Economy

WASHINGTON (Reuters) -President Joe Biden warned Republicans on Tuesday that they would give Russia a “Christmas gift” if they failed to provide additional military aid to Ukrainian President Volodymyr Zelenskiy, whose meeting with a top U.S. lawmaker concluded without a commitment for more support.Zelenskiy traveled to Washington to plead for money to back Ukraine in its war with Russia, but he faced a skeptical reception from key Republican lawmakers. Mike Johnson, the speaker of the House of Representatives, would not agree to support Biden’s request to give Ukraine $61.4 billion.”What the Biden administration seems to be asking for is billions of additional dollars with no appropriate oversight, no clear strategy to win and with none of the answers that I think the American people are owed,” Johnson said after meeting with Zelenskiy.Biden, who met with Zelenskiy later at the White House, said he would not walk away from Ukraine and neither would the American people. He warned lawmakers that they risked handing a victory to Russian President Vladimir Putin if they did not approve the request for aid.”Putin is banking on the United States failing to deliver for Ukraine,” he said during a press conference with the Ukrainian leader. “We must … prove him wrong.” Earlier in the Oval Office, Biden told Zelenskiy, “We’re gonna stay at your side,” saying that Congress needed to pass legislation approving the aid “before they give Putin the greatest Christmas gift they could possibly give him.”Zelenskiy said he heard “great many things” during his talks with political leaders in Washington and was thankful for the support of the Biden administration and lawmakers, but time will tell if the U.S. will continue to help fund its defense against Russia.”There were signals. They were more than positive. But we know that there are words and there are concrete results. We will count on a great result,” Zelenskiy said.He also rejected any calls to cede Ukrainian territory to Russia.”How can Ukraine simply give away its territory? This is absolutely insane,” Zelenskiy said. “Let’s be honest. … Our people live there…our children. It’s a part of our society. We’re talking about people who live there.”IMMIGRATION DEBATEHeading into winter, with tens of thousands of Ukrainians dead, a yawning budget deficit and Russian advances in the east, Zelenskiy is asking Washington to provide badly needed support. Wearing a black shirt and olive drab trousers, Zelenskiy was met with sustained applause in Congress as he entered a closed-door meeting with U.S. senators, and the chamber’s Democratic and Republican leaders pledged their support. But some Republicans, particularly those with the closest ties to former President Donald Trump, oppose more aid. They say any further money must be paired with changes to immigration policy at home — an exceptionally divisive issue in U.S. politics.Democratic Senator Chris Murphy, who is leading the talks, said he thought lawmakers could reach an immigration deal and pass the spending package before Congress recesses for the year on Friday. But Republicans said that was not likely.”I’m becoming increasingly pessimistic,” Senator Susan Collins told reporters.Speaker Johnson said he would not act until the Senate passed legislation. “I implore them to do their job because the time is urgent and we do want to do the right thing,” he told reporters.Both the war and immigration issues are expected to be lightning-rod issues ahead of the 2024 U.S. presidential and congressional elections. Trump and Biden are both seeking the presidency.DEADLOCK STRATEGYBiden said the U.S. wanted Ukraine to win the war, but one Republican lawmaker questioned whether additional aid would help Ukraine defeat Russia after a summer offensive that has failed to yield clear gains. “I know everyone wants Ukraine to win. I just don’t see it in the cards,” Republican Senator Ron Johnson said.Democrats in Congress accused their political opposition of aiding Putin. “He is delighting in the fact that Donald Trump’s border policies are sabotaging military aid to Ukraine,” Democratic Senate Leader Chuck Schumer said.Newly declassified U.S. intelligence shows that “Russia seems to believe that a military deadlock through the winter will drain Western support for Ukraine” and ultimately give Russia the advantage, said Adrienne Watson, spokesperson for the White House National Security Council.The White House told Congress on Dec. 4 the government will no longer have funding to provide more weapons for Ukraine after the end of the year. Congress has approved more than $110 billion for Ukraine since Russia’s February 2022 invasion, but no new funds since Republicans took control of the House from Democrats in January.Biden told Zelenskiy during the press conference that Ukraine’s continued existence as an independent nation was a sign of success. “For you to be here today – again today – nearly two years later and for Ukraine to be staying strong and free is an enormous victory already,” he said. The United States cannot turn the tide of war in Ukraine by pumping tens of billions more dollars into the country, the Kremlin said on Tuesday. The war has cost Russia 315,000 dead and injured troops, nearly 90% of the personnel it had before the conflict began, according to a source familiar with a declassified U.S. intelligence report. More

WASHINGTON (Reuters) -U.S. President Joe Biden’s administration said on Tuesday it strongly supports swift passage of the National Defense Authorization Act, as Congress rushed to complete the $886 billion defense policy bill before the end of the year.”The NDAA provides the critical authorities we need to build the military required to deter future conflicts while supporting the service members and their spouses and families who carry out that mission every day,” the administration said in a statement.The National Defense Authorization Act, or NDAA, is one of the few major pieces of legislation Congress passes every year.The Senate and House are both expected to approve the fiscal 2024 bill later this week, sending it to the White House for Biden to sign into law. The Senate backed a procedural measure ending debate on the measure by 85 to 15 on Tuesday, far beyond the 60 needed to advance the measure to a final vote.Separate from the appropriations bills setting government spending levels, the NDAA governs everything from pay raises for the troops – this year’s will be 5.2% – to purchases of ships and aircraft to policies such as support for Ukraine.This year’s bill also includes a four-month extension of a key domestic surveillance authority, giving lawmakers more time to either reform or keep the disputed program, known as Section 702 of the Foreign Intelligence Surveillance Act (FISA).The fiscal 2024 NDAA authorizes a record $886 billion in military spending, up 3% from last year.The Republican-majority House passed its version of the bill earlier this year, followed by the Senate, which is controlled by Biden’s fellow Democrats. Negotiators from both parties and both chambers unveiled their compromise version last week.The final version of the NDAA left out many provisions addressing divisive social issues, such as access to abortion and treatment of transgender service members, that had been included in the version passed by the House, threatening to derail the bill. More

TOKYO (Reuters) -Japan’s central bank chief faces a key test of his communication skills at next week’s monetary policy meeting, where he is expected to keep alive prospects of an end to negative rates while hosing down excitement that such a move is imminent.Less than a year into the job, Bank of Japan Governor Kazuo Ueda has already wrong-footed markets twice in comments about the future of policy, most recently last week when bond yields and the yen surged on expectations of a near-term shift in rates.It has been more than 16 years since Japan’s last interest rate hike and financial markets have developed a hypersensitivity to any hint of an end to ultra-loose monetary settings, making it difficult for the BOJ to signal changes without triggering destabilising bond yield spikes.However, as the economic case for an end to accommodative policy builds, the BOJ’s priority now more than ever is to avoid surprising markets, three sources familiar with its thinking say. That means Ueda – unlike his predecessor who shocked markets with abrupt policy shifts – will try to drop some hints in advance.”There’s nothing good about surprising markets especially when central banks are weaning out stimulus,” one of the sources said, a view echoed by another source.That heightens the importance of what Ueda will say at his news conference after the BOJ’s two-day meeting ending on Tuesday, where the board is seen making no major changes to its ultra-loose policy setting.More than 80% of economists polled by Reuters in November expect the BOJ to end its negative rate policy next year with half of them predicting April as the most likely timing. Some see the chance of a policy shift in January.Ueda faces a tricky balancing act. With inflation exceeding its 2% target for well over a year, the BOJ wants to keep alive market expectations of a near-term shift.But the BOJ also needs to avoid any explicit language or hints that commit it to specific timing, which means keeping some ambiguity in its messaging.The BOJ’s current strategy is to emphasise the prerequisites for an exit, but hold off pre-announcing the expected timing, the sources said.The delicate challenge of communicating without committing means Ueda could offer an array of ambiguous comments that risk being misinterpreted and causing unwanted market volatility, some analysts say.A more transparent way of communicating would be to tweak or ditch a dovish forward guidance on policy that promises to ramp up stimulus as needed, though many in the BOJ rule out the option given uncertainty over the economic outlook, the sources said.The BOJ’s communication is also constrained by a disconnect between its dovish policy bias and hawkish forecasts predicting inflation will stay near its 2% target until early 2026.Blaming the inflation overshoot on cost-push pressures, Ueda has stressed the need to wait for inflation to be driven more by domestic demand and stronger wage growth, in normalising policy.But the governor himself acknowledged that this was a tough sell, telling parliament last week it was “hard to explain all this in a convincing way.”As well as creating market volatility, messaging missteps also undermine the effectiveness of central bank communication, an essential part of the policy transmission process.Naomi Muguruma, senior market economist at Mitsubishi UFJ (NYSE:MUFG) Morgan Stanley Securities, plans to focus on how Ueda describes progress the BOJ has made in scrutinising the price outlook.”The key is how much the BOJ will try to signal the chance of a policy change in January,” she said. “In any case, markets will probably remain volatile given the risk of Ueda’s comments being taken out of context again.” More

In a prerecorded announcement Caputo said the peso would be weakened to around 800 per dollar from some 365 now, discretionary transfers to the provinces would be cut to a minimum and public work tenders would be halted.Caputo added that the government of libertarian President Javier Milei would reduce energy and transport subisidies, though would double social spending for the poorest, a bid to avoid a rise in povertry already at above 40%. More

Several companies including Comcast (NASDAQ:CMCSA) and Walt Disney (NYSE:DIS) paused their advertisements on the platform after Musk last month agreed with a post on X, formerly Twitter, that claimed Jewish people were stoking hatred against white people.Joe Benarroch, head of business operations at X, told Reuters the report “presents an incomplete view of our entire business, as the sources Bloomberg relied on for information are not providing accurate and comprehensive details”.X’s revenue from advertising services for the last four quarters as a public company totaled $4.7 billion, according to LSEG data, covering the second half of 2021 and first half of 2022. The company generated a little more than $600 million in advertising revenue in each of the first three quarters of 2023, and expects a similar performance in the current period, the report added citing people familiar with the matter.Since Musk’s takeover in October 2022, monthly U.S. ad revenue declined at least 55% year-over-year each month, according to third-party data provided to Reuters in October.Ad sales make up between 70% and 75% of X’s total revenue. Executives had targeted $3 billion in revenue from advertising and subscriptions in 2023, but will fall far short of that number, according to the report.Musk had also said in July Twitter’s cash flow had remained negative because of a nearly 50% drop in advertising revenue and a heavy debt load. More

A bipartisan report recommended stripping China of the low tariffs the United States granted it two decades ago, among other actions.Bipartisan lawmakers on Tuesday called for severing more of America’s economic and financial ties with China, including revoking the low tariff rates that the United States granted Beijing after it joined the World Trade Organization more than two decades ago.The House Select Committee on the Chinese Communist Party released a wide-ranging set of recommendations for resetting America’s economic relationship with China. The report, which was signed by both House Democrats and Republicans, argued that China had carried out a “multidecade campaign of economic aggression” that had undercut American firms, dominated crucial global industries and left the United States highly vulnerable in the event of a broader military conflict.The 53-page report included nearly 150 recommendations that Congress and the administration could take to offset those vulnerabilities. They ranged from imposing new tariffs on older types of Chinese chips to further cutting off the flow of capital and technology between the world’s largest economies.Among the report’s other recommendations were requiring that publicly traded American companies disclose ties to China and investing further in U.S. research and manufacturing capacity to counter China’s dominance of sectors like pharmaceuticals and critical minerals. It also suggested developing plans to coordinate economically with allies if the Chinese government invades Taiwan.Many of the recommendations may never be adopted by a fractious Congress. But the report could provide a path toward some bipartisan legislation on China in the months to come.Representative Mike Gallagher, Republican of Wisconsin and the committee’s chairman, said in an interview that he would like to see Congress come together on a major China bill next year ahead of the presidential election. He said that while some American firms opposed restrictions on doing business with China — a large and growing market — legislation clarifying what was allowed would be beneficial for many companies.“If Congress doesn’t step up and do something legislatively,” Mr. Gallagher said, “we’re just going to bounce back and forth between different executive orders that have wildly different rules that create chaos for Wall Street and the market.”The report is a tangible sign of how much the bipartisan consensus toward China has shifted in recent years.The most prevalent argument a decade ago was that economic interdependence between the United States and China would be a force for peace and stability. Some — including Biden administration officials — still say that business ties can help stabilize the relationship and promote peace.But that theory has increasingly given way to fears that ties to China could be weaponized in the event of a conflict. It could be catastrophic for the U.S. economy or the military, for example, if the Chinese government cut off its shipments to the United States of pharmaceuticals, minerals or components for weapons systems.Beijing’s subsidization of Chinese firms and incidents of intellectual property theft have also become an increasing source of friction. In some cases, China has allowed foreign firms to operate in the country only if they form partnerships that transfer valuable technology to local companies.The report said that the United States had never before faced a geopolitical adversary with which it was so economically interconnected, and that the full extent of the risk of relying on a strategic competitor remained unknown. The country lacks a contingency plan in the case of further conflict, it said.“Addressing this novel contest will require a fundamental re-evaluation of U.S. policy towards economic engagement with the P.R.C. as well as new tools to address the P.R.C.’s campaign of economic aggression,” the report said, using the abbreviation for the People’s Republic of China.This year, the committee hosted a tabletop exercise to simulate how the United States would respond if the Chinese government invaded Taiwan. It found that U.S. efforts to deter China through sanctions and financial punishment “could carry tremendous costs to the United States,” the report said.The lawmakers said that they did not advocate a full “decoupling” of the U.S. and Chinese economies, but that the country needed to find a way to reduce Beijing’s leverage and to make the United States more economically independent.The report includes a variety of other recommendations, including increasing the authority of a committee that reviews foreign investments for national security threats and devising new high-standard trade agreements, especially with Taiwan, Japan and Britain.But the report’s first recommendation, and perhaps its most significant, is phasing in a new set of tariffs for China over a short period of time.When China joined the World Trade Organization in 2001, the United States and other members began offering China lower tariffs to encourage trade. In return, China started undertaking a series of reforms to bring its economy in line with the organization’s rules.But the report argued that China had consistently failed to make good on those promised reforms, and that the “permanent normal trade relations” the United States had granted to China after its W.T.O. succession did not lead to the benefits or economic reforms Congress had expected. The report said Congress should now apply a different, higher set of tariffs to China.Such a move has been debated by lawmakers, and has been backed by former President Donald J. Trump and other Republican candidates. Last year, Congress voted to revoke permanent normal trade relations with Russia after its invasion of Ukraine.But increasing tariffs on China, one of the United States’ largest trading partners, would provoke more opposition from businesses, since it would raise costs for products imported from China and most likely slow economic growth.The United States already has significant tariffs on many Chinese products, which were imposed during the Trump administration’s trade war and President Biden is still reviewing. The further changes suggested by Congress would increase levies on other items, like toys and smartphones, that have not born additional taxes.A study published by Oxford Economics in November and commissioned by the U.S. China Business Council estimated that such tariffs alone would lead to a $1.6 trillion loss for the U.S. economy over a five-year horizon. It would also be likely to cause further friction at the World Trade Organization, where the group’s most steadfast supporters have already accused the United States of undermining its rules.Liu Pengyu, a spokesman for the Chinese Embassy, said that the U.S.-China economic relationship was “mutually beneficial” and that the proposals would “serve no one’s interests.”The report runs counter to “the principles of market economy and fair competition, and will undermine the international economic and trading order and destabilize global industrial and supply chains,” he said.The Retail Industry Leaders Association, a trade group that includes Target, Home Depot and Dollar General, said in a statement on Tuesday that it was concerned about the recommendations. Raising tariffs on Chinese products would “only harm U.S. businesses and invite retaliation from China,” it said.The lawmakers’ report acknowledged that such a change would be an economic burden, and suggested that Congress consider additional appropriations for farmers and other support for workers.Mr. Gallagher said that extricating the United States from its “thorough economic entanglement” with China would not be easy, and that Washington should work to develop alternative markets and prepare for potential retaliation from Beijing.Reaching consensus on the report required months of negotiations between Democrats and Republicans, which its authors said should send a message to China. Only one member of the 24-person committee voted against the report: Representative Jake Auchincloss, a Massachusetts Democrat who had concerns about protectionism.“One of the theories that the C.C.P. has about the United States is that we are divided, that we are tribal, that we are incapable of coming together to deal with challenges,” said Representative Raja Krishnamoorthi of Illinois, the committee’s top Democrat, referring to the Chinese Communist Party. “On this particular issue of competition between the United States and the C.C.P., we are of one mind.” More

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The US has hit companies in Turkey, the UAE and China with sanctions as part of a sweeping effort to stop the Russian defence industry easily obtaining sensitive technologies for Vladimir Putin’s war in Ukraine.More than 250 entities were covered by the measures, which also reached deep into Russia’s war economy, even targeting a provincial bakery refitted to make drones. The latest US package is timed to coincide with Ukrainian president Volodymyr Zelenskyy’s visit to Washington this week, a show of support for Kyiv even amid political roadblocks that have raised doubts about future military aid.The sanctions target military contractors and civilian companies that have turned to supporting Russia’s war effort, leading to increasing confidence from the Kremlin that it can bolster its arsenal while western resolve to support Ukraine crumbles.“We will continue to use the tools at our disposal to promote accountability for Russia’s crimes in Ukraine and those who finance and support Russia’s war machine,” said US secretary of state Antony Blinken.Ukraine’s allies are particularly concerned about Russia using countries such as Turkey, the UAE and China either as sources or conduits for high-end electronics and high-precision goods that Moscow’s war effort is unable to produce domestically. The US measures also target companies that have helped transfer munitions and military equipment from North Korea to bolster Russia’s defence stocks.North Korean dictator Kim Jong Un has swung to supporting Moscow after meeting Putin in September, supplying the Russian military with much-needed artillery rounds.But the US’s main focus is on industrial companies in Russia, many of which are civilian companies that have switched to producing defence equipment under Putin’s drive to put the economy on a war footing. The continued supplies of technologies from advanced microchips to ball bearings have helped keep artillery, drones and missiles rolling off the production lines at Russian factories. Putin boasted last week that Ukraine’s overreliance on western backing doomed it to lose the war. “When you don’t have your own raison d’être, no ideology, industry, money, or anything of your own, then you don’t have a future. And we do,” Putin told a group of servicemen in comments published on Sunday.The Financial Times reported in November that Nato member Turkey’s exports of military-linked parts to Russia have soared since Moscow launched its full-scale invasion of Ukraine last year. The US, EU, UK and other western partners say these so-called high-priority goods are items of particular value to Russia’s war effort and include microchips, navigation equipment and scopes.Janet Yellen, US Treasury secretary, said: “Our sanctions today continue to tighten the vice on willing third-country suppliers and networks providing Russia the inputs it desperately needs to ramp up and sustain its military-industrial base.”Washington and Brussels are particularly frustrated that Turkish companies are purchasing dual-use items, which have commercial and military applications, from western suppliers and then re-exporting them to Russia either directly or through intermediaries in central Asia and eastern Europe. One of the newly sanctioned Turkish companies, Kartal Exim, describes itself as a “multifunctional supplier of technological equipment”. Russian records suggest it has shipped about $2.1mn of goods to Orlan LLC — a St Petersburg company that is a self-described fishing equipment supplier. By far the largest category of goods shipped from Kartal Exim to Orlan, worth $1.1mn, was listed as “data transmission” equipment, a category on the high-priority goods list. The items, shipped from Istanbul, were made by western suppliers including Hewlett Packard Enterprise, Fujitsu, Dell and Samsung. Kartal did not respond to an FT request for comment.While Turkey has not applied western sanctions directly on Russia, it says “strict monitoring and prevention of efforts to skirt sanctions through Turkey is an integral part of our . . . policy”.In the UAE the new sanctions have targeted 12 companies, many of which are involved in moving aircraft parts into Russia. One of the sanctioned entities is Aspect DWC, a UAE company which, according to Russian customs records, has been shipped parts for Dassault business jets. A significant focus of sanctions on Chinese companies was a procurement network run by Hu Xiaoxun, a businessman. According to the US Treasury, his company — Jarvis HK — has exported ammunition, loitering munitions and semiconductor microchip manufacturing equipment from China into Russia. The US also listed 17 other Chinese entities, including Beijing Yunze Technology and Chang Guang Satellite Technology. According to the listing, the two companies supplied satellite imagery used in Russian operations, including by the Wagner Group. Russia, the Treasury noted, had become “reliant on PRC commercial satellite imagery”.The US also targeted Ivan Tavrin, a private equity executive who has emerged as a central dealmaker for western companies looking to exit Russia, and Expobank, which has financed several of those deals. More