Business and Economy

The red carpet was rolled out, and a trade truce was extended. Yet, beneath the pomp and pageantry of Chinese President Xi Jinping’s state visit with US leader Donald Trump on Thursday, Washington and Beijing remain locked in a much deeper strategic rivalry.

Xi arrived in Washington, DC on Wednesday evening for talks on Thursday, and Trump was there to meet him personally on the tarmac.

The meeting was the first state visit by a Chinese leader to the US in 11 years. But it is also the third time in less than a year that the two men have met face to face, as the two powers remain uneasily gridlocked in competition over AI, rare-earth metals, the question of Taiwan, and the Iran war.

Overhanging it all is the paused, but simmering, trade war between their two nations.

Almost as soon as Trump began his second term in the White House in January 2025, up went tariffs on Chinese goods as he accused China of facilitating the flow of fentanyl, a deadly drug, to the US. Beijing responded with its own levies, then restricted exports of valuable rare-earth metals which are crucial for the development and manufacture of everything high-tech, from smartphones to fighter jets. At one point, tariffs were heading towards 150 percent before being paused to allow time for talks.

Finally, the two leaders called a truce on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in South Korea on October 30, and they met once more, in May, when Trump travelled to Beijing.

As Xi landed in Washington on Wednesday this week, the Trump administration announced that the two countries had agreed to extend an October 2025 truce which had offered some respite from the punishing tariffs, produced an agreement from China to buy more soyabeans from the US and delayed the ban on rare-earth exports from China until January 10. The prospect of a much-longed-for trade deal appeared to be in the air when US Treasury Secretary Scott Bessent told Fox News he had met Chinese ‌Vice Premier He Lifeng before Xi’s visit to “see if we could ⁠do a bigger deal as opposed to just a series ⁠of smaller things”.

But analysts have, for the most part, shot down such hopes. Beyond tariffs, they say, the simmering conflict between the two powers now encompasses new US sanctions on buyers of Russian oil – namely China – and sweeping investment and research restrictions, never mind the intensifying race for dominance in artificial intelligence.

“The two-month extension isn’t a bridge to a grand bargain – it’s a temporary sandbag holding back a structural flood,” Beijing-based Einar Tangen, a senior fellow at the Center for International Governance Innovation, told Al Jazeera.

Theatrics or continued thaw in tensions?

In fact, the truce is little more than “transactional theatre” – an attempt at good optics before the upcoming US midterm elections – Tangen said.

Trump’s deeply unpopular war on Iran has already inflicted severe damage to his chances in that vote. Democrats are leading in the polls amid concerns about the rising cost of energy, triggered by the war which the US started. Trump ultimately needs wins on other issues.

The current truce with China serves a purpose, therefore, but is fragile enough to be undone the moment political utility shifts for Trump, Tangen said.

“Success in January won’t be measured by what is solved, but by whether the knot is left tight enough to hold, but not kill,” said Tangen.

Phillippe Le Corre, professor of international relations and Asian studies at France’s ESSEC Business School, said the length of the truce extension indicates clearly that a more permanent deal remains out of grasp.

“The extensions are getting shorter and shorter, which means they haven’t found a common ground on many issues,” Le Corre told Al Jazeera.

“The two-month extension is a terrible outcome for the US. Nothing is resolved, and many Damocles’ swords are still hanging over Washington’s head,” he added.

Trump’s entire China policy, Le Corre argued, is in fact short-sighted. “That is bringing the world a lot of uncertainty,” he said.

Some analysts are more hopeful, but not much. Sun Chenghao, a fellow at the Center for International Security and Strategy at Tsinghua University in Beijing, described the extension of the trade truce as a “useful interim step”. It shows that both sides want to preserve the recent easing of tensions, which is meaningful progress, he said.

“From China’s perspective, a sustainable agreement needs reciprocal benefits and greater policy predictability,” Sun told Al Jazeera. “Additional purchases cannot indefinitely compensate for uncertainty over tariffs, technology restrictions and market access.”

The extension’s value, however, will depend on whether it produces “concrete commitments” from Beijing and Washington, Sun added.

A game of ‘economic chicken’

There is motivation to get a deal done, analysts say. Any escalation in the US-China trade war will be costly for both sides.

But there is some way to go. A Congressional Research Service report in July 2026 noted that Chinese goods exported to the US still face tariffs of 36.5 percent, while US goods entering China are taxed at 31 percent.

Any higher, and they will raise import and manufacturing costs in the US, squeeze margins and increase pressure on consumer prices, said Sun. They would also hurt US farmers and industrial exporters, he added, just as the US faces pressure from the rising costs of its war on Iran, which have pushed it into a record national debt of $40 trillion two years earlier than expected.

“Washington is playing a high-stakes game of economic chicken with a $40 trillion debt load, an inflationary sword of Damocles, zero fiscal cushion to absorb a truce collapse and a dependence [on] Chinese industrial and manufacturing inputs,” Tangen said.

US consumers and the economy in general will find it tough to survive yet another inflationary shock from renewed tariffs “at a time when the federal budget already operates like a high-wire Ponzi scheme”.

Then there is the AI race, which no one can afford to lose. According to Jon Bateman, a senior fellow at the Carnegie Endowment for International Peace, a partial “decoupling” of US and Chinese technology ecosystems is under way. US policymakers have pushed to become less dependent on Chinese tech and “to secure America’s technological future in the context of a rising China”, Bateman writes.

But that will not help if there is a collapse in valuations of companies in the AI sector, which currently drive global stock markets. An AI valuation collapse, Tangen warned, “could trigger a financial tsunami that makes 2008 look tame – making technological decoupling meaningless as the world is plunged into a depression”.

Despite the trade war and Trump’s tariffs, China’s trade with other countries has risen sharply, with the country registering a $1.2 trillion global trade surplus last year. But an escalation of the trade war with the US would nevertheless spell increased pressure on export orders, employment in exposed industries and business confidence, said Sun.

Beijing does hold one crucial ace card – it is sitting on 60 percent of the world’s known deposits of rare-earth minerals, said Le Corre. It processes 90 percent of them, too. These are the metals that all countries need supplies of for semiconductors, technological components and the manufacture of weapons, to name but a few. Last year, China began to make use of that leverage by restricting exports of five of the 12 rare-earth metals it mines in April. Then, in October, it prepared to restrict seven more – until the trade truce happened. Plans for the export restrictions are not shelved, however, merely on hold.

“[China] understood this over the past year and they are certainly not going to give up on this,” said Le Corre.

“Washington is hostile, but it is hooked,” Tangen said. “You cannot threaten China with secondary sanctions on energy while desperately needing its rare-earths to fuel your military-industrial base.”

A drawn-out path to durability

The path to a lasting US-China trade deal will be long and rocky. First, any new tariff reductions will need more coverage and duration, said Sun.

For a deal to last, it would also require “more predictable licensing and actual deliveries of rare earths and critical minerals; restraint in expanding technology restrictions; and market access reflected in regulatory approvals and completed transactions”, he said.

A durable agreement also needs regular consultations and a process for resolving complaints. If all this can be hammered out then, just maybe, there might be a chance, Sun said.

Tangen and Le Corre were less optimistic, however. “The US view of China as an existential threat has to change before there can be solutions,” said Tangen.

Le Corre, meanwhile, said that while China is a long-term planner, “durable is a word that can hardly be associated with Trump.”

The existing trade truce also risks breaking down if there are new unilateral tariffs, broader technology or mineral restrictions, or disputes over whether commitments have been fulfilled, said Sun.

Tensions over Taiwan, which China claims as its own territory, but for which the US approved an $11.1bn arms sale in December last year, could also trigger a breakdown in trade relations, the analysts said.

“Taiwan remains the ultimate low-probability, catastrophic-impact tail risk – where a single round of arms sales can snap a multibillion-dollar trade truce in an instant,” Tangen noted.

The heads of several major AI firms told the United Nations Security Council (UNSC) their industry urgently needed global oversight to avoid dangers that could threaten the whole world.

“If managed poorly, I even believe AI could be a risk to humanity as a whole,” Dario Amodei, the chief executive officer of Anthropic, told members of the body on Wednesday.

Sam Altman, the head of rival company OpenAI, echoed his concerns, telling the 15-member council tasked with tackling major crises globally that humanity could “lose control of the future of AI”.

The meeting, which coincides with the UN General Assembly (UNGA) gathering in New York City, was convened by France and comes at a time when experts are increasingly warning that the rapid development of AI needs more human oversight to ensure it does not slip out of control and cause a global catastrophe.

Altman and Amodei called on world leaders to take action.

“If AI is to be democratic, the most important decisions cannot be made by labs in San Francisco alone,” Altman told members. “They must be shaped through democratic processes and by governments accountable to the people they serve.”

Their concerns were shared by several representatives on the council, including the foreign ministers of France and the United Kingdom, who said the international community needed to step in and create common frameworks for how the technology should be controlled.

Hugging Face CEO Clement Delangue, whose company has come under attack by out-of-control AI models in recent months – incidents used by the other companies as evidence of the need for more safety measures – told the UNSC his company had relied on the technology to defend itself in those same incidents.

Delangue said Hugging Face had relied on a Chinese AI model to help defend against the attack by OpenAI’s AI agents, because it faced fewer restrictions than comparable US tools.

“We were attacked by AI, but more importantly, we defended ourselves with AI,” he told the council.

US and China reluctant to impose restrictions

In the United States, though, where the largest and most influential companies developing AI are based, the administration of US President Donald Trump has baulked at imposing new guardrails on the industry.

The administration’s representative at the UNSC meeting, Michael Kratsios, told members, “We totally reject all efforts by international bodies to assert centralised control and global governance of AI.”

Chinese President Xi Jinping is expected to discuss whether and how to regulate AI during a visit to Washington, DC, this week. The two countries are locked in a technological race to develop more powerful AI tools, a competition that experts say makes it less likely that either country would want to impose any major new restrictions on their efforts right away.

Yet there is a growing recognition at the UN of the danger AI potentially poses to the world, said Daniel Forti, head of UN Affairs at the International Crisis Group. Member states understand that “there will be much more of a need for international cooperation, setting some rules of AI, even if the biggest players are more focused on growth opportunities than on some sort of collaboration,” Forti said.

For several years, the UN has been participating in multilateral meetings to shape everything from protections for workers from AI in emerging economies and ensuring open access to this technology, to following how AI is used in military conflicts. In 2024, the UNGA unanimously passed its first resolution on AI, a nonbinding statement that called on member states to protect personal data, monitor AI for risks and safeguard human rights.

The adoption of AI has taken off dramatically since then, and with it have come dire warnings from environmental groups, human rights advocates, and even the tech moguls whose companies are developing the tech.

The future of AI “cannot be decided by a handful of countries or left to the whims of a few billionaires”, UN Secretary-General Antonio Guterres said at a global summit held earlier this year.

Last year, the UNGA formed two new bodies to deal with AI: the Independent International Scientific Panel on AI that brings together experts to provide governments with independent assessments, and the Global Dialogue on AI Governance, which provides a regular forum for discussing approaches to AI governance.

“The dangers are real and imminent,” Yoshua Bengio, a Canadian expert on AI and co-chair of the Independent International Scientific Panel, told the UNSC on Wednesday. “This council faces an unprecedented threat, one that none of its members would ⁠choose, that none can contain alone, and that does not respect the borders we defend.”

Iran’s aviation officials negotiate with Oman and Iraq as Secretary Bessent targets carriers seven months into the conflict.

Flights from Iran to Baghdad and Muscat will be cancelled starting at midnight ahead of new United States sanctions taking effect Wednesday, Tasnim News Agency reported.

A spokesman for Iran’s Civil Aviation Organization told the news agency on Tuesday that the agency is “negotiating so that flights whose destination is Baghdad can be redirected to [Iraq’s] Najaf Airport”.

Iran’s ISNA news agency reported that negotiations with Oman were likewise ongoing, adding that all remaining international flights, including those to Istanbul, will operate as scheduled.

US Treasury Secretary Scott Bessent said on Monday that all Iranian airlines would be shut down on September 23 through the threat of secondary sanctions on aviation service providers, seven months into the war between the US and Iran.

Bessent told CNBC that when Iranian carriers land at an airport, “you cannot provide them with fuel, you cannot provide them with landing services, you cannot sell them tickets, or you will be knocked out of the dollar system”.

The move marks the latest step in Washington’s expanding sanctions campaign against Tehran. Aviation analysts told Al Jazeera that although the US lacks authority to close foreign airspace, targeting local refuelling and ground-handling providers achieves a similar outcome by cutting off essential operational support.

Earlier this month, the US issued stricter measures administered by the Treasury Department’s Office of Foreign Assets Control (OFAC), placing restrictions on trade, energy and financial institutions.

The administration of President Donald Trump also expanded secondary sanctions in late August, warning that foreign firms doing business with Iran across shipping, technology, gold and digital assets face penalties of their own.

Tehran, however, signalled on Saturday that it remains open to talks mediated by Qatar to reach a long-term resolution, while maintaining a combative stance towards Washington.

“It is in Washington’s interest to accept these conditions,” Mohsen Rezaei, Iran’s security chief, told Al Jazeera in an interview last week. “Trump’s threats will not achieve any results. We are prepared for a decisive war.”

A gold mine collapse in northern Sudan has killed at least 10 people and injured 21, according to survivors, bringing renewed attention to the dangers facing workers in one of the country’s most important and least regulated industries.

The collapse took place on Sunday at the Awny mining area near Sudan’s border with Egypt. Miners told the AFP news agency they had recovered 10 bodies and pulled 21 injured workers from the site, while the search continued for people believed to be trapped beneath the rubble. It is unclear how many people are trapped in the collapsed mine.

The disaster comes just days after another deadly accident at a gold mine in West Kordofan State. A collapse at the al-Zaraa mine near en-Nahud, a town in central Sudan, left at least 82 people dead.

Sudan is one of Africa’s top gold producers, recording 70 tonnes of production last year, according to the Sudanese government.

Since fighting broke out in April 2023 between Sudan’s army and the paramilitary Rapid Support Forces (RSF), businesses have been devastated, agriculture has been disrupted, millions of people have been displaced, and Sudan’s formal economy has weakened. In that environment, gold has remained one of the country’s most valuable sources of income.

In July 2025, it was reported by local agencies that Sudan’s gold production rose sharply despite the ongoing conflict, reaching 64 tonnes in 2024, 53 percent higher than the 41.8 tonnes recorded in 2022, and generating $1.57bn in legal export revenues.

However, the gold trade has also become a point of international scrutiny. Most of the gold exports end up in the UAE. In March 2025, Sudan went to the International Court of Justice (ICJ), accusing the UAE of supporting and funding the RSF using gold. The UAE has denied accusations that it supplies weapons to the RSF.

Sudan’s gold deposits are spread across the country, with the majority in the northeast. Port Sudan, the country’s main port, is home to most of the deposits and has been largely controlled by the Sudanese Army since the war began. However, areas controlled by the RSF are also populated by gold deposits.

At the moment, “much of Sudan’s gold is taken out of the country through smuggling or illicit networks instead of passing through government channels that could directly contribute to public revenue,” said Joseph Tucker, senior analyst on the Horn of Africa at the International Crisis Group.

But amid that diplomatic battle and the accusations surrounding gold, the mining deaths in northern Sudan have also raised larger questions over how the country manages the sector, analysts say.

“This disaster is yet another example of the deadly hazards facing those working in Sudan’s gold mines,” Tucker told Al Jazeera. “Most of these (gold mines) are informal, artisanal mines in remote areas that are unregulated and lack modern mining technology, adequate infrastructure, and specialised safety equipment.”

This year, Sudanese Prime Minister Kamil Idris met with the minister of minerals and spoke on the policies for regulating traditional mining and the management and control of various mineral markets. According to French-based Sudanese media, Sudanese authorities called for swift action to address the environmental damage and public health hazards caused by mining activities across the country.

Yet, despite the dangers, Tucker said the state of the Sudanese economy made gold mining appear lucrative to many Sudanese.

During the war, the Sudanese currency’s value has crashed. Before the outbreak of fighting in 2023, about 570 Sudanese pounds could buy a US dollar. By April 2026, the currency had slid to a sixth of that value: It cost 3,500 pounds or more to afford a dollar. That has led to sharp food inflation and a surge in the costs of transport and fuel.

According to estimates by the United Nations Development Programme, Sudan lost $6.4bn of its gross domestic product (GDP) in 2023 alone: That’s a quarter of the country’s $26bn GDP that year. In August, the UN agency reported that 90 percent of the agrarian nation’s farmers had seen yields drop over the previous year.

That economic crisis, Tucker said, “fuels the demand for gold and willingness of miners to work in poor conditions” – even if it proves deadly.

FAA halts East Coast flights due to equipment outage, affecting major US airports in New York, Newark, and Philadelphia.

The United States Federal Aviation Administration (FAA) has halted flights to several busy East Coast airports amid an equipment outage, snarling more than 1,000 flights.

On Monday, the FAA issued ground stops at large commercial airports, including New York’s John F Kennedy International (JFK) and LaGuardia; Newark Liberty International in New Jersey, as well as Boston Logan and Philadelphia International Airport.

The flights were halted on the day that 130 world leaders and dozens of ministers were arriving in New York for the annual high-level meeting of the United Nations General Assembly.

US Transportation Secretary Sean Duffy said in a post on social media platform X that flights have resumed into New York’s LaGuardia and into Philadelphia, but that ground stops are still in effect at Newark, JFK, and Teterboro Airport in New Jersey. The ground stop has also been lifted in Boston.

FAA Administrator Bryan Bedford told reporters on Monday that it had “lost the primary circuit” at what is called Philadelphia TRACON, or Terminal Radar Approach Control, which controls air traffic into Philadelphia and airports across the busy northeast US airspace.

Bedford said that the backup fibre had a break and told reporters that it could take up to 13 hours to repair. He said the cut was between the city of New Brunswick, New Jersey, and Newark, New Jersey, which is home to Newark Liberty International Airport.

“An Amtrak construction crew accidentally cut into a fiber line in New Jersey which caused a telecom outage and forced FAA to pause flights in the Northeast,” Duffy said in a post on X.

Newark delays

At Newark alone, more than 1,000 flights had been delayed or cancelled. Throughout the US, there were nearly 4,000 delayed flights and 500 cancelled.

United Airlines said it would waive change fees for impacted travellers. Newark serves as a major hub for the airline.

“Flights that had been destined for Newark have either been held at their departure airport or diverted to alternative airports. Once the FAA outage is resolved, we will work to safely get our customers to their destinations and have issued a travel waiver to give our customers flexibility to manage their travel plans,” a representative for United Airlines said in a statement provided to Al Jazeera.

Newark has recorded the highest levels of delays and cancellations of any airport, according to FlightAware, which tracks flight disruptions in real time. As of 3pm Eastern Time in the US (19:00 GMT), 31 percent of departing flights from Newark had been cancelled, along with 29 percent of inbound flights. Meanwhile, 17 percent of departing flights from the United hub had been delayed, as had 17 percent of inbound flights.

A ground stop was also issued at Teterboro Airport in New Jersey, a private airport neighbouring New York City.

Scott Bessent says airports and companies servicing Iranian carriers risk being cut off from the US dollar system.

United States Treasury Secretary Scott Bessent says Iranian airlines could effectively be shut out of international travel from Wednesday, as Washington threatens foreign companies with secondary sanctions if they continue servicing the country’s carriers.

“On September 23, all the Iranian airlines will be shut down around the world,” Bessent told CNBC on Monday.

The warning is aimed not just at the airlines themselves, but at the airports, fuel suppliers, ticketing companies and other businesses they rely on to operate abroad.

“If they land, you cannot provide them with fuel, you cannot provide them with landing services, you cannot sell them tickets, or you will be knocked out of the dollar system,” Bessent said.

The threat marks the latest step in US President Donald Trump administration’s escalating economic campaign against Tehran, which has continued alongside the war between the US and Iran.

Earlier this month, the US Treasury imposed sanctions on all remaining Iranian airlines that had not already been targeted, as well as companies outside Iran accused of supporting the country’s aviation sector.

Iran’s aviation industry was already heavily constrained by years of US sanctions, which have made it difficult for carriers to buy new aircraft and obtain spare parts and maintenance services.

The measures are part of a much broader sanctions regime aimed at isolating Iran from the international financial system. US secondary sanctions threaten foreign companies that do business with Iran across sectors including energy, shipping, technology, gold and digital assets with penalties of their own.

China ‘very engaged’ on Iran sanctions

Bessent’s comments came a day after talks with Chinese Vice Premier He Lifeng, ahead of Trump’s meeting with Chinese President Xi Jinping on Thursday.

China is one of Iran’s most important economic partners and diplomatic backers, making Beijing’s cooperation potentially significant to Washington’s efforts to financially isolate Tehran.

Bessent said Chinese officials had been “very engaged” in the US pressure campaign. Washington was holding what he described as positive talks with Chinese financial authorities, including People’s Bank of China Governor Pan Gongsheng, about compliance with US sanctions on Iran.

Tehran, Iran – Amid dire fuel shortages and mounting economic challenges, the Iranian government is seeking cost-saving measures for government workers and other citizens to deal with the crisis.

On Saturday, the government set office attendance hours for 8am to 1pm from September 23 to the end of the current Iranian year (late March 2027), with the remaining contractual hours to be completed remotely.

Agencies must also designate one day a week when employees and managers travel to work by public transport. In recent days, government ministers have released videos showing themselves using the metro to commute to work as part of the campaign.

Metro and bus rapid transit (BRT) systems will also be free of charge until mid-November in a bid to encourage commuters to leave their cars at home. Worn-out government vehicles will also be replaced with electric, gas-powered or hybrid alternatives, although this is expected to take years to implement.

The reopening of universities is expected to be staggered and partial, with some lessons shifted online by authorities.

Government-linked offices are required to switch off heating and turn off lights after working hours, while schools, universities, healthcare facilities and operational services are to follow separate arrangements to be announced later.

President Masoud Pezeshkian signed a directive on September 12 instructing government agencies to facilitate remote work for suitable employees to save on petrol, electricity and natural gas costs for the state.

“We have begun consumption savings with the government,” Pezeshkian said earlier this month. This is seen as effectively framing remote work and other measures for government workers as in line with other energy-saving measures that the government has asked of the rest of the population.

Resource-rich Iran has dealt with energy crises before, rooted in mismanagement and dated infrastructure, when similar cost-saving measures were implemented. But the added pressure of war with the United States and Israel has forced the government to think of creative solutions to energy shortfalls.

In early September, the cash-strapped government raised the price of fuel for the third tier of quotas for a second time in less than a year, meaning that people will pay double for any petrol use beyond 110 litres (29 gallons) per month. Imported vehicles and some other categories of cars are also limited to the most expensive tier of fuel.

For the first five months of the current Iranian year, which ended on August 22, average daily petrol production was 122 million litres while consumption was at 132 milion litres, highlighting a shortfall in supply versus demand. In the first half of the sixth month, the gap between production and consumption was around the same, at a 10 million litre shortfall.

The US naval blockade of Iran’s southern ports in place since July has halted fuel imports that previously helped balance the gap. The blockade has also stopped Iran from exporting its oil via supertankers transiting the Strait of Hormuz, affecting its foreign currency income. Crude stored on open waters beyond the blockade line is still being gradually sold to China.

Oil and gas facilities, petrochemical companies and major fuel depots were also bombed by the US and Israel, impacting production and distribution. Oil Minister Mohsen Paknejad said in early September that “a significant portion of production capacity has now been restored, and the process is continuing”.

As rampant inflation continues to squeeze most Iranians, data released this week by the Statistical Center of Iran also highlighted the damage the war with the US has dealt to the economy.

Iran experienced a massive 10.1 percent year-on-year fall in real gross domestic product (GDP) and a 26.4 percent fall in oil and gas extraction between late March and late June 2026, the centre’s data showed.

Including oil, industries and mining were down 14.7 percent, while construction was down by 6.4 percent, services overall by 4.8 percent, and transport, storage and communications by 17 percent.

The government has not released any information on how many workers are estimated to be affected by the remote work directive, or how it expected efficiency to be impacted.

But after decades of mismanagement, corruption and inefficiency among government-linked organisations, some Iranians believe it highlights a wider issue of state inefficiency.

“My unpopular opinion is that if 85-90 percent of government sector personnel are fired and 70 percent of ministries closed down, absolutely no problem will occur in the country,” a user named Mohsen wrote on X.

Zabihollah Salmani, a deputy head of the Administrative and Employment Organisation of Iran, told reporters during a press conference in August that more than 2.43 million were on its payroll.

If council, fire brigades, social security and non-government organisation workers were included, this would bring the number to more than four million people. The average monthly pay for government personnel at the end of the previous Iranian year in late March 2026 was around 240 million rials ($104 at the current exchange rate).

Asked by reporters how many of these employees could potentially be taken off the payroll without hurting output, Salmani said, “We do not yet have these figures.” He added that agencies were being asked to submit that information.

About 1,075,000 people are on the payroll of the Education Ministry, including teachers and trainee staff, while 600,000 employees work under the Ministry of Health and its affiliated networks, according to official figures.

Amir-Hossein, a young man working at a research centre linked with the government-funded University of Tehran, said that since the start of the month, he had been assigned two days of remote work. Working hours were set for 7am-1pm before, but are to be shifted to 8am-1pm starting from Wednesday, per the government.

His work can be done on his laptop, but might require some coordination on the phone or short commutes to other centres, he said. Overall, the remote work lifestyle has been beneficial.

“Sometimes I get more work done than I would have at the office,” he told Al Jazeera, asking not to use his full name due to security reasons.

As Amir-Hossein regularly uses online ride-hailing services to commute to and from his job, working from home has been financially beneficial for him.

An Iran-based economist who spoke to Al Jazeera on background said the government measures are essentially crisis control at best, and not a long-term solution to the problem.

Amid the US-Israel war on Iran, the country’s economy has suffered a sharp contraction, with its crucial oil and gas sector taking the biggest hit as the United States tightens its economic and military pressure on Tehran.

Data released by the government-administered Statistical Center of Iran showed gross domestic product (GDP) shrank by 10.1 percent year-on-year between March 21 and June 20, the first quarter of the Persian calendar.

The period covers the opening months of the US-Israel war on Iran, which began on February 28.

The economic downturn has come as Iran struggles to export its oil, one of its most important sources of foreign currency, while also contending with high inflation, a weakening rial, and disruptions to trade and industry.

Here is what you need to know:

What does the economic data say?

The headline GDP number masks an even steeper decline in Iran’s energy industry. Crude oil and natural gas activity contracted by 26.4 percent compared with the same period a year earlier. GDP excluding oil, by comparison, fell by 4.6 percent.

The damage has spread beyond the energy sector. Industry and mining contracted by 14.7 percent, services declined by 4.8 percent, and manufacturing contracted by 2.5 percent. Agriculture was the exception, growing at 2.3 percent.

Those figures come amid an already difficult economic situation in the country. Earlier this month, Iran’s 12-month average inflation reached 69.9 percent, while food, beverage, and tobacco prices rose at nearly twice that rate. Official unemployment climbed to 9.1 percent in the spring.

The rial, meanwhile, fell from about one million to the US dollar a year earlier to more than 2.2 million in early September.

What is the latest with Iran’s oil exports?

Iran’s ability to sell crude has been dramatically curtailed by the US naval blockade, imposed for most of the war.

Iranian crude and condensate loadings collapsed from about two million barrels per day in March to roughly 740,000bpd in July and just 220,000-255,000bpd in August, according to estimates from Kpler and Vortexa.

TankerTrackers.com told the Reuters news agency that 29 tankers, carrying 36.11 million barrels of crude, were trapped in the Strait of Hormuz. Meanwhile, Vortexa estimated total Iranian crude afloat had fallen from 135 million barrels at the end of July to 107 million barrels by late August.

Is Trump winning the economic war on Iran?

By several economic measures, Washington’s pressure campaign is inflicting damage on Iran’s economy.

On September 6, total trade had fallen by 25 to 35 percent, President Masoud Pezeshkian said, with imports hit harder than exports. The US blockade of the Strait of Hormuz has made it hard for ships carrying imports to reach Iranian ports.

Tehran has also explicitly linked the end of the war to economic relief. Iran’s security chief Mohsen Rezaei told Al Jazeera on Saturday that its conditions include “the release of our frozen funds and an end to the naval blockade”.

In addition to the naval blockade, US Treasury Secretary Scott Bessent last month announced an economic pressure campaign against Iran, pledging to target its financial interests across the world. He said the US would target all of Iran’s sources of revenue, including oil, to prevent other countries and companies from doing business with Tehran.

The US-Israeli attacks and Iran’s retaliations have disrupted Tehran’s trade with one of its main economic partners, the United Arab Emirates.

The UAE last month announced an indefinite trade embargo on Iran after accusing its forces of carrying out several ballistic missile attacks, which Tehran denied, calling it a “false flag operation” by Israel and the US.

Chris Beauchamp, market analyst at IG Group, said, “Most wars are contests of stamina more than anything else.”

“The 10 percent drop in Iranian GDP is a sign that the US is succeeding in putting pressure on its foe. But the question rests, as it has done since March, on whether Iran can weather the fall in economic activity better than the US can stand the surge in energy costs,” he told Al Jazeera.

“For a regime prepared to do anything to stay in power, this news will make little difference, so long as the security forces remain loyal,” he added.

What is the latest with diplomatic efforts to end the war?

While Iran has taken a defiant stance against US economic and military pressure, it has indicated repeatedly that it remains open to diplomatic means to end the nearly seven-month-old war.

On Saturday, Rezaei told Al Jazeera that Iran conveyed a formal set of conditions to Washington through Qatari mediators for ending the war.

Iranian state media outlet IRNA reported on Monday that Pakistani Interior Minister Mohsin Naqvi was set to visit Tehran, without specifying the agenda or other details.

Mediators Qatar and Pakistan have been working to re-establish negotiations between the two sides since their memorandum of understanding (MoU) expired last month.

Meanwhile, Iranian Foreign Minister Abbas Araghchi will stop briefly in Qatar before going to New York for the UN General Assembly, IRNA reported.

Iran has repeatedly said it remains ready for any new strikes by Washington.

Rezaei said on Saturday Tehran did not rule out a new US strike against Iran, calling the possibility “very much on the cards” based on his country’s military assessments.

Mark Pfeifle, a Republican strategist and former White House and national security official, said Iran and the US are still willing to strike a deal.

“Sometimes in diplomacy it’s what’s taken off the table,” he told Al Jazeera.

Pfeifle said when Rezaei reiterated his demands for talks with the US, he spoke of “ending the blockade, releasing the frozen funds [and] stopping the attacks”.

“But he left off reparations and reconstruction money, which tells me that there’s a concrete sign that amongst all the rhetoric, which is still very strident, that the pressure campaign that the US is putting on Iran is having some effect,” he said.

“And it tells me that both sides are still looking for room to negotiate in the coming weeks.”

Tehran, Iran – Hossein, a 32-year-old marketing specialist based in Tehran, has been thinking of replacing his 13-year-old Iranian-made car with a newer model.

Even though he earns about four-and-a-half times the minimum wage after a recent pay rise – his salary is now close to 900 million rials (about $390 at the current exchange rate) – imported vehicles are not even remotely affordable for him.

Even finding a locally made car might be out of his budget, with an economic crisis gripping the country since the United States and Israel launched a surprise war on Iran on February 28 and later enacted a crippling siege and sanctions on the country.

“I’m losing hope of ever being able to buy a new domestic production car too, unless the country opens up and becomes a bit more normal again,” Hossein, who asked to keep his full name confidential for security reasons, told Al Jazeera.

His old manual Peugeot 206 model, an originally French-made car but now produced domestically after foreign counterparts left Iran due to sanctions, can fetch up to 10 billion rials ($4,350) if he sells it towards making a new purchase. However, his replacement options are limited.

Upgrading to a slightly improved Peugeot 207 with an automatic gearbox could cost him 28 billion rials ($12,170) now. This means that, after selling his car, he would need more than 20 months of his entire salary.

A domestic sedan Shahin model costs more than 31 billion rials ($13,480), and a crossover Reera is priced at more than 43 billion rials ($18,700).

With these options, he would need to save about 24 months and 37 months of his whole salary, respectively, and that is if prices remain stable and he does not spend a rial on anything else. But the reality of the fast-rising living costs and lagging incomes in Iran means he can barely put aside any money, let alone afford a new car.

Domestic car prices have mostly risen 40 to 80 percent since the start of the war, while some vehicles sell for more than 130 percent of their September 2025 costs.

The costs of maintaining the vehicles are also rising much faster than people’s salaries. Domestically produced tyres, motor oil, brake pads and clutch kits have at least doubled since last year, with some car parts having more than tripled in price.

Domestic vehicles have generally low safety standards, meaning that they contribute to staggering road accident deaths. At least 1,609 Iranians have been killed so far on intercity roads in the current month of Shahrivar of the solar Hijri calendar, which ends on September 22. More than 20,000 people lose their lives on the roads every year. In comparison, fewer people in the whole of the European Union, nearly five times Iran’s population, died on roads last year.

Iran’s fuel-guzzling cars also contribute to smoke-congested city streets, degrade vehicles faster and increase fuel costs, just as petrol prices have risen for users.

How did we get here?

Experts say, due to a combination of protected state-linked businesses, privileged access, economic isolation and a curtailing of imports, Iranian households have no choice but to pay exorbitant prices – compared with their salaries – to buy low-quality cars.

The damage from the war, including the extensive bombing of multiple steel giants by Israel and the US, has only added insult to injury. The naval blockade of Iran’s southern ports has prevented goods coming in from popular neighbouring markets like the United Arab Emirates.

Under such circumstances, domestic vehicle manufacturers have little incentive to improve.

End customers are also beset by government charges, currency and financing costs, margins levied by murky intermediaries – and in numerous documented cases, industry corruption.

“People are forced to buy expensive low-quality cars whose real prices should be a quarter of global prices, and this is a direct harm done to them,” Mohammad Rashidi, a member of the presiding board of Iran’s parliament, told local media on Saturday. “The traces of a mafia system are visible throughout the process.”

His claims echo those of other officials and state-linked media, who have openly described the industry as resembling an organised crime operation.

According to the latest figures released by state media, about 233,000 cars were manufactured or assembled in Iran in the first five months of 2026, compared with 366,000 the year before. Only about 25,000 vehicles were imported in that period.

Only a handful of state-linked companies or intermediaries are allowed to import vehicles, with duties plus value-added tax increasing final prices up to 200 percent.

The government and parliament have discussed lowering import tariffs this year, with no agreement announced so far.

The premiums are more visible for high-end cars, with a 2026 Toyota Land Cruiser VXR going for approximately 660 billion rials ($287,000) in Iran at the moment, while the same model is available for about $86,000 in the UAE. The same story applies to most other models, at different rates depending on the rarity of the vehicle and the availability of parts.

The price of a mid-range Chinese-designed SUV sold as Exeed VX in international markets is listed at about $32,000 in China, while it is priced at about $42,000 in the UAE. The same car, assembled from imported parts by a state-linked company in Iran under a different name, currently costs Iranian customers the equivalent of $53,000.

The bizarre situation was on full display during a three-day “international” car exhibition in Tehran last week that mostly featured Chinese-manufactured vehicles. These remain available in Iran despite the US sanctions, since Tehran exports almost all of its oil to China and barters this for goods, including cars.

Some domestic manufacturers and importers were absent, either because they had no products to offer or because they had angry customers who registered months ago to get vehicles they never received. Spare parts for some of the vehicles on display are currently either not available in the Iranian market or cost several times their price in international markets.

Even the cheapest vehicles offered at the exhibition were completely unaffordable to the average Iranian. It would take a worker on the minimum wage with standard allowances 50 years to buy an XPENG G9, a Chinese-made electric SUV priced at 120 billion rials ($52,150), on his or her salary, without spending a rial on food, housing or clothing.

Still, there were huge queues outside the exhibition centre each of the three days.

“It was sad because most people just came to take pictures with the cars they knew they could never afford,” a young man who attended the exhibition told Al Jazeera. “The doors of the cars were locked too.”

The Iranian lender has faced years of Western sanctions over alleged ties to Tehran’s nuclear programme.

Turkiye’s banking watchdog has revoked the operating licence of Iranian lender Bank Mellat’s branch in the Turkish city of Istanbul.

“It has been decided to revoke the operating licence of Bank Mellat, Head Office in Tehran, Istanbul Turkey Central Branch,” read the decision by the Banking Regulation and Supervision Agency (BDDK), published in the Official Gazette on Saturday.

The regulator said the decision was taken under a clause of Turkiye’s banking law allowing a bank’s licence to be revoked or withdrawn if its continued operation is deemed to pose a risk to depositors’ rights or to the security and stability of the financial system.

Bank Mellat has been subject to Western sanctions for years over accusations that Tehran was pursuing a nuclear weapon under the cover of a civil nuclear programme.

Those sanctions were lifted as part of a landmark 2015 deal between Tehran and world powers to curb Iran’s nuclear ambitions. However, the United States unilaterally pulled out of the agreement in May 2018, reimposing economic sanctions on the country.

Bank Mellat was hit by further US and Gulf sanctions in 2019 after being named as one of 25 entities linked to Iran’s Islamic Revolutionary Guard Corps (IRGC).

The Turkish notice did not cite the US measures or specify operational issues.

Earlier this month, the US Treasury Department imposed sanctions on a small Turkish investment bank and two subsidiaries over alleged ties to Iran.

The Treasury Department accused Golden Global Yatirim Bankasi Anonim Sirketi (Golden Global Bank) of facilitating “tens of millions of dollars’ worth of transactions for the Islamic Revolutionary Guard Corps-Qods Force” and providing the Iranian government with banking access to move its funds internationally.

Golden Global Bank has denied the accusations.

Magdalena Andersson will likely face several challenges as she tries to get Sweden’s other left-wing parties to unite.

Sweden’s opposition leader has officially begun talks to form a coalition government after the country’s left-wing bloc won a slim majority in last week’s election.

Magdalena Andersson, leader of the centre-left Social Democrats, was asked by Parliament Speaker Andreas Norlen on Friday to begin efforts to form a new government.

Norlen’s request follows the resignation of centre-right Prime Minister Ulf Kristersson, who stepped down on Thursday after the general election result was confirmed.

“I have now been tasked with exploring the possibility of forming a government. A task I undertake with great humility and will act constructively to put together a new government,” Andersson said in a statement posted on Instagram.

“My approach to the work that is now taking place is that all political forces now need to put party tactics aside and put Sweden and the Swedish people first.”

Andersson will likely face a series of challenges as she tries to persuade Sweden’s other left-wing parties to unite and form a new administration. The left-wing bloc won 176 of Parliament’s 349 seats in last week’s vote, securing a razor-thin majority of three seats.

Andersson is expected to seek the support of three other left-wing parties: the Greens, the Centre Party and the Left Party.

The socialist Left Party says Andersson will have to award some of its MPs cabinet posts to win their support. However, the liberal Centre Party insists it will not support such a government.

Andersson has until September 28 to form a government. If she fails, Kristersson, whose centre-right bloc won 173 seats, will try to form a coalition.

Coalition and minority governments are common in Sweden because the country has two major left- and right-wing blocs, both of which contain four parties.

The process of forming a government following the 2022 election took more than a month.

Kremlin calls UK’s support for Ukraine an endorsement of ‘terrorism’ after recent escalation of weapons supplies.

Russia has stepped up pressure on Ukraine’s allies, summoning Britain’s top diplomat in Moscow over arms shipments to Kyiv and seizing Russian assets of several Western firms.

The Russian Ministry of Foreign Affairs summoned Britain’s charge d’affairs, Danae Dholakia, on Friday, issuing a formal protest over the UK’s “further increase” in weapons to Ukraine.

“London is placing itself in the position of an accomplice to the bloody atrocities committed by the Kyiv regime, which can only be characterised as terrorism and war crimes,” the ministry said in a statement.

Britain has maintained its support for Ukraine and says it will stand “shoulder to shoulder” with Kyiv and will provide whatever military equipment it needs, saying just last month that it will share classified weapons information.

Moscow’s move comes the day after Polish Prime Minister Donald Tusk warned that Russia might be preparing to launch hybrid drone and missile strikes against countries that support Ukraine, including Poland. He said that such attacks would be framed as accidental, with the intention of weakening NATO states’ resolve to invoke collective defence provisions in the event of an attack on one of its countries.

French President Emmanuel Macron said on Friday that the threat posed by Russia’s shadow operations was growing across Europe and that Moscow had targeted ⁠⁠France with hybrid attacks in the past few ⁠⁠weeks.

“The Russian hybrid threat against Europeans and against France has intensified,” he said after a meeting with French political leaders.

France’s interior minister had met regional prefects to step up “vigilance in response to the Russian hybrid attacks”, Macron said, adding that he had ordered “the government to prepare a plan to protect our critical infrastructure” and the “most sensitive” defence industry and technology sites against drone and cyber-attacks.

Moscow seizes French, Swiss firms

As Russia steps up pressure on Ukraine’s political allies, it is also targeting Western companies.

Moscow has ordered the seizure of Russian businesses and assets of Swiss food giant Nestle and three French firms: retailer Auchan, DIY chain Lemana Pro (formerly Leroy Merlin) and logistics firm FM Logistics.

President Vladimir Putin signed a decree late on Thursday that changed the firms’ Russian operations to a new entity, LEV Management, which is managed by a Russian Ministry of Interior general, according to Novaya Gazeta Europe.

Nestle said it was still “assessing” the situation and its options but it remains “committed to taking all necessary steps to protect its rights”.

Kremlin spokesman Dmitry Peskov told reporters on Friday that one of the reasons behind the decision was because Nestle and Auchan are companies from “unfriendly” countries.

Their assets are only under “temporary administration” and that no decisions have been taken as of yet, Peskov added.

Overnight Russian strikes hit multiple regions in Ukraine, sparking several fires across the country, as President Volodymyr Zelenskyy is to host the inaugural Carpathian Eight summit of several European countries.

They include Romania, Poland, Slovakia, Czech Republic, Austria, Hungary and Serbia, with the European Union also set to discuss regional cooperation.

Hungary and Slovakia have refused to send Kyiv direct military assistance in the past, though Poland and Romania remain staunch allies.

Bank of Japan raises benchmark interest rate from 1 to 1.25 percent, pledging to help counter inflation risks.

The Bank of Japan (BoJ) has raised interest rates by 0.25 to 1.25 percent, pushing borrowing costs to their highest level in 31 years, amid rising inflation and wages, and pressure from Washington.

The move on Friday marked the first hike since June, and takes interest rates closer to levels the BoJ deems neutral to the economy, marking another step away from decades of ultra-low rates that cemented the yen’s status as a cheap global funding currency.

Japan is grappling to contain inflation, which is being driven by factors including rising energy prices, global supply pressures and domestic inflation exceeding the 2 percent target.

Core consumer inflation held steady near the target in August, data showed on Friday, as companies continued to pass on rising costs for a wide range of food and grocery items.

The country also faced a “slow-moving demographic shock” with a shrinking labour pool lifting wages, a structural factor that ⁠cannot be dismissed as temporary, BoJ Executive Director Koji Nakamura said on Monday.

The Federal Reserve’s rate hike on Wednesday, and the prospect of another one later this year, have added pressure on the BoJ to keep pace.

Further widening of the United States-Japan rate gap risks weakening the yen and lifting inflation through higher import costs, analysts told the Reuters news agency.

Its policy rate also remains lower than the European Central Bank, which raised its key rate to 2.5 percent last week.

Such pressure could affect the tone of BoJ Governor Kazuo Ueda’s post-meeting briefing, which will be closely watched by markets for clues on the timing and pace of further increases.

Iran’s missiles and drones have downed dozens of US aircraft, damaged or destroyed hundreds of the United States’ buildings at its bases in the Middle East, and drained its inventories of military equipment worth billions of dollars, the Pentagon conceded earlier this week.

On Wednesday, Tehran unleashed another unlikely weapon in its war against the US: a maths equation.

Iranian Parliament Speaker Mohammad Bagher Ghalibaf, who has also been a lead negotiator during talks between Tehran and Washington at different stages during the past six months, typed out a version of the Taylor equation, a formula used by central banks to determine interest rates, in a post on X loaded with a wartime message.

“Let’s see if a hike could open SOH or produce a single barrel,” he wrote, referring to interest rate hikes and the Strait of Hormuz, a crucial waterway Iran has effectively blocked for global shipping.

“You can’t 25bp [basis points] a chokepoint,” he added, seemingly again referring to the strait. “It’s SOH risk premium, and We set it.”

Hours after Ghalibaf’s post, the US Federal Reserve did raise the benchmark interest rate by 25 basis points.

Early in the war, which was launched by the US and Israel against Iran on February 28, Ghalibaf frequently used financial arguments to mock how the conflict was being conducted by the administration of US President Donald Trump, to point to Iran’s ability to hurt Washington economically unless it changed its approach.

Now he’s turned to maths.

“This is a spectacular bit of agitprop from Iran, a country which, if nothing else in 2026, has demonstrated an impressive ability to needle its US opponent,” Chris Beauchamp, chief market analyst at IG Group, told Al Jazeera.

But what exactly is Ghalibaf trying to say? What is the Taylor equation, has the Iran war influenced the US interest rate, and does Tehran “set it”, as the parliament speaker has suggested?

What is the Taylor equation that Ghalibaf cited?

The rule is a formula economists use to estimate where a central bank should set interest rates based on inflation and the strength of the economy.

Developed by economist John Taylor in the early 1990s, the rule links the US federal funds rate to inflation and the “output gap” – the difference between actual economic output and its potential.

In its simplest form, the formula is:

Interest rate = inflation + 0.5(output gap) + 0.5(inflation − 2%) + 2%.

This means the recommended interest rate rises when inflation moves above the 2 percent target or when economic output exceeds its potential. It falls when inflation weakens or the economy operates below potential.

However, the equation is a benchmark, not a set rule that is strictly followed. Policymakers at the US Federal Reserve weigh other economic factors when setting interest rates.

Is the Iran war a factor in the US interest rate hike?

Trump’s tariffs, the energy shock following the US-Israeli war with Iran, and heavy investment associated with the artificial intelligence boom, taken together, have kept inflationary pressures strong, experts say.

On Wednesday, when the US Federal Reserve raised interest rates by 25bp, it was the first increase in three years.

Fed Chairman Kevin Warsh, in his speech following the rate hike, said renewed fighting between the US and Iran, which has pushed up petrol prices, helped convince Fed officials to support higher rates.

“There’s no hiding from hot spots around the world,” Warsh said.

IG Group’s Beauchamp said, “The Iran war, indirectly, is a huge driver of last night’s hike, though no one wants to admit it.”

“The energy spike has combined with the rise in yields to drive the Fed into a corner with no way out,” he said.

Susannah Streeter, chief investment strategist at the Wealth Club, said there is “no denying” that Iran’s retaliatory action against the US and its allies across the Gulf region has “intensified concerns about energy supplies and led to hotter inflation forecasts”.

“The ongoing geopolitical turmoil and elevated crude prices certainly were key issues behind the Fed’s decision to hike rates,” she said.

Is Iran ‘setting’ the US interest rate?

In short, no.

Wealth Club’s Streeter cautioned that while the war in the Middle East and rising oil prices were certainly an element in the Fed’s decision, they weren’t the “only factors at play”.

“The spending might of AI hyperscalers has also pulsed through the veins of the economy, with strong capital investment and resilient domestic demand adding to inflationary pressures, so policymakers will have been looking at the whole picture,” she noted.

“So, while Tehran has arguably had an influence on some of the forces feeding into US monetary policy, particularly through the impact of the conflict on oil supplies and prices, it is not ‘setting’ US interest rates.”

Streeter said the US Federal Reserve was responding to a much broader set of economic conditions.

“Iran’s actions have affected the inflation outlook, but the decision on where to set interest rates ultimately rests with the Federal Reserve, and there are plenty of other data points policymakers use,” she noted.

What’s behind Ghalibaf’s maths mocking?

In March, Iran’s parliamentary speaker had repeatedly used social media to comment on markets and energy prices, including mocking efforts by the Trump administration to influence oil futures and arguing that financial manoeuvring could not create “actual fuel” at petrol stations.

Last month, Ghalibaf posted a graphic bearing the phrase “Make America Hungry Again” – a play on Trump’s slogan “Make America Great Again” – together with statistics on food insecurity and hunger in the US.

“You can’t cover up defeats with false claims,” he said.

They also agreed to expand air travel and reinstate direct flights between both countries.

Israel and Morocco have agreed to upgrade their diplomatic ties, including elevating their respective missions to embassies and appointing ambassadors to both countries.

A meeting between the two countries’ foreign ministers was hosted by the United States ambassador to the United Nations, Mike Waltz, in New York on Wednesday.

Israeli Foreign Minister Gideon Saar and Moroccan Foreign Minister Nasser Bourita also agreed to advance economic and trade relations, including completing two agreements by the end of this year on investment protection and preventing double taxation.

“[The] establishment of full diplomatic, peaceful and friendly relations between Morocco and Israel is in the common interest of both countries and will advance the cause of peace,” the US mission to the UN said in a joint statement on behalf of all three countries.

The two sides also agreed to expand air travel, including by reinstating direct flights operated by carriers from both nations, and confirmed plans for high-level bilateral visits in the coming months.

The announcement comes just a day after the sixth anniversary of the Abraham Accords, an initiative spearheaded by US President Donald Trump during his first term in office. The United Arab Emirates, Bahrain, Morocco, Sudan and Kazakhstan have all joined the accords, which are aimed at normalising ties between Arab and Muslim-majority countries and Israel.

DEVELOPING STORYDEVELOPING STORY,

The 25 basis-point hike is the first raise in three years and comes ahead of critical midterm elections in the United States.

The United States Federal Reserve has said it will raise interest rates by a quarter of a percentage point as inflation, driven by soaring fuel prices amid the US-Iran war, continues to weigh on the economy.

The Fed, which is the central bank of the US, said on Wednesday that it will hike interest rates by 25 basis points to 3.75 percent to 4 percent.

It is the first hike in more than three years and comes just weeks before the US midterm elections, despite repeated demands from US President Donald Trump to lower rates.

“Economic activity is expanding at a solid pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient,” the Fed said in a statement on Wednesday.

“Inflation remains elevated. Today’s policy action will support a timelier return to the Committee’s 2 percent goal. The Committee will deliver price stability.”

After Wednesday’s hike, Fed officials expect one more rate increase this year, according to their quarterly projections.

CME FedWatch, which tracks the likelihood of monetary policy decisions, forecast a 92.3 percent chance of the Fed increasing rates to 3.75 to 4 percent. A week ago, that forecast was a 40 percent chance of a quarter-percent rate increase.

But in the days since, a slew of data shifted those expectations.

For one, consumer prices jumped in August by 0.4 percent, the highest increase in four months. On an annual basis, prices rose 3.4 percent, matching the increase recorded in July, while the job market remains healthy.

Since then, benchmark crude oil prices have continued to soar as strikes in the US-Israel war on Iran have intensified. Brent crude hovered near $109 per barrel on Tuesday.

The average price for a gallon (3.8 litres) of petrol is $4.36, up 14 cents in the past week, and up from $4.06 in the last month, according to the American Automobile Association (AAA), which tracks daily petrol prices.

Diesel, on the other hand, was at $6.31, the highest recorded average and roughly double from a year ago. That, in turn, is expected to further stoke prices as diesel is used in trucks to haul everything from fruits and vegetables to steel and cement.

At the same time, the benchmark 10-year Treasury yield broke above the psychologically important 5 percent threshold on Tuesday, hitting 5.02 percent, its highest level in 19 years. The yield serves as a benchmark for borrowing costs, including car loans and home mortgages, and is a bellwether for inflation.

“The economy is in an unusual place,” Michael Klein, professor of international economic affairs at Tufts University’s Fletcher School and executive editor of EconoFact, a nonpartisan economic and social policy publication, as unemployment remains at a comfortable level while higher prices continue to stick, sending inflation beyond the Fed’s target of 2 percent.

“There [has been] a lot of pressure on Chairman Warsh to raise interest rates because of inflation coming in high, and that has been compounded by concerns about Trump’s pressure” as the president has continued to demand that interest rates be lowered, Klein said.

“Higher interest rates tend to weaken the economy… but if the market believes that there’s going to be a rate increase, it’s priced in already as prices move on news, so this won’t be news,” Klein said, adding that should help steady yields.

Prices spiked as attacks on oil tankers escalated in the Middle East.

Oil prices have increased by four percent, with benchmark Brent crude hitting $105 a barrel after the biggest rise in attacks on shipping since the Iran war began spurred trader concerns about further supply disruptions.

Brent crude futures were up $4.05, or four percent, at $105.26 a barrel by 1215 GMT on Thursday. United States oil topped $100 a barrel for the first time since May, as West Texas Intermediate crude futures CLc1 rose $3.99, or 4.15 percent, to $100.04.

Brent prices have surged by more than 30 percent from lows touched in early August, as a permanent agreement between the US and Iran to cease attacks never materialised and fighting resumed.

Iran-aligned Houthis seized control of Yemen’s port of Mocha on Thursday, further threatening Red Sea traffic, while Gulf traffic remains restricted through the Strait of Hormuz as tanker attacks in the region have intensified in recent days.

“The recent run-up in prices lays bare the market’s approach: this conflict will last longer than anticipated even a month ago, let alone at the beginning of the summer. If oil supply and exports are diminished, the oil balance remains tight and prices remain elevated,” PVM analyst John Evans said.

Iran said it had attacked 10 ships near the Strait of Hormuz on Wednesday, after the US hit five Iranian oil tankers. Iran’s Islamic Revolutionary Guard Corps said it would escalate its response to any further attacks.

While fears of prolonged and more severe supply disruptions in the Gulf have lifted Brent above $100, analysts say the durability of the rally will hinge on China.

Chinese demand

China, the world’s largest crude importer, has stepped up purchases in recent weeks after months of subdued demand, boosting physical crude markets, ING analysts said in a note.

If Chinese buying continues to recover, it could amplify the impact of any supply disruptions and drive prices higher, while a pullback in imports could temper market gains, ING said.

“For months, the bearish case rested on soft Chinese demand,” said David Jorbenaze, global oil market lead at commodities information provider, ICIS.

Rising oil prices have worsened worries about inflation and cranked up pressure within the bond market, helping to lower stocks again on Wall Street.

The S&P 500 fell 0.6 percent and is on track for a fourth straight loss.

The increase in oil prices has pushed the price for a gallon of regular petrol to an average of nearly $4.28 across the US, according to the American Automobile Association. That is not only costing more at the pump but also through higher prices for all kinds of products that move by truck to store shelves.

Following Thursday’s reports, traders are betting on a close to 70 percent chance the Fed will raise the federal funds rate at its meeting next week. That’s up from the 61 percent probability seen the day before, according to data from CME Group. That’s also despite President Donald Trump’s consistent lobbying for interest rates to go lower rather than higher.

Bettiah, India – Neyaz Miya was adjusting a kitchen handle. Mehadi Hassan was fixing a bracket for a bed.

They were at different construction sites – Miya in a half‑constructed home, a little higher up the hill, while Hassan was on the ground floor of Ganesh Hotel, closer to the Trishuli River that flowed through Syafrubesi, a bustling market town near the Nepal‑Tibet border, now wiped off the map by the August 26 flash floods.

More than 1,200 bodies have been recovered since then, at least 4,000 people remain missing, and more than 13,000 have been rescued.

“First came the terrifying loud sound. Then the ground trembled, and dark clouds descended upon us,” recalls 34‑year‑old Miya, who ran further up the hill with his phone and slippers that morning, five or six others running alongside him.

Hassan, lower on the slope, did not wait to reach for his slippers or his phone. He just ran, climbing a narrow, stair‑like path, up the hill, stopping only when he reached roughly 60 metres (200ft) above the road.

At some point, Miya and Hassan found each other. Around them were 60 to 70 other survivors who had also gathered high up on the hill.

A decade earlier, Miya had arrived in Syafrubesi as a carpenter. Three years later, he brought Hassan with him – both men from Bihar’s Bettiah district. Over the years, they built the town’s interiors – sofas, beds, almirahs, and kitchens for hotels and homes.

On that Wednesday morning, they watched all of that washed away. The multi‑storey hotels where they had worked – Red Panda, Garden Hotel, Buddha Hotel, Sunrise Hotel – were all swallowed by the flood.

“The town was gone in a blink,” Miya recounts, now sitting in his home in Turhapatti village of Bihar, India, just across the Nepal border. “There were only three kinds of people who survived that day: Those who were out of town, those who were at work and managed to run, and those who lived a little higher up the hill.”

Based on what he witnessed, Miya says only a few hundred people in Syafrubesi, a town that had a population of 2,271 in the 2011 census, likely survived.

Miya and Hasan are among them. Three of their close friends and colleagues, also migrant workers from Bihar, are not.

A workday like no other

When the floods reached Syafrubesi, the men were already at work: Their shifts began at seven in the morning.

“To start at seven, we would wake up at four or five,” Miya recalls. They would leave with empty stomachs and were fed tea with doughnuts or biscuits at the construction site by building owners. Their first break came at 11am, when they returned to the rented one‑room space (3,500 Nepali rupees or $23 a month) that housed five to seven migrants at a time.

On the morning of August 26, they left for work alongside 34‑year‑old Arman Ansari, 20‑year‑old Samir Ansari, and 52‑year‑old Mukhtar Ansari, all migrants from Miya’s Turhapatti village.

In the rented room, two teenage boys, Arman’s 14‑year‑old son, Salman Alam, and his friend Shibu Alam, 17, remained asleep. They had come a month earlier to visit the hills.

“My father had cooked meat bhaat (rice with meat),” Salman recounts. He was waiting for his father to return at 11am so they could eat together.

Arman, his father, was working beside Hassan on the ground floor, pasting sunmica onto the same bed. Samir and Mukhtar were on the top floor of the Full Moon Hotel.

When Hassan ran out of the under-construction building and up the hill, he believed Arman was behind him. But by the time Hassan and Miya met higher up, there was no sign of the other three: Arman, Samir and Mukhtar.

Miya and Hassan found the boys, Salman and Shibu, terrified, on the hill. “Salman was crying, howling and searching for his father,” Hassan said.

The flood, which came with a high speed, took half an hour to recede. Soon, helicopters started hovering above them, airlifting the critically injured.

The four of them – Miya, Hassan and the boys – walked down the hill on foot to search for the three missing in the debris. They found nothing but sludge. Miya’s furniture-cutting tools and machines, worth 80,000 Nepali rupees ($530), were buried in the debris.

When they got back to their room, perched high on a slope, they found that it had survived.

But the army had taken charge, and soldiers herded survivors away from tenements near the river. “They said it [the flood] might come again,” Miya recalls.

They slept that night in a government school building in a village, he says. “At night, we were given daal bhat (rice and daal), and we wrapped ourselves in tarpaulin and slept.”

The next morning, a helicopter took them to another village. From there, another helicopter carried them to an army compound in a town. In the evening, they teamed up with five other migrants and hired an SUV to reach Nepal’s capital Kathmandu, each paying 3,500 rupees ($23).

The next morning, on August 28, they hired another SUV, which charged them 950 rupees ($6) each for a distance of 290km (180 miles) to Birgunj, a town on the India-Nepal border. They then crossed the border on foot before boarding buses for their villages.

It wasn’t the homecoming Indian migrants who work in Nepal usually plan.

‘No regular work’ back home

Turhapatti is among thousands of villages tucked along the 1,715km (1,066-mile) stretch of the India-Nepal border, where generations have crossed back and forth in search of work.

The two countries share an open border, and on both sides, especially in Bihar, the bond is known as a roti-beti ka rishta (a relationship of food and daughters), alluding to ties of livelihoods and matrimonial kinship. People live, work, and marry across the border.

Kathmandu is as close to Turhapatti as is Patna, the capital of Bihar. Per its 2021 Population and Housing Census, Nepal had 700,000 foreign-born residents, 97 percent of them from India.

Miya and Hassan say the wages for a carpenter or a mason on the Indian side are between 600-700 rupees, while for the same work in Nepal, wages are about 900 rupees. That drives migrant workers from India over the border into Nepal.

Nepal, for its part, is facing a major out-migration crisis — its per capita income is the lowest in South Asia, barring Afghanistan, and hundreds of thousands of young men and women leave each year to find work elsewhere. This creates a demand for migrant workers from Bihar, India’s poorest state that lies just across the border.

In Turhapatti, Miya owns only 0.03 hectares (0.06 acres), not enough to feed his family of six children, wife and parents. In recent years, he transitioned from being a carpenter to a contractor, which allowed him to bring in more workers from Bihar.

He had been sending 30,000 Indian rupees ($315) back to his family every month.

Hassan has even less back home: He inherited a 6×8-metre (20×25ft) room from his father and no agricultural land. “There is no regular daily work here,” he says. He would send 15,000 Indian rupees ($157) home from Nepal each month for his wife and four children.

Their story echoes in most homes in Turhapatti. The village had a population of 16,000 people in the 2011 census, India’s latest one. In nearly every household, men have left to work in other parts of India and abroad as carpenters, masons, or labourers mixing cement and sand into mortar.

The destinations are Kashmir, where close to 700 men from the village work; Nepal, with nearly 600; and thousands scattered across Indian cities: Chennai, Kolkata, Delhi, Mumbai. About 100 men have migrated to Dubai, Oman and Saudi Arabia.

The houses they built in Turhapatti stand in stark contrast to those of those who remain in India. The marble-fronted and iron-gated homes belong to men working in the Gulf, while semi-permanent dwellings belong to those who stayed behind.

Migrants in Nepal fall in between: Miya has been able to raise a brick house.

‘My body shivers at the thought’

This economic reality is what drove Arman Ansari to Syafrubesi. On July 26, Arman left for Nepal with Samir and Mukhtar. Arman’s son and his friend Shubu went with the three adults; the teenagers were on a trip to the hills.

Now, Arman’s brother-in-law. Jameel Miya, a carpenter in Kathmandu, scours the city’s hospitals for Arman’s body, telling authorities that his brother-in-law’s right hand and chest had deep scars, cut by shards of glass when he was young.

Arman’s wife, Sahrun Khatun, has only her last phone call with Arman to hold on to. They spoke two hours before the floods swept him away. “He was about to get his wages on September 1 and return home,” she says.

Salman, who had tagged along with his father to see the hills, hasn’t been able to sleep since the flood.

“The moment I close my eyes, I feel the flood is coming for me,” he says.

Mukhtar’s family lives a few lanes away.

Since the floods, Kasmun Khatun, Mukhtar’s wife, has been glued to the internet for any news of her missing husband. Joining her in that remote search are her daughter Asmana (18) and son Sadre Alam (14).

Her eldest son, Osama, 25, a tailor in Kathmandu, has been busy searching for his father in city hospitals.

“After waiting for a week and watching the videos, I submitted my DNA samples,” he says over a phone call. Osama manages to send home 6,000 rupees ($63), but that is no longer enough – his mother needs eye surgery that has already been delayed and cannot be put off much longer.

“The guardian has gone, all of a sudden,” he says, referring to his father.

At the far edge of Turhapatti stands the home of Samir Ansari, the youngest among the missing migrants and youngest of his five migrant brothers.

The Ganesh Hotel project he was working on was only three days from completion.

“He said he found another site to work on,” recalls his father, Hasmuddin Miya, remembering their last phone call on the evening of August 25.

Samir was a mason who specialised in marble tiles, a skill he had learned in Kashmir while working under his elder brothers at construction sites.

The three families are preparing to host a bhoj, the funeral feast – a custom of feeding hundreds of people – having given up on hope.

Meanwhile, the two survivors, Miya and Hassan, are already making calls to find work again. This time, their search turns towards Nepal’s plains. They pledge never to return to the hills.

“My whole body shivers at the thought of going there,” says Hassan.

For more than a decade, governments got used to cheap borrowing. That era may now be ending.

Government bond markets are flashing warnings around the world.

Across major economies, yields – the interest rates governments pay to borrow – are climbing to levels not seen in years and, in some cases, decades.

Investors are pricing in more risk before they’ll lend to governments already carrying heavy debt loads.

Inflation remains stubborn, geopolitical tensions are adding pressure, and central banks may have to keep interest rates higher for longer.

Those higher borrowing costs are pushing up what banks charge companies and homeowners.

London, United Kingdom – In a wheat field near High Wycombe in the rolling English countryside, Alex Nelms watched the harvest on his farm die in a matter of days.

His crop had looked strong until the first heatwave came in May, when temperatures surpassed 35 degrees Celsius (95 degrees Fahrenheit) just as his milling wheat entered its grain-fill phase, the critical weeks when the plant fattens its kernels.

“It just killed everything stone dead,” he told Al Jazeera. “Everything was finished really early, and when we were sort of full of optimism and hope, it was scuppered almost overnight.”

Nelms farms just over 2,000 acres (809 hectares) of arable land in south Buckinghamshire, on a business his grandparents founded in 1955. His uncle, who has worked the farm for more than 40 years, has just suffered the worst harvest of his career.

Last month, the Department for Environment, Food and Rural Affairs (Defra) said almost three-quarters of England, 71.3 percent, remained in drought. Rainfall in August reached just 34 percent of what would normally be expected by that point in the month, Defra said, and reservoir levels were 18.2 percentage points below where they should be for the time of year.

“We’re totally reliant on Mother Nature,” Nelms said, and nature did not deliver this year.

After a historically dry spring and a run of summer heatwaves, the farm is down roughly 1,000 tonnes on its average harvest, a shortfall of some $270,000 in revenue.

The farm, tucked in the Chiltern Hills, a steep, long ridge of white limestone rock, has no irrigation and never will.

“That has serious knock-on effects on our cash flow,” he said. A third consecutive difficult year would mean hard conversations with his bank and landlord, and farming to minimise risk rather than maximise output, “consequently, probably producing less food”.

‘Financial crisis point’

The National Farmers’ Union (NFU) says farmers are at a “financial crisis point” after the worst drought in 50 years, with historically low harvests, stunted grass growth, rising fuel and fertiliser costs, and a severe outbreak of bluetongue disease in livestock.

The union puts the gross production value loss of wheat at approximately $499m and the cost of replacing a shortfall in forage at roughly $45m.

NFU president Tom Bradshaw has said farmers now lack “breathing space” and are “increasingly exposed to geopolitical shocks, as well as repeated weather extremes, animal disease and global wars”.

He believes action is needed now to ensure the future of British farming “and enable the next generation to keep producing the nation’s food”.

To manage the risk, Nelms is diversifying, planting oilseed rape again on about 350 acres (142 hectares) for the first time in 20 years. He says that the crop’s usual insecticide protection, neonicotinoid seed treatments, is now banned, leaving it exposed to cabbage stem flea beetle and to game birds that can “absolutely nibble, eat, and destroy a crop”.

Growing it also means breaking a continuous wheat rotation that has kept a soil-borne disease called “Take-all”.

Tax allowances would make investing in grain storage and diversified income worthwhile, he said, as well as government-backed bridging loans, modelled on COVID-era support, to survive a bad year without permanent damage.

It is the kind of relief the NFU is pressing the government to provide nationally.

The union wants an interest-free “Keep Britain Growing” loan tied to drought losses, help covering the cost of disposing of livestock lost to bluetongue, faster planning permission for on-farm reservoirs, and clearer rules letting farmers access water as soon as levels allow, echoing Nelms’s case for storage on his farm.

“Drought conditions will continue to worsen until we receive sustained rainfall across the country and we still all have a role to play in conserving precious water supplies,” according to Philip Duffy, the Environment Agency’s chief executive, in a statement shared by Defra.

The Environment Agency has applied for a drought order to restrict abstraction from the River Severn, and 10 water companies, serving 30 million customers, now have restrictions in place.

“A few days or even weeks of wetter weather cannot reverse the impacts of several months of exceptionally dry conditions,” added Duffy.

Defra noted that the first meaningful rains since June have fallen but they have been patchy, so reservoirs and groundwater are still declining even as a handful of rivers see brief upticks in flow.

Despite the losses, Nelms is hopeful about farmers pulling together – sharing labour, machinery and market routes. He points to the Central Chiltern Farmer Cluster, where growers meet to talk through their problems and find solutions together.

“We’re working together, not competing with each other,” he said.

For a farm like Nelms’s, with no irrigation and no water in reserve, that patchiness is the problem. Soil parched from months without rain needs to absorb sustained rainfall before groundwater can even begin to recharge, let alone refill the reservoirs a future harvest might depend on.

“Our climate has changed,” Water Minister Emma Hardy, who chairs the National Drought Group, said late last month, “and we will continue to take all action necessary.”