TheChek News Flow

Packaged-food giant revamps an icon for schools, tapping a new market and drawing pushback

One of the world’s biggest food companies has a new idea for winning consumers: Feed them lunch in schools.

Across the U.S. this fall, school cafeterias will serve children familiar staples such as pasta and hamburgers. Some might also offer Lunchables, Kraft Heinz’s KHC 0.51%increase; green up pointing triangle prepackaged meal kits, in a move that has raised concerns over adding processed, branded foods to school menus.

For Kraft Heinz, making the iconic yellow meals eligible for school lunch is part of a strategy of marketing its brands to a new generation of consumers. Shoppers for years had been gravitating toward upstart brands that promoted more natural and less-processed products. That changed during the pandemic, when many returned to familiar foods and big-name products.

Miguel Patricio, Kraft Heinz’s chief executive, and Carlos Abrams-Rivera, the company’s head of North America—who will assume the CEO post next year—said in an interview that the company identified schools as a key way to expand its food-service division, which it sees as helping drive supermarket sales too. Lunchables, already a billion-dollar business, were a natural fit.

“The kids have it and then they go to retail and they see it,” Abrams-Rivera said. “[It’s] a penetration machine,” Patricio added. In a quarterly report in May, the company estimated education food service as an untapped, $25 billion potential market.

Earlier this year, Kraft Heinz unveiled new versions of its turkey-and-cheese and pizza Lunchables, re-engineered to comply with federal guidelines for the National School Lunch Program. The company has been pitching the products to schools since last summer as a way for cafeterias to save on labor.

The move has drawn pushback from some child-nutrition advocates, school-meal officials and others who see the products as a step backward for school-meal programs, as concerns grow over children’s nutrition and processed foods’ impact on health.

Since February, more than 100 people have submitted letters to the U.S. Department of Agriculture mentioning Lunchables, largely in response to the agency’s request for comments on proposed new school nutrition guidelines.

“While it’s brilliant marketing on the part of Kraft, we have sold out our kids for Kraft to build market share this way,” Barbara Whitaker, a mother from Washington state, wrote.

Kraft Heinz said it made its Lunchables for schools more nutritious, introducing whole grains, adding protein and cutting saturated fat. A spokeswoman said the products can be part of a well-balanced school meal, with both varieties also offering a good source of calcium. She said improved nutrition is a pillar of Kraft Heinz’s current efforts, reflected in its global targets to limit sugar, sodium, saturated fat and calories and boost helpful nutrients across the company’s brands.

Kraft Heinz’s focus on schools is part of an effort to elevate its business dedicated to restaurants, bars and other institutions.

Until recently, Kraft Heinz treated its food-service division like a second-class citizen, Abrams-Rivera said. Business was transactional, talent was lacking and product offerings were limited.

In recent years, Kraft Heinz has worked to change that, installing some of the company’s best people in its food-service division, Patricio said. With restaurants and bars accounting for just half of U.S. food-service locations, Kraft Heinz executives have said they are focused on entering new markets, such as schools and travel-and-leisure.

North American food service accounted for 9% of Kraft Heinz’s total sales last year, compared with 66% from retail, according to the company. Long term, Kraft Heinz is targeting organic sales growth of 5% in the food-service division, versus 1% to 2% from U.S. retail.

Lunchables, introduced in 1988, have long been a go-to for busy parents and a coveted item among kids. Now, schools themselves have the option to offer two products directly to students as part of the National School Lunch Program.

Under the program, established in 1946, schools receive cash subsidies for each eligible meal they serve. Schools are responsible for offering lunches that meet federal requirements, which are laid out by the USDA. School meal programs serve some 30 million students and are widely considered the best source of healthy food for many children.

School lunch has been a battleground, with some pushing for years to make offerings healthier, fresher and more locally produced. The Biden administration earlier this year proposed new rules under which schools will be required to gradually limit the amount of sugar and salt in meals served to children. This month, the administration unveiled $30 million in grants to boost school nutrition in more than 250 small and rural communities.

Jo Dawson, a consultant and former child-nutrition programs director for the state of Alaska, said Lunchables could occasionally fill a need for some schools, such as those in small, rural towns where staffing shortages can be acute.

Some advocacy groups, including the Center for Science in the Public Interest, and school-meal officials said the potential addition of Lunchables to school lunch menus reflects a broken system for feeding children.

Some concerns over Lunchables center on the products’ sodium levels and use of processed meat. Researchers have linked processed meat to health problems including cancer. Meat-industry officials have rejected the link, saying many studies have shown no relationship between meat and cancer in humans.

Others worry about schools giving tacit approval to packaged-food products that also are sold in supermarkets, where retail versions aren’t held to the same federal nutrition standards.

Kraft Heinz sells dozens of Lunchables products in grocery stores. Many feature foods such as turkey or ham, sometimes paired with a Capri Sun juice drink and a cookie or candy.

The company has said it is committed to making Lunchables more nutritious. It said the brand is focused on cutting sodium, sugar and saturated fat, and recently reduced the salt and oil ingredients in its crackers.

Earlier this month, Kraft Heinz unveiled a new line of Lunchables featuring fresh fruit that it intends to be sold in grocery stores’ produce aisles. Executives have said the company would likely offer a wider selection of Lunchables to schools in the future.

Jessica Willis, who manages cafeterias in a Mississippi school district, said she offers children scratch-cooked meals such as a gumbo or red beans and rice as often as possible, but that she would consider serving Lunchables on field-trip days.

“The goal is to give them the best we can,” Willis said. “Some days that may be a Lunchable.”

Child-nutrition advocates said Lunchables might be too good a deal to pass up for some underfunded and overburdened school cafeterias.

Serving healthy meals is an uphill battle in many districts, according to school-meal officials. The Covid-19 pandemic exacerbated labor shortages in cafeterias, and many districts have removed kitchens from schools, leaving heat-and-serve or prepackaged products the only options.

Low reimbursement rates under the National School Lunch Program and a burdensome system for reviewing meals might also make products like Lunchables appealing, advocates said.

The federal government subsidizes all school meals, but typically provides a higher reimbursement rate for free and reduced-price meals served to lower-income children. The actual cost of making school meals usually surpasses these rates, USDA research shows, and advocates say rates haven’t kept pace with inflation.

Minor deviations from nutritional requirements, like too many stems in the grapes or too few spoonfuls of applesauce in a serving, can threaten a school’s eligibility for reimbursement. Products like Lunchables, which consistently deliver the same amount of nutrients in each serving, offer to ease that burden, advocates said.

Not all school districts are on board. Public-school meals in New York City are largely freshly prepared and no longer include deli meat, according to a spokeswoman for the city’s Department of Education. The spokeswoman said: “We will not be offering a prepackaged option like Lunchables in our schools.”

Vista Equity agrees to invest $1bn in fintech Finastra in return for $4.8bn refinancing

Private lenders extracted a large concession from one of the best-known leveraged buyout firms active in the technology industry this week when they demanded it stump up $1bn to help a portfolio company’s looming debts.

Lenders to Finastra, a financial technology company, required owner Vista Equity Partners to invest the extra $1bn into it in exchange for a $4.8bn loan the business needed to refinance debts coming due next year.

The deal is being looked at as a template for rival leveraged buyout shops as they contend with slower growth, higher interest rates and portfolio companies that may struggle to refinance debts maturing in 2025 and beyond through traditional capital markets. Vista was forced to turn to lenders in the burgeoning $1.5tn private credit industry instead of banks.

But as the new loan to Finastra demonstrated, while private credit is available to private equity groups attempting to keep their investments alive, lifelines will be expensive. In the case of Finastra, the six-year loan carries an interest rate of roughly 12.6 per cent, according to people briefed on the matter.

“The dynamic of private equity putting more capital into some of these capital structures, this is not the last of that,” said Michael Patterson, a governing partner of HPS Investment Partners. “This will be the theme for the time being. Private equity wants to retain ownership and have more runway to see a business through [a cycle].”

Finastra’s choice to turn to so-called direct lenders — investors who lend directly to a business, replacing a traditional bank — was driven by lacklustre demand in the bank loan market and the company’s own troubles. Asset managers such as Blue Owl, Sixth Street and HPS Investment Management have been competing with banks to lend to larger and larger businesses.

So-called collateralised loan obligations — the biggest buyers of riskier bank loans — have also slowed down their purchases. This is expected to push other private equity groups to private credit.

“Ratings are a huge issue for CLOs,” Craig Packer, a co-president of Blue Owl Capital, said. “The public markets are not nearly as flexible as it is perceived. Private lenders can do the diligence, make our judgment and take a long-term view.”

For months Vista prodded private lenders to come up with a multibillion-dollar loan to help refinance its existing debt, at each step seeking proposals that would allow it to avoid putting any new money of its own into Finastra.

But one risk kept floating to the surface: the company Vista bought in 2012 and expanded through a number of acquisitions, including a $3.6bn deal in 2017 that led it to be rebranded Finastra, was struggling to manage its debt load.

It may never have been a concern had markets not frozen after the Federal Reserve signalled its intent to aggressively raise interest rates. Deal activity collapsed and the number of initial public offerings plunged, making it far harder for private equity groups to sell off businesses they had acquired in the preceding years.

Buyout groups as a result are holding on to some businesses for longer than expected — and confronting debts that would have been managed by new owners after a sale.

Vista is not alone. Earlier this year KKR agreed to pump new capital into one of its portfolio companies, Heartland Dental, to help it refinance a portion of its debt. But the sheer scale of Finastra’s refinancing has captivated the market.

“Finastra will be a preview of the next three to five years ahead,” one person involved in the deal said.

Vista initially envisioned borrowing $6bn from private lenders to refinance Finastra’s debt. But difficulties emerged.

Lenders briefly pushed to split the loan into a senior and junior one. A tantalising yield of 12 to 12.5 percentage points over the floating rate benchmark — or roughly 17 to 18 per cent — was discussed for the junior debt, two people said. The high cost was seen as prohibitive and even then the company couldn’t round up enough interested lenders.

Refinancing was imperative, as Finastra had a loan and revolving credit facility that were set to mature in 2024. Most companies seek to refinance their bonds and loans at least a year before they come due to keep them from becoming current liabilities on their balance sheets.

As the summer progressed, Vista pushed lenders to keep pitching proposals that would keep it from putting in any extra cash. But it ultimately relented. Vista declined to comment.

“They started out trying to get more debt from the direct lenders, so it really shows appropriate credit discipline from the lenders,” one person involved in the deal said.

Blue Owl, Ares, Oak Hill, HPS Investment Partners, Oaktree and Elliott Management were among the investors that agreed to lend the $4.8bn this week. The loan will pay roughly 7.25 percentage points above the benchmark interest rate and was offered at a slight discount to par.

Vista, for its part, structured its $1bn investment as preferred equity, making the new money senior to Finastra common stock.

Private equity sponsors have other options and many are loath to pump extra cash into an investment that is struggling, particularly when it was purchased from an older fund that may be winding down.

Many have gone down the path of distressed debt exchanges, where a company offers to give its creditors new bonds or loans worth less than the outstanding ones in exchange for more seniority in the capital structure. Others may choose to throw in the towel altogether, as private equity firm KKR did when its Envision Healthcare filed for bankruptcy earlier this year.

“It’s on the sponsor to defend their portfolio,” said John Kline, managing director of New Mountain Capital. “Sponsors will make rational decisions to support their great assets and they won’t let a small amount of interest expense or leverage get in the way of the future of business. They might not defend poorly performing assets.”

Some are holding out hope that public markets will rebound, opening the door to a much wider pool of buyers of high-yield bonds and leveraged loans. There are signs that it is already happening, with JPMorgan Chase and Goldman Sachs lining up $8.4bn of debt to fund GTCR’s purchase of a majority stake in payments provider Worldpay. That debt will eventually be sold on to buyers of risky loans and bonds.

The difference, lenders and investors noted, was that recent deals reflected new financial conditions, with growth and interest rates that few buyout groups were considering when signing deals between 2018 and 2020. As a result, debt levels are being managed more conservatively.

That is not the case for deals that buyout firms hold from an earlier era.

“Issuers with weaker credit quality and near-term maturities may be attracted to private credit,” said Christina Padgett, head of leveraged finance at rating agency Moody’s. “Private credit lenders have a higher tolerance for risk which is mitigated by a strategy that includes the potential for an equity contribution from the private equity owner.”

King’s trips abroad and friendship with martial arts fighter had sparked concern and stymied decision making

When King Mohammed VI of Morocco returned to a busy schedule of public appearances in the spring, many in the royal court probably breathed a sigh of relief.

The monarch’s prolonged absences abroad in the past year and his friendship with a flamboyant martial arts fighter and his two brothers had set tongues wagging and upset senior courtiers, concerned about the image of the monarchy in a country riven by inequality but where the sovereign is seen as a foundation of stability.

“Since his return we’ve seen him almost daily on television,” said Omar Brouksy, a Moroccan political scientist and commentator. “He’s been inaugurating this and launching that and exercising his authority.”

The king’s presence matters in Morocco: under its constitution the monarch exercises near-absolute power and is the ultimate decision maker in economic and political affairs. “This is not a Scandinavian king,” said Brouksy. “He’s the one who chairs the council of ministers.”

Moroccan observers say the monarch spent extensive periods — sometimes months on end — in France and Gabon in 2022 and earlier this year. His absences have come as the country faces a series of challenges, including high inflation, drought and anaemic growth.

But what appears to have particularly worried Morocco’s establishment is his association with Ultimate Fighting Championship fighter Abu Bakr Azaitar and his brothers, who became frequent visitors to the royal palace and accompanied the monarch abroad as personal trainers.

The brothers, who were reportedly introduced to the ruler in 2018 ahead of Abu Bakr’s UFC debut, “were everywhere and acted like they owned the place”, said a person close to the court. “They used to speak very rudely to everyone. They were very arrogant and even used to try and control access to the king.” 

The north African kingdom is one of the most stable in the Arab world but is marked by wide economic and social inequality. In the monarch’s 24 years on the throne, billions of dollars have been poured into infrastructure such as affordable housing and extending electricity to villages. The country has also built successful export industries, including automobiles and textiles.

But improvements in health, education and judicial reform have lagged behind.

Since Russia’s 2022 invasion of Ukraine, Morocco has also been battered by high inflation, which sat at 7.1 per cent in June, while increasingly frequent droughts have hit agricultural output and economic growth. Gross domestic product grew 1.1 per cent in 2022, compared with 7.9 per cent the year before, according to the African Development Bank.

“The governing system is one of the more effective in the Middle East,” said a European analyst. “But it’s also very vertically integrated. It’s undeniable that [the king’s] absence has an impact on decision making.”

The Azaitar siblings were born to a Moroccan immigrant in Germany and raised on the outskirts of Cologne, where Abu Bakr acquired a criminal record. He was jailed aged 17 after being tried on charges of attacking a businessman, dousing him in gasoline and taking his Ferrari.

A report in the Economist in April that detailed the ruler’s friendship with the Azaitars sparked “an earthquake among the elite” in Morocco, according to an observer in the country. But while local media panned the story as superficial and populist, they noted that the Moroccan press had already published stories about the Azaitars.

In a country where independent journalists have been jailed, Moroccan media have savaged the brothers and questioned their apparent access to the palace.

Hespress, a digital newspaper, has described the Azaitars as “timebombs” ready to “explode in the face of Moroccans” and asked: “What is the role of the Azaitars in the political and social arena in Morocco? To what dead-end tunnel are they dragging Morocco?”

The fiercely critical coverage reflects disquiet within ruling elites about the king’s association with the Azaitars, analysts say.

“The fact those articles have been published in Morocco means powerful elites are unhappy with the state of affairs,” said Haizam Amirah-Fernández, senior analyst at the Elcano Royal Institute think-tank in Madrid. “They would be concerned over the impact on the country’s stability and also about their own position in relation to the ruler.”

Moroccan media have questioned how the siblings mustered the means to launch businesses in prime locations in Morocco. They have also lambasted them for an ostentatious lifestyle flaunted on social media, their irreverent use of royal symbols on items such as bathrobes, and the names of their fast food outlets, Royal Burger and Royal Donut. The entrance to the latter is adorned with a large, colourful, plastic armchair topped by a crown that is reminiscent of a throne.

“The images are clear enough and a simple exercise in semiology can tell us the story these rogues want to promote,” Hespress wrote last year.

The Azaitar brothers did not respond to Financial Times requests for comment.

The king’s return and his increased visibility probably reflected “domestic pressure, particularly from inside the palace”, said the European analyst.

Now he is back, the Azaitar siblings appeared to be keeping a low profile. But, said the Moroccan observer: “It’s hard to tell if they are completely off the scene.”

- Pres Biden is reportedly considering a state visit to Vietnam in mid-September, citing, insiders familiar with the matter

The Arrow 3, considered the most advanced system of its kind, is meant to intercept long-range ballistic missiles before they reenter the atmosphere

The United States approved a $3.5 billion sale of Israel's Arrow-3 missile defense system to Germany, in what will be Israel's biggest-ever defense deal, the Israeli defense ministry said on Thursday.

Development and manufacturing of the system was led by the Israel Aerospace Industries, the Defense Ministry's Homa Administration for air-defense systems, and the U.S. Department of Defense's Missile Defense Agency.

In a ceremony scheduled for November, Israeli and German defense officials will sign a declaration of commitment of $600 million to allow for the project's immediate commencement. The details of the contract were agreed upon by both defense ministries and have been submitted for final approval by the German government.

The weaponry, missile interceptor and radar detection system of the Arrow 3 were developed by the Israel Aerospace Industries, led by President and CEO Boaz Levy. Its command and control technology was developed by Israel's Elbit Systems. The Tomer and Rafael Advanced Defense Systems, both Israeli government companies, are the main subcontractors for producing the system's main interceptors. Stark Aerospace, owned by the Israel Aerospace Industries, is the main contractor in the U.S.

During the decades when Israel was shunned by much of the world, it found friends – and customers for military products – in unsavory regimes. Are the Abraham Accords a repeat of 'Operation Condor'?

In view of conflicting media reports about the chances of success of the tripartite negotiations between the Biden administration, the State of Israel and Saudi Arabia to draw up a normalization agreement between the latter two countries, one should look at the last decades and understand that such an accord is inevitable – but has a dark underside to it. A historical examination of how other countries have severed and renewed their relations with Israel indicates that the danger to the rights and freedoms of hundreds of millions of civilians should normalization be achieved.

After the State of Israel’s founding in 1948, it immediately engaged in providing military and civilian aid to countries worldwide, many of them with dictatorial and military regimes, with the aim of establishing diplomatic relations, and counteracting what would become an ongoing campaign to eliminate Israel physically and politically.

In a nutshell, the main spoiler of Israel’s international aspirations was Egypt, under the leadership of Gamal Abdel Nasser, who became its ruler in 1956; subsequently Libya played a similar role, after Muammar Gadhafi came to power, in 1969. Egypt wielded its political, military and economic power to dissuade other states from establishing relations with Israel, or to cut or downgrade existing ties. Gadhafi used mafia-type methods, threatening to destabilize regimes that had ties to Israel. The Arab pressures were successful, and after the wars of 1967 and 1973, dozens of states, with both non-Arab Muslim and non-Muslim populations, officially severed or downgraded their relations with Israel. These were not just African countries. While today BDS, the boycott, divestment and sanctions movement, is successful in preventing international pop stars from performing in Israel, Arab countries, under the leadership of Egypt and Libya, over the years, for example, successfully imposed oil embargoes on countries and sanctions on companies that did business within Israel, and even managed to force European governments to limit their relations with it in certain realms.

Following the waves of severed relations with Israel after the wars, Israel looked elsewhere and was largely successful in keeping and strengthening its ties with regimes ostracized by other countries, among them the leadership of apartheid South Africa. Israel also established strong ties with military juntas in Latin America during their various “dirty wars” – the internal campaigns they waged from the mid-1970s to the early ‘80s to eliminate domestic political opponents. The military regimes in the so-called Southern Cone of Latin America launched an effort called Operation Condor, in which they cooperated in locating, capturing, torturing and eliminating opposition and guerrilla activists. For its part, Israel helped each junta separately in implementing Operation Condor in its territory, but unlike the involvement of the United States in that effort, there is no evidence that Israel was involved in the overall coordination of the operation.

• ‘We have until the end of the year’: Israel’s ex-air force chief is worried. Very worried
• The unsavory marriage between Israeli cyberweapons, U.S. interests and dictatorships
• For decades, I defended Israel from claims of apartheid. I no longer can

After Israel and Egypt signed the Camp David Accords, in September 1978, Israel was liberated from its main “spoiler,” and slowly, other states began renewing or establishing relations with Jerusalem. As has been reported over the years in Haaretz and other media outlets, with many countries, this renewal was based on Israel selling military services and equipment, and more recently surveillance technology, even to murderous regimes.

In the 1990s, with the end of the Cold War, the signing of the Oslo Accords with the PLO and the peace agreement with Jordan, what was a trickle became a wave. Israel was able to resume and build relations with most countries of the world, but still encountered difficulty in normalizing its ties with Arab and non-Arab Muslim countries. However, it became clear that the continued demand of the Palestinian leadership that such countries avoid joining this wave, was lacking any credibility. The PLO not only normalized its relationship with Israel, but the Palestinian Authority became an important subcontractor in administering Israel’s apartheid regime in the West Bank and the Gaza Strip. That made it politically easier for other countries to negotiate with Israel and agree with it on normalization steps.

This bogus nature of such anti-normalization didn’t begin during the Oslo period, but several decades earlier, when many countries may have severed formal relations with Israel, but continued doing business with it. One example is Chad, a country with a Muslim majority that officially cut ties with Israel in 1972, and renewed them only in 2019. Yet, a document prepared by Israel’s Ministry of Foreign Affairs in May 1985 and recently declassified by the State Archives, states that as early as 1982 Israel, initiated contact with Chad’s then-dictator, Hissène Habré. The following February 1983, an agreement was signed with him, according to the 1985 document, on “Israeli military assistance to Chad in manpower and equipment, and also for establishing a secret Israeli mission in Chad.”

At the time, President Habré was responsible for mass murder, disappearances and rape within his own country, leading in 2016 to his conviction by an international tribunal for crimes against humanity. Habré was overthrown in a 1990 coup, but in 2008, his successor, Idriss Déby, bought armored vehicles from Israel whose roofs were fitted with devices for mounting machine guns. Déby, a former head of the country’s military, was in the midst of a bloody civil war when he purchased the vehicles. After the publication of reports and images of these vehicles in the media, Chad admitted their purchase from Israel and reported it to the United Nations.

It was not only a lack of credibility that undermined Palestinian leaders’ demands that Arab and non-Arab Muslim countries avoid normalization with Israel, but also a lack of feasibility due to the changing interests of those countries. Two historical events in the second decade of the 21st century changed the picture in the direction of rapid normalization with Israel. One was Iran’s decision to increase its regional provocations and other subversive activity, and the other was the Arab Spring of 2011. Despite their disputes, most Arab and non-Arab Muslim countries have come to the conclusion that they must cooperate in order to fight Iran’s regional power grab and also to rebuff any signs of a resurgence of the Arab Spring: that is, they must fight movements seeking to instigate regime change. One of the most prominent players among those latter groups is the political-Islam movement and ideology, and in particular the Muslim Brotherhood and its affiliates, although the greater movement’s ostensible commitment to democratic values differs from country to country, and in some of them its “success” means only replacing one dictatorial regime with another.

Since the Oslo Accords, and in light of increasing involvement and activity on the part of Iran and political Islam – and specifically the radical Palestinian version of the Muslim Brotherhood, the militant Islamic Hamas organization – those forces have replaced the PLO as Israel’s main archnemeses. This is a historic reversal. If David Ben-Gurion invented the doctrine of the “alliance of the periphery” – which included extending Israeli aid to regimes like that of the shah in Iran – now Israel is working with Arab and non-Arab Muslim countries to rein in Iran, while helping those countries maintain the stability of their own tyrannical regimes, while they in turn help Israel maintain its own own tyrannical regime in the West Bank.

The United States fully shares Israel’s opportunistic position and strategy regarding this historic reversal of interests; this was not just a whim of former President Donald Trump. Evidence of this was mentioned by Maj. Gen. (ret.) Amos Gilad, a former longtime senior member of the Israeli security establishment, who for years was involved in building Israel’s relations with Arab and non-Arab Muslim countries, as well as maintaining ties with America, in an interview aired in political commentator Nadav Perry’s podcast, on April 16, 2023 .

In response to the question of how Israel should relate to Saudi Arabia in light of the 2018 murder of journalist Jamal Khashoggi and the dismembering of his body, Gilad answered, “I, who have dealt a lot with Arab countries, have come to the conclusion that the State of Israel should do everything to strengthen ties with Arab countries without really considering the regimes there. There is no chance of there ever being a democracy in the Middle East, except for Israel... The regimes, such as in Egypt, Saudi Arabia, Jordan, the principalities and the Emirates, are stable regimes, [and] their stability serves the national security interests of Israel and the entire free world, even the Americans understand this.

“The difference between the United States and China is that the United States doesn’t need oil, unlike in the past, and an administration like that of President Biden gives high priority to democratic values. But I see a moderation in the American attitude toward the Arab world... Biden also reached out to [Saudi Crown Prince] Mohammed bin Salman... I detect a more sober attitude there, even vis-à-vis Egypt; they [the Americans] hardly condemn the Egyptians.”

In an article that Gilad published in Cyclone (a Hebrew publication of the The Institute for Policy and Strategy) in February 2021 to mark the 10th anniversary of the Arab Spring, he wrote: “The understanding has been internalized both in Israel and in large parts of the international community that an accelerated opening of the political systems in the Arab world to democratic processes could lead to the rise of radical forces, led by representatives of extreme political Islam.” Prior to that, at a December 2019 conference of the Israeli military industries, Gilad had said: “The problem is, how do you deal with revolutions? ... Any Israeli military equipment that contributes to building a force that could be used to attack Israel, given a revolution there [in an Arab country], is undesirable and should be prevented. Everything related to regime stability – and here moral questions arise about using it against opponents [of those regimes] – I support preservation in Israeli aid.” Moreover, Gilad added, “We also have incredible security cooperation with the Gulf countries, Saudi Arabia.” That is, as long as there is no fear that Israeli knowledge and weaponry will be used against Israel itself, Israel should not limit its exports for fear that it will be used for internal repression.

The concept, Gilad explained, stands at the heart of the Abraham Accords and of emerging agreements with other Arab and non-Arab Muslim countries. According to this arguably racist strategy, since the states in question are not ripe for democracy, and in order to help preserve the “free world” and/or Western civilization – the United States and Israel should help their tyrannical regimes when they resort to violence to suppress opposition elements, journalists, women and other minorities. Political Islam has replaced the “communist threat” and Iran has replaced the USSR. These are the same self-righteous arguments that were used to justify America’s war in Vietnam, and the military aid the U.S. and Israel provided, for example, to the Pinochet junta in Chile when it perpetrated crimes against humanity in the 1970s and ‘80s. Now they are being summoned to support the geopolitical reorganization of the Middle East and North Africa.

Long shuttered is the School of the Americas in the Panama Canal, where the United States trained tens of thousands of officers from across Latin America, many of whom returned to their countries during the Cold War to participate in military coups, mass torture, murder, rape, genocide and terrorism. But, according to what Maj. Gen. Gilad noted in Perry’s podcast, most of the officers in the Arab countries’ military are still being trained in the United States, in an effort to preserve their regimes’ dependence on the latter, and to prevent their transition to full reliance on China. It is clear that the spreading of democratic values is not of high priority in the American officer training program. The nonprofit news organization Intercept has confirmed that U.S.-trained military officers, most of them in Muslim-majority states, have taken part in 11 coups in West Africa since 2008, most recently in Niger. Following the Abraham Accords and other normalization agreements entered into by Israel, in addition to its providing sophisticated surveillance and weapons systems to a variety of problematic regimes, army officers from those regimes will likely receive training and intelligence from Israel as well, which the latter has acquired and developed also thanks to its oppression and control of the Palestinian population.

All these developments will not guarantee the stability of Arab and non-Arab Muslim dictatorial regimes, as their existence will always be conditional and challenged. A clear example of this is Egypt, which receives the most U.S. military aid after Israel, and is still one of the most unstable countries in the region. The greatest enemy of the Egyptian people is their own regime, which wastes its huge human and natural resources and is focused on a ceaseless war against the majority of citizens who do not belong to the elite that rule the country. To maintain the appearance of stability in Egypt and other regimes in the region, an endless cycle of oppression and violence is necessary. In situations like these, if they feel it is necessary, such regimes won’t blink – that is, there will be many more horrific cases like the murder of journalist Khashoggi.

Unlike the role it played in the 1970s and ‘80s in Latin America, nowadays, as part of “Operation Condor 2.0” in the Middle East and North Africa, Israel will not be a secondary actor but one with a leading role in its overall coordination. As with heroin, these regimes will become addicted to Israeli surveillance equipment, weaponry, training and intelligence, and will only pay lip service to the Palestinian issue. This time the fight to maintain the stability of the regimes, including the stability of Israel’s own apartheid regime vis-à-vis the Palestinian population, will be waged with more advanced technology than the Uzi machine guns and Galil rifles that were peddled by Israel for the elimination of masses of opposition and leftist activists in Latin America. And yet, in its essence, it will still be the same “dirty war.”

Paris is the gold standard, but London is learning. Dan Keeling shares the best spots for a good glass

Forest Gate in east London has a place in my heart. In fact, why tell porkies? Forest Gate does not have a place in my heart. But Joyau, a wine bar in Forest Gate, does as it provided an answer to a question that left me speechless during a recent Q&A. “Where in London would you go for a good glass of wine?” asked an audience member, addressing a panel of winos that included the regular writer of this column.

It should have been easy. Yet, although the likes of Planque, Brawn and Chez Bruce came to mind, the fact that they’re wine-centric restaurants with licences requiring customers to eat “a substantial meal” — rather than offering lunch of an entirely liquid variety — meant I drew a blank. I’d have loved to recommend the casual sort of place the French, Italians and Spanish do so well: no reservations, a stash of interesting bottles and the option of simple, tasty food. A wine bar in the purest sense.

A crawl of the nouveau bar à vins mecca — that is, east London — was clearly necessary. At Joyau, drinking a beautiful 2020 Maison En Belles Lies Aligoté as trains to Barking rumbled overhead, it seemed I’d found what I was looking for.

Wine bars today are worlds away from ye old English drinking dens of yesteryear serving pub-grade plonk to cravat-wearing blokes with purple noses. Perhaps the only applicable definition is akin to Justice Potter Stewart’s definition of pornography: “I know it when I see it.” But they are invariably informal places frequented predominantly by a youthful clientele looking for a place for a pre-rave refill, or a neighbourhood destination, with extensive by-the-glass selections often focused on low intervention vino.

Above all, there’s a carefree joyfulness to a wine bar that the formality of even the most wine-centric restaurant can’t match. You don’t have to confirm your booking with a credit card, make an upfront payment or be subject to a cancellation policy. There’s no “hurry up and order because we need your table back” or “the name of this scallop is Sandy, and she was hand-dived in St Ives”. And certainly no one to move the bottle of Pouilly-Fuissé you’ve paid too much for out of reach, then fill your glass too quickly or too slowly.

As far as I’m aware, no wine bars sold tedious meal kits during lockdown, knowing their pleasures can’t be summarised in absentia. (Although a care package consisting of an entire paté en croûte, a corkscrew and a magnum of Ganevat would have been a wonderful thing.)

Of course, as the co-owner of three wine-centric restaurants, it might sound disingenuous to point out such advantages. But before the idea of opening Noble Rot blossomed from it being only a wine bar into a wine bar and restaurant, Vivant and L’Avant Comptoir in Paris were the kind of casually charming places we dreamed of emulating.

Vivant, in particular, was bar à vins bliss. A former exotic-bird shop in the 10th arrondissement with original art-nouveau tiles, floor-to-ceiling fridges with bottles made by the freshest names in natural wine and a lone Japanese chef assembling a simple menu with the aid of a single induction hob, it oozed cool.

Our plan to steal — sorry, reappropriate — this small but perfectly formed blueprint in central London was derailed by the lure of bigger, fully fledged restaurant sites. But echoes of such Parisian je ne sais quoi rippled through influential East End bars of the 2010s, such as the original Sager + Wilde, the late P Franco (now reimagined as 107) and, more recently, Joyau and its contemporaries such as Cadet and Hector’s.

Like Vivant, the new wave of stand-alone wine bars make a virtue of their limitations, employing a skeleton crew with often a single chef, again using one hob and doubling down on quality bread, ferments, shellfish, charcuterie and cheese.

Rather than cooking per se, the creative assembly of dishes is (excuse the pun) the bread and butter of many wine bars. Indeed, on the afternoon I visited Joyau the chef was away and the menu pared back to cheese, saucisson and rillettes — although they tell me that they’re developing a following for a fabulous-sounding double-carb hit known as potato-and-crème-fraîche pie.

In answer to the question, “Where in London would you go for a good glass of wine?” this fits the bill nicely. The wine list mixes traditionalist gems such as Pierre Gonon St Joseph and Egon Müller “Scharzhof” with naturalista domaines that have long been ubiquitous.

Although wine bars proliferate the length of the country, I’ve concentrated my crawl around east London because of its unrivalled number of openings in recent years (Dan’s, Newcomer, Binch, Top Cuvée, Weino Bib, 107 and Hector’s, to name a few). Co-owned by importers Beattie & Roberts and charcutier George Jephson, Newington Green’s Cadet (supposedly pronounced “Cad-ey”) has an impressive pedigree: Tom Beattie managed Clapton’s P Franco, a perennially popular shop and wine bar focused around a communal table, that functioned as a creative stepping stone for chefs such as Tim Spedding and Anna Tobias.

Packed with a thirtysomething crowd, bathed in summer sunshine from its tall front windows, Cadet is as idyllic a setting as the residents of Stoke Newington have any right to expect. It combines simple-assembly dishes like peaches wrapped in shiso with crème fraîche with a couple of cooked ones (pollack with cockles and girolles in a buttery, lardo-infused sauce was inspired) and Jephsons’ charcuterie. My god — what charcuterie! It’s very difficult to find cold cuts as good as this.

I really like Cadet, from the clean lines of the interior to the stylish graphics that Beattie & Roberts use to promote the 30-odd natural winemakers they exclusively serve. But although my idea of great wine also means as few manipulations as possible, my favourite lists also incorporate traditionalist domaines.

Hector’s, in leafy De Beauvoir Town, offers more limited fare, but its excellent selection of bottles and buzzing atmosphere makes me want to return time and again. Sure, you might only be able to eat a gilda, or Iberico ham over crisps, but hard-to-find treasures such as Valentini’s saline Trebbiano d’Abruzzo and Cécile Tremblay’s masterful Morey-Saint-Denis Tres Girard make it well worth a special trip.

Companies with a lot of cash offer a great security blanket for investors—and Covid vaccine makers BioNTech BNTX –2.53% and Moderna MRNA –4.35% are two of the most cash-rich large companies in the world relative to their size.

You wouldn’t know it by looking at their stocks. Although both rallied this past week on reports of higher U.S. Covid cases, Moderna stock (ticker: MRNA), at about $103, is down 43% this year, making it one of the worst performers in the S&P 500SPX –0.01% index. BioNTech (BNTX), at about $111, is down 26%. Both have fallen from favor as investors ratchet down expectations of global Covid vaccine administration this year and in the future. The issues include vaccine fatigue, diminished fears of contracting the virus, and a perception of limited benefits of Covid boosters for the already vaccinated.

That’s a shortsighted view. Moderna and Germany-based BioNTech are being given little credit for their big cash positions, still-durable Covid franchises—BioNTech and its partner Pfizer PFE +0.41% (PFE) have the leading Covid vaccine in sales, with Moderna at No. 2—and promising and well-funded drug pipelines. Their stocks look appealing at now-depressed prices.

“The market views them as one-trick ponies and that the ponies are getting tired,” says Michael Pye, an investment analyst at Baillie Gifford, the largest Moderna investor and one of the top BioNTech holders. “What the market is missing here are huge cash piles and genuine R&D platforms and pipelines.”

The case for both stocks starts with their cash hoards. Moderna has $14.6 billion of cash and equivalents on its balance sheet, or about 35% of its market capitalization of $40 billion. BioNTech is even more flush, with nearly $20 billion of cash and investments, or almost 75% of its market value of $27 billion. Neither has any long-term debt.

The companies aren’t the cash cows they were in 2021 and 2022, when each earned a total of about $20 billion. But BioNTech remains profitable and is expected to net about $5 a share this year and $3 a share in 2024. Moderna has moved into the red and is expected to lose $4 a share this year and $5 a share in 2024, due in part to a sharp rise in research-and-development costs, which should total $4.5 billion this year, up from $2 billion in 2021.

Covid vaccine sales are expected to remain substantial for both companies this year and account for virtually all of their revenue. Moderna projects $6 billion to $8 billion in Covid sales, and BioNTech nearly $5.5 billion. That’s even after Moderna cut its expectations for U.S. Covid vaccinations to 50 million to 100 million this year, though some analysts are skeptical that even 50 million will be administered. The companies will probably make more from the vaccines as the drugs move to the U.S. commercial market, where they’ll cost about $100 a jab, versus the $20 the U.S. government had paid.

Moderna said this past week that its updated Covid vaccine for the fall vaccination season showed a “robust immune response” against the virus. The Covid vaccine market is moving to annual boosters administered in the fall.

One risk with cash-rich drug companies is that they could blow their money on expensive acquisitions with uncertain payoffs. Neither company says it wants to do a major deal. Instead, Moderna is developing a host of vaccines and treatments based on the messenger RNA technology that underpins its Covid vaccine. These include vaccines for respiratory syncytial virus, flu, combinations of a Covid and flu vaccine, and a cancer treatment that is being tested in clinical trials with Merck MRK +0.26% ’s (MRK) blockbuster drug Keytruda, which harnesses the body’s immune system to fight the disease.

BioNTech’s founders, Ugur Sahin, the CEO, and his wife, Ozlem Tureci, the chief medical officer, are cancer experts and have researched the disease for decades. That is a focus of BioNTech, which is developing treatments for lung and other cancers as well as infectious diseases.

“BioNTech probably is the best-funded biotech on the planet,” says Simon Baker, a Redburn analyst. ‘The company has some interesting cancer treatments coming down the track, and it’s doing a good job of advancing the pipeline.” He upgraded the stock to Buy from Neutral earlier this year and has a fair value of $170 per share.

BioNTech is the safer play due to its higher cash balance and continued profitability. Moderna might be the more interesting one. While the company is burning cash now, it has a larger and more advanced drug pipeline, with six treatments now in Phase 3 trials—the final stage of testing before potential approval by the Food and Drug Administration. Another catalyst could be an activist investor that would push for more restrained spending, something BioNTech, which is scaling back its R&D spending by 15%, to $2.3 billion this year, has already done.

Moderna could even be a takeout play. It has no dominant shareholder, although it does have a strong-willed CEO in Stéphane Bancel, who was an early believer in mRNA technology when skeptics were plentiful. Its market value of $40 billion is digestible.

Covid plays understandably excite investors less now, but the virus may continue to plague the world for a long time. Moderna and BioNTech offer cheap plays on that prospect and some underappreciated drug pipelines, with the security of a lot of cash.

Pop quiz: Which country exports the most cars? Germany? Japan? Try China.

The No. 2 economy surpassed Japan in the first half of 2023. Full-year exports should exceed four million vehicles, up from one million or so prepandemic, says Paul Gong, China auto analyst at UBS.

The top destination this year is Russia, where Chinese auto makers have jumped in while global rivals fled. But other big customers include Mexico; Saudi Arabia; and Belgium, as a gateway to the European Union. “Chinese companies are building better and better cars and offer a cost advantage,” Gong says.

Is this evidence that rumors of China’s economic death are exaggerated?

Yes and no. China makes more electric vehicles than the rest of the world combined, with improving quality. That’s not what’s driving the export boom, though. About 70% of the foreign sales are old-fashioned internal combustion cars, Gong says. State-owned SAIC Motor and Chery are the leading exporting companies. Of the EV exports, U.S.-owned Tesla (ticker: TSLA) accounts for nearly 40%.

The old-school state companies are exporting to survive more than expand, says Bill Russo, CEO of Shanghai-based consultancy Automobility.

China’s domestic car sales peaked in 2017, and gas-powered vehicles are down 7% as EVs’ market share rises.

“They have a tremendous built-up capacity, and they don’t want to lay off people,” he says.

Innovative EVs may play a bigger role in China’s export engine as it keeps rolling.

Annual vehicle exports could reach nine million by 2030, consultancy AlixPartners predicts. China’s emerging EV champion, BYD (1211.Hong Kong), has barely begun to focus on exports, because its cars are selling like hot cakes at home. The company’s domestic market share has soared to 37%, Russo reports. That’s four times Tesla’s, and leaves competitors like Li Auto (LI), XPeng (XPEV), and Nio (NIO) in the dust, for the moment.

BYD lately broke ground on a factory in Thailand, and is shopping for a European site. Its lead in a crowded field is still too fragile to bet on, says Sharukh Malik, a portfolio manager for Asian equities at Guinness Asset Management. “On a five-year horizon, I don’t have a clue which EV auto makers will be left standing,” he says.

He’s looking instead into China’s EV supply chain for companies with more defensible market niches and less potential to raise protectionist hackles abroad. One example is Wuxi Lead Intelligent Equipment

(300450.China), a contract manufacturer for Chinese battery giant

Contemporary Amperex Technology , or CATL (300750.China), but also a budding partner for would-be European battery champion Northvolt.

Malik also favors Shanghai Putailai New Energy Technology (603659.China), which makes EV battery anodes and just agreed on a $1.5 billion plant in Sweden, Northvolt’s home base; and Hongfa Technology (600885.China), whose power relays are built into all of Tesla’s Chinese-built cars, and up to 40% of its U.S. vehicles. Malik doesn’t own CATL itself, finding its business model “very capital intensive.”

However fickle individual corporate fortunes, China’s lead in EV technology writ large is firmly established. The U.S. and Europe won’t easily subsidize and/or protect their way around it. “I applaud the IRA, but it’s 20 years too late,” consultant Russo says, referring to last year’s Inflation Reduction Act, meant to finance a U.S. green leap forward.

None of that negates China’s mounting internal problems with overextended property developers, black-hole local government debt, and unemployed youth.

It’s something for investors to weigh in the balance, though.