Wall Street rally pauses after underwhelming revenue forecasts

By April Joyner

NEW YORK (Reuters) – U.S. stocks edged lower on Wednesday as videogame makers gave disappointing revenue forecasts and investors awaited developments on U.S.-China trade relations.

The benchmark S&P 500 and the Nasdaq were weighed by declines in shares of Electronic Arts Inc, which tumbled 13.3 percent after the videogame publisher forecast full-year revenue below Wall Street estimates. The sharp drop pulled down shares of rival videogame publisher Activision Blizzard Inc, which fell 10.1 percent.

Shares of industry peer Take-Two Interactive Software Inc also dropped sharply, 13.8 percent, after the company’s similarly underwhelming forecast.

The slump in videogame stocks contributed to a 1.5 percent decline in the S&P 500 communication services sector, the largest drop among the S&P’s major sectors.

Despite the fall, Wall Street’s indexes remained near two-month highs. A 7.3 percent gain in the S&P 500 would put the index above its record closing September high.

“The market is feeling a little exhausted after we’ve had a nice run in January and early February,” said Nathan Thooft, global head of asset allocation at Manulife Asset Management in Boston.

Investors cited a void of catalysts for market gains.

“Trade talks are probably the thing that’s really intriguing to the market, but that’s in March,” said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh, referring to the deadline for the United States and China to reach a trade agreement before additional tariffs go into effect.

The Dow Jones Industrial Average fell 21.22 points, or 0.08 percent, to 25,390.3, the S&P 500 lost 6.09 points, or 0.22 percent, to 2,731.61 and the Nasdaq Composite dropped 26.80 points, or 0.36 percent, to 7,375.28.

U.S. Treasury Secretary Steven Mnuchin said trade talks with China last week were “very productive” and confirmed that he and other officials will travel to Beijing for the next round of meetings.

Federal Reserve Chairman Jerome Powell will speak on Wednesday at 7:00 p.m. ET (0000 GMT) in Virginia.

Though the major indexes drooped, the Philadelphia SE Semiconductor Index advanced 2.6 percent. Shares of Apple supplier Skyworks Solutions Inc jumped 11.5 percent after the company announced $2 billion in stock buybacks, while shares of Microchip Technology rose 7.3 percent after the company suggested the chipmaker industry was close to recovery from its recent downturn.

Shares of Capri Holdings Ltd, formerly Michael Kors, climbed 11.3 percent after the fashion company posted a better-than-expected quarterly profit and raised its revenue forecast.

Anadarko Petroleum Corp shares slid 7.4 percent after the oil and gas producer’s fourth-quarter profit missed analyst estimates.

Declining issues outnumbered advancing ones on the NYSE by a 1.50-to-1 ratio; on the Nasdaq, a 1.09-to-1 ratio favored decliners.

The S&P 500 posted 17 new 52-week highs and two new lows; the Nasdaq Composite recorded 39 new highs and 17 new lows.

Volume on U.S. exchanges was 6.70 billion shares, compared to the 7.50 billion average over the last 20 trading days.

(Reporting by April Joyner; Additional reporting by Medha Singh and Amy Caren Daniel in Bengaluru; Editing by Shounak Dasgupta and Susan Thomas)

Trump nominates critic of global institutions to lead World Bank

By David Lawder

WASHINGTON (Reuters) – U.S. President Donald Trump said on Wednesday that the World Bank Group should be led by U.S. Treasury official David Malpass, a Trump loyalist and critic of multilateral institutions who has vowed to pursue “pro-growth” reforms at the development lender.

Trump’s nomination of Malpass, the Treasury Department’s top diplomat, is subject to a vote by the World Bank’s executive board and could draw challengers from some of its 188 other shareholding countries.

The United States is the largest shareholder with 16 percent of its voting power and has traditionally chosen the bank’s president, but Jim Yong Kim, who stepped down from the job on Feb. 1, faced challengers from Colombia and Nigeria in 2012.

The nomination of Malpass signals that the Trump administration wants a firmer grip on the World Bank. He was an economic adviser to Trump’s 2016 election campaign.

Malpass, Treasury undersecretary for international affairs, a job in which he oversees the U.S. role in the World Bank and the International Monetary Fund, has criticized them for growing ever larger, more “intrusive” and “entrenched.”

He also has pushed the bank to cut back lending to China, which he argues is too wealthy for such aid when it is saddling poorer countries with debt in its Belt and Road infrastructure drive.

Last year, as part of a $13 billion World Bank capital increase, Malpass helped negotiate reforms aimed at refocusing resources toward the poorest countries and winding down lending to China.

“He has fought to ensure financing is focused on the places and projects that truly need assistance, including people living in extreme poverty,” Trump said in announcing his choice at the White House with Malpass by his side.

Malpass said at the White House he would work to implement these reforms and also focus on women’s economic empowerment.

“I’m very optimistic that we can achieve breakthroughs to create growth abroad that will help us combat extreme poverty and create economic opportunities in the developing world,” Malpass said.

Malpass will continue to participate in U.S.-China trade negotiations as he campaigns for the World Bank presidency. He will join a delegation heading to Beijing for more talks next week, a senior Trump administration official said.

But as Trump’s “America First” trade agenda and tariff war with China puts strains on many developing economies, some development experts say that Malpass’ candidacy will be a difficult sell.

“David Malpass will have a lot of work to do to convince other shareholders that he is prepared to move beyond his past statements and track record when it comes to the World Bank’s agenda,” said Scott Morris, a former U.S. Treasury development finance official who is now a senior fellow at the Center for Global Development in Washington.

Morris said that includes the global lender’s role in climate finance and “the need for constructive engagement with China.”

By naming Malpass a day before the World Bank board begins a month-long nomination process, Trump could deter the emergence of other candidates.

Malpass would honor the bank’s standards and obligations, including its initiatives to combat climate change, the senior Trump administration official said.

If approved, Malpass would replace Kim, a physician and former university president who resigned more than three years before his term ended to join private equity fund Global Infrastructure Partners. Kim had differed with the Trump administration over climate change, effectively ending the bank’s financing of coal-fired power projects.

Malpass served in Treasury and State Department roles during the Ronald Reagan and George H.W. Bush administrations and at investment bank Bear Stearns where he was chief economist before its 2008 collapse.

(Reporting by David Lawder and Jeff Mason; Editing by Jeffrey Benkoe and Grant McCool)

Eli Lilly backs U.S. proposal on drug rebates to lower costs

The logo and ticker for Eli Lilly and Co. are displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 18, 2018. REUTERS/Brendan McDermid

By Tamara Mathias

(Reuters) – Eli Lilly and Co on Wednesday embraced a U.S. government proposal to end a decades-old system of rebates drugmakers make to industry middlemen, saying it could lower the cost of insulin and other prescription drugs for patients.

Lilly, along with other major insulin makers, Sanofi SA and Novo Nordisk, has been under mounting pressure from patients and politicians over the rising cost of the life-sustaining diabetes treatment.

“While it’s still a proposal, we see this as … a win for patients, lowering their out-of-pocket costs at the pharmacy counter with the greatest benefit realized by patients taking more highly-rebated products such as insulin,” Chief Executive David Ricks said on a call with analysts.

Drugmakers argue they have to keep prices high because of the rebates they must pay to pharmacy benefit managers and health insurers to get products on their lists of covered drugs. In January, the administration of U.S. President Donald Trump proposed a rule that would end the rebate system or pass along the savings to patients.

“We’ll adapt to whatever rules come out and how they get finalized,” Ricks said.

Lilly on Wednesday also cut its 2019 profit and revenue forecasts to account for disappearing sales of its cancer drug Lartruvo, which won conditional U.S. approval in 2016 based on early data but last month failed to extend patient survival a confirmatory trial. Costs related to Lilly’s pending $8 billion acquisition of Loxo Oncology also contributed to the revised forecast.

Lilly has said it is suspending promotion of Lartruvo and it will no longer be prescribed to new U.S. patients.

The Indianapolis-based drugmaker’s research and development spending is also expected to rise as it develops Loxo’s pipeline of targeted drugs for cancers driven by rare genetic mutations.

The company said it now expects 2019 adjusted earnings of $5.55 to $5.65 per share, down from its prior forecast of $5.90 to $6.00. It expects revenue of $25.1 billion to $25.6 billion versus its prior view of $25.3 billion to $25.8 billion.

“The forecast cut was generally expected, given the Loxo acquisition and the Lartruvo failure were known events,” Edward Jones analyst Ashtyn Evans said.

“Diabetes will always be an area where we’ll see pricing pressure. Lilly fully takes that into consideration when giving guidance,” she added.

Excluding items, Lilly earned $1.33 per share, a penny shy of analysts’ average estimate, according to IBES data from Refinitiv.

Eli Lilly shares fell 1.3 percent to $118.82.

(Reporting by Manogna Maddipatla, Tamara Mathias in Bengaluru and Julie Steenhuysen in Chicago; Editing by Saumyadeb Chakrabarty and Bill Berkrot)

Pope says he is committed to stopping sexual abuse of nuns

Pope Francis gestures during a farewell ceremony before leaving Abu Dhabi, United Arab Emirates February 5, 2019. Vatican Media/­Handout via REUTERS

By Philip Pullella

ABOARD THE PAPAL PLANE (Reuters) – Pope Francis, whose papacy has been marked by efforts to quell a global crisis over sexual abuse of children by Catholic clergy, said on Tuesday he was committed to stopping the abuse of nuns by priests and bishops, some of whom had used the women as sex slaves.

Francis made his comments on the plane returning from Abu Dhabi in response to a reporter’s question about an article last week in a Vatican monthly magazine about the abuse of nuns in the Catholic Church.

Recently more nuns, encouraged by the #MeToo movement, have been coming forward to describe abuse at the hands of priests and bishops. Last year, the International Union of Superiors General, which represents more than 500,000 Catholic nuns, urged their members to report abuse.

“It is true … there have been priests and even bishops who have done this. I think it is still going on because something does not stop just because you have become aware of it,” Francis said.

“We have been working on this for a long time. We have suspended some priests because of this,” he said, adding that the Vatican was in the process of shutting down a female religious order because of sexual abuse and corruption. He did not name it.

“I can’t say ‘this does not happen in my house.’ It is true. Do we have to do more? Yes. Are we willing? Yes,” he said.

Francis said former Pope Benedict dissolved a religious order of women shortly after his election as pontiff in 2005 “because slavery had become part of it (the religious order), even sexual slavery on the part of priests and the founder”.

He did not name the group but Vatican spokesman Alessandro Gisotti said it was a French order.

Before he became pope, Benedict was Cardinal Joseph Ratzinger, the head of the Congregation of the Doctrine of the Faith, the Vatican department that investigates sexual abuse. The pope at the time was John Paul.

Then-cardinal Ratzinger wanted to investigate the religious order where women were being abused but he was blocked, Francis said, without saying who prevented the probe.

After he became pope, Ratzinger reopened the investigation and dissolved the order, Francis said.

Pope Francis has summoned key bishops from around the world to a summit later this month at the Vatican to find a unified response on how to protect children from sexual abuse by clergy.

Asked if there would be some kind of similar action to confront abuse of nuns in the Church, he said: “I want to move forward. We are working on it.”

(Reporting by Philip Pullella; Editing by Frances Kerry)

As opium poppies bloom, Mexico seeks to halt heroin trade

Soldiers cut opium poppies as they destroy a field of illegal plantation in the Sierra Madre del Sur, in the southern state of Guerrero, Mexico, August 25, 2018. REUTERS/Carlos Jasso

By Lizbeth Diaz

JUQUILA YUCUCANI (Reuters) – In the mountains of Mexico’s tropical Sierra, an ever-growing expanse of pink poppy flowers has pushed prices so low for opium paste, the gummy raw ingredient of heroin, that farmer Santiago Sanchez worries how he will feed and clothe his family.

The area of Mexico that illegally farms opium poppies grew by more than one-fifth last year, to an area the size of Philadelphia, according to a U.N.-backed study published in November.

A soldier burns an illegal opium plantation near Pueblo Viejo in the Sierra Madre del Sur, in the southern state of Guerrero, Mexico, August 24, 2018. REUTERS/Carlos Jasso

A soldier burns an illegal opium plantation near Pueblo Viejo in the Sierra Madre del Sur, in the southern state of Guerrero, Mexico, August 24, 2018. REUTERS/Carlos Jasso

That, along with a trend toward mixing synthetic opiate fentanyl in Mexico’s tarry black heroin, has slashed what criminal gangs pay farmers like Sanchez for a kilo of opium. Now, Sanchez earns about $260 per kilo, a fifth of the average price two years ago.

While Mexico’s top drug traffickers still make billions of dollars supplying U.S. addicts, at the bottom of the supply chain, the villagers are hardly surviving.

“We can’t keep living like this,” said Sanchez, who is a local leader in the remote Mixtec Indian village of Juquila Yucucani, where hundreds of poppy farmers have seen already meager incomes shrivel. “We can barely afford our food.”

HEROIN TRADE

In the United States, overdose deaths from opioids have increased almost six-fold in the past two decades, according to the Centers for Disease Control and Prevention. More than 15,000 people died of heroin overdoses in 2017 alone.

Heroin from Mexico accounted for 86 percent of the heroin found on U.S. streets, according to the Drug Enforcement Agency’s most recent annual narcotic report.

The heart of illegal poppy cultivation is in the hills of Guerrero state, in some of the poorest mountain districts – such as Juquila Yucucani, some 800 miles south of the U.S.-Mexican border. Guerrero is now among the country’s bloodiest states. 

Despite unprecedented violence across the country, Mexican President Andres Manuel Lopez Obrador said last week that the government had “officially” ended its war against drug trafficking, a military-led offensive launched in 2006 that led to a surge in bloodshed as criminal groups splintered.

The government’s focus will now be on meeting the needs of marginalized communities, Lopez Obrador said, as part of a broader strategy to curb an illegal drug trade that is thriving despite the capture of high-profile kingpins like Joaquin ‘El Chapo’ Guzman, who is on trial in New York for drug trafficking that spanned more than two decades.

Lopez Obrador has not entirely turned his back on using soldiers to tackle violence stemming from drugs – he plans to create a new militarized National Guard police force. But he is also exploring a crop substitution program, relaxing prohibition and amnesties for low-level drug dealers and farmers.

On a visit to Guerrero in January, Lopez Obrador pledged price supports for grains, including around $300 a tonne for corn, part of a strategy meant to give farmers alternatives to planting illicit crops.

“Here, in the hills, we are going to pay a little more, so that corn is planted and people are compensated for their effort. So that other crops are not planted,” he said.

Lopez Obrador has backed a legislative bill to legalize marijuana, and along with the former head of Mexico’s military and other members of his team, he suggested last autumn that legalizing medical opium could be part of the solution.

The government appears to be backing away from that idea after opposition from the United States.

“WE ARE NOT TRAFFICKERS”

The farmers in Juquila Yucucani do not consider themselves criminals and say current poppy eradication efforts by the army also sometimes destroy legal crops.

“They have killed the food crops that my family use to eat,” said Lazaro Lopez, 65, who said the military should apologize. Although Reuters could not independently verify Lopez’s account, human rights groups have documented military abuses in parts of Guerrero. The army did not respond to requests for comment for this story.

For Sanchez, who said his village would embrace legalization, crop substitution is a poor alternative.

Other than poppies, few plants take to the thin soil on Juquila Yucucani’s stony slopes. Some land is apt for planting mango or avocado trees, Sanchez said, but they would take years to mature. The narrow ribbon of twisted dirt road connecting the village to the outside world would make it almost impossible to transport bulky or delicate crops to markets, he added.

Arturo Garcia, a farmers rights activist in the state, said the government’s new ideas would only work if a really sustained and well-funded effort were made to offer residents a way out of the drug trade.

“The state must throw all its weight into this region so that it begins to alleviate the conditions that have allowed violence,” he said.

For now, several hours journey from the nearest hospitals or schools, Juquila Yucucani’s poppy farmers say they have two choices to make a living: sneak illegally into the United States, or grow poppies.

“We are not drug traffickers, we want a dignified life,” said elderly Nieves Garcia, who has grown poppies since she was a child and speaks a variant of the indigenous Mixtec language, but no Spanish. “My kids have left this place because there’s no way of getting ahead,” she said.   

For photo essay, please click on: https://reut.rs/2UJSwSF

(Writing by Michael O’Boyle and Frank Jack Daniel; Additional reporting by Michael O’Boyle; Editing by Diane Craft)

Palestinians warm to Netanyahu rival, citing signs of compromise

FILE PHOTO: Benny Gantz, a former Israeli armed forces chief and head of Israel Resilience party, delivers his first political speech at the party campaign launch in Tel Aviv, Israel January 29, 2019. REUTERS/Amir Cohen/File Photo

By Stephen Farrell and Dan Williams

RAMALLAH, West Bank/JERUSALEM (Reuters) – Palestinians warmed on Wednesday to Prime Minister Benjamin Netanyahu’s toughest election rival, a former top general who said Israel should not maintain its dominion over them.

With both a general election and the unveiling of a U.S. peace initiative on the horizon, the centrist candidate, Benny Gantz, has been signaling an openness to territorial compromise in the occupied West Bank. That marks a contrast with the right-wing Netanyahu, who has ruled out withdrawing settlements.

The secret U.S. proposal for breaking a five-year diplomatic deadlock is widely expected to be unveiled after Israel’s April 9 ballot. Pollsters see Netanyahu’s conservative Likud party winning around 30 of parliament’s 120 seats, setting him up for a fifth term.

In an interview on Wednesday with Israel’s Yedioth Ahronoth newspaper, Gantz was asked about prospects for accommodation with the Palestinians, who seek a state in the West Bank and Gaza Strip, with East Jerusalem as its capital.

“We need to find a way not to have dominion over other people,” Gantz said.

Gantz, whose new Resilience party is gaining ground against Netanyahu’s Likud with as many as 24 projected seats, has said he wanted to strengthen settlement blocs in the West Bank.

But he has not mentioned what might happen in any future peace deal to isolated settlements that are not incorporated into Israel if Palestinians are given a separate state.

Nabil Abu Rudeineh, a spokesman for Palestinian President Mahmoud Abbas, praised “the signs coming from Gantz about settlements”, calling them a step in the right direction should he win the election and prove “willing and ready” for peace.

“It’s encouraging, if he succeeds and he sticks to this opinion,” Abu Rudeineh told Reuters.

Most world powers consider Israeli settlements on land captured in a 1967 war to be illegal under the Geneva conventions. Israel disputes this, citing historical ties to the land, and has expanded the settlement population steadily, including during the past decade under Netanyahu.

Palestinians say settlements must be removed from their future state in any final agreement, although some could be ceded to Israel as part of an agreed swap for other land. The last peace talks collapsed in 2014, in part over the issue of settlements, and Abbas is boycotting the Trump administration, accusing it of being biased toward Israel.

In a statement, Likud said Gantz was planning to form a “leftist government” sympathetic to the Palestinians.

Gantz’ Resilience party said “no unilateral decision will be made on settlement evacuation” and that he would “maintain … non-negotiable security protections”.

Netanyahu cites the example of Gaza — where Israel unilaterally pulled out its settlements in 2005 and the Islamist group Hamas soon took control — as proof that removing settlements from the West Bank would be dangerous.

Gantz described the Gaza withdrawal as well executed, telling Yedioth: “We need to take the lessons and apply them elsewhere.”

The Trump administration has wavered over whether it would endorse a Palestinian state, saying the final outcome will be up to the sides to determine, but both may need to compromise.

(Additional reporting by Ali Sawafta; Writing by Dan Williams; Editing by Peter Graff)

International Red Cross steps up aid operations in Venezuela

People wait in line outside of a currency exchange house in Caracas, Venezuela, February 5, 2019. REUTERS/Andres Martinez Casares

GENEVA (Reuters) – The International Committee of the Red Cross has doubled its budget in Venezuela to 18 million Swiss francs in recent weeks and is also helping Venezuelan migrants in neighboring Colombia and Brazil, ICRC President Peter Maurer said on Wednesday.

The ICRC, a neutral independent aid agency, is working with the national Venezuelan Red Cross, mainly on health projects, and not taking sides in the political conflict between President Nicolas Maduro and opposition leader Juan Guaido, Maurer said.

“So that is a growing operation,” Maurer told a news briefing. “At the present moment, our concern and focus is really on the one side to increase our response to Venezuelans, and the other to keep away from the political controversy and political divisions which are characteristic to the crisis in Venezuela.”

(Reporting by Stephanie Nebehay; Editing by Hugh Lawson)

Trump asks U.S. Congress to prohibit late-term abortion

U.S. President Donald Trump gestures during his State of the Union address to a joint session of Congress on Capitol Hill in Washington, U.S., February 5, 2019. REUTERS/Jim Young

WASHINGTON (Reuters) – U.S. President Donald Trump called for curbs on late-term abortion in his State of the Union address on Tuesday, citing controversies over the issue in New York and Virginia.

Using emotive language, Trump waded into what has long been a divisive issue in American politics, even though the procedure was legalized in a Supreme Court ruling more than 40 years ago.

“To defend the dignity of every person, I am asking the Congress to pass legislation to prohibit the late-term abortion of children who can feel pain in the mother’s womb,” Trump said.

“Let us work together to build a culture that cherishes innocent life. Let us reaffirm a fundamental truth: all children – born and unborn – are made in the holy image of God,” he said.

The issue of whether a fetus feels pain has been raised frequently in recent years by abortion opponents pushing for more restrictions in state legislatures. Medical opinion on the issue is not conclusive.

With the confirmation last year of Trump’s pick for the Supreme Court, Justice Brett Kavanaugh, conservatives now have a 5-4 edge on the nation’s highest court, raising fears among abortion rights supporters that the 1973 Roe v Wade ruling could be weakened or overturned.

Currently, laws governing late-term abortions vary state by state.

Trump criticized a New York law enacted last month that provides strong abortion rights protections, including late-term abortions when the mother’s health is endangered.

In his speech, he said lawmakers in the state “cheered with delight” at the law “that would allow a baby to be ripped from the mother’s womb moments before birth.”

The Republican president also seized on a controversy surrounding Virginia Governor Ralph Northam, repeating Republicans’ accusations that Northam, a Democrat, advocated infanticide when he defended a bill that would have lifted restrictions on later-term abortions.

Northam has said his comments were misinterpreted. “Extrapolating otherwise is bad faith,” his spokeswoman, Ofirah Yheskel, said last week.

The embattled Virginia governor is facing a separate controversy over a racist photo in his 1984 medical school yearbook, but has resisted calls to resign.

(Reporting by Makini Brice and Doina Chiacu; Editing by Sonya Hepinstall)

‘Get out of Syria,’ Iran tells U.S.

Iran's President Hassan Rouhani speaks during his visit to the shrine of the founder of the Islamic Republic, Ayatollah Ruhollah Khomeini, south of Tehran, Iran, January 30, 2019. Official President website/Handout via REUTERS

By Babak Dehghanpisheh

GENEVA (Reuters) – Senior Iranian figures said on Wednesday that Syria was a top foreign policy priority and American troops should withdraw, as planned by U.S. President Donald Trump.

“Whether they want to or not, the Americans must leave Syria,” Ali Akbar Velayati, a senior adviser to Iran’s Supreme Leader Ayatollah Ali Khamenei, was reported as saying.

There are fears in the West that Trump’s plan to extricate about 2,000 soldiers from Syria will cede influence to Tehran, which has backed President Bashar al-Assad in the nearly eight-year war, and also allow Islamic State militants to regroup.

“Now 90 percent of Syrian soil is under the control of the government and the rest will soon be freed by the Syrian army,” Velayati added during a meeting with Syria’s Foreign Minister Walid al-Moualem in Tehran, according to the Tasnim news agency.

President Hassan Rouhani told Moualem that peace in Syria was a priority. “One of the important regional and foreign policy goals of the Islamic Republic is the stability and complete security of Syria,” Tasnim quoted him as saying.

“And establishing normal conditions in Syria and the return of the people of this country to their normal lives.”

Moualem was in Tehran for negotiations before the meeting of leaders of Russia, Turkey and Iran in the Russian Black Sea resort town Sochi on Feb. 14 over Syria.

Separately, Rear-Admiral Mahmoud Mousavi, a deputy commander of the regular armed forces, said on Wednesday that Iran plans to extend the range of its land-to-sea missiles beyond 300 kilometers (186 miles), according to the Fars news agency.

Iran has expanded its missile program, particularly its ballistic missiles, in defiance of opposition from the United States and expressions of concern by European countries.

Tehran says the program is purely defensive.

The European Union said on Monday it was gravely concerned by Iran’s ballistic missile launches and tests and urged it to stop activity that deepens mistrust and destabilizes the region.

(Reporting by Babak Dehghanpisheh; Editing by Andrew Cawthorne)

With eye on Afghanistan talks, Trump vows to stop ‘endless wars’

FILE PHOTO: U.S. troops patrol at an Afghan National Army (ANA) Base in Logar province, Afghanistan August 7, 2018. REUTERS/Omar Sobhani/File Photo

By Patricia Zengerle

WASHINGTON (Reuters) – President Donald Trump told Americans on Tuesday his administration had accelerated talks for a political settlement in Afghanistan and would be able to reduce U.S. troops there as negotiations advance to end America’s longest war.

U.S. President Donald Trump delivers his second State of the Union address to a joint session of the U.S. Congress in the House Chamber of the U.S. Capitol on Capitol Hill in Washington, U.S. February 5, 2019. REUTERS/Jonathan Ernst

U.S. President Donald Trump delivers his second State of the Union address to a joint session of the U.S. Congress in the House Chamber of the U.S. Capitol on Capitol Hill in Washington, U.S. February 5, 2019. REUTERS/Jonathan Ernst

“Great nations do not fight endless wars,” Trump said in his annual State of the Union address to Congress, in which he also said U.S. troops had nearly defeated Islamic State militants in Syria and it was time to bring them home.

After 17 years of war in Afghanistan, Trump praised “the unmatched valor” of U.S. forces.

“Thanks to their bravery, we are now able to pursue a possible political solution to this long and bloody conflict,” Trump said.

He said his administration was holding constructive talks with a number of groups, including Taliban militants.

“As we make progress in these negotiations, we will be able to reduce our troop presence and focus on counter-terrorism. And we will indeed focus on counter-terrorism,” Trump said.

Trump offered no specifics about when he would bring home the 14,000 U.S. troops now in Afghanistan.

U.S.-led forces in 2001 toppled the hardline Taliban for harboring the al Qaeda militants responsible for the Sept. 11 attacks.

“We do not know whether we will achieve an agreement – but we do know that after two decades of war, the hour has come to at least try for peace,” Trump said.

‘END MILITARY PRESENCE’

The Taliban, responding to Trump’s speech, rejected any suggestion of a lingering U.S. focus on counter-terrorism after troops are drawn down, reiterating their long-held demand that all foreign troops get out.

“At the first step, we want all the foreign forces to leave and end the military presence in our country,” Sohail Shahin, a spokesman for a Taliban office in Qatar, said by telephone.

“But after ending their military presence, their non-military teams can come and … take part in the reconstruction and development process.”

In December, a U.S. official said Trump was planning to withdraw more than 5,000 U.S. troops in Afghanistan, triggering worries about whether a smaller force would be able to fulfill missions underway and stabilize the country.

When he campaigned for president in 2016, Trump said he wanted to focus more on domestic issues than foreign conflicts.

However, Trump’s sudden announcement in December that he would withdraw U.S. forces from Syria alarmed allies and many current and former U.S. officials, who worry that Islamic State militants remain a threat.

After the speech, Democratic Representative Eliot Engel, chairman of the House of Representatives Foreign Affairs Committee, said Trump’s Syria plans did not seem well thought out and could put U.S. allies like the Kurds and Israel at risk, while empowering Iran.

“We’ll probably come back at a future date, with much more danger to our troops,” Engel told Reuters.

Earlier on Tuesday, General Joseph Votel, head of the military’s Central Command, warned that Islamic State would pose an enduring threat.

In his address, Trump said Islamic State controlled more than 20,000 square miles of territory in Iraq and Syria. “Today, we have liberated virtually all of that territory from the grip of these bloodthirsty monsters,” he said.

(Reporting by Patricia Zengerle, additional reporting by Abdul Qadir Sediqi in KABUL; Editing by Mary Milliken, Sonya Hepinstall and Nick Macfie)