Financial Times Europe - 13.11.2019

4 ★ FINANCIAL TIMES Wednesday13 November 2019

lawsuits for unfair trade practices. Rem-

ington’s promotional materials had

emphasised the military capabilities of

the Bushmaster XM15-E2S semi-auto-

matic rifle, a type of AR-15 used by

Lanza, thereby encouraging his behav-

iour, the families alleged.

“Despite evidence that rifles like the

XM15-E2S have become the weapon of

choice for mass shooters, [Remington’s]

advertising continued to exploit the fan-

tasy of an all-conquering lone gunman,”

the families said in a submission to the

Supreme Court last month.

The case was initially blocked by a

Connecticut district court, which found

the families did not have standing to

bring the lawsuit, before the state

supreme courtgave it the go-ahead n ai

4-3 decision in March.

Remington appealed against the Con-

necticut supreme court decision, argu-

ing that it would have dramatic conse-

quences on gunmakers.

“The impact on the firearms industry

of even a few courts following the Con-

necticut Supreme Court would be pro-

found,” the gunmaker said in its appeal

to the US Supreme Court in August.

avoid accountability,” attorney Josh

Koskoff aid in a statement.s

“We are ready to resume discovery

and proceed towards trial in order to

shed light on Remington’s profit-driven

strategy to expand the AR-15 market

and court high-risk users at the expense

of Americans’ safety,” he added.

A spokeswoman for Remington did

not immediatelyreply for comment.

The company is privately held, but

shares inAmerican Outdoor, a rival for-

merly known as Smith & Wesson, fell

2 per cent in morning trading.

The lawsuit has sought damages from

Remington despite a broad federal

exemption from liability Congress gave

gunmakers under the Protection of

Lawful Commerce in Arms Act. The

families have sued under a Connecticut

state law that allows personal injury

K A D H I M S H U B B E R— WASHINGTON

The US Supreme Court has refused to

block a landmark lawsuit brought by

families of Sandy Hook victims against

RemingtonArms,thegunmakerwhose

assault-style rifle was used in the 2012

massacre.

The courtyesterday declined to hear an

appeal by Remington against a Con-

necticut court decision that said a fed-

eral law granting gunmakers some

immunity from litigation could not

shield the company in this case.

Family members of victims of the

Sandy Hook school shooting, in which

20 children and seven adults were killed

by Adam Lanza, brought the lawsuit in

2014 alleging that Remington’s market-

ing of the rifle had inspired the killer.

The case could provide a template for

victims of US mass shootings to seek

compensation from gunmakers despite

a 2005 law that shields them from

responsibility for the misuse of their

weapons.

“The families are grateful that the

Supreme Court upheld precedent and

denied Remington’s latest attempt to

I N T E R N AT I O N A L

JA M E S P O L I T I —WASHINGTON

US president Donald Trump attacked
the Federal Reserve for failing to lower
interest rates below zero and defended
his protectionist trade policies ahead of
next year’s presidentialcampaign.
n remarks at the Economic Club ofI
New Yorkyesterday, Mr Trump said his
administration had “delivered on our
promises and exceeded our expecta-
tions” after nearly three years in office,
but blamed the US central bank for

restraining growth under his watch.

The US president, who has frequently

challenged the Fed’s independence by

demanding easier monetary policy, said

the US was at a “competitive disadvan-

tage” because it had not followed the

eurozone into the land of negative rates.

Although the Fed has cut interest

rates three times this year, after raising

them last year, it has since suggested a

pause in easing for the time being.

Mr Trump’s remarks came at a pivotal

moment in his presidency, on the eve of

public impeachment hearings over the

Ukraine scandal nd less than a yeara

from the 2020election. Mr Trump

wants to tout his economic prowess as a

key selling point in thecampaign, in a

bid to hold on to the swing voters who

propelled him to the White House in the

race against Hillary Clinton in 2016.

“We have ended the war on American

workers, we have stopped the assault on

American Industry, and we have

launched an economic boom the likes of

which we have never seen before,” Mr

Trump said.

Despite record highs in US stock mar-

kets, persistently low unemployment

and strong consumption, there have

been some warning signs forMr Trump

about the health of the economy. The

pace of growth has slowed throughout

the year, with both agricultural produc-

ers and manufacturers in the American

heartland bearing the brunt of the trade

wars and weakening global output.

This has exposed Mr Trump to criti-

cism from Democrats and rivals for the

presidency that his policies have back-

fired, failing to live up to their promise

of boosting the prospects of average

middle-class households.

Mr Trump’s more pugnacious, protec-

tionist approach to trade, particularly

with regards to China, has been a cor-

nerstone of his economic agenda from

the beginning of his presidency.

The US administration has placed tar-

iffs on $360bn of Chinese imports since

March 2018, and threatened to impose

levies on a further $156bn in December.

Mr Trump added he had taken the

“toughest ever action” against China,

compared with previous administra-

tions, which he has frequently criticised

for being too soft on Beijing.

Critics have pointed out that despite

the tariffs, the US has failed to secure

major concessions from China on the

toughest trade issues like industrial sub-

sidies andtheft of intellectual property.

Andy Green, f the Center for Ameri-o

can Progress, a left-leaning think-tank,

said: “This laughable cheerleading in

front of Wall Street pretty much sums

up Trump’s economic agenda: no real

results for the country at large, but

delivering for the titans of Wall Street

and corporate monopolies.”

Notebook age 8p

Martin Wolf age 9p

J U D E W E B B E R— MEXICO CITY

The murder of nine members of a US
Mormon community by drug cartel
gunmen in Mexico has added to growing
alarm in the US at rising violence on its
southern border.
Thehorrific attack on unarmed
mothers and children has undercut
Mexican president Andrés Manuel
López Obrador’s claim to be transform-
ing a country that has been wracked by
13 years of drug wars, in which more
than 200,000 people have been killed.
The government has vowed to end the
corruption and impunity that has
allowed drug violence to spiral, but has
backed away from the military-style
confrontations favoured by its prede-
cessors — a strategy that Mr López
Obrador has dubbed “hugs not bullets”.
Even after decades of drug violence,
the murder of three women and six chil-
dren, all dual US-Mexican citizens, has
struck a nerve on both sides of the bor-
der. It has led to calls from US Republi-
can senators Tom Cotton and Josh Haw-
ley for Washington to “take matters into
our own hands” and toimpose sanctions
to curb drug trafficking.
It follows an incident that made global
headlines three weeks earlier, in which a
bungledeffort to arrest Ovidio Guzmán,
the son of jailed drug lord Joaquín “El
Chapo” Guzmán, sparked a cartel siege
of the Sinaloa state capital Culiacán.
Experts say the Mexican president’s
obstinacy in the face of emboldened car-
tels could backfire.
“There is real alarm in US policy cir-
cles about what is happening in Mexico
and the fact that there doesn’t seem to
be any plan or strategy about how to
address security,” said David Shirk at
the University of San Diego, whose work
includes the university’s Justice in Mex-
ico project aimed at helping improve the
country’s rule of law.
Alejandro Poiré, who served for a year
as interior minister under former Mexi-
can president Felipe Calderón, said that
unless Mr López Obrador changed strat-
egy, “it will be hard to have any signifi-
cant advance in diminishing violence
and improving security”.
He added: “If he doesn’t, it won’t just
be more of the same, it’ll be much worse
of much more.”

The violence also risks convincing US

opponents of therevamped Nafta reef

trade agreement, known as USMCA, to

delay its ratification, and scare off

investment at a time when economic

growth has sunk to zero during Mr

López Obrador’s 11 months in office.

“It’s another pretext for not moving

ahead with USMCA,” said Duncan

Wood, head of the Mexico Institute at

the Wilson Center.

One former military commander was

scathing: “All the people who were well

trained are out of the loop. The conse-

quence is 36,000 Mexicans killed in his

government. He hasn’t saved any lives,

the cartels are stronger.” Jorge Torres

Aguilar, head of the American Chamber

of Commerce of Mexico said: “I think

the strategy is well intentioned... but

changes need to be made on the basis of

the new reality.”

Security and the rule of law are the top

concern of his organisation’s 1,450 cor-

porate members, almost four out of 10

of whichspend more than 5 per cent of

their operating budgets on security.

Businesses tend to see cartel violence

as “manageable risk”, according to

James Bosworth, founder of consul-

tancy Hxagon. “ ‘Hugs not bullets’ is a

cute slogan, but everyone agrees what’s

needed is police and judicial reform and

to be able to prosecute with impunity.”

Mr López Obrador has changed tack

before, having performed a U-turn on

his initial broad welcome to Central

American migrants after pressure from

US president Donald Trump. But the

closest he has come to revising his secu-

rity strategy is to acknowledge that the

places where the National Guard has

been deployed could be reviewed.

Mr López Obrador ill have to “pickw

his battles”, said Mr Bosworth, who rec-

ommended concentrating on Tijuana

on the Californian border, the central

state of Guanajuato and the western

state of Michoacán, which have seen

particular surges in violence.

There is urgency on both sides. While

Mr Trump wants preventing the flow of

synthetic drug fentanyl to be the focus,

Mexico wants Washington to do more to

halt the southbound flow of weapons.

“These last two incidents, while high

profile, are not one-offs,” noted Antonio

Garza, a former US ambassador to Mex-

ico. The government as “losing time.w

Very empowered groups can make their

demands very real and very known.”

The armed forces also appear to be

not as united behind Mr López Obrador

as he likes to project. La Jornada news-

paper leaked an unusually critical

closed-door speech by General Carlos

Demetrio Gaytán Ochoa in which he

said: “We are worried by Mexico today.

We feel aggrieved as Mexicans and

offended as soldiers.”

What could rigger a change ist Mr

López Obrador’sapproval ratings,

which havefallen one point a week since

the debacle in Culiacán and now stand

at 59.8 per cent, according to pollster

Mitofsky. A worsening economy is

another damper. The president will

only revise course “when the impact on

public opinion is greater than his stub-

bornness”, Mr Wood said.

C H LO E C O R N I S H —BEIRUT

Banking restrictions in Lebanon are

exacerbating a scarcity of foreign cur-

rency, leading to shortages of fuel and

vital medical supplies as the country’s

economicturmoildeepens.

Petrol stations closed across the country

at the weekend, while medical profes-

sionals said hospitals could not access

adequate US dollars to replenishstocks.

One of the world’s most indebted

countries, Lebanon has been grappling

with an economic crisis for months,

aggravated in recent weeks by nation-

wideprotests that forced thegovern-

ment’s resignation nd meant somea

lenders closed for almost a fortnight.

Lebanon’s economy has long been

dependent on a robust flow of dollars

intoits banking sector. That supply has

diminished as economic activity has

slowed and remittances from Lebanon’s

diaspora dwindled. To bolster itsforeign

exchange reserves, the central bank has

increased interest rates on dollar depos-

its, soaking up more foreign currency

from the commercial sector and putting

more pressure on the Lebanese pound.

The local currency has weakened

against the dollar by around 19 per cent

on the black market, pushing up prices

in shops and stoking fears that people’s

savings could be wiped out.

RiadSalame, central bank governor,

on Monday insisteddeposits were safe

and said thebank would not enforce

official capital controls. But commercial

lenders haveintroducedhaphazard

restrictions.Someare controlling how

much money a customercan send over-

seas, others are limiting the amount of

dollars that can be withdrawn in cash.

A manager at achemicals company

said his bank would not allow him to

transfer dollars abroad to pay uppliers,s

while a paint shop owner said he had

raisedprices after his bank refused to

sell dollars at the official exchange rate.

The chaotic situation was undermin-

ing confidence in the banking system,

experts said. “[The restrictions are] a

very inferior form of capital controls,”

said Farouk Soussa, Middle East econo-

mist at Goldman Sachs. He added that

the opaque restrictions had raised sus-

picion that some of Lebanon’s richest

people might have cut deals to move

money out, while smaller depositors

were being told their funds were stuck.

The restrictions haveprompted angry

outbursts from customers, leading the

bank workers’ union to call for a strike.

The dollar shortage is particularly

acute for hospitals, according to Sulei-

man Haroun, president of Lebanon’s

private hospitals syndicate, who said

the country had only abouta month of

medical supplies. In response, the cen-

tral bankagreed to extend a facility that

guarantees access to dollars for certain

products to include medical equipment.

Other businesses are also suffering.

Although the central bank last month

guaranteed the supply of dollars for

fuel, a person close to the fuel industry

said banks had stopped opening letters

of credit for fuel importers. Without let-

ters of credit — used to guarantee pay-

ments between buyers and sellers when

fuel is in transit —shipments are halted.

With many dry petrol stations

already closed, Lebanon’s fuel import-

ers’ syndicate said the rest could follow

as their supplies ran out.

A N J L I R AVA L
SENIOR ENERGY CORRESPONDENT

Carbon emissions are set to rise up to
2040 even if governments meet exist-
ing environmental targets,in a stark
reminder of the drastic changes need-
edtoalleviatetheclimatecrisis.

In its annual energy outlookyesterday,
the International Energy Agency said a
rapidfall in emissions would require
“significantly more ambitious policy
action” in favour of efficiency and clean
energy technologies than those being
planned. Until then, the impact of an ex-
panding world economy and growing
populations on energy demand would
continue to outweigh the push into ren-
ewables and lower carbon technologies.
Fatih Birol, IEA executive director,
said: “The world needs a grand coalition
encompassing governments, compan-
ies, investors, and everyone committed
to tackling the climate challenge. In the
absence of this, the chances of reaching
climate goals will be very slim.”
The report noted the world’s reliance
on fossil fuels remained “stubbornly
high”, with a “gap between expectations

of fast, renewables-driven energy tran-

sitions and the reality of today’s energy

systems”. Energy use accounts for

almost all global carbon dioxide emiss-

ions and about two-thirds of all green-

house gases.

Mr Birol added that current govern-

ment policies would not bring the world

in line with the Paris climate goals of

limiting temperature rises to well below

2C or even a more aggressive 1.5C target

to prevent the worstof climate change.

Shouldcountries stick with current

policies under a “business-as-usual”

scenario, carbon emissions from energy

would amount to 41.3 gigatonnes by

2040. Yet even if policymakers followed
      through on climate measures already
      announced, the IEA aid this figures
      would only fall to 35.6gt.
      Carbon emissions, mostly caused by

burning hydrocarbons such as oil and

coal, trap heat in the atmosphere, which

leads to climate change. These emis-

sions grew 44 per cent between 2000-

2018 to 33.2gt. In the same period, glo-

bal energy demand, of which fossil fuels

made up 80 per cent, rose 42 per cent.

The IEA also modelled a “sustainable

development” scenario of stricter ener-

gy efficient policies and lower energy

demand. While emissions would then

fall to 15.8gt, critics have said it does not

go far enough in mapping the deep cuts

needed to limit warming to 1.5C.

Although theannual survey is consid-

ered the definitive assessment of the

world’s energy sector, its findings have

beenscrutinised by critics who have

deemed them too fossil-fuel friendly.

Even under its most radical scenario,

fossil fuels would still make up nearly

60 per cent of the world’s energy mix.

Joeri Rogelj, alecturer at Imperial Col-

lege London, said even this“leads the

world down a dangerous climate action

cul-de-sac, which ends in 2050 with a

world warming beyond a level science

considers compatible with sustainable

development of poor populations”.

US politics

Trump hits at Fed in call for negative rates

President seeks to bolster

his economic reputation

before 2020 campaign

Middle East

Lebanon

economic

crisis worsens

with dollar

shortage

Cartel killings. ecurity policyS

Violence strains Mexico’s relationship with US

López Obrador under

pressure to mount tougher

response to drug cartels

Family

members gather

at the site of the

recent attack on

US Mormon

women and

children. Police

released footage

of the arrest of

alleged drug

trafficker Ovidio

Guzmán. He was

later released as

officers were

outnumbered

Manuel Velasquez/Getty

‘ “Hugs not

bullets” is a

cute slogan,

but

everyone

agrees

what’s

needed is

police and

judicial

reform’

IEA report

‘Ambitious action’ urged to tackle climate crisis

School shooting

Sandy Hook families win gunmaker court case

A police officer in

the Connecticut

courtroom holds

the same make and

model gun used in

the shooting

‘The world needs a grand

coalition... committed to

tackling climate challenge’

Fatih Birol, IEA