Business

By Devayani Sathyan

BENGALURU (Reuters) – Australia’s central bank will raise rates by a modest 25 basis points for a second straight meeting in June, still opting to move more slowly than most of its peers in a campaign to bring down soaring inflation, a Reuters poll of economists found.

With the economy recovering smartly from the pandemic and inflation at a 20-year high of 5.1%, well above a 2-3% target range, the Reserve Bank of Australia has only recently changed its tune on the need to raise interest rates.

The median forecast in the May 26-June 2 Reuters poll of 35 economists showed the RBA will lift its official cash rate by another 25 basis points to 0.60% from the current 0.35% at its June 7 meeting.

Nearly two-thirds of respondents, 22 of 35, forecast rates at 0.60%, while 11 predicted a 40 basis point increase to 0.75%, where rates were before the pandemic. Only one expected a 50 basis point hike to 0.85% and one other expected no move.

But at a time when many of its peers, including the Reserve Bank of New Zealand, the Bank of Canada and the U.S. Federal Reserve have already delivered more than one 50 basis point rate increase, some analysts say the RBA is moving too slowly.

“The question worth pondering is this: Does it make sense to raise rates in 25 basis point increments when the inflation rate is so far above target, and so far above the level of policy rates? Or does it make more sense to front-run the early tightening?” asked Rob Carnell, chief economist for Asia-Pacific at ING.

In the past, the RBA has cited relatively low wage inflation, which has lagged overall inflation, as a justification for not joining the global tightening cycle. But that argument no longer holds for some.

“Labour market indicators suggest that 25 basis point rate hikes may not be enough to bring inflation swiftly back within the RBA’s target range,” said Carnell.

Among major local banks, CBA and NAB are expecting a 25 basis point hike on Tuesday while ANZ and Westpac are looking for 40 basis points.

Interest rate futures are fully priced for 0.60% at the meeting, and imply rates could reach 2.75% by Christmas, well ahead of expectations in the poll. [RBAWATCH]

Still, economists do expect the RBA to pick up the pace a bit, doubling rates by end-September to at least 1.25%. Seven of 35 economists forecast rates at 1.25%, nine forecast 1.35% and seven expected it to reach 1.50% or higher by then.

But economists were exceptionally split on where rates will end 2022, with a range of 1.00%-2.60%.

Nearly 60% of respondents, 20 of 35, expected rates at 1.75% or higher by end-year, including eight saying 1.75%, two at 1.85% and 10 at 2.00% or more.

“The market has never got this far ahead of RBA rhetoric. That doesn’t mean market pricing is wrong, but it is another indication of the disconnect with the RBA,” said David Plank, head of Australian economics at ANZ who expects the cash rate to reach 2.50% by the middle of next year.

That is well below current market pricing of 3.00%.

“Of course the market has been proven right in its long-held conviction the RBA would be tightening in 2022 rather than holding off until 2024,” he added.

(Reporting and polling by Devayani Sathyan; Editing by Ross Finley, Kirsten Donovan)

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(Reuters) – Calling high inflation the Federal Reserve’s “number one challenge,” Vice Chair Lael Brainard on Thursday said she backs at least a couple more half-point interest rate hikes, with more on tap if price pressures fail to cool.

“Market pricing for 50 bps potentially in June and July…seems like a reasonable path,” Brainard told CNBC. September is less clear, she said. “But if we don’t see the kind of  deceleration in monthly inflation prints…then it might well be appropriate to have another meeting where we proceed at the same pace.”

The Fed has raised interest rates by three quarters of a percentage point this year, and most Fed policymakers back raising interest rates another half of a percentage point at each of their next two meetings. Atlanta Fed President Raphael Bostic has suggested that by September the Fed ought to pause to assess the state of the economy before tightening policy further.

Brainard said that’s unlikely.

“Right now it’s very hard to see the case for a pause,” she told CNBC. “We’ve still got a lot of work to do to get inflation down to our 2% target.”

Brainard is typically seen as among the Fed’s more dovish members, but in her new role as the Fed’s vice chair – she was sworn in last month – her remarks are better seen as conveying the view of the core Fed leadership.

Policymakers next meet in mid-June, and this week is the last where they are free to speak publicly before their regular pre-meeting communications blackout.

“We are certainly going to do what is necessary to bring inflation back down,” Brainard said on Thursday. “That’s our number one challenge right now. We are starting from a position of strength, the economy has a lot of momentum.”

(Reporting by Ann Saphir and Lindsay Dunsmuir;Editing by Chizu Nomiyama)

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Forbes Under 30 Summit in Jerusalem Brings Together Israeli, Palestinian Entrepreneurs

400 young leaders from Europe, the Middle East, and Africa share ideas and challenges

The annual Forbes Under 30 Summit EMEA (Europe, the Middle East, and Africa) was held this week in Israel for the fifth time.

The four-day summit gathered over 400 top young entrepreneurs from 34 countries, including most of those on the Forbes Under 30 List, to learn, connect and create in Tel Aviv and Jerusalem.

The event also hosted many Israeli and Palestinian entrepreneurs, companies, and projects to share ideas, build bridges, and work to understand each other.

Thomas Nides, US ambassador to Israel, said at the event, “The fact that many of you, who are successful young entrepreneurs, have come here to work with others and share your wisdom about your success, that is cool.”

He added that the only way for a two-state solution to work is to make sure that the Palestinians, from the West Bank, east Jerusalem, and Gaza, have a sense of connection as entrepreneurs. “If we lose that, we lose everything,” Nides said.

Dr. Erel Margalit, founder and executive chairman of the Jerusalem Venture Partners international venture capital firm and of the Margalit Startup City creative campus, told The Media Line, “The significance of today’s event is that we have both Israeli and Palestinian entrepreneurs working together.”

Jerusalem is seeing the region’s next chapter becoming a reality, he said.

We are doing this in Jerusalem, where you have many Arabs and Jews, Margalit continued. “When this is the city of diversity, when you have so many religious and secular people who are working together to open the next chapter in this region from the city of Jerusalem, that’s a big deal.”

Tomer Cohen is co-founder and co-CEO of Tech 2 Peace, which works to connect young Palestinian and Israeli leaders through high-tech, dialogue, and entrepreneurship training.

The group has been doing just that for more than three and a half years, he told The Media Line. “We have over 350 Palestinian and Israeli alumni, many of them working together in various projects,” he added.

The seminars and events that Tech 2 Peace organizes change young Israelis’ and Palestinians’ perspectives, Cohen said. They teach them that everyone can be an entrepreneur and that they can see the people on the other side as potential business partners.

Tech 2 Peace’s goal is to have 9,500 Israeli and Palestinian alumni by 2025.

If the NGO achieves this, said Cohen, “we will have enough people in Ramallah, Bethlehem, Tel Aviv, and the various peripheral cities who will be invested in working with the other side and promoting better social and economic change by understanding the other side and working with it.”

Margalit said that for the last 20 years, “we have been working with the Arab community on educational projects with entrepreneurs. This is the place for cooperation; we have been doing this quietly.”

He said he doesn’t deny the problematic events, but that underneath, “there is a lot of cooperation, and many of us here in Jerusalem see the next chapter already happening.”

Zada Haj, CEO and co-founder of Abu Dhabi-based DANA Ventures, a startup accelerator, and an alumna of Tech 2 Peace, also attended the summit. She is a Palestinian Israeli who founded a venture capital company together with a Jewish Israeli and a Jewish American woman. DANA Ventures acts as an accelerator for women-led startups in the fields of agrotech, food tech, circular economy, and waste management.

“We focus on the sustainability aspect and a positive impact for the environment, and the MENA region where we help startups to scale up in the Middle East and North Africa and emerging markets,” she said.

Haj added that the company has startups in Gaza, Israel, the United Arab Emirates, Morocco, and Saudi Arabia.

The region, women’s leadership, and climate challenges, the issues where Dana Ventures is trying to make a difference, need strong companies to get that done, she said.

We believe in rhinos, not unicorns, Haj said, “because unicorns don’t exist, and in our region and our climate change crisis, we need very strong creatures and businesses, and this is what we believe in.”

“Rhino” is a British slang term for money; in business, a “unicorn” is a privately held startup company valued at over $1 billion.

She added that political conflicts won’t stop the company from continuing to unite entrepreneurs from different backgrounds.

DANA Ventures began working with its first cohort last May, when there was the 11-day conflict between Israel and Gaza, she said.

To illustrate her point, Haj recalled, “One of the startups was from Gaza, and during the interview with them, Shirley [one of DANA Venture’s founders in Israel] told them: ‘Sorry, I have noise behind me.’ The other guy answered, ‘Sorry I have rockets behind me,’ and two days later, they signed with us.

“This shows that nothing will stop us from creating mutual collaboration and ventures and scaling up for the better of everyone,” Haj said.

Lina Zahayka, 25, is co-founder and CEO of Greeners, a Palestinian startup based in Jenin, in the West Bank, that uses carbon dioxide emissions to create eco-friendly sustainable fertilizers through a patented formula, in an effort to reshape the agriculture sector.

The Israeli-Palestinian conflict sometimes creates obstacles, Zahayka told The Media Line. She mentioned the differences in culture and language, the logistics of getting in and out of the West Bank, and the political views that sometimes get in the way.

She added, however, that the company has two Israeli mentors who help to overcome these issues.

Sometimes “we can’t prevent these political conflicts from coming out at the table. It happens here and there, but we’re not having any problems with it,” Zahayka said.

Margalit said that Saudi Arabia is “the next big thing in the region.”

Israeli companies are already making their presence known in the kingdom, he said.

There are companies there selling cybersecurity products to banks, health care IT products to allow governments to better deal with the COVID-19 pandemic, water treatment facilities, alternate protein agriculture, and fintech products, Margalit noted.

The fact that Israel is working together with locals in a variety of Middle Eastern cities is creating a foundation for the next, diplomatic, phase, he said.

He said he likes it when business comes first, “when entrepreneurs come together, and the young entrepreneurs who are under 30, the nice thing about them, is they don’t see any obstacles, they think they can connect, and just like entrepreneurs around the world can connect, entrepreneurs in the region can connect and make a big difference,” Margalit said.

It prepares the ground for the politicians, he said.

Randall Lane, Forbes chief content officer and responsible for the Forbes Under 30 Summit EMEA, explained to The Media Line why he has chosen to hold it in Israel over and over again.

Obviously, he said, “the Startup Nation, Israel, is such an unbelievable country in terms of the startup energy, in terms of entrepreneurial energy.”

Therefore, Lane continued, “for several years we’ve been bringing the top young entrepreneurs from the Forbes Under 30 List to Tel Aviv and Jerusalem to just bathe in the entrepreneurial culture, and the history.”

Israel is a very good place to bring people to think about how to be even more entrepreneurial and to understand the challenges that entrepreneurs can help to create solutions for, he said.

“We’re trying to inspire people to go back and be more entrepreneurial,” Lane said. “The Startup Nation has a lot to teach the world.”

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WASHINGTON (AP) — China, the world’s top emitter of carbon dioxide that causes global warming, has seen a notable dip in its emissions over the past three quarters — but it’s not clear how long the drop will continue.

A new analysis of China’s economic data shows that carbon emissions dropped 1.4% in the first three months of the year, compared to the prior year, making it the third consecutive quarter to show a drop — and the longest sustained dip in a decade.

The downward trend began last year and accelerated over the winter. The decline continued but was milder this spring.

It’s not clear whether China’s emissions will continue to fall this year. Over the past decade, five shorter dips were followed by rebounding emissions.

China’s recent emissions decline was driven by decreased output in cement, steel and power industries, as well as COVID lockdown measures, according to an analysis by Lauri Myllyvirta, a Finland-based climate and energy analyst at the Centre for Research on Energy and Clean Air.

“Steel and cement are China’s second and third largest emitting sectors, and the demand for both sectors is largely driven by construction activity,” but policy changes on real estate lending and debt have at least temporarily depressed the construction sector, Myllyvirta wrote in an analysis for Carbon Brief.

Whether China meets its long-term goal to become carbon neutral by 2060 depends in large part on what happens in its power sector.

And that depends upon how quickly the world’s second largest economy can move away from coal.

China’s leaders have recently doubled-down on plans to promote coal-fired power, calling for coal production capacity to increase by 300 million tons this year, or 7% over last year.

Li Shuo, a senior global policy adviser for Greenpeace, told the Associated Press in April that economic concerns, including those related to China’s zero-COVID policy, meant that China’s leaders were prioritizing energy security over moving away from fossil fuels, at least in the short-term.

“This mentality of ensuring energy security has become dominant, trumping carbon neutrality,” he said.

China is currently the world’s largest carbon emitter, although other countries, such as the United States, have contributed a greater share of historic emissions.

China’s carbon emissions increased by 750 megatonnes over the two-year period between 2019 and 2021, driving the global rebound in carbon emissions after the first phase of pandemic, according to the nonprofit Paris-based International Energy Agency.

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The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Department of Science Education. The AP is solely responsible for all content.

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EU To Boycott 90% of Russian Oil by End of Year

Lebanon, Yemen especially vulnerable to higher energy prices produced by sanctions, experts say

European Union leaders in Brussels agreed on Monday night to ban the seaborne import of Russian oil – about two-thirds of the total − by the end of 2022. And while landlocked Hungary, Slovakia, and the Czech Republic will continue to receive Russian oil via the Druzhba pipeline, Germany and Poland have pledged to voluntarily forgo it, bringing the total cut in imports to about 90%.

This is the sixth round of sanctions imposed by Europe on the Russian Federation since the war in Ukraine began.

Talks on an oil boycott had been taking place since the beginning of May. However, they were stalled because Hungary wanted to continue to buy Russian oil.

The sanctions are expected to cause global oil prices to rise.

In the Middle East, some countries could suffer collateral damage; others will benefit.

Nader Itayim, Dubai-based Mideast Gulf editor at Argus Media, told The Media Line the countries that will most benefit are the region’s oil exporters.

“Saudi Arabia, the UAE, Kuwait, Iraq, Oman, and even Iran despite the sanctions will all be benefiting from $100+/barrel oil,” he said.

Itayim explained that higher prices translate into higher state revenues, which first will help these countries to alleviate any short-to-medium-term budgetary issues that they may be facing, possibly because of COVID-19, and second finance their plans to diversify their economies away from hydrocarbons.

The region’s oil importers will suffer. He cited Lebanon, Jordan, and even Israel.

For them, he said, “higher oil prices translate into higher import costs for the state, which put pressure on state finances and foreign exchange reserves.”

Robin Mills, CEO of Qamar Energy and author of The Myth of the Oil Crisis, explained to The Media Line that while the increase in oil prices benefits exporters and hurts importers, there are other factors that are important to consider.

While oil-importing countries such as Egypt, Jordan, and Lebanon suffer from higher prices, they may to some extent recover from higher remittances from their citizens working in oil-exporting states and from aid from oil-exporting governments, he said.

On the other hand, he continued, “the non-oil sector in oil-exporter [countries] is also negatively affected by higher prices, especially in countries where oil price rises are passed on to domestic fuel prices, such as the United Arab Emirates.”

The negative effects are reflected in fuel shortages, higher fuel prices, and general inflation, Mills explained. “This can be increased when governments have to cut back on fuel subsidies,” he noted.

So far, he continued, “we have not seen much of that in the region, but it happened in previous situations of rising food and fuel prices.”

For now, it has mostly affected Lebanon, but Egyptians and Iranians could also suffer if they have to reduce subsidies, Mills said.

Mohammed al-Qadhi, a Yemeni political adviser at the Geneva-based Centre for Humanitarian Dialogue, told The Media Line that Yemen is one of the countries most hurt by rising oil prices.

His country is already harshly affected by the Ukraine war due to the lack of wheat exports.

Concerning the high oil prices, Qadhi added, Yemen will be badly hurt because it imports crude oil for the local market and for power stations.

Yemen is normally an oil producer, he explained. However, because of the civil war that began in 2014, it halted production.

Now with the truce, Qadhi continued, “only a few companies resumed their production of oil, but it is not that much and … it will be shipped to sell it outside of Yemen.”

Yemenis are suffering a great deal because of the price of fuel, which is already very high, he said.

This, he explained, has resulted in a black market all over the country, especially in the areas under the control of the Houthis. “This black market is generating millions according to international organizations,” Qadhi said.

Already now, before the latest jump in oil prices is felt, people and vehicles wait in long lines to get gasoline, he said. This is happening both in the Houthi-controlled areas and in Aden, the headquarters of the internationally recognized interim government.

“Yemen is already facing a lot of problems, and if oil prices rise more, it is going to face more problems,” Qadhi said.

Mills said governments could implement policies to reduce people’s suffering from increases in the cost of energy.

“They can phase in subsidy reductions, offer other support to lower-income citizens, and improve non-oil options,” he said.

Qadhi, however, is not optimistic about the Yemeni government’s ability to act.

He described the Yemeni government as “toothless” when it comes to alleviating the effects of higher oil prices.

“It is not capable of doing anything,” he said. “They are depending on the Saudis for fuel in the gas stations, and we don’t know how much longer they are going to aid Yemen,” Qadhi said.

Itayim said the answer is for governments to plan and think ahead.

“In a word: planning,” he said. In the past, he explained, “particularly in some GCC [Gulf Cooperation Council] countries, you would see clear shifts in policy between times of boom [high oil prices] and bust [lower prices].”

In boom times, Itayim added, “you’d see governments regularly implement public sector wage hikes and give generous handouts to the people, instead of diversifying and reinvesting in the economy, while in times of bust, public spending would really be scaled back.

“I think those days are behind us now,” he noted.

Itayim believes that governments in energy exporter countries will continue to focus on strengthening their economies and balance sheets, to make sure they are better prepared for any future price falls.

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BERLIN (AP) — Deutsche Bank subsidiary DWS said Wednesday that its chief executive is resigning, hours after authorities raided its offices as part of a probe into claims that the company exaggerated the sustainable credentials of some of the financial products.

CEO Asoka Woehrmann is set to step down after the company’s annual general meeting on June 9, DWS said. He will be succeeded by Stefan Hoops, who currently oversees Deutsche Bank’s corporate and commercial client activities.

In a statement, Woehrmann said DWS was profitable and stable despite difficult market conditions.

“At the same time, the allegations made against DWS and myself in past months have become a burden for the company, as well as for my family and me,” he was quoted as saying. “In order to protect the institution and those closest to me, I would like to clear the way for a fresh start.”

Some 50 investigators searched the offices of DWS and Deutsche Bank on Tuesday, Frankfurt prosecutors said.

The raids were triggered by a former manager in charge of sustainability, who claimed that DWS had engaged in “greenwashing” by exaggerating the environmental and climate credentials of certain funds it sold.

Prosecutors said initial investigations showed there were sufficient indications that environmental, social, and governance criteria were not considered in a majority of the funds featured in the company’s sales brochures.

Deutsche Bank said Tuesday that the actions taken by prosecutors were “directed against unknown people in connection with greenwashing allegations against DWS.”

“DWS said that they have continuously cooperated fully with all relevant regulators and authorities on this matter and will continue to do so,” the bank said Tuesday.

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(Corrects to fiscal 2023 from fiscal 2022 in paragraph 2)

(Reuters) -Michael Kors owner Capri Holdings Ltd raised its full-year profit forecast on Wednesday, signaling robust demand for its luxury goods as higher-income consumers return to their old shopping routines.

The company forecast fiscal 2023 profit of about $6.85 per share, compared with its prior estimate of about $6.60 per share.

(Reporting by Uday Sampath in Bengaluru; Editing by Amy Caren Daniel)

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By Tom Sims, Frank Siebelt and Paul Carrel

FRANKFURT (Reuters) -The chief executive of top German asset manager DWS will step down next week, he said on Wednesday, a day after raids by prosecutors over allegations that the company misled investors about “green” investments.

The raids and departure of DWS CEO Asoka Woehrmann mark another setback for Deutsche Bank, DWS’s majority owner, which has been trying to move on from regulatory breaches, including money laundering and securities misselling, leading to billions in fines.

DWS has been dogged by the accusations for months, prompting German prosecutors to conduct the raids on DWS and the headquarters of Deutsche Bank on Tuesday.

German and U.S. officials have been investigating reports and a whistleblower’s allegations that DWS had exaggerated the green credentials of investments it sold – a practice known as greenwashing. DWS has repeatedly denied that it misled investors.

The management change had been in the works for some time but was ultimately made at meetings late on Tuesday in the wake of the raids, a person with direct knowledge of the matter said.

Woehrmann, told employees in a memo that it was a joy to see DWS flourish but that “allegations …, however unfounded or undefendable, have left a mark”.

“To quote Charles Dickens: it was the best of times, it was the worst of times,” he said in the memo, which was seen by Reuters.

Deutsche Bank, which retained majority ownership of DWS after its initial public offering, has marketed itself as bank companies can turn to as they seek a greener future.

UNCERTAINTY

On Tuesday German prosecutors said that “sufficient factual evidence has emerged” to show that environmental, social and governance (ESG) factors were taken into account in a minority of investments “but were not taken into account at all in a large number of investments”, contrary to statements in DWS fund sales prospectuses.

The U.S. Securities and Exchange Commission and German financial watchdog BaFin last year launched separate investigations into the whistleblower’s allegations. The whistleblower, a former head of sustainability at DWS, had said the company overstated how it used sustainable investing criteria to manage investments.

In February, Deutsche Bank agreed with the U.S. Department of Justice to extend the stay of a special monitor at the bank after it failed to report allegations involving DWS in a timely manner.

Shares in DWS have slumped 26% since the SEC and BaFin investigations were made public in August last year. They were down about 7% midday on Wednesday.

The accusations show “greenwashing is not a trivial offence,” said Magdalena Senn of the German consumer advocacy group Finanzwende.

“The raid and the resignation will have a signal effect for other asset managers,” she said.

Credit Suisse analysts said Woehrmann’s departure was a disappointment because he successfully implemented reform and turnaround at DWS.

“We see the change of leadership heralding a period of uncertainty for DWS’ strategy – and could even raise questions over its future as an independent asset management company,” Credit Suisse said.

DWS and Deutsche Bank on Tuesday said that the asset manager had cooperated with regulators and authorities in the past and would continue to do so.

UNDER PRESSURE

Woehrmann has been under pressure on multiple fronts since the greenwashing allegations broke.

Deutsche Bank conducted an internal investigation into Woehrmann’s possible private email usage for business purposes, and the European Central Bank also looked into corporate governance issues surrounding him.

He has also received threatening letters, including one in December with red crosshairs, white powder and a racial slur.

When asked about the allegations in a DWS earnings call with analysts, Woehrmann said he emphatically rejected all the allegations.

Deutsche Bank CEO Christian Sewing publicly backed Woehrmann in January, saying he had done a wonderful job.

Stefan Hoops, who has been overseeing Deutsche Bank’s corporate banking division since 2019, will replace Woehrmann from June 10, the bank said.

Hoops has not been involved in asset management over the past two decades, though Deutsche Bank said he was “a proven capital markets specialist”.

Woehrmann’s resignation takes effect on June 9, the day of its annual general meeting.

(Reporting by Paul Carrel, Tom Sims and Frank Siebelt; Additional reporting by Anna PruchnickaEditing by Bradley Perrett, David Goodman, Jane Merriman and Sabine Wollrab)

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By David Shepardson

WASHINGTON (Reuters) – The U.S. Federal Aviation Administration (FAA) will grant a shorter regulatory compliance program extension to Boeing than planemaker sought, so it can ensure the company implements “required improvements,” the agency said on Tuesday.

The FAA opted to renew Boeing’s Organization Designation Authorization (ODA) program for three years rather than the five years Boeing had asked for.

Boeing did not immediately comment.

The FAA, which delegates some tasks to Boeing under a long-standing program, said Tuesday that “during the three-year period, the FAA will verify that Boeing completes required improvements” to the program including ensuring employees can “act without interference by company officials.”

In December, a U.S. Senate report said the FAA must do a better job overseeing Boeing and the certification of new airplanes, as well as review allegations raised by whistleblowers.

Congress passed sweeping reforms in December 2020 to how the FAA certifies new airplanes after two fatal 737 MAX crashes killed 346 people and led to the plane’s 20-month grounding.

“FAA’s oversight of the certification process has eroded,” the report found, saying the agency “over time, increasingly delegated away its authority” to Boeing and others.

Then FAA Administrator Steve Dickson told Congress late last year the agency was delegating fewer tasks to Boeing.

The FAA said Tuesday the shorter renewal was in part “due to a number of items that must be tracked and completed during that timeframe.” The FAA letter said it expects “the next three years should provide ample time for these improvement activities to be completed.”

The FAA “will also track the timely implementation of corrective actions, updates to the Boeing ODA Procedures Manual, self-audits and the effective implementation of the Boeing Safety Management System.”

The FAA continues to inspect all Boeing 737 MAXs to determine airworthiness and will also inspect all 787 Dreamliners once Boeing addresses quality issues and deliveries resume.

In November, the acting head of the FAA office that oversees Boeing told the company that some appointees performing work for FAA did not have required expertise and were not meeting FAA expectations.

(Reporting by David Shepardson; Editing by Chris Reese and Aurora Ellis)

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By Andrew Chung

(Reuters) -The U.S. Supreme Court on Tuesday blocked a Texas law that bars large social media companies from banning or censoring users based on “viewpoint,” siding with two technology industry groups that have argued that the Republican-backed measure would turn platforms into “havens of the vilest expression imaginable.”

The justices, in a 5-4 decision, granted a request by NetChoice and the Computer & Communications Industry Association, which count Facebook, Twitter and YouTube as members, to block the law while litigation continues after a lower court on May 11 let it go into effect.

The industry groups sued to try to block the law, challenging it as a violation of the free speech rights of companies, including to editorial discretion on their platforms, under the U.S. Constitution’s First Amendment.

Conservative Justices Samuel Alito, Clarence Thomas and Neil Gorsuch issued a written dissent, saying that it is “not at all obvious how our existing precedents, which predate the age of the internet, should apply to large social media companies.” Liberal Justice Elena Kagan separately dissented but did not offer any reasons.

The Texas law was passed by the state’s Republican-led legislature and signed by its Republican governor. Its passage comes as U.S. conservatives and right-wing commentators complain that “Big Tech” is suppressing their views. These people cite as a prominent example Twitter’s permanent suspension of Republican former President Donald Trump from the platform shortly after the Jan. 6, 2021, attack on the U.S. Capitol by a mob of his supporters, with the company citing “the risk of further incitement of violence.”

The law, formally known as HB20, forbids social media companies with at least 50 million monthly active users from acting to “censor” users based on “viewpoint,” and allows either users or the Texas attorney general to sue to enforce it.

In signing the bill last September, Texas Governor Greg Abbott said, “There is a dangerous movement by some social media companies to silence conservative ideas and values. This is wrong and we will not allow it in Texas.”

The industry groups said the state’s law would unconstitutionally allow for government control of private speech. Restricting the platforms’ editorial control, the groups said, “would compel platforms to disseminate all sorts of objectionable viewpoints – such as Russia’s propaganda claiming that its invasion of Ukraine is justified.”

“Instead of platforms engaging in editorial discretion, platforms will become havens of the vilest expression imaginable: pro-Nazi speech, hostile foreign government propaganda, pro-terrorist-organization speech, and countless more examples,” they added.

The groups also denounced what they called “viewpoint discrimination against ‘Big Tech,’” in the Texas law through its exclusion of smaller social media platforms popular among conservatives such as Parler, Gab, Gettr and Trump’s own Truth Social.

U.S. Judge Robert Pitman in the state capital Austin blocked the law last December. Pitman ruled that the constraints on how the platforms disseminate content violate the First Amendment.

The New Orleans-based 5th U.S. Circuit Court of Appeals subsequently put Pitman’s decision on hold two days after hearing oral arguments in the case. The 5th Circuit has yet to issue a ruling on the merits of the case.

(Reporting by Andrew Chung in New York; Editing by Will Dunham)

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