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The average income of people around the world will be cut by one-fifth because of climate change by the middle of the century, according to a new report by Germany’s Potsdam Institute for Climate Impact Research, published in the journal Nature. Henry Ridgwell has more.
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Paris, France — G7 environment ministers committed on Tuesday to ramp up the production and deployment of battery storage technology, an essential component for increasing renewable energy and combating climate change.  

Here is how and why batteries play a vital role in the energy transition:   

Growing demand

Batteries have been central to the rise of electric vehicles (EVs) but are also critical to wind and solar power because of the intermittent nature of these energy sources.  

Surplus electricity must be stored in batteries to stabilize distribution regardless of peaks in demand, or breaks in supply at night or during low winds.   

Battery deployment in the energy sector last year increased more than 130 percent from 2022, according to a report released last week by the International Energy Agency (IEA).    

The main markets are China, the European Union and the United States. 

Following closely are Britain, South Korea, Japan and developing nations in Africa, where solar and storage technology is seen as the gateway to energy access.  

Six-fold goal

To triple global renewable energy capacity by 2030 — a goal set at the UN climate conference in December — the IEA says a six-fold increase in battery storage will be necessary.  

Clean energy is essential to reduce emissions from burning fossil fuels and to hope to keep the international target of restricting global warming to 1.5 degrees Celsius above pre-industrial levels.   

The total storage capacity required to achieve this target is an estimated 1,500 gigawatts by 2030.  

Of this, 1,200 GW will need to be supplied by batteries.

Cost challenges

In less than 15 years, the cost of batteries has fallen by 90 percent.  

“The combination of solar PV and batteries is today competitive with new coal plants in India. And just in the next few years, it will be cheaper than new coal in China and gas-fired power in the United States,” IEA chief Fatih Birol said last week.   

“But still the pace is not fast enough to reach our goals in terms of climate change and energy security.”  

Costs will have to come down further, he said, while calling for supply chains to be diversified.   

Most batteries are currently produced by China.   

But some 40 percent of planned battery manufacturing projects are in the United States and Europe, according to the IEA.   

If those projects are realized, they would be nearly sufficient to meet the needs of those countries.

Metal matters

Another thorny issue is the availability of critical metals like lithium and cobalt that are essential to make batteries.  

Experts say the development chemical alternatives could complement the dominant lithium-ion technology.  

“Transition in the technology will reduce the amount of lithium” needed, said Brent Wanner, head of the IEA’s power sector unit, adding, “this includes shifting to sodium-ion batteries.” 

Beyond 2030, high-density solid-state batteries that offer a longer lifespan are expected to become commercially available. 

There are other storage options, although not as widely applicable or available as batteries.

Pumped storage hydropower has long been used in the hydroelectric sector.

The transformation of electricity into hydrogen, which can be stored and transported, is a new technology expected to become more readily available. 

Be flexible

Renewable energy is not entirely reliant on storage and measures can be taken to improve the flexibility of its production to meet demands.   

Industry and governments are gearing up for the transition.   

The European Union’s Energy Regulators Agency called on member states in September to assess their “flexibility potential” based on estimates that renewables will need to double by 2030.   

Such a rise requires greater “flexibility” in grids, meaning energy can be stored and distributed consistently despite fluctuating production and demand.   

The G7 said Tuesday it would not only support more production and use of battery storage, but promote technological advancements in the sector as well as grid infrastructure.

 
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HAVANA — Alejandro Fonseca stood in line for several hours outside a bank in Havana hoping to withdraw Cuban pesos from an ATM, but when it was almost his turn, the cash ran out. He angrily hopped on his electric tricycle and traveled several kilometers to another branch, where he finally managed to withdraw some money after wasting the entire morning.

“It shouldn’t be so difficult to get the money you earn by working,” the 23-year-old told The Associated Press in a recent interview.

Fonseca is one of an increasing number of frustrated Cubans who must grapple with yet another hurdle while navigating the island’s already complicated monetary system — a shortage of cash.

Long queues outside banks and ATMs in the capital, Havana, and beyond start forming early in the day as people seek cash for routine transactions such as buying food and other essentials.

Experts say there are several reasons behind the shortage, all somehow related to Cuba’s deep economic crisis, one of the worst in decades.

Omar Everleny Perez, a Cuban economist and university professor, says the main culprits are the government’s growing fiscal deficit, the nonexistence of banknotes with a denomination greater than 1,000 pesos (about $3), stubbornly high inflation and the nonreturn of cash to banks.

“There is money, yes, but not in the banks,” said Perez, adding that most of the cash is being held not by salaried workers but by entrepreneurs and owners of small- and medium-size business who are more likely to collect cash from commercial transactions but are reluctant to return the money to the banks.

This, Perez says, is either because they don’t trust the local banks or simply because they need the pesos to convert into foreign currency.

Most entrepreneurs and small business owners in Cuba must import almost everything they sell or pay in foreign currency for the supplies needed to run their businesses. Consequently, many end up hoarding Cuban pesos to later change into foreign currency on the informal market.

Converting those Cuban pesos to other currencies poses yet another challenge, as there are several, highly fluctuating exchange rates on the island.

For example, the official rate used by government industries and agencies is 24 pesos to the U.S. dollar, while for individuals, the rate is 120 pesos to the dollar. However, the dollar can fetch up to 350 Cuban pesos on the informal market.

Perez notes that in 2018, 50% of the cash in circulation was in the hands of the Cuban population and the other half in Cuban banks. But in 2022, the latest year for which information is available, 70% of cash was in the wallets of individuals.

Cuban monetary authorities did not immediately respond to AP’s emailed request for comment.

The shortage of cash comes as Cubans grapple with a complex monetary system in which several currencies circulate, including a virtual currency, MLC, created in 2019.

Then, in 2023 the government announced several measures aimed at promoting a “cashless society,” making the use of credit cards mandatory to pay for some transactions — including purchases of food, fuel and other basic goods — but many businesses simply refuse to accept them.

Making things worse is stubbornly high inflation, meaning more and more physical bills are needed to buy products.

According to official figures, inflation stood at 77% in 2021, then dropped to 31% in 2023. But for the average Cuban, the official figures barely reflect the reality of their lives, since market inflation can reach up to three digits on the informal market. For example, a carton of eggs, which sold for 300 Cuban pesos in 2019, these days sells for about 3,100 pesos.

All while the monthly salary for Cuban state workers ranges between 5,000 and 7,000 Cuban pesos (between $14 and $20).

“To live in an economy that, in addition to having several currencies, has several exchange rates and a three-digit inflation is quite complicated,” said Pavel Vidal, a Cuba expert and professor at Colombia’s Javeriana University of Cali.
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WASHINGTON — The nation’s economy slowed sharply last quarter to a 1.6% annual pace in the face of high interest rates, but consumers — the main driver of economic growth — kept spending at a solid pace.

Thursday’s report from the Commerce Department said the gross domestic product — the economy’s total output of goods and services — decelerated in the January-March quarter from its brisk 3.4% growth rate in the final three months of 2023.

A surge in imports, which are subtracted from GDP, reduced first-quarter growth by nearly 1 percentage point. Growth was also held back by businesses reducing their inventories. Both those categories tend to fluctuate sharply from quarter to quarter.

By contrast, the core components of the economy still appear sturdy. Along with households, businesses helped drive the economy last quarter with a strong pace of investment.

The import and inventory numbers can be volatile, so “there is still a lot of positive underlying momentum,” said Paul Ashworth, chief North America economist at Capital Economics.

The economy, though, is still creating price pressures, a continuing source of concern for the Federal Reserve. A measure of inflation in Friday’s report accelerated to a 3.4% annual rate from January through March, up from 1.8% in the last three months of 2023 and the biggest increase in a year. Excluding volatile food and energy prices, so-called core inflation rose at a 3.7% rate, up from 2% in fourth-quarter 2023.

From January through March, consumer spending rose at a 2.5% annual rate, a solid pace though down from a rate of more than 3% in each of the previous two quarters. Americans’ spending on services — everything from movie tickets and restaurant meals to airline fares and doctors’ visits — rose 4%, the fastest such pace since mid-2021.

But they cut back spending on goods such as appliances and furniture. Spending on that category fell 0.1%, the first such drop since the summer of 2022.

The state of the U.S. economy has seized Americans’ attention as the election season has intensified. Although inflation has slowed sharply from a peak of 9.1% in 2022, prices remain well above their pre-pandemic levels.

Republican critics of President Joe Biden have sought to pin responsibility for high prices on Biden and use it as a cudgel to derail his re-election bid. And polls show that despite the healthy job market, a near-record-high stock market and the sharp pullback in inflation, many Americans blame Biden for high prices.

Last quarter’s GDP snapped a streak of six straight quarters of at least 2% annual growth. The 1.6% rate of expansion was also the slowest since the economy actually shrank in the first and second quarters of 2022.

The economy’s gradual slowdown reflects, in large part, the much higher borrowing rates for home and auto loans, credit cards and many business loans that have resulted from the 11 interest rate hikes the Fed imposed in its drive to tame inflation.

Even so, the United States has continued to outpace the rest of the world’s advanced economies. The International Monetary Fund has projected that the world’s largest economy will grow 2.7% for all of 2024, up from 2.5% last year and more than double the growth the IMF expects this year for Germany, France, Italy, Japan, the United Kingdom and Canada.

Businesses have been pouring money into factories, warehouses and other buildings, encouraged by federal incentives to manufacture computer chips and green technology in the United States. On the other hand, their spending on equipment has been weak. And as imports outpace exports, international trade is also thought to have been a drag on the economy’s first-quarter growth.

Kristalina Georgieva, the IMF’s managing director, cautioned last week that the “flipside″ of strong U.S. economic growth was that it was “taking longer than expected” for inflation to reach the Fed’s 2% target, although price pressures have sharply slowed from their mid-2022 peak.

Inflation flared up in the spring of 2021 as the economy rebounded with unexpected speed from the COVID-19 recession, causing severe supply shortages. Russia’s invasion of Ukraine in February 2022 made things significantly worse by inflating prices for the energy and grains the world depends on.

The Fed responded by aggressively raising its benchmark rate between March 2022 and July 2023. Despite widespread predictions of a recession, the economy has proved unexpectedly durable. Hiring so far this year is even stronger than it was in 2023. And unemployment has remained below 4% for 26 straight months, the longest such streak since the 1960s.

Inflation, the main source of Americans’ discontent about the economy, has slowed from 9.1% in June 2022 to 3.5%. But progress has stalled lately.

Though the Fed’s policymakers signaled last month that they expect to cut rates three times this year, they have lately signaled that they’re in no hurry to reduce rates in the face of continued inflationary pressure. Now, a majority of Wall Street traders don’t expect them to start until the Fed’s September meeting, according to the CME FedWatch tool.
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Washington — U.S. officials are considering a request from Vietnam to be removed from a list of “nonmarket” economies, a step that would foster improved diplomatic relations with a potential ally in Asia but would anger some U.S. lawmakers and manufacturing firms.

The Southeast Asian country is on the list of 12 nations identified by the U.S. as nonmarket economies, which also includes China and Russia because of strong state intervention in their economies.  

Analysts believe Hanoi is hoping for a decision before the November U.S. election, which could mean a return to power of Donald Trump, who during his previous term as president threatened to boost tariffs on Vietnam because of its large trade surplus with the United States.

Under the Trump administration, the Department of Treasury also put Vietnam on a list of currency manipulators, which can lead to being excluded from U.S. government procurement contracts or other remedial actions. The Treasury, under the Biden administration, removed Vietnam from this list.

On the eve of President Joe Biden’s September visit to Hanoi, where he and Vietnamese Secretary-General Nguyen Phu Trong elevated the U.S.-Vietnam relationship to a comprehensive strategic partnership.

Vietnam formally asked U.S. Department of Commerce to remove it from the list of nonmarket economies on the grounds that it had made economic reforms in recent years.  

The Biden administration subsequently initiated a review of Vietnam’s nonmarket economy (NME) status. The Department of Commerce is to issue a final decision by July 26, 270 days after initiating the review.  

“Receiving market economy status is the highest diplomatic priority of the Vietnamese leadership this year, especially after last fall’s double upgrade in diplomatic relations,” said Zachary Abuza, a professor at National War College where he focuses on Southeast Asian politics and security issues.

He told VOA Vietnamese that the Vietnamese “are really linking the implementation of the joint vision statement to receiving that status.”

The U.S. is Vietnam’s most important export market with two-way trade totaling more than $125 billion in 2023, according to U.S. Census data. But Washington has initiated more trade defense investigations with Vietnam than with any other country, mainly anti-dumping investigations. Vietnam recorded 58 cases subject to trade remedies of the U.S. as of August 2023, in which 26 were anti-dumping, according to the Vietnam Trade Office in the U.S.

Vietnam has engaged a lobbying firm in Washington to help it win congressional support for a status upgrade. A Foreign Agents Registration Act’s statement filed to the U.S. Department of Justice shows that Washington-based Steptoe is assisting the Vietnamese Ministry of Industry and Trade and supporting the Vietnamese government in “obtaining market economy status in antidumping proceedings.”

“I understand why Vietnamese are lobbying,” said Murray Hiebert, a senior associate of the Southeast Asia Program at the Center for Strategic and International Studies (CSIS).

“One reason is U.S.-Vietnam relations have come so far, and to hold the non-market [status] is a little bit disingenuous because most of the countries that have this status are countries like China, Russia, North Korea, who are not so friendly with the United States. So I think [the U.S. recognition of Vietnam as a market economy] would be a sign that relations have improved.”

US election key

Both Abuza and Hiebert believe that Vietnam is pushing hard to secure the upgrade before the November U.S. election that could bring Trump back into office.

“Trump began an investigation of Vietnam’s dumping just before the end of his administration. He may again start that process,” said Hiebert, who was senior director for Southeast Asia at the U.S. Chamber of Commerce before joining CSIS.

But Vietnam’s campaign faces opposition from within the U.S.

More than 30 U.S. lawmakers in January sent joint letters to U.S. Secretary of Commerce Gina Raimondo urging the Biden administration not to grant market economy status to Vietnam. They argued that Vietnam did not meet the procedural requirements for a change of status and that granting Hanoi’s wish would be “a serious mistake.”

The U.S. designated Vietnam as a nonmarket economy in 2002 during an anti-dumping investigation into Vietnamese catfish exports. Over the past 21 years, the U.S. has imposed anti-dumping duties on many Vietnamese exports, including agricultural and industrial products.

In a request sent to Raimondo to initiate a changed circumstances review, the Vietnamese Ministry of Industry and Trade said that over the past 20 years, the economy of Vietnam “has been through dramatic developments and reforms.” It said 72 countries recognize Vietnam as a market economy, notably the U.K., Canada, Australia and Japan.

‘Unfairly traded Chinese goods’

U.S. manufacturing groups have expressed opposition to Vietnam’s request, arguing that Vietnam continues to operate as a nonmarket economy. In comments sent to Raimondo, the Alliance for American Manufacturing (AMM) said that Vietnam “cannot reasonably be understood to demonstrate the characteristics of a market economy.”

“There’s still heavy intervention by the governing Communist Party [of Vietnam],” said Scott Paul, president of AMM. “There’s a lot of indication that China may be using Vietnam as a platform to also export to the U.S., which is obviously concerning to firms here,” he said.

In a letter dated January 28, eight senators wrote “Granting Vietnam market economy status before it addresses its clear nonmarket behavior and the severe deficiencies in its labor law will worsen ongoing trade distortions, erode the U.S. manufacturing base, threaten American workers and industries, and reinforce Vietnam’s role as a conduit for goods produced in China with forced labor.”  

Many Chinese products have been found to be disguised or labeled as “Made in Vietnam” to avoid U.S. tariffs since Trump launched a trade war with China in 2018. Vietnam has promised to crack down on the practice.

Abuza pointed out what he called a contradiction in U.S. policy.

“Vietnam is too important to the United States economically in terms of trade and foreign direct investment, and we cannot look to Vietnam for supply chain diversification out of China if it doesn’t have market economy status.”

Hiebert said the U.S. “should do this and get moving” as Vietnam is “one of the U.S.’ best friends in Asia and Southeast Asia and help stand up to China.”
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Harare, Zimbabwe — Zimbabwe’s recently introduced gold-backed currency is sliding on the local black market but officials insist the currency is getting stronger and has a bright future. Columbus Mavhunga reports from Harare.

Even songs are played on the radio encouraging citizens to embrace the currency, called Zimbabwe Gold — or ZiG — introduced on April 5 trading at 13.56 to the U.S. dollar.

Official statistics say ZiG is now trading at 13.41. But on the black market it is around 20.

Chamunorwa Musengi, a street vendor in Harare, is not optimistic about the new currency which for the moment is trading electronically, with notes and coins coming into circulation on April 30:  

“Let’s wait and see,” he said. “Maybe it will boost our economy for some time. But I do not see anything changing with the new currency, because things are really tight at the moment. We been through this before. When they introduced bond notes, things stabilized for a short time and then it started sliding on the market. They are saying ZiG is around 13 — it will end up around 40,000 against the dollar.”

Bond notes refer to the currency which was launched in 2019 after a decade of Zimbabwe using the U.S. dollar and other currencies.  The bond note had lost about 80% of its value and was trading at around 40,000 to the dollar before its official demise.

Samson Kabwe, a minibus conductor, says he cannot wait for the physical notes and coins of ZiG to be released.

“We are for ZiG, especially for change,” he said. “We had no small notes for change. If ZiG notes and coins come, the government would have done a great thing. We want it like now.”

The government says for now, commodities like fuel will still be bought and sold using U.S. dollars. 

Gift Mugano, an economics professor, predicts the new currency will go the way of the abandoned one.

“[In] 2016, we introduced bond notes which was backed by Afreximbank (African Export–Import Bank) facility of $400 million,” he said. “The Afreximbank is an international bank with reputation. But that was not be sufficient to guarantee the success of the bond notes. So it failed. Right? Why are we failing to guarantee stability? There is no sustained production in the economy because you defend the economy with production. Secondly, confidence issues. People do not trust this system because we have lost money several times.”

But John Mushayavanhu, the new governor or the Reserve Bank of Zimbabwe, predicts the currency will succeed because it is backed by reserves of gold and other minerals worth $175 million and $100 million cash.   

“We are doing what we are doing to ensure that our local currency does not die,” he said. “We were already in a situation where almost 85% of transactions are being conducted in U.S. dollars because [the] local currency was not living up to the function of store of value. We are going to restore that store of value so that we can start reviving our currency. So, we are starting at $80 million worth, and as we get more reserves, we will gradually be moving towards greater use of the local currency. It is my wish that if we get to the year (end) at 70-30, next year 60-40, the year after 50-50; by the time we get to 50-50 people will be indifferent as to which currency they are using. And that way we regain use of our local currency.”

While Mushayavanhu has that confidence, social media is awash with people and traders — including government departments — refusing to accept the outgoing Zimbabwe currency.
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London — Environmental and human rights activists are calling on the Nigerian government to withhold approval of plans by the London-based oil giant Shell to sell off its operations in the Niger Delta, unless the oil giant does more to tackle pollution in the region caused by the industry.

For decades, foreign energy firms have extracted hydrocarbons from the Niger Delta, and Shell is by far the biggest investor. It has earned the companies — and the Nigerian government — billions of dollars. Locals, however, have long complained of massive environmental damage.

“You can’t grow crops. You can’t drink the water. You can’t fish because the fish are dying or they’re dead,” said Florence Kayemba, Nigeria director at the civil society group Stakeholder Democracy Network, based in Port Harcourt in the Niger Delta.

Shell Oil announced in January it is pulling out of its onshore and shallow water operations the region. It intends to sell its Nigerian subsidiary, the Shell Petroleum Development Company of Nigeria Limited (SPDC), to Renaissance, a consortium of five mainly local firms. The sale would include existing mining licenses and infrastructure. Shell says it is part of a plan to transition away from fossil fuels.

Civil society groups say Shell must do more to clean up the environment before it leaves. A recent report by a Dutch organization, the Centre for Research on Multinational Corporations, or SOMO, warned the divestment plan is a “ticking time bomb.”

“Communities fear that, once Shell exits, they will never see their environment restored or receive compensation for lost livelihoods,” the SOMO report said. “Most people in the Delta depend on farming and fishing, occupations that are impossible when the soil and waterways are deeply contaminated.”

Florence Kayemba of the Stakeholder Democracy Network, which contributed to the SOMO report, told VOA that the Nigerian government must scrutinize the sale more closely.

“We are very concerned about the legacy of pollution being left behind by Shell — not only Shell but also other oil companies that have divested their assets from the Niger Delta,” she said.

“We believe that it’s very important for the federal government to look into these issues, because the oil is not going to flow forever,” Kayemba added. “You will have a post-oil Nigeria. You will have a post-oil Niger Delta. And we need to have an environment that is functional.”

Oil companies like Shell have often blamed theft and sabotage for oil spills, a claim contested by environmental groups. Locals also seek to make money from unlicensed small-scale production known as “artisanal refining,” according to Kayemba.

“What you have is a situation where artisanal oil refining is just reinforcing what has been happening,” she said. “And yet that pollution had already existed. So, by the time you get to disentangle this, it becomes really difficult. Who is to blame who?”

A report commissioned in May 2023 by Bayelsa State, one of the major oil producing regions in the Niger Delta, estimated that it would cost some $12 billion to clean up decades-old oil spills in the state over a 12-year period. It blamed Shell and the Italian oil firm ENI for most of the damage.

Both Shell and ENI dispute the findings.

The SOMO report claims Shell is now selling its operations to domestic companies that may not have the capability to deal with the aging infrastructure and legacy of oil exploration.

“Shell is selling its oil blocks and infrastructure as going concerns to companies that appear, in several cases, to lack the finances and willingness both to deal with the old and damaged infrastructure and to undertake responsible closure and decommissioning when this becomes necessary,” the report said.

“Shell’s exit exposes the communities of the Niger Delta to major ongoing risks to their environment, health, and human rights, long after the oil industry ceases and likely for generations to come,” it added.

In a statement to VOA, Shell said that “Onshore divestments by international energy companies are part of a wider reconfiguration of the Nigerian oil and gas sector in which, after decades of capability building, domestic companies are playing an increasingly important role in helping the country to deliver its aspirations for the sector.”

“As divestments occur, mandatory submissions to the Federal Government allow the regulators to apply scrutiny across a wide range of issues and recommend approval of these divestments, provided they meet all requirements,” the statement said.

Shell added that it will continue to deploy its “technical expertise” under the terms of the sale to the new buyers.

The Nigerian government has indicated it intends to approve Shell’s divestment plans. Heineken Lokpobiri, Nigeria’s petroleum minister, told the World Economic Forum in Davos that the government is committed to “fostering a business-friendly environment” in the sector.

“On the part of the government, once we get the necessary documents, we will not waste time to give the necessary considerations and consent,” Lokpobiri said at Davos January 18, according to Reuters.

The Nigerian Ministry for Petroleum Resources did not respond to VOA requests for comment.
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WILMINGTON, Del. — The Biden administration pledged on Monday to provide up to $6.6 billion so that a Taiwanese semiconductor giant can expand the facilities it is already building in Arizona and better ensure that the most-advanced microchips are produced domestically for the first time. 

Commerce Secretary Gina Raimondo said the funding for Taiwan Semiconductor Manufacturing Co. means the company can expand on its existing plans for two facilities in Phoenix and add a third, newly announced production hub. 

“These are the chips that underpin all artificial intelligence, and they are the chips that are the necessary components for the technologies that we need to underpin our economy,” Raimondo said on a call with reporters, adding that they were vital to the “21st century military and national security apparatus.” 

The funding is tied to a sweeping 2022 law that President Joe Biden has celebrated and which is designed to revive U.S. semiconductor manufacturing. Known as the CHIPS and Science Act, the $280 billion package is aimed at sharpening the U.S. edge in military technology and manufacturing while minimizing the kinds of supply disruptions that occurred in 2021, after the start of the coronavirus pandemic, when a shortage of chips stalled factory assembly lines and fueled inflation. 

The Biden administration has promised tens of billions of dollars to support construction of U.S. chip foundries and reduce reliance on Asian suppliers, which Washington sees as a security weakness. 

“Semiconductors – those tiny chips smaller than the tip of your finger – power everything from smartphones to cars to satellites and weapons systems,” Biden said in a statement. “TSMC’s renewed commitment to the United States, and its investment in Arizona represent a broader story for semiconductor manufacturing that’s made in America and with the strong support of America’s leading technology firms to build the products we rely on every day.” 

Taiwan Semiconductor Manufacturing Co. produces nearly all of the leading-edge microchips in the world and plans to eventually do so in the U.S. 

It began construction of its first facility in Phoenix in 2021, and started work on a second hub last year, with the company increasing its total investment in both projects to $40 billion. The third facility should be producing microchips by the end of the decade and will see the company’s commitment increase to a total of $65 billion, Raimondo said. 

The investments would put the U.S. on track to produce roughly 20% of the world’s leading-edge chips by 2030, and Raimondo said they should help create 6,000 manufacturing jobs and 20,000 construction jobs, as well as thousands of new positions more indirectly tied to assorted suppliers in chip-related industries tied to Arizona projects. 

The potential incentives announced Monday include $50 million to help train the workforce in Arizona to be better equipped to work in the new facilities. Additionally, approximately $5 billion of proposed loans would be available through the CHIPS and Science Act. 

“TSMC’s commitment to manufacture leading-edge chips in Arizona marks a new chapter for America’s semiconductor industry,” Lael Brainard, director of the White House National Economic Council, told reporters. 

The announcement came as U.S. Treasury Secretary Janet Yellen is traveling in China. Senior administration officials were asked on the call with reporters if the Biden administration gave China a head’s up on the coming investment, given the delicate geopolitics surrounding Taiwan. The officials said only that their focus in making Monday’s announcement was solely on advancing U.S. manufacturing. 

“We are thrilled by the progress of our Arizona site to date,” C.C. Wei, CEO of TSMC, said in a statement, “And are committed to its long-term success.” 
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KEAN SVAY, KANDAL PROVINCE, Cambodia — Five years ago, Lun Sam Ath took out a $12,000 loan to build a new wooden house and repay a previous loan that she had used to buy a motorbike.

The 45-year-old mother of five owed $200 a month to Amret, one of the country’s largest microfinance institutions (MFI), which she figured she could repay with help from her older daughter’s earnings from a garment factory job. But then her husband contracted hepatitis, and treatment was costly.

After her husband died, Lun Sam Ath, who made about $180 a month in a garment factory, fell behind on payments. So, she decided to sell their house — along with a 10-by-20-meter plot of land. But with Cambodia experiencing a post-COVID real estate slump, it remains unsold.

The MFI credit officers seeking repayment started pressuring Lun Sam Ath.

“They would come to my home with several people, three to five motorbikes, and also bring the village chief with them,” she said during a recent interview with VOA Khmer.

She couldn’t handle the stress and shame. Last June she abandoned her home and rented a room for $40 a month, living with her three younger children, ages 9 to 14.

In February, she moved to the capital, Phnom Penh, where she sells face masks on the street. She screens phone calls “since I am afraid the bank agents will call me” she said. “They [the MFI] can take my land and sell it now to pay off the loan.”

Lun Sam Ath’s loan was one of nearly 2 million outstanding microfinance loans in Cambodia as of the end of 2023, according to the Cambodia Microfinance Association (CMA). Cambodia’s population is about 16.5 million, and researchers say the ratio of microfinance loans per person is the world’s highest.

The MFI sector was once hailed as a key tool for lifting Cambodians out of poverty by injecting capital into small businesses or farms unsuitable for traditional loans. Instead, thousands of Cambodians found themselves in a debt trap, taking out increasingly burdensome loans to pay back other loans, and taking increasingly extreme measures to escape the cycle of indebtedness. Substantial research conducted in Cambodia and in other developing nations found that while microloans helped many, especially women, the small loans have also made lives, like Lun Sam Ath’s, worse.

Advocates say the MFIs in Cambodia frequently fail to clearly explain the risks of these loans to borrowers, who are often financially illiterate and use their land as collateral.

Two local rights groups, Licadho and Equitable Cambodia, released a report, Debt Threats: A Quantitative Study of Microloan Borrowers in Cambodia, based on a survey of 717 households in Kampong Speu province, which is about 50 kilometers from Phnom Penh.

“Widespread over-indebtedness has led to significant numbers of serious human rights abuses,” the study said.

It found 6.1% of households had sold land to repay a debt, while about 3% of households had a child drop out of school specifically due to a loan, often to start working to help repayment.

The study, released in August, also found a spike in people increasing their borrowing to repay other loans. In 2012, 3.45% of loans went to repaying existing loans, which increased to 34.8% of loans in 2022.

Am Sam Ath, operations director at Licadho, called for urgent intervention from MFIs and the government to protect borrowers. But he said loan officers employed by MFIs were often perpetuating the problem.

Rather than approving loans for income-generating activities, these institutions were issuing loans for house repairs, medical expenses or repaying other loans.

And Cambodia is seeing increasing reports of credit officers resorting to intimidation or other unscrupulous tactics to compel borrowers to repay their debt, Am Sam Ath told VOA Khmer in January.

That month, the CMA released a study touting the “transformative impact” of microfinance loans.

Kaing Tongngy, a spokesperson for the association, said there were more than 2 million borrowers across the country, “so it is unavoidable that some clients were unable to pay.”

The CMA impact study, conducted by development research agency M-CRIL, found that 31% of the 3,200 microfinance borrowers surveyed experienced substantial economic benefit and life improvements, while 36% reported some improvement over the past five years.

And while nearly 6% of borrowers had reported selling some land over the past five years, 20% reported purchases of some land, according to the CMA report.

Licadho’s Am Sam Ath said the CMA study “focused mostly on positive work of MFIs, but little on negatives.” He and other like-minded advocates want to see “solutions and improvements in the sector.”

The growth of MFIs has been staggering. Starting with about 50,000 clients and a total loan portfolio of more than $3 million in 1995, the microfinance sector provided loans to 2.1 million households with a portfolio of $9.4 billion by the end of 2022, according to the CMA. That accounts for more than 30% of Cambodia’s estimated GDP of $29.96 billion.

MFIs often tout the relatively high repayment rates as proof of the industry’s health. The National Bank of Cambodia in 2022 reported a sectorwide non-performing loan rate of just 2.5%. But researchers from Cambodia and Singapore said an obsession with “portfolio quality” was masking the true cost to individual borrowers.

“These indicators hide how people are juggling debt from informal lenders to repay their loans. Consequently, claims about the social impact of microfinance are based on a flawed understanding of household borrowing practices,” said their report, released last year with a grant from the National University of Singapore.

“Lenders not only fail to measure the impact of their services, but they also have a conflict of interest in reporting on the abuses that their services have caused. So long as repayment rates are considered an indicator of success, then the risks associated with juggling debt are likely to increase,” it added.

According to a report by the National Bank of Cambodia, its officials have imposed fines or taken other administrative actions against MFIs that fail to follow existing regulations.

Cambodia’s microfinance industry is being investigated by the International Finance Corporation’s (IFC) watchdog’s Compliance Advisor Ombudsman (CAO), because of the reports of forced land sales and other human rights violations from advocacy organizations.

CAO is reviewing six of Cambodia’s top IFC-funded microfinance institutions including Amret, which issued Lun Sam Ath’s loan. It declined to comment on her case in an email to VOA on March 16.
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