US sanctions Indian firm involved in deal with Sri Lanka’s Mattala airport

By Shihar Aneez

Thursday November 7, 2024 8:22 am

ECONOMYNEXT – The United States has sanctioned an Indian firm which is in a consortium with a Russian firm to manage Sri Lanka’s Mattala Airport, official data showed.

The U.S. Department of the Treasury sanctioned India-based Shaurya Aeronautics Private Limited (Shaurya) last week among 275 individuals and entities involved in supplying Russia with advanced technology and equipment that it desperately needs to support its war machine.

“Today’s action targets both individual actors and sprawling sanctions evasion networks across 17 jurisdictions, including India, the People’s Republic of China (PRC), Switzerland, Thailand, and Türkiye,” the U.S. Department of the Treasury said in a statement.

“In addition to disrupting global evasion networks, this action also targets domestic Russian importers and producers of key inputs and other material for Russia’s military-industrial base.”

A joint venture between Shaurya Aeronautics and Airports of Regions Management Company of Russia has won the contract to manage Sri Lanka’s Chinese-built Mattala Airport for 30 years.

The previous Sri Lanka government under former leader Ranil Wickremesinghe had approved the 30-year deal to hand over its Chinese-built airport operations to the consortium, despite the U.S. having informed about a US sanction on the key stakeholder of the Moscow firm.

“India-based Shaurya Aeronautics Private Limited (Shaurya) has sent shipments to Russia of high-priority dual-use technology, including radar apparatus, radio navigational aid apparatus and radio remote control apparatus, and electrical apparatus for switching,” the U.S. Department of the Treasury said.

“Shaurya is being designated pursuant to E.O. 14024 for operating or having operated in the technology sector of the Russian Federation economy.”

SRI LANKA TO REVIEW DEAL

Former Aviation Minister Nimal Siripala de Silva in July said the U.S. approached the Sri Lankan government to inform that the key stakeholder of Russia’s Airports of Regions Management Company was sanctioned by the US treasury in 2018 for suspected meddling in the 2016 U.S. elections.

The former minister said Sri Lankan authorities checked the U.S. claims and found it was “only a rumour” and despite requests the U.S. officials based in Sri Lanka were unable “to furnish evidence”.

However, later former Foreign Minister Ali Sabry before the September 21 presidential poll had said the deal was to be reviewed. Newly elected President Anura Kumara Dissanayake’s government also has said it will review the deal after November 14 parliamentary polls.

The airport, built at a cost of $209 million, was once dubbed the “world’s emptiest airport” because of a lack of flights. It has been incurring a loss of 3 billion rupees (US$10 million) annually.

The airport is strategically located close to the Hambantota on the southern coast of Sri Lanka where China operates a port on a 99-year lease and also Sinopec is building a US$5 billion refinery.

It has been used sparingly when flights are unable to land in the country’s main airport at Katunayaka, 30 km north to Colombo.

Airports of the Regions, the Russian firm in the joint consortium, is a large airport holding in Russia.

Until 2021, the strategic investor of the company was Renova Group of Companies, owned by Viktor Felixovich Vekselberg, a Ukrainian born Russian who was sanctioned by the US treasury in 2018 for suspected meddling in the 2016 U.S. elections.

In 2021, however, Vekselberg transferred control over the management company “Airports of the Regions” to a former top manager of Renova, according to media reports.

Sri Lanka used Mattala airport to attract more Russian and Ukrainian tourists soon after the Covid-19 lock down.

Under the 2015-2019 previous government, this airport was offered to India with an aim to boost Indian cultural tourists into Sri Lanka. However, the discussion with India to operate the airport did not succeed.⍐  

(Colombo/November 07/2024)

What Trump’s historic election victory means for the global economy

What Trump’s historic election victory means for the global economy

CNBC Thu, Nov 7 2024 Sam Meredith

Key Points

1. Donald Trump’s election victory marks a historic return to the White House – an extraordinary political comeback that is likely to have seismic ramifications for the global economy.
2.  The former president’s litany of campaign pledges include steep tariffs, tax cuts, deregulation and a push to withdraw from key global agreements.
3. Oxford Economics’s Ben May said the direct impact of Trump 2.0 on global growth could be limited in the near term, “but masks major implications for trade and the composition of growth, and for financial markets.”

Donald Trump’s election victory over Vice President Kamala Harris marks a historic return to the White House — an extraordinary political comeback that is likely to have seismic ramifications for the global economy.

Speaking to his supporters in Florida early Wednesday, Trump said an “unprecedented and powerful mandate” would usher in “the golden age of America.”

The former president’s litany of campaign pledges include steep tariffs, tax cuts, deregulation and a push to withdraw from key global agreements.

Analysts say it is hard to pin down the extent to which Trump will seek to implement these measures in his second four-year term, but the consequences of any will have clear repercussions across the globe.

Lizzy Galbraith, political economist at asset manager Abrdn, said it remains to be seen exactly what style of presidency investors can expect when Trump returns to the White House.

“Congress has a really big part to play in this,” Galbraith told CNBC’s “Squawk Box Europe” on Thursday.

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“If Trump does have unified control of Congress, as is looking very likely and is what we expect to happen over the next few weeks and days, then he does have greater latitude to implement his tax-cutting agenda, his deregulatory agenda, for example, but we are also likely to see elements of his trade policy sitting alongside that.”

On tariffs, Galbraith said there were currently two schools of thought. Either Trump seeks to use them as a bargaining tool to gain concessions from other parties — or he delivers on his promise and implements them much more broadly.

Trump’s favorite word

Trump has previously described “tariff” as his favorite word, calling it “the most beautiful word in the dictionary.”

In an effort to raise revenues, Trump has suggested he could impose a blanket 20% tariff on all goods imported into the U.S., with a tariff of up to 60% for Chinese products and one as high as 2,000% on vehicles built in Mexico.

For the European Union, meanwhile, Trump has said the 27-nation bloc will pay a “big price” for not buying enough American exports.

“Now, I think it is worth pointing out that we do think that in any situation which Trump is using tariffs quite often, his principal focus is going to be on China. And we don’t see Trump’s secondary tariff pledge — that baseline tariff, which would hurt European companies — as being all that feasible,” Galbraith said.

“So, it’s not necessarily our base case that you see something like a baseline tariff applied that would really hurt European goods although there is still a distinct possibility there that specific European products could be affected,” she added.

Analysts have warned that Trump’s plan to impose universal tariffs are highly likely to raise prices for consumers and slow spending.

Europe

Ben May, director of global macro research at Oxford Economics, said the direct impact of Trump 2.0 on economic growth is likely to be limited in the near term, “but masks major implications for trade and the composition of growth, and for financial markets.”

For instance, May said that in a scenario in which the more radical aspects of Trump’s policy agenda are adopted, particularly on tariffs, the impact across the globe will be “very sizable.”

“A key unknown is whether a clean sweep raises the risk that a Trump administration will push through more extreme policy measures, such as larger, less-targeted tariffs,” May said in a research note.

“Uncertainty over Trump’s stance on the conflicts in Ukraine and the Middle East also adds to the risk of greater instability in both regions, which could take a toll on regional, and even global, growth,” he added.

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The prospect of a second Trump presidency had long been viewed as negative for Europe and the European Union more broadly.

Yet, analysts at Signum Global Advisors said in a research note on Wednesday that “the magnitude of that truth remains underappreciated.”

Indeed, they argued that several factors mean the EU is likely to be “the biggest loser of a second Trump era,” citing trade tensions, an ongoing frustration with key European policy decisions and Trump’s likely desire to double down on America’s advantage at attracting capital relocation.

Asia

Analysts at Macquarie Group said Thursday that, at face value, Trump’s election victory is “bad news for Asia,” particularly China, but the region is “more prepared” than in 2016, when he first moved into the White House.

“A key tenet of Trump’s campaign was higher tariffs. While well telegraphed, the headwinds that are likely to sweep across Asia, particularly China, should spike volatility and compress multiples as uncertainty prevails,” analyst at Macquarie Group said in a research note.

“A counter-balance to this is a likely acceleration in China stimulus measures,” they added. “The Chinese government has already outlined its ambitions to support economic growth at the 5% level and address property market woes to support domestic consumer confidence.”

Mitchell Reiss, an American diplomat and distinguished fellow at the Royal United Services Institute (RUSI) think tank, said there are likely to be some differences to the Trump playbook this time round.

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“I think that President-elect Trump has said that he would like to increase tariffs on China again until the playing field is level, in his view,” Reiss told CNBC’s “Squawk Box Europe” on Thursday.

“What was interesting the last time when Trump won was the number of China hawks that staffed his administration. This was a very tough administration in terms of personnel and in terms of their view of how they saw China as an adversary, expansionist in the South China Sea and contrary to American values and friends and allies around the world,” he continued.

“So, I don’t think that that’s going to change. I think that might be mitigated a bit by the economic interaction that we have with China, but I think that it is going to be a complicated relationship going forward.”⍐