Day: April 20, 2022

Senior leaders of the United States, Canada and the United Kingdom walked out of a meeting of the Group of 20 major economies on Wednesday in protest of the G-20’s decision to allow Russian officials, including Finance Minister Anton Siluanov, to participate.

The U.S. and other members of the G-20 had called on Indonesia, which holds the rotating chair of the organization, to bar Russia from the meeting over its invasion of Ukraine. The fact that Russia was allowed to participate highlights the significant fractures within the organization in addressing the war in Ukraine.

Although Ukraine is not a member of the G-20, Ukrainian Foreign Minister Dmytro Kuleba and Finance Minister Serhiy Marchenko were invited to attend the meeting. In remarks at the beginning of the session, Kuleba vowed that Ukraine would not cede territory to Russia as part of peace negotiations. Both Kuleba and Marchenko joined the walkout.

In his remarks, Siluanov warned against politicizing dialogue among member states, saying that it might harm the global economy.

Major split

While the U.S., U.K., France, Germany, Japan and Canada — some of the largest members of the G-20 — have forcefully condemned Russia’s actions in Ukraine and fully participated in a regime of tough economic sanctions, many others have not. The latter include China, Indonesia, India and South Africa.

On Wednesday morning, Treasury officials told the Reuters news organization that Treasury Secretary Janet Yellen had spoken with Indonesian Finance Minister Sri Mulyani Indrawati the day before the meeting. In a statement, the department said, “Secretary Yellen firmly condemned Russia’s brutal invasion of Ukraine, and emphasized there will be no business-as-usual for Russia in the global economy.”

The statement continued: “Secretary Yellen emphasized that the United States will continue to work in solidarity with Indonesia to advance the important business of the G-20, including addressing the negative impacts of Russia’s invasion on the global economy.”

Yellen had signaled her intention to avoid meetings in which Russia participated in comments on April 7, when she reiterated U.S. President Joe Biden’s call to expel Russia from the organization.

On Wednesday, Canadian Deputy Prime Minister and Minister of Finance Chrystia Freeland tweeted, “This week’s meetings in Washington are about supporting the world economy — and Russia’s illegal invasion of Ukraine is a grave threat to the global economy. Russia should not be participating or included in these meetings.”

A plea for cooperation

The G-20 was founded in 1999, but it became a force on the world stage during the global economic crisis of 2008-09, when it served as the coordinating body for a series of policy responses that many economists credit with preventing far greater economic damage.

More recently, the group was central in the development of a plan to impose mandatory minimum taxes on international businesses to prevent a “race to the bottom” as countries competed to attract companies with ever-lower tax rates.

On Wednesday, International Monetary Fund Managing Director Kristalina Georgieva called on G-20 members to continue cooperating to address major global problems, calling the organization “crucial to sustain the momentum on collective efforts to deliver on global ambitions for the common good.”

She added, “We also recognize how interdependent we are … and it is so obvious that cooperation must and will continue.”

Future effectiveness questioned

Experts, however, are now concerned that the G-20 may struggle to lead on some of the key issues that its members have identified as important, including climate change and global food shortages, because of disagreements about Russia’s continued participation.

“We have a real need for a group like that, to sit down and try to come up with practical solutions,” Matthew Goodman, senior vice president for economics at the Center for Strategic and International Studies, told VOA. “But it’s very difficult to see how that’s going to happen under the current circumstances. There’s a substantial group that doesn’t want to work with Russia right now, and there’s another substantial group that isn’t willing to talk or agree to things without Russia at the table. So, it’s hard to see how you get out of that.”

Goodman, who helped organize G-20 summits during the Obama administration, said it was possible that there might be some “lowest common denominator” issues that the entire G-20 could agree on despite its internal divisions. But he wasn’t holding out much hope.

“It’s just hard to see how this group really delivers on anything,” he said.

Summit in doubt

Unlike the annual G-20 summit, which is normally attended by heads of state, Wednesday’s meeting in Washington involved member states’ finance ministers and central bank governors.

This year’s summit, scheduled for November, will be held in Bali, in recognition of Indonesia’s position as chair. Indonesian President Joko Widodo has indicated that Russian President Vladimir Putin will be welcome in Bali, prompting protests from other group members and suggestions that a boycott might take place.

Last month, Australian Prime Minister Scott Morrison said, “The idea of sitting around a table with Vladimir Putin, who the United States are already in the position of calling out [for] war crimes in Ukraine, for me is a step too far.”

The Biden administration has not made an official statement about the president’s plans for the Bali summit. In a press conference on April 7, press secretary Jen Psaki noted that the meeting was seven months away, “a lifetime.”

A history of expulsions

If Russia were excluded from the G-20 — a prospect that most experts view as unlikely — it would not be the first time the country had been ousted from a prestigious international organization.

Russia’s membership in the G-7 group of some of the world’s largest economies (at the time, the G-8) was suspended in 2014 after it invaded and took over Ukraine’s Crimean Peninsula.

Russia formally left that organization in 2017 and expressed no interest in rejoining it, even after then-U.S. President Donald Trump and then-Italian Prime Minister Giuseppe Conte called for its reinstatement in 2018. The G-7’s other members rejected the proposal unanimously.

Source: Voice of America

Tesla, Inc. results surged past Wall Street expectations Wednesday, as higher prices helped insulate the electric vehicle maker from supply chain chaos and rising costs.

The results also should trigger $23 billion in new payouts to CEO Elon Musk, already the world’s richest man.

Tesla has been an outlier since the pandemic outbreak, posting record deliveries and earnings for several quarters when rivals wrestling with global supply chain snarls rolled out production halts.

Shares of Tesla rose 5% after the close of regular trading. On an investor conference call, Musk said Tesla has a reasonable shot at achieving 60% vehicle delivery growth this year and remains confident of seeing 50% annual delivery growth for several years.

Tesla raised its prices in China, the United States and other countries, after Musk said in March the U.S. electric carmaker was facing significant inflationary pressure in raw materials and logistics amid the crisis in Ukraine.

“Our own factories have been running below capacity for several quarters as supply chain became the main limiting factor, which is likely to continue through the rest of 2022,” Tesla said in a statement.

The price increases are designed to cover higher costs for the next six to 12 months, which protects Tesla on orders for cars that it may not deliver for a year.

“Price increases are nicely exceeding cost inflation,” said Craig Irwin at Roth Capital.

“Chinese production issues seem well managed, and we expect Austin and Berlin to make up the slack from Shanghai’s 19-day outage,” he said referring to Tesla’s two new factories in Texas and Germany which have started deliveries in recent months.

The results let Musk meet a hat trick of performance goals worth a combined $23 billion in new compensation. He receives no salary, and his pay package requires Tesla’s market capitalization and financial growth to hit a series of escalating targets.

The world’s most valuable automaker said revenue was $18.8 billion in the first quarter ended March 31, versus estimates of $17.8 billion, according to IBES data from Refinitiv. This is up 81% from a year earlier.

Revenue from sales of its regulatory credits to other automakers jumped 31% to $679 million in the first quarter from a year earlier, helping boost revenue and profits.

Its earnings per share was $3.22, beatings analysts’ estimates of $2.26.

Tesla’s pre-tax profit (EBITDA) per vehicle delivered rose by more than 60% to $16,203 in the latest quarter compared with a year earlier.

Tesla said it has lost about a month of build volume out of its Shanghai factory due to COVID-related shutdowns. It said production is resuming at limited levels, which will affect total build and delivery volume in the second quarter.

Musk expected Tesla’s total production in the current quarter to be similar to that of the first quarter.

Lithium is software

Musk said lithium is responsible for cost increases and “a limiting factor” to EV growth.

He encouraged companies to get into the lithium business, which he said would generate high margins thanks to high prices.

“The lithium margins right now are practically software margins … Do you like minting money? Well, the lithium business is for you.”

He also said Tesla will have “some exciting announcements in the months to come” regarding securing raw materials for batteries.

Musk said its own 4680 battery cells would become a risk to production next year if it does not solve volume production by early 2023. “But we’re highly confident of doing so.” He also said as a risk mitigation, it will also use its existing, 2170 batteries for vehicles being made in Texas.

Musk said Tesla expects to mass produce a robotaxi with no steering wheel or pedal by 2024.

During the call, Musk did not mention Twitter, which he offered to buy last week for $43 billion. Investors are concerned that he may sell some Tesla stocks or borrow against additional Tesla shares to finance his bid.

Investors also worry about Musk being distracted by his Twitter bid at a time when Tesla is ramping up production at new factories in Berlin and Texas.

“Factory ramps take time, and Gigafactory Austin and Gigafactory Berlin-Brandenburg will be no different,” Tesla said in a statement.

The new factories will be key to meeting demand and reducing reliance on its China factory, its biggest one, which is recovering from a plant shutdown.

Source: Voice of America