China issues first nationwide drought alert in 9 years


Beijing
CNN
 — 

Chinese authorities issued a nationwide drought warning for the first time in nine years as the country copes with below-average rainfall and one of the strongest heat waves seen in six decades.

The “yellow” alert, which was issued Friday, is the third-highest on China’s four-tier scale. It indicates that at least two provinces are facing drought-like conditions, and more dry weather or drought is expected.

China’s meteorological agency said Friday that at least 244 cities across the country could see temperatures rise above 40 degrees Celsius (104 degrees Fahrenheit), while another 407 could see the mercury rise to more than 37C (98F). Forecasters expect the heat wave to could continue for another week, while the next three days will see little rain and continued drought development.

As of Wednesday, about 830,000 people across six provinces have had their water supplies affected by drought conditions, according to the Ministry of Water Resources. More than 300,000 people are experiencing temporary difficulties even accessing drinking water. It’s a significant number of people impacted, but a fraction of China’s population of 1.4 billion.

‘That’s not water’: Scenes from China’s Covid response illustrate brutal heat

Provinces in southern and central China – especially those along the Yangtze River, such as Jiangsu, Hubei and Sichuan – are the most affected. Local officials have been advised to conserve water supplies for domestic purposes and reduce agricultural, commercial and industrial use. Authorities are also trying to seed clouds to make it rain.

The drought has affected more than 2 million acres worth of farmland in six provinces, a water ministry official said Wednesday.

The extreme heat has caused a spike in demand for air conditioning in offices and homes, putting pressure on the power grid. The drought has also depleted river water levels, reducing the amount of electricity produced at hydropower plants.

Sichuan, a province of 84 million people, has been gripped by extreme heat and drought since July. On Wednesday, Sichuan authorities ordered factories to shut for six days to ease heat-related power shortages.

Experts worry that the power rationing in a key manufacturing hub for semiconductors and solar panels could affect some of the world’s biggest electronics companies, including Intel and Foxconn.

Economists have also warned that the extreme temperatures could further drag down the world’s second-largest economy, which is already dealing with the effects of its strict Covid-19 lockdowns and a real estate crisis. Both Goldman Sachs and financial services firm Nomura lowered their forecasts for China’s GDP growth this year, citing in part the heat wave.

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Chinese-Canadian tycoon Xiao Jianhua sentenced to 13 years in prison


Hong Kong
CNN
 — 

Chinese-Canadian tycoon Xiao Jianhua was sentenced Friday to 13 years in prison, more than five years after the billionaire was abducted from a hotel room in Hong Kong and taken to mainland China.

Xiao and his company Tomorrow Holdings were convicted of crimes involving tens of billions of dollars, including illegally absorbing public deposits, betraying the use of entrusted property, illegal use of funds and bribery, the Shanghai First Intermediate Court said in a statement.

The court also fined Xiao 6.5 million yuan ($950,000) and Tomorrow Holdings 55 billion yuan ($8.1 billion).

“The criminal acts of Tomorrow Holdings and Xiao Jianhua seriously damaged the financial management order, seriously endangered the country’s financial security, seriously infringed on the integrity of the state staff, and should be severely punished according to law,” the court said.

But it added that Xiao and Tomorrow Holdings have “turned themselves in, confessed their crimes and helped with the recovery of assets,” and thus can receive a more lenient punishment.

Xiao was one of China’s richest men and controlled the Tomorrow Group, a massive holding company with stakes in banks, insurers and property developers. According to Hurun, which analyzes Chinese wealth, Xiao had a net worth of $6 billion and ranked 32nd on its 2016 rich list, a league table equivalent to the Forbes list.

The court said Xiao and Tomorrow Holdings gave shares, real estate, cash and other assets to government officials worth around $100 million over 20 years to 2021.

Xiao, known for his close connections to some of China’s most powerful political families, was seized in 2017 by Chinese security agents from his room at the Four Seasons hotel in Hong Kong and taken to mainland China.

A person familiar with the abduction told CNN there was a small scuffle at the hotel between two dozen Chinese security officials and Xiao’s own security detail, which typically numbered about eight bodyguards per shift. The source asked to remain anonymous because of the politically sensitive nature of the case. Xiao has not been seen in public since the incident.

Chinese billionaire seized from Hong Kong hotel

Xiao was one of a number of Chinese tycoons who had moved to Hong Kong and taken up residence in private apartments at the 5-star Four Seasons hotel during Xi’s crackdown on corporate excess.

Xiao’s disappearance sent shockwaves through Hong Kong’s elite business community, where it was widely interpreted as a signal the city was no longer beyond the reach of the mainland’s security apparatus.

Last month, the Canadian Embassy in Beijing told CNN the trial of Xiao, a Canadian citizen, would take place without consular access. “Canada made several requests to attend the trial proceedings of Canadian citizen, Mr. Xiao Jianhua. Our attendance was denied by Chinese authorities,” the embassy said.

A spokesman for China’s Foreign Ministry said Friday that Xiao has Chinese citizenship, and as China does not recognize dual citizenship, Xiao doesn’t have the right to another country’s consular protection.

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Israel is pumping water from the Med to refill a lake

But this place of religious pilgrimage — where the New Testament says many of Jesus’ miracles were performed — is facing a bleak future. The climate crisis is causing huge fluctuations in the lake’s water levels. Now it happens to be fairly full, but just five years ago, it hit a record low.

Climate change and unsustainable water management are leaving lakes dried up all over the Middle East and beyond, but the Israeli government is hopeful it has a solution: It plans to pump water from the Mediterranean sea, take the salt out of it and send it across the country to top up the lake when needed.

It’s a dramatic change for the Sea of Galilee, called the Kinneret in Hebrew, which once pumped out nearly all of Israel’s drinkable water. The water will now flow in the opposition direction.

Israel has plenty of expertise in desalination. As a water-insecure nation, it has for more than two decades been taking seawater from the Mediterranean and treating it through a process called reverse osmosis, essentially taking the salt out of the water to make it drinkable. It’s a process that other parts of the world, including California, have turned to in times of drought, but in Israel, it’s an everyday reality. Five desalination plants along the coast now provide nearly all the tap water for the country’s 9.2 million people.

The new project looks a little underwhelming — a 1.6-meter-wide water pipe laid across 31 kilometers — but it’s the first of its kind. It will take the desalinated water and pump it through the Tsalmon stream that feeds the lake.

When he first heard of the project, Noam Ben Shoa, head engineer at Israel’s national water company, Mekorot, thought it was a strange idea.

“But very soon, we understood the value it has to the national market itself,” he told CNN at a construction site for the pipe.

The Sea of Galilee.

It also helps with the development of agriculture in the wider region, he said, as well as relations with neighboring Jordan.

Israel has a long standing agreement with Jordan to sell tens of millions of cubic meters of water annually to the kingdom. In 2021, the two countries signed a new agreement where Jordan would receive 200 million square meters of desalinated water a year from Israel — about 20% of Jordan’s water needs — in return for solar energy to help power Israel’s electric grid. Emirati companies would build 600 solar power plants in Jordan to generate the energy.

Within months, the new $264 million pipeline is expected to be functional, and will be able to move 120 million square meters of water per year, but will only pump to the lake when necessary, Ben Shoa said.

“The uniqueness of this project is that it gives us almost infinite flexibility,” he said. “We can basically take the water where it is available … and just divert it and transport it to wherever it is needed. In the population centers, for agricultural or industrial uses as well.”

Getting ahead of the crisis

The need to do things radically differently hit home during the most recent, five-year drought, which ended in 2018. Despite a ban on pumping water from the lake, water levels here still reached a record low. But it’s also what’s to come with the worsening climate crisis that has pushed Israel’s water authority to intervene now.

“They looked into the future climate change, and what’s going to happen [with] rainfall in this area, and also looked at the increase in population and projected increase in demand of water,” Gideon Gal, senior scientist and head of the Kinneret Limnological Laboratory, told CNN. “And they realized that 30, 40 years from now, there’s going to be a serious problem in maintaining [water] levels in the lake, and maintaining water quality unless something is done.”

But that something had never been done before. Even if salt is removed, the makeup of the water is also different in other ways, Gal said.

People bathing in the Sea of Galilee, which despite its name, is actually a freshwater lake.

“When you mix desalinated water with natural water, you see an impact on the biology in the experiments,” Gal said. “We’ll be bringing things to the lake that may not exist naturally.”

But so far, Gal says their experiments show the new water won’t cause a huge impact on existing species. In fact, it may even help the lake combat the effects of climate change by causing a higher rate of water turnover, which helps prevent too much bacterial growth, and could help cool the water’s temperatures.

Even with the potential benefits, Gal said he wished the lake didn’t need any human intervention.

“But given what we think we know about climate change, and what’s going to happen in the lake,” Gal said. “The risk of introducing desalinated water is a risk that is worthwhile taking.”

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Class-action lawsuit alleges sexual misconduct by prominent Quebec cardinal and priest

In that lawsuit, a woman identified as “F” alleges she was touched against her will by Cardinal Marc Ouellet and forced to perform sex acts on another priest, Father Leopold Manirabarusha.

“F” said she met Ouellet during dinner in 2008 while serving as an intern for the Diocese of Quebec, according to the lawsuit. She claimed in the legal filing that later that evening she “feels two hands land on her shoulders and begin to massage her shoulders with force. F looks up to see that it is Cardinal Marc Ouellet who stands behind her and massages her shoulders. Cardinal Marc Ouellet smiles at her and strokes her back before leaving.”

In the lawsuit, “F” said the incident was intrusive and left her feeling uneasy.

In another incident in 2008, “F'” came in contact with Ouellet again, according to the lawsuit. Another priest asked if he knew “F”, according to the filing, “to which he replies very loudly that they both know each other very well. Cardinal Marc Ouellet then casually kisses ‘F,’ even though they had only seen each other once or twice before, and holds her firmly against him while stroking her back with his hands,” according to the lawsuit.

“F” claimed one of the last times she came in contact with Ouellet was in February 2010. According to the lawsuit, Ouellet told her he could kiss her again because “there is no harm in spoiling yourself a little.”

“F” said she didn’t say anything because she was worried her internship and professional future depended on Ouellet, according to the lawsuit.

After attending a training on sexual assault, “F” started having flashbacks of what she said she had experienced with Cardinal Marc Ouellet, according to the lawsuit. She realized that Ouellet’s interactions with her constituted touching of a sexual nature without consent and therefore sexual assault, according to the lawsuit, and decided to tell her new partner and a few female friends.

One of these friends advised her to talk to the Advisory Committee for Sexual Abuse of Minors and Vulnerable People of the Catholic Church of Quebec about these sexual assaults, according to the lawsuit.

A statement released by Matteo Bruni, director of the Vatican press office, said a preliminary investigation conducted by Fr. Jacques Servais, S.I., at the Pope’s request, concluded “that there are no elements to initiate a trial against Cardinal Ouellet for sexual assault.”

Canadian government agrees to pay a nearly $1 billion settlement for claims of sexual misconduct in the armed forces

“Following further pertinent consultations, Pope Francis declares that there are insufficient elements to open a canonical investigation for sexual assault by Cardinal Ouellet against the person F,” Bruni said in the statement

The Catholic Archdiocese of Quebec acknowledged the allegations made in the lawsuit against Cardinal Ouellet but said it has no comment.

Additionally, in the lawsuit, “F” described sexual assaults by another priest of the Diocese of Quebec, Father Leopold Manirabarusha.

“F” alleged she was forced to perform sex acts for Manirabarusha while she was an employee of the diocese, according to the filing. She alleged in the lawsuit that one day Manirabarusha took her to his library and made it clear he expected her to perform oral sex on him. “F” complied with his demands, seeing no other way out.

On about 15 different occasions, according to the lawsuit, Manirabarusha sexually assaulted her in various places, including church property and a hotel.

The Archdiocese of Quebec confirmed Manirabarusha is still a Catholic priest and said, “but he has been off-duty for a suspension since the beginning of April. So, until the whole affair is settled, he cannot have any pastoral intervention with people.”

Cardinal Marc Ouellet has been one of the most prominent Vatican cardinals for over a decade. His name was raised during the Conclave of 2013 as a possible Pope, according to CNN reporting from the time.

He has headed the powerful Vatican office of Bishops since 2010. The office is responsible for vetting and overseeing Catholic bishops worldwide and works closely with Pope Francis. Cardinal Ouellet typically meets weekly with the Pope to keep him informed of developments in his office, according to published bulletins of the Pope’s meetings.

In 2019, upon turning 75, Ouellet submitted his resignation to Pope Francis as required by Vatican law, but Francis did not accept it, as CNN has confirmed that Ouellet remains in his position.

The Royal Canadian Mounted Police, in an email to CNN, said it is unable to confirm if there is a criminal investigation and that investigations are usually confirmed if and when criminal charges are recommended against someone.

CNN has reached out to the Quebec City Director of Criminal and Penal Prosecutions about possible criminal investigations and was told via email it has no public information concerning this case for the moment.

SNAP, the Survivors Network of those Abused by Priests, which has been providing support for victims of sexual abuse in institutional settings for 30 years, released a statement saying: “We applaud the bravery of all the victims who are involved in this case for coming forward and hope they are able to receive the justice and healing they deserve. We especially recognize that given the prominence of the man who she has accused, the alleged victim of Cardinal Ouellet will no doubt receive intense public scrutiny, and we recognize that for her to have come forward has taken considerable courage.”

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Emirates airline suspends all flights to Nigeria over fund repatriation dispute

Emirates announced in a statement Thursday that it has put a hold on flight operations in and out of Nigeria due to its inability to repatriate funds from the West African country.

The airline said there has been “no progress” in reaching Nigerian authorities for a solution.

“Emirates has tried every avenue to address our ongoing challenges in repatriating funds from Nigeria and have made considerable efforts to initiate dialogue with the relevant authorities for their urgent intervention to help find a viable solution. Regrettable there has been no progress,” Emirates said in a statement.

The decision comes after Emirates announced last month of flights it would reduce flights to Nigeria’s commercial capital Lagos, the carrier said it could not access its funds amounting to $85 million withheld in the country. The stuck funds had been rising by over $10 million every month, the airline said in a letter addressed to Nigeria’s Aviation Minister Hadi Sirika.

Currency in freefall

Sirika told CNN the trapped funds will be released as this was not the first time Nigeria was holding onto huge amounts of revenue belonging to foreign air carriers.

“In the past, Nigeria has demonstrated the capacity and the willingness and fairness to resolve this type of issue. It happened when we took over power in 2015: There were lots of blocked funds, about $600 million at that time. It was at a time when the country was in a recession and there were dwindling revenues coming to the country, yet we honored our obligation to pay out all those blocked funds,” Sirika told CNN Thursday.

“Unfortunately, due to many factors and reasons, the monies piled back up. Government is working hard to ensure that these monies are released, not only for Emirates but all airlines affected,” Sirika added.

Sirika added that “mechanisms will be put in place to ensure that this does not occur in the future.”

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The minister did not elaborate on what the factors were although Nigeria is grappling with shortages in foreign exchange which has restricted access to foreign currency for imports.
Earlier in June, the International Air Transport Association said Nigeria was holding onto $450 million revenue belonging to foreign carriers operating in the country.
The local currency has been in freefall against the dollar with most of the country’s foreign exchange derived from crude oil sale, which has dwindled due to oil theft in producing communities. The government is also burdened with the high cost of subsidizing fuel for local consumption.

Nigeria is one of Africa’s biggest markets for international carriers.

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Russian tourist visas: Europe can’t decide if it wants to punish ordinary Russians for Putin’s war



CNN
 — 

Finland, a country that shares an 830-mile-long border with Russia, announced this week that it is to halve its cap on the number of visa applications from Russian citizens. 

Currently, 1,000 Russians can apply for Finnish visas each day, but as of September 1 that number will drop to 500. Jussi Tanner, director general for consular services at Finland’s Ministry of Foreign Affairs, told CNN that a maximum of 20% of those slots will be allocated for tourist visas, meaning no more than 100 tourist visas will be available per day.

The move comes after Estonia, another European Union nation that borders Russia, banned even Russians who already had visas from entering the country. According to Reuters, that amounts to 50,000 people. 

The Czech Republic and Latvia have also been supportive of visa bans and have also taken measures to restrict Russians from traveling into the EU. 

The proposal was first floated by Ukrainian President Volodymyr Zelensky, who wants to stop Russians from entering the bloc, where they can then travel freely for 90 days in the EU’s common travel zone, the Schengen area. 

Not everyone agrees. German Chancellor Olaf Scholz says that while it is important to sanction those in Russian President Vladimir Putin’s inner circle, Europeans need to “also understand that there are a lot of people fleeing from Russia because they disagree with the Russian regime.” 

A senior German diplomat told CNN that Scholz’s argument is not based in fact, “as anyone can apply for a humanitarian visa.” The diplomat believes that Scholz is mostly attempting to “balance his own party which is split between those who want dialogue with Russia and those who want to appear hard.” 

Vladimir Putin and Olaf Scholz speak at a joint press conference in Moscow on February 15, before Russia's invasion of Ukraine had started.

Advocates of limiting Russian visas believe the argument is quite clear. 

Alexander Stubb, a former Finnish Prime Minister and foreign minister who had previously advocated for visa liberalization with Russia, told CNN: “It’s a sad state of affairs, but the price of war has to be felt by Russian citizens.” 

He said that “the only way in which the hearts and the minds of the Russian people can be changed is for them to understand what Putin is doing is a blatant violation of international law. That means a total visa ban on Russians.”

Rasa Juknevičienė, a former Lithuanian defense minister and current member of the European Parliament, says that “first and foremost, this is a security issue.” 

“Russian citizens travel to the EU mainly via Finland and Estonia. The official services of the countries are under enormous pressure. Russia is controlled by KGB legacy structures, which exploit the openness of the Schengen countries for various operations,” Juknevičienė told CNN. 

It’s unlikely that European leaders will reach a full agreement on this issue. While the EU has been largely united since the start of the war and has come together to place serious economic sanctions on Russia, there is a geographical reality that complicates any consensus between 27 countries with vastly different economic and political priorities. 

Countries in the west and south of the EU, who are somewhat protected from Kremlin aggression due to sheer distance, are quick to remind hawks that Russia is a very large part of the wider region of Europe. 

French President Emmanuel Macron (R) meets with Russian President Vladimir Putin (L) in Moscow on February 7, 2022.

It is therefore not only extremely difficult, but probably not particularly productive, to simply ignore Russia. Once the war is over, European economies will want to re-establish ties with Russia. Not only is this beneficial to those countries, but it could also prove valuable in a post-conflict propaganda war to convince average Russians of the benefits of European values.  

Strategically, most serious figures also agree that any post-war European security plans will have to involve Russia, and it’s far better that Moscow is proactively involved and working with its European neighbors. 

At the other end of the spectrum, there are those countries such as Poland, Estonia, Lithuania and Latvia who have already suffered at the hands of Russia quite a lot, both at the hands of the oppressive dictatorship of the Soviet Union and more recently from the threat of Putin’s Kremlin.

These are the competing factors that make handling Putin and Russia so complicated. 

Will the EU work with Putin if he remains in power after the war? If not, how different must the regime that follows be from Putin’s to satisfy the bloc? What would need to be included in a hypothetical treaty to assure different European leaders that Russia will not provoke further conflict? What might the EU be willing to concede in order to broker a peace? It’s worth remembering throughout all of this that Ukraine is now a candidate for EU membership. 

All of these big questions create smaller questions, including what should be done during the conflict on visas. And the longer the war goes on, as the West’s options for sanctions and retaliation become increasingly limited, the more of these questions will emerge. 

The hard reality is that these smaller questions, headaches in themselves, must be balanced against whatever is the best-case, long-term outcome of this bleak period. And the blunt truth is that one thing will never change: Europe cannot simply ignore Russia. 

Correction: This story has been updated to reflect that Rasa Juknevičienė is a politician from Lithuania.

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Gotabaya Rajapaksa: Sri Lanka’s former president tipped to return to crisis-hit nation next week

Foreign Minister Ali Sabry told CNN late Wednesday the Sri Lankan government had been told of Rajapaksa’s return “through diplomatic channels.”

“Officially we have no role in the return. He is a citizen of Sri Lanka and can travel as he wishes,” Sabry said.

Rajapaksa’s estranged cousin Udayanga Weeratunga, a former Sri Lankan Ambassador to Russia, told reporters Wednesday the former leader would return on August 24.

Rajapaksa is in Thailand after fleeing Sri Lanka in July on a military plane for Maldives, and then traveling to Singapore, days after angry protesters stormed his official residence and office.

He tendered his resignation from Singapore, while public anger grew over his alleged mismanagement of the economy.

The former leader’s hurried exit was a historic moment for the nation of 22 million, which members of the Rajapaksa family ruled with an iron fist for much of the past two decades.

Former Sri Lankan President Rajapaksa requests to travel to Thailand

Anger has been growing in Sri Lanka for months after the country’s foreign exchange reserves plummeted to record lows, with dollars running out to pay for essential imports including food, medicine and fuel.

Rajapaksa’s brother Mahinda Rajapaksa was forced to resign as prime minister in May as public fury grew over the crisis.

His departure came during a day of chaos and violence that culminated in police imposing a curfew across the country.

Sri Lankan President Ranil Wickremesinghe reportedly said in late July it was “not the right time” for Gotabaya Rajapaksa to return to the country as it could inflame political tensions.

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Kabul: Explosion hits mosque in Afghan capital, police say

Khalid Zadran, a spokesman for the Kabul police chief, told CNN that the blast did cause casualties, but did not specify further.

The incident occurred in the city’s police district 17 and security forces are on the scene investigating, he added.

Healthcare organization Emergency later confirmed that at least three people had died.

“Following today’s explosion, we admitted 27 patients to our Surgical Centre for War Victims in Kabul, including five minors, one of them a seven-year-old boy,” Stefano Sozza, Emergency’s Country Director in Afghanistan, told CNN.

“Two patients arrived dead, one died in the emergency room,” he said.

“In the month of August alone, we managed six mass casualties in our hospital, with a total of almost 80 patients. Throughout the year, we have continued to receive gunshot injuries, shrapnel injuries, stabbing injuries, and victims of mine and IED explosions on a daily basis. The country is suffering the consequences of a very long conflict that has undermined its future,” he added.

Bilal Karimi, the Taliban’s deputy spokesman, condemned the explosion in a tweet on Wednesday evening.

“The murderers of civilians and perpetrators of similar crimes will soon be caught and punished for their actions, God willing,” Karimi wrote.

This is a developing story and will be updated.

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Scottish local authorities under fire for appointing man as ‘period dignity officer’

A group of colleges and local councils in Tay region in eastern Scotland announced the appointment of Jason Grant, who previously worked as a student wellbeing officer at a local college, to the role on Thursday.

However, critics argue that a woman would have been better suited to the job.

Retired tennis star Martina Navratilova commented on the news of his appointment, calling it “f**king ridiculous” on her Twitter account.
“Have we ever tried to explain to men how to shave or how to take care of their prostate or whatever?!? This is absurd,” she wrote in a separate tweet.

Barrister Charlotte Proudman also questioned why a man was appointed to the role.

“I remember at school, girls used sanitary pads because tampons were unaffordable,” she tweeted. “What experience does Jason Grant have of this? I’m all *for* men’s support – but let’s have women lead on our experiences.”

Grant’s role is the first of its kind in Scotland.

Women in Scotland now have a legal right to free menstrual products

“He will coordinate and streamline the approach to ‘Period Dignity’ across the area by working directly with the colleges and local authorities,” Grainger PR said in a press release announcing the appointment, which was made by a working group of .

“Jason will lead a regional campaign across schools, colleges and wider communities, raising awareness and understanding of the new Act and ensuring that the Scottish Government funding is allocated appropriately,” it said.

The Period Products Act came into force on Monday and means that menstrual products, including tampons and pads, will be made available free of charge in public facilities in Scotland.

It will be the responsibility of local authorities and education providers to ensure the products are available free of charge.

Grant called the legislation “transformational and long-overdue” in the press release announcing his appointment.

“With our partners, we will be looking at fine-tuning the existing distribution and availability of products, including sustainable options and even plan performing art workshops in schools and colleges to improve education around periods,” he said.

California public schools will provide free menstrual products under new law

His appointment “surprised and intrigued some colleagues and friends,” according to the press release, but Grant, a former personal trainer and tobacco salesman, said he believes he has a lot to bring to the role.

“I think being a man will help me to break down barriers, reduce stigma and encourage more open discussions. Although affecting women directly, periods are an issue for everyone,” he said, adding that he will also work to raise awareness of the menopause.

“It’s time to normalise these topics and get real around the subject,” he added. “I believe I can make progress by proving this isn’t just a female topic, encouraging conversations across all genders and educating and engaging new audiences.”

A spokesperson for the working group that employed Grant said giving him the job “was a no-brainer with his vast experience in project management from both the private and public sectors.”

CNN has contacted Grainger PR for further comment.

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UK inflation hits 10% as cost-of-living crisis accelerates

Annual consumer price inflation hit 10.1% in July, according to data published by the Office for National Statistics on Wednesday, up from 9.4% in June. Soaring food prices — up 12.7% since July 2021 — were the largest single contributor to the acceleration in inflation, the ONS said.

The headline inflation number was higher than predicted by a Reuters poll of economists, and food inflation is now running at its highest level in 14 years.

“All the eleven food and non-alcoholic beverage classes made upward contributions to the change in the annual inflation rate, where prices overall rose this year but fell a year ago,” the ONS said.

The largest upward contributions came from bread and cereals, and from milk, cheese and eggs, with notable price increases in cheddar cheese and yoghurts.

On a monthly basis, the consumer price index was up 0.6% in July, compared with no change a year ago. Higher gasoline and diesel prices, together with rising air fares, were also to blame, the ONS added.

The higher-than-expected reading will keep the pressure on the Bank of England to follow last month’s biggest increase in interest rates in 27 years with further rate hikes despite mounting evidence of the pressure on household budgets and signs that the UK economy may already have entered a recession.

Data published last week showed that the country’s GDP dropped by 0.1% in the second quarter of this year.

‘Miserable’ for consumers

And Tuesday’s official labor market report found that paychecks rose by 4.7% between April and June, meaning average incomes fell by 3% during the period once inflation is taken into account — the biggest drop in real wages since the ONS began keeping records more than 20 years ago.

“The situation is miserable for UK consumers, who are currently being squeezed from all sides,” wrote Kallum Pickering, senior economist at Berenberg, in a note to clients. “Wages are not rising fast enough to offset surging inflation, but they are rising too fast for the [Bank of England’s] liking, as it wants to return inflation to target,” he added.

Inflation is forecast to go even higher later this year, driven by further rises in regulated energy bills in October. Electricity prices have already risen by 54% and gas prices by 95.7% in the 12 months to July 2022 because of rocketing wholesale costs, worsened by Russia’s invasion of Ukraine in late February.

UK government officials are reportedly examining options to provide more support to households. But Liz Truss, frontrunner to succeed Boris Johnson as next UK prime minister in early September, has yet to set out a detailed plan beyond promising tax cuts.

The opposition Labour Party is calling for a windfall tax on UK oil and gas companies to be extended to help fund a freeze in household heating bills this winter.

— Anna Cooban and Rob North contributed to this article.

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