Economy

Russia’s finance ministry said on Monday it had sent an order to a correspondent bank for the payment of coupons on eurobonds amounting to $117.2 million which are due on Wednesday.The diplomatic standoff and economic curbs have sparked questions over whether and how Russia will make the payment, raising the spectre of its first major external debt default since 1917, when Bolsheviks failed to recognise Tsarist debt in the wake of the revolution. Here is what we know and do not know about Russia’s debt and its repayment: HOW MUCH DOES RUSSIA OWE IN HARD CURRENCY BONDS? Russia has 15 international bonds with a face value of around $40 billion outstanding, around half of them held by international investors. The coupons on March 16 are the first of several, with another $615 million due over the rest of the month. The first principal payment is due on April 4 when a $2 billion bond matures.The bonds themselves have been issued with a mix of terms and indentures. Bonds sold after Russia was sanctioned over its 2014 annexation of Crimea contain a provision for alternative currency payments. For bonds listed after 2018, the rouble is listed as an alternative currency option.The bonds linked to Wednesday’s coupon payment were listed in 2013 and are to be paid in U.S. dollars, with Citi as the paying agent.Fitch Ratings said on Tuesday that if the payments were done in roubles, it would constitute a sovereign default if not corrected after a 30-day grace period.According to the bonds’ prospectus, payment in other currency would only be effective after the recipients exchange that currency amount for dollars, and at the dollar amount recoverable in the open market.Citi declined to comment.WILL MOSCOW PAY?Sanctions have been biting hard, especially the freezing of the central bank currency reserves, with Moscow initially balking at the prospect of sending scarce hard currency to foreign investors. A presidential decree on March 5 announced that Russian debtors have the right to pay foreign creditors in roubles and by putting their funds in a Type C account at the national depository. However, the central bank and finance ministry can make exceptions. Subsequent statements have been more nuanced and seemingly allow hard currency payments. The finance ministry said in a statement https://minfin.gov.ru/ru/press-center/?id_4=37805-utverzhden_vremennyi_poryadok_ispolneniya_gosudarstvennykh_dolgovykh_obyazatelstv_rossiiskoi_federatsii_v_inostrannoi_valyute on Monday that it had approved a temporary procedure to make FX payments and that Russia would fulfil obligations “in a timely manner and in full.”However, if foreign banks fail to execute the payments, Russia could withdraw the funds and pay them in roubles into an account at the national depository. WILL INVESTORS BE ABLE TO RECEIVE THE MONEY? Sanctions from both sides mean it has become more complicated for Russia to transfer the funds, but also for foreign investors to receive them. The U.S. Office of Foreign Assets Control (OFAC) issued general license https://home.treasury.gov/system/files/126/russia_gl9a.pdf 9A on March 2 which authorizes transactions for U.S. persons with regards to “the receipt of interest, dividend, or maturity payments in connection with debt or equity” issued by Russia’s finance ministry, central bank or national wealth fund. However, that exemption runs out on May 25 with Russia due to pay nearly $2 billion on its external sovereign bonds after that deadline and until year-end. WHAT IS THE PROSPECT OF A RUSSIAN DEFAULT? A Russian external debt default seemed unthinkable with its international bonds trading above par until well into February. Harsh sanctions have changed all that and now bonds hover at distressed levels, some barely at a tenth of their face value. Most payments due – like the one on Wednesday – have a 30-day grace period during which Russia has time to make the payment. Some issues have a 15-day grace period. Unlike some of Russia’s other external bonds, which have alternative payment provisions in the small print, the coupons due on Wednesday have to be paid in U.S. dollars.Failure to pay them in full or paying in another currency would lead to a default by the end of the grace period, according to analysts. WHAT WOULD BE THE CONSEQUENCES OF A DEFAULT?Countries in default have no access to international capital markets, though given current restrictions, Russia is shut out of markets anyway. However, a default could have consequences far and wide.It could trigger Russian debt default insurance policies known as Credit Default Swaps (CDS) that investors take out for this kind of situation. Investment bank JPMorgan (NYSE:JPM) estimates there are roughly $6 billion worth of outstanding CDS that would need to be paid out.Furthermore, it is not just international asset managers who are exposed to Russia’s external debt. “Many Russian investors bought this paper via their accounts in Western banks,” said Evgeny Suvorov, Russia-based economist at CentroCredit Bank. “There is a large suspicion that it’s specifically Russian investors that are the main bondholders of sovereign external debt.”Russian banks could also be in trouble with the bonds making up part of their capital buffers. Being under the jurisdiction of a defaulted sovereign adds to pressure on Russian corporates, which have frequently used international capital markets to raise financing and have nearly $100 billion in hard currency bonds outstanding. More

WASHINGTON (Reuters) -The U.S. government will run out of supplies of COVID-19 treatments known as monoclonal antibodies as soon as late May and will have to scale back plans to get more unless Congress provides more funding, the White House said on Tuesday.Raising the alarm about depleted funding for the U.S. pandemic response, the White House said the government also would not have enough money to provide additional COVID-19 booster shots or variant-specific vaccines without a new injection of cash.The White House has requested $22.5 billion in immediate emergency funding to fight the pandemic, but, after objections from Republicans and some Democrats, the money was removed from the latest government funding bill passed by lawmakers last week.White House spokesperson Jen Psaki said there would be “dire” consequences if the funding did not come through.”With cases rising abroad, scientific and medical experts have been clear that in the next couple of months there could be increasing cases of COVID-19 in the United States as well,” she told reporters. “Waiting to provide funding until we’re in a worse spot with the virus will be too late. We need funding now so we’re prepared for whatever comes.” An administration official, speaking on condition of anonymity, said the government had planned to put in an order with AstraZeneca (NASDAQ:AZN) on March 25 for what would likely have been hundreds of thousands of doses of monoclonal treatments. That order would have to be scaled back or scrapped without new funds, the official said.”We’ll likely run out of these treatments for our most vulnerable … Americans by the end of the year if not sooner,” the official said. “Without additional funding soon, thousands of patients could lose access to treatments and these companies will have little incentive to continue investing in the development and manufacturing of these treatments.”A program that reimburses medical providers for providing COVID testing, treatments and vaccines to uninsured people will have to be scaled back in March and shuttered in April without additional funding, the White House said.President Joe Biden is scheduled to sign the larger funding bill without the emergency pandemic relief on Tuesday afternoon. Republicans objected to the additional aid, arguing that it was not needed, while Democrats did not like how it was going to be distributed. The money was to be used for research and to stockpile vaccines for possible future spikes in COVID-19 infections.Lawmakers plan to revisit the matter in separate legislation.There have been more than 972,000 COVID-19 deaths and more than 79.6 million infections recorded in the United States – the most in the world – since the pandemic began in 2020, according to Reuters data.The call for funding comes as precautionary measures against COVID-19, including mandatory mask requirements, have been lifted across the country, with cases decreasing and Americans relishing a return to some form of normalcy.But the White House has said other COVID-19 variants may come. It said on Monday that the Omicron BA.2 sub-variant had been circulating for some time, with roughly 35,000 current cases and more expected. More

LONDON (Reuters) – Rules forcing Britain’s banks to wrap their retail arms with a bespoke cushion of capital should be retained for now, though they could “ossify” the sector in the longer term if left unchanged, an independent review for the finance ministry said on Tuesday.The’ring-fencing’ rules were introduced for banks with deposits of over 25 billion pounds ($32.6 billion) to insulate accounts from any blow-ups in separate investment banking activities, a lesson from the financial crisis when taxpayers had to bail out banks.Banks wanted the rules, applied by seven lenders, including HSBC, Barclays (LON:BARC), Lloyds (LON:LLOY) and NatWest, to be dismantled, saying they risk harming competitiveness.The review, chaired by Keith Skeoch, said the rules have improved resilience of retail banking, though they need to be more adaptable for simpler lenders.The 25-billion-pound threshold should remain but its application made more flexible so that less complex banks would be exempt from ring-fencing, even if they hold deposits above this amount, the review said.”Ring-fencing has to date had some impact on banking competition and competitiveness but has not been the main driver in any of these areas,” the review said.”In the longer term, there is a risk that retail banking in the UK ossifies and remains focused on addressing the risks and opportunities of the past, rather than being able to adapt to address the risks and opportunities identified in the future.”The benefits of ring-fencing will diminish with time as separate ‘resolution’ rules for dismantling a failing bank and moving accounts to another lender, become embedded.As regulators become comfortable with the ability of the resolution rules to work well, they will also become confident in continuity of retail services without the structural separation of ring-fencing, the review said.”Our main recommendation would change the scope of the regime in the longer term by giving the authorities more flexibility and a new power in their toolkit to remove banks from the ring-fencing regime that are judged to be resolvable,” Skeoch said in the review’s foreword.($1 = 0.7668 pounds) More

CNBC Fed Survey

Forecasters have raised their outlooks for a recession and boosted their inflation projection as the Federal Reserve faces the quandary of fast-rising prices and greater uncertainty from Russia’s invasion of Ukraine, according to the latest CNBC Fed Survey.
The probability of a recession in the U.S. was raised to 33% in the next 12 months, up 10 percentage points from the Feb. 1 survey. The chance of a recession in Europe stands at 50%.

Respondents debated whether the recent surge in commodity prices would prompt the Fed to hike rates faster because it adds to inflation or raise rates less because they reduce growth.

Arrows pointing outwards

CNBC Fed Survey

“The tax impact of higher commodities prices is likely to slow the pace of hiking more than the inflationary impact is to accelerate it,” wrote Guy LeBas, chief fixed income strategist at Janney Montgomery Scott.
But Rob Morgan, senior vice president at Mosaic, wrote: “I expect six quarter-point rate hikes from the Fed in 2022. If CPI reaches 9% in the March or April report, the Fed might be pressured into a 50-basis point hike in May.”
The 33 respondents, who include fund managers, strategists and economists, forecast the Fed will raise rates an average of 4.7 times this year, bringing the funds rate to end the year at 1.4% and to 2% by the end of 2023. Nearly half of the respondents see the central bank hiking five to seven times this year.

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CNBC Fed Survey

The rate hike cycle is seen ending at a peak funds rate of 2.4%, about the Fed’s neutral rate. But half of all respondents believe the central bank may ultimately have to raise rates above neutral to get control of inflation.

Propelling the rate increases are forecasts for the consumer price index to peak at 8.5% in March, but gradually decline to finish the year at a still high 5.2%. That’s nearly a full percentage point higher than the February survey. The CPI in 2023 is forecast to rise a tamer 3.3%, a rate still above the Fed’s target.
“We might be on the cusp of the Fed raising rates at the same time there is a minus sign in front of GDP,” wrote Peter Boockvar, chief investment officer of Bleakley Advisory Group. “What an awful position to be in, but until inflation falls sharply, they have no choice but to carry on.”

Recession not base case

While a recession is seen as a greater possibility than in February, it’s not the base case for most respondents. The average GDP forecast for this year slipped by 0.8 percentage point but remains at a slightly above-trend 2.8%. The GDP forecast for 2023 dropped by about a half a point from the last survey to 2.4%.
Inflation forecasts had already been high for this year, but Russia’s invasion of Ukraine has aggravated the situation with nearly 90% saying they boosted their 2022 inflation outlook because of the war. They added an average 0.8 percentage point to their inflation forecast. Sixty percent of respondents said they shaved the GDP forecasts due to the conflict, with an average of a half a point.
While inflation forecasts rose and growth outlooks declined, the outlook for stocks is relatively bullish. Respondents lowered their outlook for equities, but only 53% now say stocks are overvalued relative to the outlook for earnings and growth. That’s down from 88% a year ago, and the least bearish respondents have been since the Covid pandemic began.
Meanwhile, the CNBC Risk/Reward ratio (measuring the chance of a 10% correction verus the chance of a 10% increase in the next six months) improved to -9 from -14, meaning a negative correction is judged less likely. The outlook for the S&P 500 dropped to 4,431 this year, suggesting stocks could have 6% upside from the current level. More

EU growth will be “severely impacted” by the disruption stemming from Russia’s invasion of Ukraine, the European Commission warned, as investor confidence dropped sharply in Germany, the union’s biggest economy. Valdis Dombrovskis, the commission’s executive vice-president, said the commission is expecting 2022 growth to be below the 4 per cent predicted in its most recent forecasts just over a month ago, although it is not predicting the expansion will “completely stop”. His words, following a meeting of finance ministers in Brussels, came as German investor sentiment fell to its lowest level since the start of the Covid-19 pandemic according to a survey published on Tuesday. The Zew research institute said its economic sentiment index recorded the biggest decline in the 31-year history of its monthly poll of investors, reflecting fears that the EU’s biggest economy could be hit by a recession and soaring inflation as a result of the fallout from Russia’s invasion of Ukraine.Soaring energy prices, the threat of higher food prices and waning confidence are threatening to derail what promised to be a second strong year of economic recovery from the Covid-19 pandemic in Europe. The EU as a whole returned to its pre-pandemic level of gross domestic product in the third quarter last year and expanded by more than 5 per cent in 2021. The German economy shrank 0.3 per cent in the final quarter of last year and economists fear the disruption caused by Russia’s invasion of Ukraine could reduce GDP for a second consecutive quarter — meeting the definition of recession.Zew said its gauge of investor expectations for the German economy had fallen from 54.3 in February to minus 39.3 in March — taking it close to the all-time low of minus 49.5 reached in March 2020 when the pandemic was spreading across Europe. A measure of confidence in German economic conditions fell 13.3 points to minus 21.4.“A recession is becoming increasingly likely,” said Zew president Achim Wambach. “The Ukraine war and the sanctions against Russia are considerably worsening the economic outlook for Germany.”The war in Ukraine has sent prices for energy, commodities and food soaring to record highs, pointing to a further surge in eurozone inflation, which had already hit a record high of 5.8 per cent in February.Christine Lagarde, president of the European Central Bank, said in a speech on Tuesday that the Ukraine crisis would “lower growth and raise inflation through higher energy and commodity prices, the disruption of international trade and weaker confidence”. But she added that the eurozone economy “should still grow robustly in 2022 thanks to the declining impact of the pandemic and the prospect of solid domestic demand and strong labour markets”.The commission warned that the impact of the external shocks would vary depending on individual countries’ exposure to Russian energy, their economic structures, geographic location and the degree of flexibility in their public finances.“So a common response is also about tackling the risk of divergence,” said, economic commissioner Paolo Gentiloni said on Monday. “If we remain agile and ready to adjust as needed, we can ensure that the recovery is not totally derailed.”

Following Russia’s invasion of Ukraine the commission signalled it would consider in May whether to extend the suspension of its debt and deficit rules by another year until 2024 — a decision that an increasing number of member states view as inevitable. Finance ministers discussed proposals including a new EU regime permitting state aid for crisis-struck businesses and emergency cuts to fuel duties. Some member states have also begun floating the idea of fresh common EU borrowing to raise funds to respond to the crisis — for example, to bolster energy investments that help the EU to wean itself rapidly off Russian fossil fuels, a goal the commission argues could be achieved as soon as 2027. However, commission officials including Dombrovskis stress that the EU should first seek to fully exploit existing sources of funding — including undrawn loans of around €200bn that are available under the NextGenerationEU recovery plan. Asked about the need to support member states that have seen the largest inflows of refugees from the Ukraine crisis, Dombrovskis added that the commission had proposed allocating €500mn to Ukraine and to neighbouring countries hosting refugees. “We are looking at further ways [of supporting] those countries that are in the front line of the situation,” he added. More

ALISHER USMANOVAlisher Usmanov, 68, a metals and telecoms tycoon with an estimated $16.2 billion net worth, has been sanctioned by the United States and European Union.Seized: – A villa in Golfo del Pevero, on the island of Sardinia, worth approximately $19 million, was seized by Italian authorities.Suspended: – The $600 million Dilbar superyacht is sitting in a Hamburg shipyard with authorities saying they have no plans to deliver it to the owner.- Everton F.C. suspended its $15 million plus naming rights deal with Usmanov’s holding company USM. – Usmanov gave up his presidency of the Fédération Internationale d’Escrime, fencing’s highest body, and said he would no longer play a role in the organisation.- A Bombardier (OTC:BDRBF) jet linked to Usmanov is one of a number of Russian planes reportedly stranded at the EuroPort airport, in the French Alsace, by Swiss airspace closures.Sailing away:- An Airbus A340 Prestige jet linked to Usmanov flew out of Munich, Germany to Tashkent, Uzbekistan on Feb. 28 and hasn’t been tracked since, according to Radar Box data.Softly, softly:- The U.S. Treasury, while blocking Usmanov’s personal assets, has left companies controlled by him off its list of sanctions in an effort not to raise the price of commodities.ROMAN ABRAMOVICHRoman Abramovich, 55, billionaire businessman with an estimated $12.3 billion fortune, has been sanctioned by Britain, and was added to the EU sanctions list on Tuesday. Suspended:- Abramovich’s attempt to sell Chelsea Football Club was halted when Britain announced sanctions. Britain’s asset freeze and sanctions bar the sale of players, new tickets and merchandise, but the team will be able to play matches. – British MP Chris Bryant said Abramovich was trying to sell his 15-bedroom mansion in Kensington Palace Gardens to avoid sanctions. He bought the home in the area of London nicknamed “Billionaire’s Row” for 90 million pounds ($119 million) in 2011. – The Kensington home, along with other property and his stakes in steelmaker Evraz and Norilsk Nickel, are also subject to the British sanctions. It was not immediately clear if any assets had been seized.Stranded:- An aircraft linked to Abramovich is at Europort Airport near Basel, which straddles the Swiss-French border, and is unable to leave due to Swiss airspace restrictions.Signed over:- New York City property records show a trio of Upper East Side properties worth $92.3 million are tied to his ex-wife Dasha Zhukova, a New York real estate developer married to shipping heir Stavros Niarchos. She is also building the 21-storey Ray Harlem, which will house the National Black Theater, according to her website. Sailing away:- The $600 million Solaris yacht linked to Abramovich left the Barcelona shipyard where it had been undergoing repairs on March 8, arriving in Montenegro territorial waters on March 12, according to monitoring site Marine Traffic. It is now on the move off the coast of the Greek island of Corfu but still “awaiting orders” on its final destination, according to the same monitoring site.- A second yacht linked to Abramovich, Eclipse, was out of tracking coverage for over 24 hours from early on Sunday, according to Marine Traffic. Eclipse’s tracking system was back on for a few hours on Tuesday, showing the yacht north of Algeria in the Mediterranean Sea. – A Boeing (NYSE:BA) 787-8 linked to Abramovich flew from Moscow to Dubai on March 4, according to Radarbox data.- A business jet linked to Abramovich landed in Moscow early on Tuesday from Istanbul, according to FLIGHTRADAR24 data. It was briefly in Israel, where Abramovich was spotted in an airport VIP lounger, before the jet departed to Turkey. OLEG DERIPASKAOleg Deripaska, 54, billionaire industrialist who founded aluminium giant Rusal, was sanctioned by the United States in 2018 and added to a British sanction list on ThursdaySanctioned:- The fate of Deripaska’s multi-million pound property portfolio in Britain remained unclear after the government said its assets would be frozen.Swarmed, not seized:- In October 2021, FBI agents raided a historic New York City townhouse at 12 Gay Street in Greenwich Village as well as a Washington D.C. mansion connected to Deripaska. He responded on social media by saying nobody was living in those properties. – “I have to ask: how much of Putin’s money was found in those abandoned houses yesterday?” he said, sarcastically inquiring whether investigators had discovered any mouldy jam or vodka in the cupboards.- Through an LLC in the British Virgin Islands, Deripaska also owns a townhouse on 11 E. 64th Street, which he bought for $42.5 million in 2008, according to New York court records. – These properties have not been seized by the government, despite sanctions that prevent him from doing business or owning property in the United States. – Deripaska’s British Virgin Islands holding company also owns 5 Belgrave Square in London. He bought the mansion in the exclusive Belgravia district for 25 million pounds ($33 million) in 2003, according to multiple media reports. – Squatters occupied 5 Belgrave Square on Monday, saying “this property has been liberated.”Softened:- U.S. sanctions were lifted against Rusal and its parent company En+ in 2019 when Deripaska reduced his stakes below a majority threshold to 44.95%. There are still concerns, however, that the Russian oligarch is pulling the strings of his business empire behind the scenes. Sailing away: – Deripaska’s $65 million yacht Clio is one of several vessels owned by billionaires anchored in the Maldives, which does not have an extradition treaty with the United States, according to shipping database MarineTraffic.VLADIMIR POTANINVladimir Potanin, 61, CEO of Norilsk Nickel with an estimated net worth of $22 billion, has not been sanctioned by the EU or United States.Stepping down:- The Guggenheim Museum said Potanin was stepping down as one of its trustees last week. He had held the position since 2002, acting as a major benefactor and sponsoring shows, including a Kandinsky exhibition currently in New York. Sailing away:- The billionaire’s 88-metre (290-foot) yacht Nirvana sailed to the Maldives, which has no extradition treaty with the United States, according to MarineTraffic.- Potanin is estimated to have lost nearly a quarter of his wealth since sanctions impacted the rouble and the Russian economy, Bloomberg has reported.IGOR SECHINIgor Sechin, 61, CEO of Rosneft and viewed as one of the most powerful people in Russia, has been sanctioned by the United States, EU and Britain. His ex-wife, Marina Sechina, was sanctioned by the EU on Tuesday. Seized:- French customs officers seized Sechin’s 190-foot (58-metre) Amore Vero yacht worth $120 million as it was trying to flee a French Riviera port.ALEXEY MORDASHOVAlexey Mordashov, 56, the son of a mill worker who became a steel magnate with estimated net worth of $29.1 billion, is on an EU sanctions list.Shifted:- Mordashov shifted his holdings in travel and tourism group TUI after sanctions were imposed on him, Bloomberg reported. – A British filing showed the steel tycoon had shifted a $1.1 billion stake in mining company Nordgold to his wife Marina, Bloomberg reported.Seized:Italian authorities seized Mordashov’s Lady M yacht, moored in Imperia, and valued at 65 million euros ($72 million). EUGENE SHVIDLEREugene Shvidler, 57, business associate of Roman Abramovich with estimated net worth of $1.7 billion. Seized:- Britain impounded a private jet it said was linked to Shvidler at Farnborough airport under new aviation sanctions that give it the authority to detain any Russian aircraft.VLADIMIR SOLOVIEVVladimir Soloviev, 58, a pro-Putin Russian TV host who is on the EU sanctions list.Seized:- Two properties on Italy’s Lake Como worth 8 million euros belonging to Soloviev were seized by Italian authorities. GENNADY TIMCHENKOGennady Timchenko, 69, chairman of the Russian national hockey league with stakes in oil and gas companies, has been sanctioned by the United States and the EU.Seized:- Italy seized Timchenko’s 50 million euro ($55 million)yacht called Lena as it was moored in San Remo. OLEG SAVCHENKOOleg Savchenko, a member of Russia’s parliament Seized:- Savchenko’s 17th Century Tuscan villa Lazzareschi worth 3 million euros was taken by Italian authorities.PETR AVENPetr Aven, oil investor who built a European business empire with an estimated net worth of $4.7 billion, is on an EU sanctions list.Suspended:- Aven’s stake in his LetterOne Investment company, with holdings in Spain’s Dia supermarket chain and a German energy group, was frozen following the EU’s sanctions. – Latvia’s government is looking to revoke his citizenship, despite his plans to open a museum there a week before the war in Ukraine started, Britain’s Financial Times (FT) reported. Stepped down:- Stepped down as trustee at the Royal Academy of the Arts in London. The arts organisation said it would return his donation towards its current Francis Bacon exhibition. MIKHAIL FRIDMANMikhail Fridman, Aven’s partner at LetterOne with an estimated net worth of $12.3 billion, is on the EU sanctions list.Stepped down:- Withdrew from the LetterOne investment firm he co-founded Suspended:- Pamplona Capital management said it had began disentangling itself from LetterOne. Other banks told the FT they were also reviewing their lending relationships. – Fridman’s north London home, which he bought for 65 million pounds ($86 million) in 2016, is not believed to have been frozen as he is not subject to sanctions in Britain, according to multiple media reports. ALEXANDER ABRAMOVAlexander Abramov, co-founder and chairman of Russian steel producer Evraz, with an estimated net worth of $5.9 billion, is not sanctioned.Sailing away: – Abramov’s yacht The Titan arrived in the Maldives last week, according to MarineTraffic.ANDREY IGOREVICH MELNICHENKOMelnichenko owned major fertiliser producer EuroChem Group and coal company SUEK. Stepped down:- The companies said in statements on March 10 that he had resigned as a member of the board in both companies and withdrawn as their beneficiary.Seized:- The 143-metre (470-foot) Sailing Yacht A, which has a price tag of 530 million euros ($578 million), has been sequestered in the northern Italian port of Trieste, the Italian government said.ALEXANDER MIKHEYEVMikheyev heads Russian weapon exporting group Rosoboronoexport and is under EU sanctions.Detention:- Spanish authorities detained a yacht called Lady Anastasia owned by Mikheyev on Tuesday. The 48-meter (158-foot) yacht, which sails under a Saint Vincent and Grenadines’ flag, cannot leave a marina in Mallorca, where it is now moored.SERGEI CHEMEZOVFormer KGB officer Chemezov is the head of Russian state conglomerate Rostec. Chemezov was sanctioned by the United States in 2014 and Britain in 2020 over Russia’s annexation of Crimea from Ukraine, and was named in sanctions lists this month by the United States and Australia.Seized:- Spain temporarily seized on Monday the 85-meter (280-foot) superyacht Valerie in Barcelona. The $140 million yacht, sailing under the flag of Saint Vincent and the Grenadines, is registered to Chemezov’s stepdaughter, Anastasia Ignatova, through a British Virgin Islands company, according to a 2021 article published in the Pandora (OTC:PANDY) Papers information leak. The yacht will remain under detention while Spanish authorities confirm its ownership.($1 = 0.7597 pounds)($1 = 0.9058 euros) More

A new world is being born. The hope for peaceful relations is fading. Instead, we have Russia’s war on Ukraine, threats of nuclear Armageddon, a mobilised west, an alliance of autocracies, unprecedented economic sanctions and a huge energy and food shock. No one knows what will happen. But we do know this looks to be a disaster.It is natural to seek someone to blame. For many, the culprit is Nato’s expansion into central and eastern Europe. A leading voice is John Mearsheimer, the distinguished “realist” scholar, who blames the US decision to open up the possibility of Nato membership to Ukraine in 2008. I agree and disagree.The mistake was the ambiguity. The offer should only have been made when Ukraine would join as a full member. But I supported the expansion of Nato into the former Russian satellites because good fences make good neighbours. Russia knows that if it invades a Nato member, there will be war. That was not the case with Ukraine. This is why this assault seemed an easy option for the despot in the Kremlin.As to why Vladimir Putin did it, one answer is that he runs a failed regime. Only empire can justify his rule. Russia’s commodity-dependent economy has fallen far behind Poland’s. It is a rentiers’ paradise. Today, those rentiers are Putin’s thugs and the Boris Yeltsin-era “oligarchs”. Ukraine has failed economically, too. But it is democratic. For Putin, that aspiration is intolerable. (See charts.)In the aftermath of the fall of the Soviet Union, many hoped for a world guided by co-operation and mutually beneficial exchange. But great power conflict was always waiting to break through. The US was inebriated by its “unipolar moment”. China grew more powerful and authoritarian under Xi Jinping. Putin chewed on his resentments, finally invading a country he thinks he owns. We hear echoes of the first world war. Then, it was Austria, the weaker partner, not Germany, that began the conflict. Today, it is Russia, the weaker partner in its alliance with China.

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China’s promised support risks turning the dangers created by Russia’s war into a catastrophe. It would transform the world into two blocs, with costly economic and security consequences. Yet a mobilised west is still far stronger. The impact of western sanctions demonstrates this. A unified west dwarfs Russia on all measures, except military personnel and nuclear warheads. Even with China added, the west is significantly more powerful, except in numbers. Nevertheless, a long-term clash between the west and an authoritarian bloc of Russia and China must be prevented if at all possible. It would be hugely dangerous.Today, then, we see a transforming world. Consider the challenges ahead.

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Most obviously, there must be an end to the war in Ukraine, which is an assault simultaneously on a peaceful country, on a democracy and on the world order. China should seek to help extricate Russia from its quagmire. It is not hard to understand why it backs Putin. Among other things, its leaders surely share his contempt for democracies. Yet these are huge mistakes. As history has often shown, free societies are powerful, once mobilised, because they enjoy the support of their people.It is also essential to manage the coming economic crisis. The combination of war, supply shocks and high inflation is destabilising, as the world learnt in the 1970s. Financial instability now seems very likely, too. Monetary authorities cannot ignore high inflation, however. So governments will have to employ targeted fiscal support for the vulnerable.

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Moreover, the west must reinforce its defences, on all fronts — military, energy, cyber and economic. It is inevitable, alas, that in a conflict with huge ramifications the requirements of security come first. This is not the world any sane person desires. But it is the one in which we now live. It is vital that the EU becomes a true security power. It comfortably possesses the economic and demographic scale to balance Russia. Post-Brexit UK must participate as fully as possible. The US needs such European assistance, since it will also be dealing with Xi’s worrying China.

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Despite these pressing needs, we should try not to abandon everything achieved in the past three decades. We are not at war with ordinary Russians and Chinese people who simply hope for a better future. On the contrary, in the long term they may prove our allies. Sanctions need to be targeted, so far as possible. The future of trade and other peaceful exchanges will depend, however, on how — and, no less, after how long — this crisis ends.Not least, we need to remember the wider concerns all humans share — the global environment, managing pandemics, economic development and peace itself. We cannot survive without co-operation. If Putin’s madness proves anything it is that. The world of “might is right” is not a world we can safely live in. As his nuclear threats show.

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After the battle of Austerlitz in 1805, William Pitt the Younger said, presciently: “Roll up the map [of Europe]; it will not be needed these 10 years.” Russia’s war on Ukraine has similarly transformed the map of our world. A prolonged bout of stagflation seems certain, with large potential effects on financial markets. In the long term, the emergence of two blocs with deep splits between them is likely, as is an accelerating reversal of globalisation and sacrifice of business interests to geopolitics. Even nuclear war is, alas, conceivable.Pray for a miracle in Moscow. Without it, the road ahead will be long and [email protected] Martin Wolf with myFT and on Twitter More

US producer prices rose more moderately in February despite maintaining a record annual pace, keeping the Federal Reserve on track to raise interest rates this week.The producer price index, which tracks the prices businesses receive for their goods and services, rose 10 per cent last month compared with February last year, the Bureau of Labor Statistics said on Tuesday, the fastest year-on-year rate since the data were first collected in 2010 and in line with January’s increase.Producer prices gained 0.8 per cent month-on-month, just shy of the 1 per cent jump registered between December and January.So-called core producer prices, an underlying gauge of inflation, also rose at a more moderate pace. After stripping out volatile items such as food, energy and trade, prices increased 6.6 per cent in February from the previous year, down from 6.9 per cent in January and well below economists’ estimates for a 7.3 per cent increase.Ian Lyngen, head of US rates strategy at BMO Capital Markets, said despite the moderation, the data still showed “ample inflation in the system”.The report comes as the Federal Reserve kicks off a two-day gathering, after which the monetary policy-setting Federal Open Market Committee is all but guaranteed to raise interest rates for the first time since 2018.Jay Powell, the sitting chair, signalled at congressional testimonies this month that the first rate rise would come in the form of a quarter-point increase, rather than a half-point adjustment — which has not occurred since 2000 and which some officials had hinted might be appropriate given recent inflation data that show US consumer prices rising at the fastest pace in 40 years.Powell has left open the option of the Fed lifting interest rates by larger increments later on this year, however, if inflationary pressures do not moderate sufficiently. Economists fear the war in Ukraine will further boost headline inflation, especially given the recent jump in energy prices following Russia’s invasion and the unprecedented package of sanctions rolled out by the US and its allies.The Fed is set to look past any growth slowdown stemming from the crisis. The “dot plot” of individual interest rate projections of the Fed’s top officials is expected to signal at least five interest rate increases this year as the committee seeks to move the federal funds rate closer to a level that no longer adds accommodation. More