Economy

Europe is desperate for new natural gas sources as the Kremlin squeezes deliveries from Russian fields. But a US promise to plug the supply gap is threatening a domestic backlash.The US wholesale gas market is likely to average $9 a million British thermal units for the remainder of the year, the Energy Information Administration forecast on Wednesday. The price is a fraction of the gas price in Europe, giving traders huge financial incentives to send fleets of liquefied natural gas tankers overseas. The US recently eclipsed Australia and Qatar as the world’s largest LNG exporter.But $9 is still triple the average US gas price of the past decade, and thus holds the potential to drive sharp increases in home heating and electricity prices at a time when inflation is close to 40-year highs.In July, state governors in the north-eastern New England region warned the White House of a potential jump in gas prices in the winter. They alluded to the US’s pledge to help Europe reduce reliance on Russian gas, made weeks after Vladimir Putin’s invasion of Ukraine.“We appreciate that the [Joe] Biden administration has been working with European allies to expand fuel exports to Europe. A similar effort should be made for New England,” the group of governors wrote to energy secretary Jennifer Granholm, in a letter seen by the Financial Times.The governors of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont asked the administration to help secure domestic LNG supplies for their region from the Gulf of Mexico coast, a move that could divert US exports away from global markets.High prices “will have significant implications for our region’s electric and natural gas customers and raises reliability concerns if the region suffers a severe winter”, the governors told Granholm.New England typically imports LNG from abroad through a terminal near Boston during the coldest months. To the frustration of US gas producers, some states in the region have fought construction of pipelines that would run from the nearby Marcellus shale, one of the world’s largest gasfields.The governors asked the administration to ease restrictions under the Jones Act, a law that requires vessels that are US-flagged, built and crewed for shipments between domestic ports.Granholm replied to the governors in a letter last month, saying that the administration was “prepared to use all the tools in our toolkit” to address supply disruptions and high prices. She said the administration would quickly review any requests for exemptions from the Jones Act, but it could not issue “blanket waivers”.Since the first gas exports left the Gulf coast in 2016, LNG shipments have grown to account for about 12 per cent of total US production. More than 70 per cent of those cargoes have flowed to Europe this year. The continent’s need for it was accentuated this week, when Russia said it would keep the Nord Stream 1 pipeline to Europe shut until western sanctions on Moscow are lifted.Business groups such the US Chamber of Commerce and National Association of Manufacturers have largely backed further gas exports. Yet others have raised concerns. In August the Industrial Energy Consumers of America, a manufacturing group, said in a regulatory filing that “LNG exports have already resulted in substantially increased inflation via higher natural gas and electric power prices”.“Electricity bills are going to shock most consumers because it’s going to rise way above the current rate of inflation,” said Albert Lin, executive director at Pearl Street Station Finance Lab, an energy-focused advisory group. “This super-high price spike that everyone is witnessing in Europe is pulling up US prices because of LNG exports.”US export capacity now stands at 14bn cubic feet a day, though more than 2bn cu ft/d is temporarily offline after an explosion at a terminal in Freeport, Texas. Capacity is on track to rise 40 per cent to 19.7bn cu ft/d by 2026 as new projects are completed, according to the EIA.The multibillion-dollar expansions have drawn resistance from climate and environmental justice campaigners on the Gulf coast. Sierra Club, one of the US’s largest environmental groups, has put up “Stop LNG” billboards along highways in southern Louisiana, where several projects have received government approval.“We are already overburdened and we already have communities that are living right next to petrochemical facilities that are already damaging the water and the air,” said James Hiatt of the Louisiana Bucket Brigade, which opposes the LNG projects. “Most of southern Louisiana will be underwater if we continue to pump these greenhouse gases, so we cannot continue this foolish exercise.”

Earlier this year a group of Democratic US lawmakers, including senators from New England states, urged the Biden administration to “limit US natural gas exports” while it examined the “impact on domestic energy prices”. Those calls could grow louder if energy prices jump this winter.Analysts at ClearView Energy Partners, a Washington-based consultancy, said in a recent report they thought it was unlikely that the administration would curtail exports given its promises to Europe. But they added that higher domestic gas prices could lead it to delay approvals and permits for new projects.“The administration recognises the urgency of which the rest of the world is looking for US natural gas,” said Charlie Riedl, executive director of the Center for Liquefied Natural Gas, a trade group. “Slowing that as a result of a winter of high prices here seems like a shortsighted geopolitical decision, and I would be surprised if this administration took that kind of action.”

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This is not the 1970s, or so we are confidently assured by respectable economists. Granted, as we confront soaring levels of inflation, there are nuanced differences between then and now. But the UK’s strikes in rail, mail and rubbish collection point to one overwhelming similarity — namely, that stagflation creates winners and losers. When national real income is squeezed by oil price shocks as in the 1970s or the current food and energy price shocks, rival claimants in the economy compete ferociously to reclaim lost income. A wage price spiral results.Milton Friedman remarked that inflation is “always and everywhere a monetary phenomenon”. Clearly, money is an important component in the inflationary process. Yet strikes in the UK and the tightness of labour markets around the developed world suggest that no explanation of inflation can be complete without reference to the distributional power struggle between labour and capital.While central bankers congratulated themselves on delivering low and stable inflation during the so-called Great Moderation in the three decades before the financial crisis of 2007-09, disinflation was in reality the result of the global labour market shock arising from bringing China, India and the eastern Europeans into the global economy. This ensured a long-term downward trend in labour’s share of national income. Productivity gains were seized entirely by capital. The disinflationary impetus was reinforced by demographics and the wider ramifications of globalisation.Weakness in returns to labour held back consumption and output because workers have a higher propensity to consume than owners of capital who have higher savings rates. This prompted endemically expansionary monetary policies. As economists at the Bank for International Settlements have long pointed out, the central banks did not lean against the booms but eased aggressively and persistently during busts. This bias to loose policy was further entrenched after the financial crisis by the asset purchasing programmes of the central banks. William White, former head of the monetary and economic department in the BIS, argues that central banks have systematically ignored supply-side shocks and in the Covid-19 pandemic failed to grasp how much supply potential had been reduced by illness and lockdowns. In effect, they have repeated the mistake of Federal Reserve chair Arthur Burns, who in the 1970s argued that the oil price shock was merely transitory while ignoring the second-round impact, notably in the labour market.In his speech at the central bankers’ annual jamboree at Jackson Hole last month, Fed chair Jay Powell indicated that the Fed was belatedly on the case, saying that the employment costs of bringing down inflation were likely to increase with delay, adding that “we must keep at it until the job is done”. The difficulty here is that both private and public sector debt are at higher levels than before the financial crisis so the output and employment costs of sharply rising interest rates will be very high.This debt trap raises in acute form the longstanding question about the politics of central banking: how to persuade politicians and the public that a modest recession now is a price worth paying to avoid a much worse recession later. At risk is central banking independence.The Fed’s harder line suggests that the bond bear market has much further to run. And the summer bounceback in equities looks to have been quixotic. Steven Blitz of TS Lombard points out that it is equities that Fed policy must have an impact on rather than credit creation because the expansions of 2010-19 and post-coronavirus amount to an asset cycle, not a credit cycle. Richly priced financial assets, he adds, have been this cycle’s source of economic distortions. Righting those distortions will mean some marked contrasts with the 1970s. Today, the shrinking of the workforce and deglobalisation are tilting the balance of power from capital back to labour. We have moved from the Great Moderation via the Great Financial Crisis to a Great Reversal into a higher inflation environment.It is also a world in which the toxic combination of the debt trap and the shrinkage of central bank balance sheets will greatly increase the risk of financial crises. While commercial bank balance sheets are in better shape than in 2008, under-regulated, opaque non-banks are a potential systemic threat as the collapse last year of the Archegos family office indicated. A vital lesson of history is that after an “everything bubble” leverage, or borrowing, turns out to be far greater than everyone assumed at the [email protected] More

Daniela Gabor is a professor of economics and macrofinance at UWE Bristol.Zugzwang is the German word for a situation in chess (and life) in which a move must be made, but each possible one will make the situation worse. It also captures perfectly the predicament facing central banks in Europe.Take the ECB, the posterchild for zugzwang central banking. It has four possible moves: raising rates, QT, holding rates and admitting regime defeat.Raising interest rates, as most expect it to do on Thursday (and by 75bp), may appease the uberhawks in Frankfurt and elsewhere, but this is a calculated bet to inflict suffering — lower growth and higher unemployment — to quote Isabel Schnabel. The ECB claims to act with “determination”, a curious choice of words to describe a rudderless central bank that openly admits, just one year after its Strategic Review, that the only bit of its inflation targeting models it still trusts is the expectations fairy, now recast as financially literate people whose expectations of higher inflation will not subside even when inflation starts to decelerate because they remember being let down by a dovish ECB. This may be the diplomatic code name for (German) monetarists, who seem to have finally managed to intimidate the ECB into administering the medicine intended for an overheating economy to eurozone countries already reeling from supply (chain) shocks, a dysfunctional energy market and falling real wages.Quantitative tightening is also on the cards, under the political pressure of monetarists and other uberhawks. Fond of passing correlation for causality, their reasoning is that the ECB must unwind its pandemic-era support for eurozone sovereigns that “ballooned” its balance sheet and fuelled concerns with fiscal dominance. But this is financially illiterate. Premature shrinking of the ECB’s portfolio of sovereign bonds is a distinctly bad move, for two reasons. First, the eurozone’s macro-financial architecture is wired to amplify volatility in sovereign spreads to the German Bund, via the €9tn repo market. This wholesale money market provides the plumbing for private credit creation, both on bank balance sheets and through securities markets. It was designed — by the ECB and the European Commission — to mainly rely on eurozone sovereign bonds as repo collateral. In turning European states into a collateral factory for private finance, the founding fathers did not consider the financial stability implications for the ECB. Yet we know from the eurozone sovereign debt crisis that repo collateral valuation means cyclical market liquidity in eurozone sovereigns except Germany, threatening liquidity spirals that only the ECB can prevent.

Liquidity spirals, it is worth remembering, or not just bad for eurozone governments, but also for private institutions that use those bonds as collateral. It is this macro-financial role of sovereign bonds that connects Mario Draghi’s “whatever it takes” speech, Lagarde’s spread-closing comments and the Transmission Protection Instrument. The ECB cannot wish it away in a high-inflation setting, and risks triggering severe repo market disruptions by panicking into “quantitative tightening”. Second, panic-QT would also pile pressure on to sovereign markets that have already delivered some tightening of monetary conditions. Italy’s 10-year yield now hovers around 4 per cent, a 2 percentage points spread to the German Bund, at a time when eurozone countries need aggressive fiscal and structural policies to contain the possibility of future persistent supply shocks.Holding rates steady may be the right technocratic choice, but it comes with institutional costs that the ECB is no longer prepared to bear. For the past year, the ECB has repeatedly made that choice, in the hope that supply shocks that it cannot control would dissipate, and inflation would once again behave as its models predict. Putin’s invasion of Ukraine, coupled with the reluctance of European governments to act decisively with energy price caps, have left the ECB as a convenient scapegoat.Scapegoating invariably turns dovish central bankers into hawks, particularly when their peers elsewhere act as obedient vassals to the dollar hegemon. Indeed, monetary historians will marvel at that brief period when European politicians believed so much in the euro’s potential to unseat the US dollar that they put Jean-Claude Trichet in charge of the ECB. He pioneered the policy mix that the uberhawks are now pushing for: hike in a crisis and reduce macro-financial support for sovereign collateral.

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With that illusion behind us and the euro below parity, the ECB is just another central bank trapped in the global dollar financial cycle, prey to facile comparisons with other central bank interest rates. The fourth move — ask if inflation targeting has run its course — has even higher institutional costs. What if Zugzwang is that last stage of a central banking paradigm, when it implodes under the contradictions of its class politics? Under the financial capitalism supercycle of the past decades, inflation-targeting central banks have been outposts of (financial) capital in the state, guardians of a distributional status-quo that destroyed workers’ collective power while building safety nets for shadow banking. The limits of this institutional arrangement that concentrates (pricing) power and profit in (a few) corporate hands are now plain to see. If the climate and geopolitical of 2022 are omens of Isabel Schnabel’s Great Volatility that most central banks and pundits expect for the near future, then macro-financial stability requires new framework for co-ordination between central banks and Treasuries that can support a state more willing to, and capable of, disciplining capital. But such a framework would threaten the privileged position that central banks have had in the macro-financial architecture and in our macroeconomic models.The history of central banking teaches us that policy paradigms die when they cannot offer a useful framework for stabilising macroeconomic conditions, but never at the hands of central bankers themselves. More

LONDON/BEIJING (Reuters) – In August, China’s ambassador to Zambia took to the stage at a new conference centre in the capital Lusaka, which he called “a gift from the Chinese government to our Zambian friends”, to speak about lending to the debt-laden southern African country.China is the world’s largest bilateral lender but discloses little on lending conditions and also on how it renegotiates with borrowers in distress, so interest in how it handles Zambian debt is intense, particuarly as more countries such as Sri Lanka struggle to repay loans. Leaders of the Group of Seven rich democracies have called on China specifically to take a more active role in helping strained countries overhaul their debt burdens. Shortly after ambassador Du Xiaohui’s Lusaka speech, China confirmed it had forgiven 23 interest-free loans to 17 African countries, making good on a pledge by President Xi Jinping at the 2021 Forum on China-Africa Cooperation (FOCAC). China said the loans had matured but did not give further detail.The announcement was welcome, but interest-free loans make up a tiny portion of China’s lending to the continent. African governments treat them like grants anyway so there was little surprise, according to researchers and government officials. This kind of debt forgiveness, which China has done for more than two decades, masks a harder stance on restructuring for the bulk of its lending to developing nations under its Belt and Road Initiative (BRI) launched in 2013, said analysts.”It’s the lowest hanging fruit,” said Hannah Ryder, chief executive of Development Reimagined, an African-owned development consultancy headquartered in Beijing. “There is more that China could do.”China generally does not disclose lending terms, while debt relief usually comes through maturity extension or new lending rather than write downs. “China has long provided various kinds of assistance, including interest-free loans, to Africa within its capacity, and actively supported the economic and social development of African countries,” a Chinese foreign ministry spokesperson told Reuters in a written statement. It did not respond to a question on how much the 23 forgiven loans were worth in total.Interest-free loans account for less than 5% of the $843 billion in Chinese loan commitments to 165 governments globally between 2000 and 2017 tracked by research lab AidData https://www.aiddata.org.CLUES FROM ZAMBIAProgress got off to a glacial start on restructuring Zambia’s $17 billion of external debt – Africa’s first pandemic era default – through the Common Framework set up by the Group of 20 major economies in 2020. Sources involved in the process have blamed China for the delay.China’s foreign ministry denied this, saying it “does not correspond to the facts”.”China has played a positive role in Zambia’s debt restructuring. It was through China’s promotion that the creditors committee was able to successfully hold two meetings,” it said in a written response to Reuters.The second meeting resulted in a restructuring commitment and paving the way for the IMF to sign off on a $1.3 billion lending programme. However, relief offered by each creditor is still being negotiated.China may push for long maturity extensions to its $6 billions of loans to Zambia rather than accepting writedowns, a source with knowledge of the negotiations said.”The choice between haircuts and stretching the repayment period… is a matter of negotiations,” Zambia’s finance minister Situmbeko Musokotwane told a news conference last week, declining to comment on China’s role specifically. [L8N3083OY]Some creditors “will choose to have their money faster” while others would opt for no haircut but repayment over a longer period, Musokotwane added.”In dealing with the debt problem, the principle of “common action and fair burden” should be followed,” China’s foreign ministry said, in its statement responding to criticism that it delayed the restructuring.There is uncertainty however over whether China would adopt a multilateral approach for other indebted countries, such as crisis-hit Sri Lanka, which defaulted on external debt that reached $47 billion at the end of last year.Tokyo said in late August it would coordinate with other creditor nations, including India and China – Sri Lanka’s largest bilateral creditor – and urged joint restructuring talks.”We are ready to work with relevant countries and international financial institutions,” Chinese foreign ministry spokesman Zhao Lijian said in response last week.’LASER-FOCUSED’Between 2000 and 2020, Chinese lenders, mostly state-owned banks, agreed to lend $160 billion to African countries, according to Boston University.China wrote off at least $3.4 billion of debt between 2000 and 2019, almost all interest-free loans to African countries, while independently, state-owned lenders restructured or refinanced $15 billion, according to Johns Hopkins University’s China Africa Research Initiative (CARI). Chinese state-owned banks were “laser-focused” on getting repaid, said AidData’s Brad Parks, noting that Congo Republic renegotiated $1.3 billion of loans from China Eximbank in 2019 by lengthening maturities and increasing interest rates. The debt rose to $1.6 billion.Beijing’s ambassador to Zambia said in his August speech, “we didn’t want to go into the G20 creditors committee, the Common Framework,” adding friendly bilateral cooperation was “the best way to deal with debt between two friends.”Du added, however, that an “important” May 31 call between Zambia’s and China’s presidents convinced Beijing to join multilateral talks. “China is having a real, healthy set of deliberations on how to deal with their first ever mammoth debt crisis and they should be applauded for their deliberations,” said Kevin Gallagher, professor of global development policy at Boston University. “But if they don’t act quick, it’ll only get worse.” More

WASHINGTON (Reuters) – The U.S. unemployment rate may need to reach as high as 7.5%, double its current level, to end the country’s outbreak of high inflation, according to new estimates from a team of researchers including two staff economists from the International Monetary Fund.That would entail job losses of perhaps 6 million people, but the research found that only under “quite optimistic assumptions” about the behavior of the U.S. job market and inflation would the U.S. Federal Reserve be able to tame current price pressures with a smaller blow to employment. As of June Fed officials at the median projected unemployment would need rise to only 4.1% by the end of 2024 for inflation to drift back towards the central bank’s 2% target. The jobless rate in August was 3.7%. “If either the labor market doesn’t behave, or (inflation) expectations don’t behave, the small increase in unemployment the Fed projects won’t be enough. Either inflation will stay substantially higher, or we will have higher unemployment and a substantial economic slowdown,” Johns Hopkins University economics professor Laurence Ball (NYSE:BALL) said in a summary of the research distributed as part of a Brookings Institution economic conference. The paper, co-authored by IMF economists Daniel Leigh and Prachi Mishra, is part of an intensifying debate over just how much economic “pain,” as Fed Chair Jerome Powell recently called it, may be needed to control the worst breakout of U.S. inflation since the 1980s.The central bank is raising interest rates at the fastest pace since that era, when then-Fed chair Paul Volcker used an intense crackdown on credit to break consumer price increases that at one point exceeded 14% annually. But success came at the cost of recession and, as firms adjusted to the slowed economy and laid off workers, an unemployment rate that exceeded 10%. Fed officials insist this time is different – their preferred measure of inflation may have peaked already at just over 6%, for instance – and still feel inflation can be beaten without a substantial rise in unemployment or a recession.New Fed projections to be issued in two weeks are likely to show the outlook getting less benign, with analysts expecting the projections from the 19 Fed policymakers will reflect a longer and tougher battle to control inflation, and higher unemployment, than they foresaw in June.But just how high is up for debate.Economists and policymakers have sparred in recent weeks over whether the Fed’s “soft landing” aspirations are altogether passe or still credible. Former Treasury Secretary Lawrence Summers for example has used the 7.5% figure also, a number the researchers incorporated into their scenarios along with the lower unemployment rate projected by the Fed in June, and a middle ground 5.3% unemployment rate the IMF has forecast. For the Fed’s best-case, the U.S economy would have to behave differently than it has in recent decades and some Fed policymakers have laid out arguments for why that is not unreasonable to expect.Ball and his co-authors, looking at how inflation might behave under different rates of unemployment, did not rule that out altogether. But the only outcome that “robustly” brought inflation under control, they concluded, was the one involving “a painful and prolonged increase in unemployment.” More

BOSTON (Reuters) -The U.S. Department of Justice on Wednesday threw its support behind a lawsuit by three graduate students accusing Harvard University of ignoring sexual harassment by a professor who they said threatened their academic careers if they reported him.The department in a court filing urged a federal judge in Boston to reject Harvard’s claim that it could only be held liable for retaliation by the Ivy League school itself, not by any of its faculty members.Harvard had made that argument in seeking to dismiss a lawsuit filed in February that claimed John Comaroff, an anthropology professor, for years kissed and groped students and threatened to sabotage students’ careers if they complained.The Justice Department in a filing supporting Margaret Czerwienski, Lilia Kilburn and Amulya Mandava argued that Title IX of the Educational Amendments of 1972, protects students’ ability to report sex discrimination without fear of reprisal.”For that to happen, schools must protect students who participate in the Title IX process from retaliation and respond effectively to known retaliatory acts of their employees,” the department said.Harvard did not respond to requests for comment. Comaroff, who is not a defendant, has denied harassing any student, and his lawyers said a review by Harvard did not find him responsible for retaliating against the plaintiffs.In the lawsuit, the three plaintiffs they were among the students who reported Comaroff to Harvard officials. Yet despite those warnings, Harvard watched as he retaliated by ensuring the students would have “trouble getting jobs,” the lawsuit said.The Justice Department’s filing came after Comaroff returned to the classroom Tuesday to teach his first course since being put on administrative leave in January, prompting protests.”We’re glad to see the government affirm that Harvard cannot skirt responsibility for the retaliatory actions of its faculty,” Russell Kornblith, the three students’ lawyer, said in statement. More

Indian and Chinese oil buying has offset most of the fall in Russian shipments to Europe, raising questions about the impact of sanctions on Moscow that have led to soaring energy bills for European consumers.A Financial Times analysis of available data from Chinese and Indian customs statistics shows the countries imported 11mn tonnes more oil from Russia in the second quarter of 2022 compared with the first quarter. Payments for Russian oil from the countries increased by $9bn. The biggest volume growth came from India, where imports of Russian oil jumped from 0.66mn tonnes in the first quarter to 8.42mn tonnes in the second.After President Vladimir Putin’s invasion of Ukraine in February, the US, EU, UK, Canada and Japan imposed sanctions on Russia, crippling its financial system and banning imports of many of its goods.But customers in China and India, the world’s most populous countries, kept buying Russian oil and other commodities such as coal and fertiliser. China, already an important buyer of Russian crude before the war, bought 2mn barrels a day in May, an increase of 0.2-0.4mn per day compared with January and February.The evidence of rising shipments to India and China comes at a time when the US is pushing importers of Russian oil, including New Delhi, to join the G7 in backing a price cap to limit Moscow’s revenues.

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Alexander Gabuev, senior fellow at the Carnegie Endowment for International Peace, said India and China were “taking advantage of opportunities on the market”.“It’s not a conscious desire to help Putin; it’s just a cynical, pragmatic way to use the situation in their best interest,” Gabuev said. “But of course, it de facto creates cash flow that helps the Kremlin when exports to Europe are being cut.”India’s ports and coastal refineries are within easy reach of shipping routes from oil-exporting countries that are much closer than Russia, including Saudi Arabia, Iraq and the United Arab Emirates. “My view on India buying larger quantities of Russian oil is that it’s economic expediency,” said Biswajit Dhar, professor at the Centre for Economic Studies and Planning at Jawaharlal Nehru University. “In a situation where inflationary pressures and shortages of fertilisers were upsetting all calculations, the Russian supplies came in handy.” 

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Dhar said a “key factor” in India’s buying was its neutrality on the war in Ukraine. Russia is also India’s largest arms supplier.While information on India’s oil import market is opaque, analysts said they believed New Delhi was also taking advantage of price discounts from Russia.Since the invasion, Russian oil has traded at discounts of as much as $30 a barrel compared with Brent crude, the international benchmark. But the total income Russia receives has still been higher than in 2021 because global prices have gone up so much, with oil trading for most of the year above $100 for the first time since 2014.Chinese customs data suggest its current oil imports from Russia cost almost the same as the smaller quantity it bought before the war. Given that global oil prices surged during that period, the figures imply that the sales took place below prevailing market prices.The unit value of imports from Saudi Arabia, the UAE, Iraq and Oman — China’s other top sources of crude oil — soared to $800 a tonne in the second quarter, while import costs from Russia stayed at $700 a tonne.

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India has even enjoyed a price cut compared with the prewar period, its trade statistics suggest. India’s oil imports from Russia cost an average of $790 a tonne in the first quarter but fell to $740 a tonne in the second. The cost of imports from other sources rose during the same period.“Although we don’t know the exact level, there seems to be a substantial discount Russia is offering on its oil,” said Neil Crosby, a Vienna-based senior analyst at OilX. “However, I don’t think many people in the market have seen any paperwork on these deals, so we can only make inferences.” Despite the discounts, Russian oil companies could still profit handsomely, said Elina Ribakova, deputy chief economist at the Institute for International Finance. Profits at Tatneft, a large Russian oil producer, rose 52 per cent year on year in the first half of 2022.

Speaking at an economic forum on Wednesday, Putin claimed Russia would have no issue selling its energy resources to non-western buyers. Whereas redirecting gas supplies is difficult due to the limitations of existing pipeline infrastructure, Russia has been more successful at maintaining oil sales.“As far as our resources are concerned,” Putin said, “you know, the demand [for them] is so great on the world markets that we have no problem selling them.”Putin said Moscow would walk away from energy contracts and cut off supplies if a price cap on Russia oil proposed by the G7 was imposed, warning that the west would end up “frozen”. “We will not supply gas, oil, coal, heating oil — we will not supply anything,” he said.Ribakova said: “Russia’s authorities might be laughing now, but they will become excessively dependent on China and India for energy exports as Europe pivots away from Russian gas in the coming one to two years.“This is why Russia is using its leverage now, as it knows soon it will no longer be as effective in the energy wars,” she said.Additional reporting by Polina Ivanova

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WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission (SEC) will on Sept. 14 propose draft rules reforming how U.S. Treasuries are traded and cleared, according to a notice published by the agency on Wednesday. U.S. regulators have been working on reforms to the structure of the $23 trillion Treasury market following a number of liquidity crunches, including a meltdown in the market as the COVID-19 pandemic shut down the U.S. economy in March 2020. That episode prompted the U.S. Federal Reserve to step in and start buying up Treasury securities. As Treasury debt continues to grow and Treasury dealers’ market-making capacity remains limited, the Treasury market remains highly vulnerable to further dysfunction under stress, regulatory experts including former Treasury Secretary Tim Geithner warned in a report this year. With the Fed kicking off “quantitative tightening” in June, letting its Treasury bonds reach maturity without buying more, the market has experienced wild price swings, Reuters reported last month. The Treasuries market is the world’s largest bond market and serves as a global benchmark for a swathe of other asset classes, making its price gyrations especially worrying.The SEC notice said the agency would consider amendments to certain clearing rules for Treasury market participants, without providing details. Central clearing involves sending trades to a clearing house, which demands both counterparties put up cash to guarantee the trade’s execution in the event either defaults. SEC chair Gary Gensler has in the past advocated for expanding centralized clearing of Treasury securities on the basis it increases resilience by bringing additional capital into the market during times of stress. More