandemic, while the number of people whose employment ended involuntarily or who completed a temporary job came in at 1.4 million, close to where it was in February 2020.

The Labor Department also revised upwards the healthy jobs gains reported in January and February, saying they were a combined 95,000 higher than first reported.

A wide range of industries hired last month, including leisure and hospitality, the sector encompassing the bars and restaurants hit hardest by the pandemic’s layoffs. 

That industry added 112,000 positions, while professional and business services firms gained 102,000 jobs in March, retailers added 49,000 positions and manufacturing employment rose by 38,000.

The labor force participation rate, indicating the share of people employed or looking for work, ticked up slightly to 62.4 percent, a post-pandemic high but still a percentage point below February 2020.

– Tightening to come –

Nonetheless, there was still ground to be recovered. The number of employed people was still 1.6 million short of its pre-pandemic level, the data said, while employment in leisure and hospitality is 1.5 million jobs lower than before the pandemic.

The recovery was also not being felt equally, with unemployment for white workers hitting 3.2 percent in March, but coming in at 6.2 percent for Black Americans and 4.2 percent for Hispanic workers, though the rates for each group decreased from the month prior.

Economists viewed the data as reinforcing the Fed’s committment to raise interest rates by half a percentage point at its meeting next month, double the increase it announced when it began hiking in March.

“Looking ahead, we expect job creation will settle into a slower but still healthy pace later this year as the economy feels the pinch from soaring inflation and tighter financial conditions,” Kathy Bostjancic of Oxford Economics said.

US lawmakers were expected to vote Friday to decriminalize marijuana nationwide, eliminating punishments for providing or possessing the drug in a major step towards bringing federal laws in line with the states.

The Marijuana Opportunity Reinvestment and Expungement (MORE) Act would remove its categorization alongside heroin and cocaine as a dangerous controlled narcotic under federal laws mandating tough sentences.

The administration in Washington is out of line with three-quarters of states that have legalized marijuana for medical use and a third, like Colorado and Washington, that have freed it for recreational use, too.

“If states are the laboratories of democracy, it is long past time for the federal government to recognize that this experiment in legalization has been a resounding success,” House Judiciary Committee Chairman Jerry Nadler, one of the bill’s sponsors, said.

Analysts expect the bill to clear the House, but are more skeptical about its prospects in the Senate, where Democrats would need 10 Republicans to overcome a 60-vote hurdle.

Cannabis is one of the fastest-growing industries in the United States, with sales hitting $25 billion in 2021, according to influential cannabis website Leafly, and projected to reach $40.5 billion by 2025.

A report released in February by the Seattle-based company said the legalized cannabis industry provides work for more than 400,000 Americans and created some 280 new jobs a day last year.

California, the first state to legalize medical marijuana in 1996, made $1 billion in tax revenue in the first two years after expanding to full recreational use in 2018.

But it remains illegal under federal law, posing significant hurdles for businesses that find themselves barred from accessing financial services and unable to secure loans or open bank accounts.

– Huge popular support –

The MORE Act would provide loans to help small businesses “owned and controlled by socially and economically disadvantaged individuals,” the bill reads.

Many people arrested for marijuana use would see their records expunged, and those jailed on federal cannabis charges would have their sentences reviewed. 

A federal tax would begin at five percent, with proceeds funding substance abuse treatment and legal counseling for the overwhelmingly Black communities harmed by the war on drugs.

The reform is hugely popular among Americans. A Pew Research poll found last year that 91 percent of adults think marijuana should be legal, either medically, recreationally or both.

But Republicans argue that decriminalization will increase use and create another layer of bureaucracy in the Treasury Department.

A similar bill passed the House in 2020 in a vote divided largely along party lines — but went nowhere in the then-Republican majority Senate.

“There is a high probability that Republicans will control the House next year. This debate will be a chance to see how many support legalization even if they object to the MORE Act,” Cowen analyst Jaret Seiberg said in a note last week reported by Bloomberg. 

“This would be especially relevant if the House goes Republican but Democrats manage to keep control of the Senate. It would mean there would be a path for cannabis legislation next year.”

There are signs of increasing sympathy for liberalization even in the Senate, however, which unanimously passed a bill last week that would expand research of marijuana.

“Current rules and regulations make it hard for researchers to study how marijuana and marijuana-derived medications can best be used to treat various conditions,” said it Democratic co-sponsor Dianne Feinstein. 

Top EU officials warned China’s leader Xi Jinping at a virtual summit Friday that any attempt to aid Russia’s war in Ukraine could hurt business ties between the two economic superpowers. 

The EU and US worry that Beijing’s failure to condemn the invasion means it could be willing to help the Kremlin sidestep the impact of sanctions or even supply hardware to aid the war effort.

“No European citizen would understand any support to Russia’s ability to wage war. Moreover, it would lead to a major reputational damage for China here in Europe,” European Commission chief Ursula von der Leyen said. 

“The business sector is watching very closely the events and evaluating how countries are positioning themselves. This is a question of trust, of reliability and of course of decisions on long-term investments.”

Von der Leyen insisted that “China has an influence on Russia and therefore we expect China to take its responsibility to end this war and that Russia comes back to a peaceful negotiations solution”.

The talks with President Xi — initially intended to focus on issues like trade and climate change — were overshadowed by Western fears of Chinese support for Moscow in its attack on Ukraine.

Chinese state media reported that Xi told the EU the two sides should “play a constructive role on China-EU relations and major issues concerning global peace and development, as well as provide some stabilising factors to a turbulent world”.

“We hope that the EU can form its own perception of China, pursue its own independent policy towards China,” Xi was reported to have said. 

A Chinese foreign ministry official said after a first round of talks involving premier Li Keqiang that the two sides “agreed to work together to maintain peace, stability and prosperity in the world”.

– Frozen trade pact –

The EU’s relations with its largest trading partner had already been battered by tensions ahead of Moscow’s assault on Ukraine and the annual summit was skipped last year as ties frayed.

The exchange of tit-for-tat sanctions over the plight of China’s Uyghur minority, followed by Beijing’s trade coercion of EU-member Lithuania over Taiwan, soured the mood.

The downgrade in relations came surprisingly quickly after the EU and China secured the investment deal in late 2020 long sought by Germany.

Human rights concerns, and US pressure on the EU, sapped momentum, sowing distrust and sinking diplomatic ties.

– ‘No limits’ –

The tensions over Russia’s war on Ukraine now threaten to hit relations harder — even if the EU for now is shying off threatening sanctions on Beijing if its helps the Kremlin.

In a meeting with Russian counterpart Sergei Lavrov, Chinese Foreign Minister Wang Yi on Wednesday said that “China-Russia cooperation has no limits”, repeating a line used by Presidents Vladimir Putin and Xi.

European Council boss Charles Michel, who was also on the virtual summit, warned that the talks were not “business as usual”.

“Any attempts to circumvent sanctions or provide aid to Russia would prolong the war. This would lead to more loss of life and greater economic impact,” he said.

“This is not in anyone’s long-term interest. We will also remain vigilant on any attempts to aid Russia financially or militarily.”

But experts say the EU remains reluctant to go too far in pressuring Beijing as it fears hitting its mammoth trade ties at a time when soaring energy prices and inflation are already causing major economic pain.

“The idea of detaching China from Russia is a pipe dream,” said Sylvie Bermann, a former French ambassador to both Moscow and Beijing.

Tom Herring knows exactly what he was doing on April 2, 1982. He was 31, a member of the 3rd Battalion The Parachute Regiment, and on weekend leave before Easter.

Then Argentinian troops invaded the Falkland Islands and he was called back to barracks. “Four days later we were boarding a ship in Southampton,” he said.

Forty years on, the memories for military veterans are strong, as too is the conviction that the islands — nearly 13,000 kilometres (8,000 miles) from London — are British.

“Our job was to protect our citizens and we felt very good about that because we wanted to make sure they were OK,” the former sergeant told reporters in London.

“It was British sovereign territory,” he said at the National Army Museum, where a new exhibition has opened about the conflict and its impact on the islands.

In Britain and the Falklands, the anniversary of the start of the conflict is muted. Islanders in particular see Argentina’s invasion as nothing to celebrate.

But a year-long series of events are taking place to mark the 40th anniversary, including on June 14 to mark Liberation Day — a public holiday on the islands.

– Public consciousness –

In Britain in 1982, few people knew much about the Falklands. 

“They thought it was near us, in Scotland,” said Herring, who is chairman of the South Atlantic Medal Association, a group for British veterans.

At the time, prime minister Margaret Thatcher was driving through unpopular economic reforms. Unemployment was sky-high and her position was under threat.

But her high-risk deployment of nearly 30,000 troops — and their swift victory — hoisted the remote archipelago of 770 islands to public consciousness.

The task force returned from the South Atlantic to a sea of Union Jacks, giving a declining Britain a patriotic boost — and ensuring Thatcher a landslide re-election in 1983.

But veterans charity Help for Heroes said last week the conflict risks becoming a “forgotten war”, and many younger people were “clueless” about its details.

Not for Herring, who also served three tours of Northern Ireland.

He visited the islands in 2012, meeting an Argentinian officer with whom he is still in contact.

“He still believes in the islands being part of their country. We believe it’s British,” he said, but added: “We don’t argue about that.

“We talk about military esprit de corps. There are friendly relationships. It’s only the governments that seem to be at loggerheads.”

– Grateful –

The islanders too have moved on, thankful for their past liberation but with an eye on a more prosperous future.

Just 3,200 people live on the Falklands, most of them in the capital, Stanley. But with an average age of 38, many were not even born when the conflict began.

“Us islanders born in the aftermath of the conflict are all grateful to the veterans,” said Tamsin McLeod, a Falkland islander now at university in Britain.

“I can’t say that enough,” she added.

The operation claimed the lives of 255 British servicemen and three female civilians, along with 649 Argentinians.

The self-governing authorities in the Falklands are keen to push how much the islands have been transformed since the war.

They point to how it is financially self-sufficient, relying on the UK only for defence, and how it is now a hub for scientific research and biodiversity.

The thousands of landmines that were laid during the war, making swathes of the islands no-go areas, were finally cleared in late 2020.

Its main industries are fishing, agriculture and tourism, including to see its population of more than one million breeding penguins, whales and dolphins.

– Democratic rights –

UK government support for the Falklands under Thatcher’s successors has been unwavering, despite Argentina’s steadfast territorial claims.

“We will continue to defend the Falkland Islanders’ democratic rights and celebrate the modern, diverse community they have built,” said Amanda Milling, minister for UK overseas territories.

“This is an important reminder that all peoples have the right to determine their own future.”

Leona Roberts, a member of the Falklands legislative assembly, is thankful to the veterans and to Thatcher for her “incredibly decisive” action.

“We’ve seen how far we’ve come 40 years since,” said Roberts, who aged 10 in 1982 cowered from the sound of gunfire under a kitchen table and an overturned sofa.

“We built the country from nothing. It (the conflict) allowed us to move on.”

Spiralling energy bills and disruptions caused by the war in Ukraine caused consumer prices in the eurozone to surge by a new record of 7.5 percent, EU statistics agency Eurostat said Friday.

Last month’s rise marked a further acceleration in inflation from February, which at 5.9 percent year-on-year was already a eurozone record, it said.

The surge has been fuelled by a 44.7-percent hike in energy prices over the year as Europe found itself caught in an oil and gas crunch due to tensions with Russia over its invasion of Ukraine.

European Central Bank (ECB) president Christine Lagarde warned Wednesday that a prolonged Ukraine conflict will keep energy prices and the cost of living spiralling, blighting a post-Covid recovery.

Similar leaps in inflation have been seen in the United States where the Federal Reserve is committed to a long series of interest hikes to cool the economy and stem the price hikes.

But the ECB is reluctant for now to take similar measures, convinced that the rise in the cost of living is linked to the war as well as lingering disruptions to the global supply chains brought on by the coronavirus pandemic.

But given inflation’s relentless pace, analysts said Lagarde would soon have no choice but to rethink her policy.

“With euro-zone inflation rising even further above the ECB’s forecast, and likely to remain very high for the rest of the year, we think it won’t be long before the Bank starts raising interest rates,” said Jack Allen-Reynolds at Capital Economics.

– ‘No painless options’ –

Of particular concern for policy makers is core inflation, which strips out volatile components such as energy and food. It soared to 3.0 percent in March, Eurostat said.

This is a full percentage point on top of the ECB’s target of two percent and will give armour to critics that argue for interest hikes to face down inflation.

“The inflation data speak for themselves,” said Joachim Nagel, the central bank governor from Germany, Europe’s biggest economy that traditionally wants stronger medicine against higher prices.

“Monetary policy should not pass up the opportunity for timely countermeasures,” he said.

But economists warn that raising interest rates would put the brakes on the post pandemic recovery, with officials already warning that current forecasts for growth in Europe are certain to take a hit due to the war.

“The question is whether the worst is behind us now and that seems doubtful,” said Bert Colijn of ING bank.

“The ECB is running out of painless options to battle current economic problems, so we expect it to tread carefully,” he added.

Nina Jane Patel felt confined and under threat as the male avatars closed in, intimidating her with verbal abuse, touching her avatar against her will and photographing the incident.

The abuse took place in a virtual world but it felt real to her, and this kind of story is causing severe headaches for architects of the metaverse — the 3D, immersive version of the internet being developed by the likes of Microsoft and Meta.

“I entered the shared space and almost immediately three or four male avatars came very close to me, so there was a sense of entrapment,” Patel told AFP.

“Their voices started verbally and sexually harassing me, with sexual innuendos,” said the London-based entrepreneur.

“They touched and they groped my avatar without my consent. And while they were doing that, another avatar was taking selfie photos.”

Patel, whose company is developing child-friendly metaverse experiences, says it was “nothing short of sexual assault”.  

Her story and others like it have prompted soul-searching over the nature of harassment in the virtual world, and a search for an answer to the question: can an avatar suffer sexual assault?

– Tricking the brain –

“VR (virtual reality) relies on, essentially, tricking your brain into perceiving the virtual world around it as real,” says Katherine Cross, a PhD student at the University of Washington who has worked on online harassment.

“When it comes to harassment in virtual reality — for instance, a sexual assault — it can mean that in the first instant your body treats it as real before your conscious mind can catch up and affirm this is not physically occurring.”

Her research suggests that despite the virtual space, such victimisation causes real-world harm.

Underlining this point, Patel explained that her ordeal did briefly continue outside of the constructed online space.

She said she eventually took off her VR headset after failing to get her attackers to stop but she could still hear them through the speakers in her living room.

The male avatars were taunting her, saying “don’t pretend you didn’t like it” and “that’s why you came here”. 

The ordeal took place last November in the “Horizon Venues” virtual world being built by Meta, the parent company of Facebook.

The space hosts virtual events like concerts, conferences and basketball games. 

The legal implications are still unclear, although Cross suggests that sexual harassment laws in some countries could be extended to cover this type of act.  

– Protective bubbles –

Meta and Microsoft — the two Silicon Valley giants that have committed to the metaverse — have tried to quell the controversy by developing tools that keep unknown avatars away.

Microsoft has also removed dating spaces from its Altspace VR metaverse. 

“I think the harassment issue is one that will actually get resolved because people will self-select which platform they use,” says Louis Rosenberg, an engineer who developed the first augmented reality system in 1992 for the US Air Force research labs.

The entrepreneur, who has since founded a company specialising in artificial intelligence, told AFP he was more concerned about the way companies will monetise the virtual space.

He says a model based on advertising is likely to lead to companies capturing all kinds of personal data, from users’ eye movements and heart rate, to their real-time interactions.

“We need to change the business model,” he says, suggesting that safety would be better protected if funding came from subscriptions.

However, tech companies have made themselves fantastically wealthy through a business model based on targeted advertising refined by vast streams of data.

And the industry is already looking to get ahead of the curve by setting its own standards.

The Oasis Consortium, a think tank with ties to several tech companies and advertisers, has developed some safety standards it believes are good for the metaverse era.

“When platforms identify content that poses a real-world risk, it’s essential to notify law enforcement,” says one of its standards.

But that leaves the main question unresolved: how do platforms define “real-world risk”?