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Economic pain casts dark shadow as Iranians go to vote

By - Feb 28,2024 - Last updated at Feb 28,2024

TEHRAN — As Iranians head to the polls for legislative and other elections on Friday, candidates have promised them on campaign posters to "fight corruption" and "fix the economy".

In the minds of many voters, economic hardship is indeed the most burning issue as the Islamic republic suffers under punishing international sanctions and rapid inflation.

At Tehran's storied Grand Bazaar, many shoppers are simply wandering the warren of aisles without buying anything, as prices have skyrocketed in recent years.

Many doubt that a quick solution is in sight — among them 62-year-old retiree Aliasghari, who said he wished the politicians would "stop the empty slogans".

"The economic situation is extremely troubling," said the pensioner walking through the labyrinthine market, who asked not to be fully named as he discussed the sensitive issue.

Citizens "are hearing a lot of fabrications and they have lost their trust in voting", he said, adding that "none of my family members are willing to take part in the elections".

Voters are due to pick new members of Iran's 290-seat legislature and the Assembly of Experts, a key body that appoints the supreme leader, a post held by Ayatollah Ali Khamenei, 84.

The vote comes amid high regional tensions as Iran's arch foe Israel fights the Palestinian militant group Hamas in Gaza and related conflicts have flared across the Middle East.

But for many in Iran, a country of over 85 million people, the biggest issue is much closer to home: annual inflation near 50 per cent, high consumer prices and a falling currency.

Just because Iranians elect a new parliament, "things won't become cheaper," said fashion vendor Fatima, 21, who complained that many people can no longer afford new clothes.

"People's economic situation is terrible," she said, adding that she would cast her vote anyway, despite having only slim hopes for meaningful change.

 

'People's pockets

are empty' 

 

Iran has reeled under crippling US sanctions since Washington's unilateral withdrawal in 2018 from a landmark deal that had promised sanctions relief in return for curbs on Iran's nuclear programme.

Before the then-US president Donald Trump pulled out of the agreement, Iran had hoped for an influx of foreign investment and to reintegrate into the global trading and financial systems.

Instead, the sanctions sharply reduced Iran's oil revenues and further restricted trade, helping to harden the decades-old enmity with the United States and Israel.

Across Iran, the economic pain has fuelled political malaise.

A recent poll conducted by Iran's state television found that more than half of respondents were indifferent to the elections.

"These past years, it has been proven to us that the campaign slogans are empty," said 40-year-old housewife Masoumeh. "It was just words and no action."

Mohsen Omidbakhsh, 40, who works in the private sector, also complained that "prices have dramatically changed... People's pockets are empty, they can't buy what they want".

Iran's current parliament has faced other challenges including nationwide protests following the September 2022 death in police custody of Mahsa Amini.

Amini, 22, an Iranian Kurd, died after being arrested for allegedly violating Iran's strict dress code for women, and the protests continued into last year.

 

Candidates vetted 

 

Centrist candidate Mohammad Bagher Nobakht, who is running for the Moderation and Development party, said the conditions for Iran ahead of the election are "not favourable".

"There is dissatisfaction that sometimes overflows onto the street, like the one we witnessed last year," he said, in reference to the protests.

Analysts expect the elections to be dominated by conservative and ultra-conservative candidates, similar to the current parliament.

Jurists in charge of vetting candidates have approved 15,200 — fewer than one third of the 49,000 hopefuls who applied — to run for parliament, local media reported.

Only between 20 and 30 of the reformists who submitted applications have been approved to run, said reformist politicians.

Nobakht charged at a press conference last month that this had further dampened voter enthusiasm.

The current parliament "does not represent all the diverse legitimate interests of the country," he said, adding that "it no longer has an important place" among the people.

Fatima, the fashion vendor, has little hope that the new parliament will be any different.

"The parliament only represents the powerful and wealthy class and not the impoverished," she said.

Ali Mohammad Abshari, a 78-year-old pensioner, said he has some hope.

"Maybe the situation gets better if some qualified and decent people enter the parliament," he said.

"I will only vote because it is our Islamic duty to do so."

US manufactured goods orders decline in January on aircraft woes

By - Feb 28,2024 - Last updated at Feb 28,2024

WASHINGTON — US manufactured goods orders dropped more rapidly than expected in January amid a sharp decline in new orders for transportation equipment and civilian aircraft, according to fresh government data published on Tuesday.

New durable goods orders for January decreased by 6.1 per cent to $276.7 billion, the Commerce Department said in a statement, down sharply from a revised 0.3 per cent decline in December.

This was lower than the market's expectations of a 4.4 per cent drop, according to Briefing.com.

Transportation equipment, which fell by 16.2 per cent, "led the decrease", the Commerce Department said.

Stripping out this component, new orders only declined by 0.3 per cent from a month earlier.

The decline in new orders of nondefense aircraft and parts was even more pronounced, registering a 58.9 per cent decline amid ongoing concerns about Boeing's 737 MAX line of aircraft.

The company is facing intensified scrutiny following a January 5 Alaska Airlines emergency landing that led to a temporary grounding of some Boeing 737 MAX aircraft.

"Overall and ex-transportation durable goods were weaker than expected in January," High Frequency Economics chief US economist Rubeela Farooqi wrote in a note to clients.

However, core capital expenditure orders "met expectations and shipments surprised to the upside", she said, adding that it pointed to "a modest uptick in overall business spending".

Protesting Spanish farmers block roads near French border

By - Feb 28,2024 - Last updated at Feb 28,2024

A sign expressing against bureaucracy is seen as farmers block the AP7 highway connecting Spain to France with tractors in Catalonia region, in Pontos, near Figueras, 40 kms from the border, on Tuesday (AFP photo)

BARCELONA — Spanish farmers in the north-eastern Catalonia region hit the roads again on Tuesday to protest about the sector's struggles, blocking motorways with tractors including a busy highway linking Spain with southern France.

Demonstrators on the AP-7 motorway began gathering at Pontos some 40 kilometres from the French border, on Monday evening and started blocking the road shortly after midnight, cutting it off in both directions, protesters said.

They also blocked the A2 motorway linking Madrid and Barcelona as part of a string of protests over what they say is unfair competition from outside the EU.

They say such products "do not have to meet the same criteria" that EU member states are required to apply, and they also want Brussels to reduce the red tape, according to a statement from Unio de Pagesos, one of the farmers' unions behind the protest.

Farmers across Europe have been protesting for weeks over what they say are excessively restrictive environmental rules, competition from cheap imports from outside the European Union and low incomes.

Since the start of February, farmers have been mobilising across Spain.

Catalan farmers flexed their muscles earlier this month when a thousand tractors converged on Barcelona.

Thousands marched through Madrid on Monday following a demonstration five days earlier in which 500 tractors trundled into town.

Brussels was also paralysed by protesters on Monday as some 900 tractors took to the streets of the European quarter where EU ministers were huddled to try to streamline rules and reduce the red tape that is fuelling protests across the bloc.

Furious farmers lobbed eggs, burnt tyres and sprayed manure at riot police who hit back with water cannon and teargas.

Since the start of the protests in Spain, unions and protest organisers have met several times with Agriculture Minister Luis Planas who pledged to ask the EU to simplify its common agricultural policy (CAP).

He also agreed to ask Brussels to ensure mirror clauses — which ensure imports respect EU agricultural rules — are imposed on pesticides, and to improve Spain's agri-foodchain legislation so producers are not forced to sell at a loss.

WTO pushes for reform, warns multilateralism 'under attack'

By - Feb 26,2024 - Last updated at Feb 26,2024

Delegates attend the 13th World Trade Organisation Ministerial Conference in Abu Dhabi of Monday (AFP photo)

ABU DHABI — The World Trade Organisation (WTO) pushed for reform at a high-level ministerial meeting in Abu Dhabi on Monday, warning that economic headwinds and geopolitical tensions are threatening global commerce and multilateral trading systems.

The WTO's 13th ministerial conference (MC13), scheduled to run until Thursday in Abu Dhabi, the capital of the United Arab Emirates, is the first in two years.

The WTO is hoping for progress, particularly on fishing, agriculture and electronic commerce.

But big deals are unlikely as the body's rules require full consensus among all 164 member states — a tall order in the current climate.

Speaking on the first day of MC13, WTO Director General Ngozi Okonjo-Iweala said that "multilateralism is under attack", highlighting a need to "reform the multilateral trading system" and boost international cooperation.

"Looking around, uncertainty and instability are everywhere," the WTO chief said, adding that the world is in an "even tougher place today" compared to two years ago when WTO trade ministers last met.

Okonjo-Iweala did not name countries, but tensions have risen between the West on one side and Russia and China on the other in recent years.

The war in Gaza and related attacks by Yemeni rebels on ships in the Red Sea have added to the challenges.

Reiterating warnings that signs of "fragmentation" are appearing in the global economy, Okonjo-Iweala said trade volumes for 2023 likely fell below the WTO's October forecast. Trade volumes may also not reach WTO's growth estimates for this year, she added.

"If we fragment, it will be very costly to the world, both developed and developing countries," Okonjo-Iweala said.

"Cooperation and trade is vital. If we didn't have it, it would be very difficult for parts of the world to adjust."

 

'Need to evolve' 

 

The WTO chief's push for reform was echoed by UAE Minister of State for Foreign Trade, Thani bin Ahmed Al Zeyoudi, who said he hoped MC13 would serve as a "launch pad" for necessary reforms.

"The world has changed. And institutions like the WTO need to evolve too," European Trade Commissioner Valdis Dombrovskis said on Monday, adding that "geopolitical tensions are on the rise. We are faced with crises wherever we look."

During the WTO's last ministerial meeting, held at its Geneva headquarters in June 2022, trade ministers nailed down a historic deal banning fisheries subsidies harmful to marine life and agreed to a temporary patent waiver for COVID-19 vaccines.

They also committed themselves to re-establishing a dispute settlement system that Washington had brought to a grinding halt in 2019 after years of blocking the appointment of new judges to the WTO's appeals court.

"Our challenge this week is to... demonstrate that MC12 wasn't a one-off miracle," Okonjo-Iweala said.

"I have seen the US engage more and I have to say they have been quite constructive," she told a press conference, dismissing claims of an American leadership vacuum.

The WTO faces pressure to eke out progress on reform in Abu Dhabi ahead of the possible re-election later this year of Donald Trump as US president.

During his four years in office from 2017 to 2021, Trump threatened to pull the United States out of the trade body and disrupted its ability to settle disputes.

"There will be the US elections in November... so this is the last chance," a diplomatic source in Geneva told AFP on condition of anonymity.

 

Reform agenda 

 

On Monday, US Trade Representative Katherine Tai said "reform is squarely on the agenda for this week".

That includes "dispute settlement reform, where the goal is not just to go back to the way things used to be, but rather to provide confidence that the system is fair", she said in a statement.

But Marcelo Olarreaga, economics professor at the University of Geneva, said the other members of the WTO "cannot expect huge concessions" from the administration of US President Joe Biden in an election year.

While there is doubt over progress at the WTO on key issues, there is hope for advances on a new global agreement on tackling fisheries subsidies.

After striking an agreement in 2022, which banned subsidies contributing to illegal, undeclared and unregulated fishing, the WTO hopes to conclude a second deal, this time focusing on subsidies that fuel overcapacity and overfishing.

"We are within sight of ratifying the fisheries subsidies agreement," Okonjo-Iweala said on Monday.

Qatar to boost gas output with new mega field expansion — minister

North Field expansion to add 16m tonnes of LNG per year

By - Feb 25,2024 - Last updated at Feb 25,2024

Qatar is among the world’s top exporters of LNG, competition for which has ramped up since the Ukraine war (AFP file photo)

DOHA — Qatar on Sunday announced new plans to expand output from the world's biggest natural gas field, saying it will boost capacity to 142 million tonnes per year before 2030.

The new North Field expansion, named "North Field West", will add a further 16 million tonnes of liquefied natural gas (LNG) per year to existing expansion plans, Qatari Energy Minister Saad al-Kaabi said at a press conference.

"Recent studies have shown that the North Field contains huge additional gas quantities estimated at 240 trillion cubic feet, which raises the state of Qatar's gas reserves from 1,760 [trillion] to more than 2,000 trillion cubic feet," said Kaabi, who also heads the state-owned QatarEnergy firm.

These results "will enable us to begin developing a new LNG project from the North Field's western sector with a production capacity of about 16 million tonnes per annum", he said.

This will bring Qatar's production capacity to 142 million tons once "the new expansion is completed before the end of this decade" — a nearly 85 per cent rise from current production levels, Kaabi added.

The QatarEnergy chief said the firm will "immediately commence" with engineering works to ensure the expansion is completed on time.

Qatar is one of the world's top LNG producers alongside the United States, Australia and Russia.

Asian countries led by China, Japan and South Korea have been the main market for Qatari gas, but demand has also grown from European countries since Russia's war on Ukraine threw supplies into doubt.

The latest expansion plans follow a flurry of announcements for longterm Qatari gas supply deals.

Earlier this month, Qatar said it would supply 7.5 million tonnes of LNG per year for 20 years to India's Petronet, with the first deliveries expected from May 2028.

And at the end of January, QatarEnergy announced a deal with US-based Excelerate Energy to supply Bangladesh with 1.5 million tonnes of LNG per year for 15 years.

Last year, Qatar inked LNG deals with China's Sinopec, France's Total, Britain's Shell and Italy's Eni.

BASF announces new cost saving measures at German base

By - Feb 24,2024 - Last updated at Feb 24,2024

BERLIN — Chemicals giant BASF recently unveiled a cost-cutting plan worth 1 billion euros ($1.1 billion) for its German headquarters, including job losses, as it struggles with slumping demand and high energy costs.

The package of savings for the Ludwigshafen site through 2026, which comes on top of existing cost-cutting measures for the whole group, will target "both production as well as non-production areas", BASF said in a statement.

This will "unfortunately lead to further job cuts", said Chief Executive Martin Brudermueller.

"The details are currently being worked out," BASF said, adding that employee representatives "will be closely involved in this process going forward".

The company also plans to "update the longer-term positioning of the Ludwigshafen site" to reflect "the changed market realities in Europe and Germany", it said.

BASF's Ludwigshafen base, the largest chemical complex in the world, is suffering from "weak demand" and "higher production costs due to structurally higher energy prices", the company said.

Like other companies in energy-intensive sectors, BASF has been hit hard by surging energy costs in the wake of Russia's invasion of Ukraine in 2022.

An industrial slowdown in Germany, Europe's biggest economy, and weaker foreign demand have added to the group's woes.

BASF announced in October that it would step up a major cost-cutting drive, particularly in Europe, and reduce investments over the coming years in an attempt to improve profitability.

New CEO Markus Kamieth will take over from Martin Brudermueller in April.

BASF confirmed worse-than-expected 2023 earnings on Friday, as the cost-cutting efforts failed to compensate for a slump in sales.

Net profit came in at 225 million euros in 2023, well below analyst forecasts of 2.25 billion euros and sales fell by 21.1 per cent, the group said.

For 2024, BASF is predicting pre-tax earnings of between 8 billion and 8.6 billion euros, betting on improved global economic momentum later in the year.

However, the group also said it is expecting continued "unfavourable framework conditions for industrial value creation" in Europe. 

 

UAE to invest $35b to help solve currency crisis — Egypt PM

Investment of $24b to develop Ras Al Hikma area, says ADQ

By - Feb 24,2024 - Last updated at Feb 24,2024

Egypt's debt crisis is substantially worse than Turkey's (AFP file photo)

CAIRO — The United Arab Emirates is to inject $35 billion in foreign direct investment into Egypt over the next two months, Egyptian Prime Minister Mostafa Madbouly told a news conference recently.

Madbouly said the investment would "contribute to resolving" a hard currency crunch that has threatened Egypt's ability to service its large foreign debt and allow it to end separate official and black market exchange rates for the Egyptian pound.

Emirati sovereign wealth fund ADQ meanwhile said that $24 billion of the investment would go to developing the Ras Al Hikma area west of Alexandria on the Mediterranean coast.

The remaining $11 billion would go towards "deposits that will be utilised for investment in prime projects across Egypt to support its economic growth and development", according to a press release.

The deal signed between the two governments foresees the injection of a first tranche of $15 billion over the next week, with a second tranche of $20 billion following within the next two months.

Madbouly said the Ras Al Hikma project would see the development of a full resort city with an airport to be managed by the UAE.

Egypt's highly import-reliant economy, dominated by military-linked enterprises and with a fondness for infrastructure mega-projects, has been hit hard by a series of recent shocks.

The pandemic impacted its key tourism sector. The Ukraine war raised the cost of wheat and other imports. And recent attacks by Yemen's Houthi rebels on Red Sea shipping have slashed vital Suez Canal fees.

Remittances from overseas Egyptian workers — the main source of foreign currency — slumped by as much as 30 per cent in July-September 2023 alone, according to Central Bank of Egypt data.

The Egyptian state, highly indebted after years of heavy borrowing, including for a new capital city in the desert east of Cairo, has struggled to service its ballooning debt.

The International Monetary Fund (IMF) has stepped in with a $3 billion loan facility but demanded painful austerity measures.

Loan tranches and programme reviews have been repeatedly delayed until Cairo moves ahead with promised reforms, including a fully flexible exchange rate, the IMF says.

The currency crunch has undermined confidence among Western investors about Egypt's ability to service its debts.

JP Morgan recently announced it would exclude Egypt from its index of government bonds, while ratings agency Moody's lowered its outlook on Egyptian bonds from "stable" to "negative".

Vietnam EV maker VinFast reports $2b net loss in 2023

By - Feb 23,2024 - Last updated at Feb 23,2024

A Vinfast electric car is parked outside a showroom in Hanoi on August 18, 2023 (AFP photo)

HANOI — Vietnamese electric vehicle maker VinFast on Thursday reported a net loss of more than $2 billion in 2023 after missing its sales target, despite a 90 per cent increase in revenue. 

The communist state's first homegrown car manufacturer is trying to crack the international market, aiming to compete with global EV giants such as Tesla. 

VinFast said in a filing submitted to the US Securities and Exchange Commission that its total revenue in 2023 was $1.19 billion, up 91 per cent compared to the previous year. 

But the firm also reported a net loss of $2.39 billion, up 14.7 per cent compared to 2022, after missing its EVs sales target. 

"We saw favourable results in our business operations in the fourth quarter with strong revenue growth and improved profit margins," Anh Nguyen, Vinfast Chief Financial Officer said in a statement. 

"We remain focused on enhancing investment performance and strengthening our balance sheet by reducing production and materials costs." 

A total of 34,855 Vinfast EVs were delivered in 2023, accounting for $1.09 billion and up 111 per cent from the previous year — but that figure was short of VinFast's 50,000 target. 

The filling said that Vinfast's gross loss was $551.6 million last year, with $174.9 million in the fourth quarter. 

However, its revenue between October and December reached $436 million, a 26 per cent rise compared to the previous quarter. 

The firm said it would raise its delivery target to 100,000 vehicles in 2024, and focus on penetrating other international markets beside the United States, Canada and Europe. 

Vinfast announced Wednesday that it will begin building an EV factory in India's southern state of Tamil Nadu on 25 February, with capacity to produce 150,000 vehicles a year. 

The firm also plans to invest at least $1.2 billion in Indonesia, where it plans to establish an EV factory, and has expressed intention to invest in the Philippines. 

Vinfast listed on the Nasdaq in August, hitting headlines around the world as its valuation skyrocketed and then crashed. 

The company's CEO is Pham Nhat Vuong, Vietnam's richest man and chairman of Vinfast's parent company Vingroup. 

Germany cuts 2024 growth forecast as economic woes pile up

By - Feb 22,2024 - Last updated at Feb 22,2024

An aerial view of containers at the inland port in Dortmund, western Germany, June 24, 2019 (AFP file photo)

BERLIN — The German government slashed its growth forecast for 2024 on Wednesday, warning that Europe's largest economy was in "difficult waters" as it faced a series of headwinds.

Output is now seen expanding by a mere 0.2 per cent this year, government spokesman Steffen Hebestreit said at a Berlin press conference.

Last autumn, the government was still expecting 1.3 per cent growth.

The country ended 2023 in recession, shrinking by 0.3 per cent, and the latest data suggest the first quarter of 2024 will see another contraction.

"The German economy is still in difficult waters," Hebestreit told reporters.

High interest rates, weaker demand and "geopolitical crises" including conflicts in the Middle East and Ukraine were just some of the challenges confronting Germany, he added.

Economy Minister Robert Habeck will unveil details of the latest economic report later on Wednesday.

According to media reports, it will show that Germany risks facing anaemic growth up to 2028 if no action is taken.

The German economy, Europe's largest and traditionally a driver of eurozone growth, is being buffeted by "a perfect storm", Habeck said earlier this month.

Germany's once-mighty industrial sector has been hit particularly hard by multiple headwinds.

Having previously relied on cheap Russian gas imports, the sector is still reeling from the energy price surge triggered by Russia's invasion of Ukraine.

The European Central Bank's streak of interest rate hikes to tame inflation has added to the pain, dampening demand and investments.

Exports have slumped on weaker trading with key markets such as China, which increasingly produces its own goods. Geopolitical tensions including shipping disruptions in the Red Sea have added to trading woes.

The long-promised shift to a greener economy meanwhile, requiring major public and private investment, has run into fresh hurdles after a shock legal ruling last year forced the government to rethink some of its climate spending plans.

German chemical giants BASF and Bayer were among some 60 companies this week issuing a joint appeal to European Union leaders to adopt a "European industrial deal" to help pull the sector out of the doldrums.

"Without a targeted industrial policy, Europe risks becoming dependent even on basic goods and chemicals. Europe cannot afford this to happen," the statement read.

 

Debt brake row

 

But the three parties that make up Chancellor Olaf Scholz's coalition of the Social Democrats, the Greens and the liberal FDP, are at odds over how to respond.

Finance Minister Christian Lindner from the pro-business FDP wants to ease the tax burden and cut red tape for businesses.

"If we do nothing, Germany will become poorer," he has warned.

A draft law that would reduce taxes on corporations was being debated by lawmakers on Wednesday, but months of squabbling has seen the expected impact reduced from around 7 billion euros ($7.5 billion) a year in tax relief to around 3 billion euros.

Economy Minister Habeck, from the ecologist Greens, wants to go further.

He has called for a relaxation of the government's constitutionally enshrined "debt brake", a self-imposed cap on annual borrowing that critics say has hampered much-needed spending on modernising infrastructure and financing environmentally-friendly projects.

Tensions over the brake spiralled after a top court in November found that the government broke the debt rule when it transferred billions of euros earmarked for pandemic support into a climate fund, throwing Scholz's budget into disarray.

While Scholz's Social Democrats have since signalled an openness to tweaking the rules, any loosening of the debt brake remains a red line for the FDP.

The economic headwinds have contributed to a steep decline in support for the government.

Plans to scrap agricultural fuel subsidies triggered nationwide tractor protests last month, with many farmers voicing dissatisfaction with Scholz and his coalition partners.

BHP profit dives after hits from nickel, Brazil mine disaster

By - Feb 20,2024 - Last updated at Feb 20,2024

SYDNEY — Mining giant BHP reported an 86 per cent slump in half-year net profit on Tuesday, hit by a writedown of its nickel assets and costs related to a 2015 Brazilian mining disaster.

Sales rose six per cent to US$27.2 billion in the six months to December 31 when compared to a year earlier, the Anglo-Australian firm said.

But net profit slumped 86 per cent to $927 million in the same period as it took a hammering from exceptional items.

BHP posted losses of $2.47 billion on writedowns of its nickel assets in Western Australia and another $3.17 billion over the fatal collapse of the Samarco iron ore tailings dam in Brazil.

BHP said its underlying profit for the period was $6.6 billion, however, barely changed from a year earlier.

"We've seen volatility in global commodity prices, and demand in the developed world has been softer than expected," said BHP Chief Executive Mike Henry.

"That said, China demand is healthy despite weakness in housing, and India remains a bright spot."

The group announced last week that it was writing down its Western Australian nickel assets because of a market slide caused by a surge in exports from Indonesia.

Nickel is essential to the manufacture of stainless steel and of the batteries that are fuelling the world's transition to greener energy.

But prices have dropped about 40 per cent in the past year as new refining techniques enabled low-quality nickel from Indonesia to be used for batteries.

Last month, a Brazilian court ordered miners Vale and BHP to pay $9.56 billion over a dam collapse at their Samarco joint venture iron ore mine.

The dam failure at their mine in the southeastern town of Mariana released nearly 40 million cubic metres of toxic sludge, flooding 39 homes and killing 19 people.

BHP said Tuesday that the joint venture partners had filed a "clarification motion" over the court order, citing "certain factual inaccuracies in the decision, including the calculation of damages".

BHP Brasil also intends to appeal the decision, challenging the merits and the amount of damages, it said, estimating that a decision could take two to five years.

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