Economy

Two years ago, investors were starting to fret about something they could not properly understand.A virus in China had kept markets on edge for a few weeks and was starting to look like it could be serious. Stocks around the world were suffering knocks of around 1 or 2 per cent a day. Fear not, the sage minds of Wall Street said, pointing to previous outbreaks of viruses such as Zika and Ebola, which left no lasting damage to stocks. This newfangled coronavirus would probably follow a similar path and prove to be an opportunity to buy the dip, they said. We all know how deep and dark that “dip” turned out to be.This is not a criticism as such. Hindsight is a wonderful thing. Nonetheless, that period of 2020 should stick in investors’ minds now that market participants have largely decided Russia’s latest display of military force in Ukraine is likely to mimic its annexation of Crimea eight years ago and produce only a modest and well-contained impact on global asset prices. Russia accounts for only around 3 per cent of the global economy, after all — about half as much as California. Hedge funds that wagered Vladimir Putin would pull back from the brink — and the oligarchs with wealth tied up in Russian shares — have certainly suffered. Moscow’s Moex index has dropped almost 9 per cent this week. This is shaping up to be that market’s worst month since 2009 — well beyond the scale of Covid’s impact. More broadly, markets have already absorbed a fair amount of Russian stress. In a note earlier this week, Goldman Sachs estimated that the tensions over Ukraine that had been bubbling up for months are responsible for a little over half of the 9 per cent drop in the S&P 500 benchmark index of US stocks so far this year. The nerves had also pushed some investors into the safety of US government bonds, lopping around one-quarter of a percentage point off 10-year yields, the bank said. Gold — another classic bolt-hole for jittery investors — is also higher in price than it would otherwise have been. The rouble, meanwhile, is around 9 per cent weaker than it would have been without this latest military adventure, considering how far it has fallen compared with a generally upbeat run in similar emerging market currencies.All in all, nasty, especially for Russian markets, but very manageable.“Investors should keep things in perspective and not overreact to headlines,” says Emmanuel Cau, head of European equity strategy at Barclays. “Although equities can fall more in the near term, we note that market drawdowns due to past military conflicts did not last very long and were mostly buying opportunities.” The annexation of Crimea generated just a 4 per cent drop in European stocks in a hiccup that lasted eight days, he added.For some seasoned Ukraine watchers, this all underplays the crisis, especially given Russia’s central role in providing oil and gas to continental Europe. “This is going to be a big conflict. There are massive risks to European energy,” says Tim Ash, an emerging markets strategist at BlueBay Asset Management. “Beware of unexpected consequences,” he adds, pointing out that the outbreak of Covid-19 and the shock of rapid exits from subsequent lockdowns proved that even true experts in supply chains and inflation have their limits.The big risk is that through the energy market Putin effectively makes the inflation shock biting into markets much worse and saps economic growth momentum. The US Federal Reserve has already indirectly acknowledged this. Geopolitical “risks”, “tensions” and “turmoil” crop up in the minutes of its January meeting no fewer than four times.Capital Economics reckons that in the worst-case scenario, oil prices could hit $120 to $140 per barrel, well above current levels of a shade under $100. Europe’s already elevated natural gas prices are also likely to keep climbing, the research house said, potentially adding as much as 2 percentage points to inflation in advanced economies.“In normal times, central banks would tend to look through an energy-led rise in inflation, but given the current high rates of inflation, and corresponding concerns about it feeding higher inflation expectations, it’s possible that this adds to the list of reasons for policymakers to raise interest rates,” wrote Neil Shearing at Capital Economics.The upshot is that, in markets at least, the latest Ukraine crisis is likely to get lost in the noise about inflation. But it is stalking investors nonetheless. And, in contrast to the pandemic crisis of 2020, if the market reaction does get messy, the Fed is unlikely to step in to help. [email protected] More

Conflict in Ukraine appears unlikely to shake Federal Reserve officials from their plans to pull back support for the economy at this point, but the rapid escalation in tension is sure to draw policymaker attention and could make for even higher inflation in the near term.The central bank has two jobs — fostering full employment and stable prices — and it has been preparing to raise interest rates and make other policy adjustments too cool down the economy as inflation runs at its fastest pace in 40 years.Oil and gas prices have already risen during the conflict and could continue to climb, leading to a higher peak in headline inflation, which includes prices at the pump. The Fed typically avoids reacting to fluctuations in energy prices when setting its policy, given the volatility of fuel costs, but the potential disruption could make ongoing inflation trends all the more painful for consumers.“The Federal Reserve pays very close attention to geopolitical events, and this one of course in particular as it’s the most prominent at this point,” Michelle Bowman, a Fed governor, said on Monday.Ms. Bowman noted that the U.S. has minor banking, financial, and trade interests with Russia, and that “we don’t believe that would have a significant impact” on the economy given the small size of those relationships.“But we do recognize that there are significant opportunities for potential impacts on the energy markets, as we’re moving forward, if things were to deteriorate,” Ms. Bowman added. “Obviously we’ll continue to watch that, and if we believe that might have some influence on the global economy, we’ll take that into account as we’re going into our meetings and discussing the economy more broadly.”High fuel prices could weigh on consumer spending on other goods and services as families devote more of their monthly budgets to energy. If the potential for war makes consumers uncertain about the future or sends stock prices plummeting, it also could weigh on demand as nervous shoppers retrench.Central bankers noted in minutes of their most recent meeting that geopolitical risks “could cause increases in global energy prices or exacerbate global supply shortages,” but also that they were a risk to the outlook for growth.But officials have painted it as more of one risk among many than as a pivotal point of concern.“We actually have seen fighting in this area of the world in the past,” James Bullard, the president of the Federal Reserve Bank of St. Louis, said on CNBC last week. “I do think it’s quite an important foreign policy issue, but I’m not seeing it as a leading macroeconomic issue, at least at this point.”Assessing exactly what the conflict between Russia and Ukraine will mean for the American economy is challenging because it is unclear how much tensions will escalate and because it is not obvious how Russia might respond as the U.S. and Europe prepare sanctions.Plus, while rising fuel prices could push up inflation, global unease is likely to push the value of the dollar higher as global investors move into what they see as “safe-haven” assets. That could make imported goods cheaper, working in the opposite direction to rising fuel costs. More

A Bank of England deputy governor has said that only a “modest tightening” of monetary policy will probably be needed to keep inflation under control in the coming months. Dave Ramsden said on Tuesday that consumer inflation “would fall below our [the BoE] 2 per cent target within two years” if the Bank rate followed the market policy trajectory in one scenario, falling further to 1.4 per cent in 2025.The comments come after markets raised their medium-term expectations of BoE rates following the latest monetary policy meeting, to a peak of almost 2 per cent by mid-2023.Steffan Ball, economist at Goldman Sachs, said that Ramsden’s comments suggested “some discomfort with the current market pricing of BoE hikes over the next three years”. Speaking at the National Farmers’ Union annual conference, Ramsden said “further modest tightening” was likely to be required in the coming months to prevent “high inflation becoming embedded in wage and price setting”.But, he added, “tightening monetary policy too much” held “risks”. The note of caution contrasted with Ramsden’s position at the Bank’s policy meeting earlier in February. At that meeting, Ramsden was one of the four members of the Monetary Policy Committee who voted for a 50 basis-point increase in interest rates, double the 25bp rise finally agreed upon. In February, the Bank raised its rates to 0.5 per cent, up from a record low of 0.1 per cent in December, marking a second consecutive increase. In January, annual consumer inflation climbed to 5.5 per cent, the fastest pace in 30 years. Economists are expecting another rate rise when the MPC meets again on March 17. However, Ramsden emphasised that he expected only a “modest” tightening in monetary policy was likely to be needed. “The word ‘modest’ is significant here though — I do not envisage bank rates rising to anything like [their] pre-2007 level of 5 per cent or above, let alone to the kind of levels we used to see before the MPC was formed in 1997,” Ramsden said. He warned of “additional uncertainty” over the economic outlook. “New shocks can arise — we did not foresee the recent rise in energy prices, and as we meet today the crisis in Ukraine is intensifying — and so we should remain humble about the possibility that things might turn out differently.” Ramsden noted that the continuing shock to energy prices had created “a challenging trade-off” for the MPC to manage, between strong inflation and weakening growth. He added that these “are tough times” for some businesses, and that a rise in BoE rates would increase interest payments and exacerbate the challenges.Ball said the BoE expected rates to rise to 1.5 per cent after the August meeting following a series of back-to-back increases. More

Inflation is always and everywhere a monetary phenomenon.” Milton Friedman made this remark in 1963. At that time, few macroeconomists agreed with him. Twenty years later a high proportion did. Twenty years after that, again most did not. Today, almost another two decades later, economists have to take money seriously again. If money is ignored, it will take revenge. As Bridgewater’s Ray Dalio recently asked: “Where is the understanding of history and the common sense about the quantity of money and credit and the amount of inflation?”The idea that there is a link between the money supply and inflation is very old. When people are holding more money than they desire, they will want to get rid of it. With any other asset, this would lower its price. But the nominal price of money is fixed: a dollar is a dollar. The adjustment comes via higher prices for everything else — or inflation.After an exceptional monetary expansion in 2020, we are surely seeing this. I noted the possibility in May that year. Tim Congdon, a well-known monetarist, had argued this before me. According to the Center for Financial Stability, “Divisia M4” (an index that weights the components by their role in transactions) grew by 30 per cent in the year to July 2020, almost three times as fast as in any similar period since 1967. No such thing happened after the 2008 financial crisis. Many then worried over the expansion of the monetary base. But that did not matter because it did not affect broader aggregates. (See charts.)A big lesson of history is that if economists think they understand how the macroeconomy works, they will be wrong. In the 1930s, the conventional wisdom was that the economy was self-stabilising. In the 1960s, it was that inflation expectations and money did not matter. In the 1980s, it was that only money mattered. In the 2000s, it was that credit expansion would not destabilise the financial system. In 2020, it was that money was irrelevant. Again and again, we fall in love with naive stories. We want to believe the economy is a simple mechanism, but it is not.In 1975, the British economist Charles Goodhart argued that “any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes”. His insight was applied to the failure of monetarism to steer the economy. But Friedman would not have been surprised. He had argued that money affected the economy with “a lag that is both long and variable”. But he did not believe in steering the economy. Those who did moved on to inflation targeting instead.Yet “Goodhart’s law” has a plausible corollary: once a measure ceases to be a target, it will again become meaningful. As Mervyn King, former governor of the Bank of England, noted in an outstanding recent lecture: “Money has disappeared from modern models of inflation.” That is ridiculous. So, why has this happened? It is because technocrats have a foolish tendency to prefer being precisely wrong to being roughly right.

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So, where are we today? Optimists argue that the inflation we are seeing is just the result of temporary shortages caused by the pandemic. That is indeed part of the story, as a recent paper from the IMF explains. Yet the requirement, it asserts, is “to sustain a still-incomplete recovery and ensure that output catches up with its pre-pandemic trend — without allowing wages and prices to spiral upwards”. Indeed. The difficulty is that, as Robin Brooks of the Institute of International Finance has shown, inflation has become general: in the US, the weight in the index of items with price rises of over 2 per cent in the year to January 2022 was just under 90 per cent. To make things worse, Alex Domash and Lawrence Summers argue that measures showing a very tight US labour market, such as the vacancy and quit rates, are better indicators of inflationary pressures than non-employment. Worse, today’s labour market tightness would previously have been associated with sub-2 per cent unemployment.In sum, the inflationary genie is out of the bottle, especially in the US. The danger is that this ignites a spiral, in which inflation expectations shift upwards, causing a flight from money and so further destabilising expectations. There is no point in insisting this will not happen, because it clearly might do so when inflation is so far above the target and previous forecasts. Credibility will have to be preserved, whatever it takes.What this means in policy now is difficult enough. But as King powerfully argues, central bankers also have to reconsider some of their recent doctrines. Just as the financial crisis showed that banking matters, so this inflationary upsurge shows that money matters. It also indicates that forward guidance assumes more knowledge than anybody possesses. Central banks may explain their reaction function, but cannot say what they are going to do, because they do not know what the economy will do. Last but not least, average inflation targeting is surely stillborn. It never made sense to target future inflation in the light of past mistakes. Is the US Federal Reserve really going to lower inflation below 2 per cent in order to make up for a prolonged overshoot? What does make sense is to reassert its determination to hit its forward-looking target. But it is also possible we are going to see a degree of financial instability that will force deeper thinking on this, too.We should always remember how little we know about the economy. Central banks must be humble and prudent. They cannot ignore valuable information just because they do not like what it shows. Yes, we cannot steer the economy via the money supply. But we cannot ignore it either. It carries [email protected] Martin Wolf with myFT and on Twitter More

LONDON (Reuters) -Britain on Tuesday slapped sanctions on five Russian banks and three men, including Gennady Timchenko, who have close links to Vladimir Putin after the Kremlin chief ordered the deployment of troops to two breakaway regions in eastern Ukraine.British Prime Minister Boris Johnson said Russia was heading towards “pariah status” and that the world must now brace for the next stage of Putin’s plan, saying that the Kremlin was laying the ground for a full-scale invasion of Ukraine. Britain has threatened to cut off Russian companies’ access to U.S. dollars and British pounds, blocking them from raising capital in London and to expose what Johnson calls the “Russian doll” of property and company ownership.Johnson told parliament that five banks – Rossiya, IS Bank, GenBank, Promsvyazbank and the Black Sea Bank – were being sanctioned, along with three people – Timchenko, Igor Rotenberg and Boris Rotenberg. “This is the first tranche, the first barrage of what we are prepared to do,” Johnson said.”Any assets they hold in the UK will be frozen and the individuals concerned will be banned from travelling here,” Johnson said of the individuals being sanctioned.Some British lawmakers asked Johnson to be tougher on Russian money, even demanding that Russian oligarchs be ejected from Britain and Russian money be dug out of the City of London. Hundreds of billions of dollars have flowed into London and Britain’s overseas territories from Russia since the fall of the Soviet Union in 1991, and London has become the Western city of choice for the super-wealthy of Russia and other former Soviet republics.TIMCHENKO Britain said that Timchenko, one of the founders of Gunvor trading company, was a major shareholder in Bank Rossiya, itself a stakeholder in National Media Group which supported the destabilisation of Ukraine after Russia’s 2014 annexation of Crimea. “Bank Rossiya has supported the consolidation of Crimea into the Russian Federation by integrating the financial system following the annexation of Crimea,” Britain said.Timchenko, who Forbes says is worth 23.5 billion pounds, is a close ally of Russian President Putin, as are the Rotenbergs, Johnson said. “Boris Rotenberg… is a prominent Russian businessman with close personal ties to (the) Russian President,” Britain said. “Igor Rotenberg is a prominent Russian businessmen with close familial ties to President Putin.”The U.S. Treasury has also sanctioned the Rotenbergs as being billionaires who have made fortunes under Putin. Britain has threatened to cut off Russian companies’ access to U.S. dollars and British pounds, blocking them from raising capital in London and to expose what Johnson calls the “Russian doll” of property and company ownership.”We must now brace ourselves for the next possible stages of Putin’s plan,” Johnson said. “Putin is establishing the pretext for a full scale offensive.”Russia’s once mighty superpower economy is now smaller than Italy’s based on IMF data, with a nominal GDP of around $1.7 trillion. More

MOSCOW/DONETSK (Reuters) -Russia’s parliament approved treaties with two breakaway regions in eastern Ukraine on Tuesday, opening the way for an immediate Russian troop deployment despite the threat of Western sanctions including the blocking of a major new pipeline.The lower house’s approval of President Vladimir Putin’s decision to recognise the two regions’ independence increased Western fears of war that have rattled global financial markets, hit Russia’s rouble and pushed oil prices to a seven-year high. [MKTS/GLOB] ][RU/RUB] [O/R] Ukrainian President Volodymr Zelenskiy said his country may sever diplomatic ties with Russia, and the United States and the European Union discussed new sanctions as Ukraine reported continued shelling in east Ukraine. German Chancellor Olaf Scholz put the certification of the Nord Stream 2 gas pipeline from Russia to Germany on ice, a measure widely considered the toughest Europe is likely to take against Moscow at this stage.”We must reassess the situation, in particular regarding Nord Stream 2,” Scholz told a news conference with the Irish leader in Berlin. The pipe, built to bring gas from Russia to Germany via the Baltic Sea, has been completed but has yet to win regulatory approval.Tensions over a Russian troop build-up near Ukraine’s borders have risen sharply since Putin announced on Monday that he was recognising the independence of the Luhansk and Donetsk regions controlled since 2014 by pro-Russian separatists. He also signed a decree on the deployment of Russian troops to “keep peace” there.Russian parliamentary approval of friendship treaties with the two regions, which enter force once Putin signs them, could pave the way for Moscow to build military bases there, adopt a joint defence posture and tighten economic integration. The Kremlin said it hoped Russia’s recognition would help restore calm and that Moscow remained open to diplomacy with the United States and other countries. A Kremlin spokesperson said he was unable to say if Russian forces had entered the two regions and that a decision to send in forces would depend on how the situation developed.Zelenskiy urged Ukraine’s allies not to wait for a furtherescalation to impose sanctions.”I will consider the issue of severing diplomatic relations between Ukraine and the Russian Federation. Immediately after our press conference, I will consider this issue,” Zelenskiy told a news conference in Kyiv.MORE VIOLENCE Ukraine said two soldiers had been killed and 12 wounded in shelling by pro-Russian separatists in the east in the past 24 hours, and reported new hostilities on Tuesday morning. A Reuters journalist saw tanks and other military hardware moving through the separatist-controlled city of Donetsk overnight. No insignia were visible on the vehicles.Western leaders are trying to work out what Putin will do next, and whether Russia plans a full-scale invasion of Ukraine after being rebuffed over demands for a redrawing of security arrangements in Europe. U.S. President Joe Biden signed an executive order to halt U.S. business activity in the breakaway regions and European Union officials met to discuss sanctions.”We’ve got to ensure that, whatever happens, Russia will feel the pain … to make sure Russia has absolutely no incentive to go further,” said Ireland’s Europe minister, Thomas Byrne.Linda Thomas-Greenfield, U.S. ambassador to the United Nations, said the description of the Russian troops as peacekeepers was “nonsense”.But the West appears likely to hold back on its toughest sanctions for now. A senior U.S. official said the deployment of Russian troops to the breakaway regions did not merit the harshest sanctions the United States and its allies have prepared in the event of a full-scale invasion, as Russia already had troops there.EU sanctions could including putting hundreds of politicians and officials on black lists, a ban on trading in Russian state bonds and an import and export ban on separatist entities, EU diplomats and officials said. Russian Foreign Minister Sergei Lavrov brushed off the threat of sanctions. “Our European, American, British colleagues will not stop and will not calm down until they have exhausted all their possibilities for the so-called punishment of Russia,” he said. Russia has denied planning to attack Ukraine. WEST CONSIDERS ITS OPTIONSA British minister said the situation was as grave as the 1962 Cuban missile crisis, when a confrontation between the United States and the Soviet Union brought the world to the brink of nuclear war.China urged all parties to exercise restraint. Japan said it was ready to join international sanctions in the event of a full-scale invasion. Turkey said Russian recognition of the two regions was unacceptable. Syria’s foreign minister said Syria backed Moscow’s decision on the two regions, state television reported. The Russian-backed separatists in Donetsk and Luhansk broke away from Ukrainian government control in 2014 and proclaimed themselves independent “people’s republics” after a pro-Moscow Ukrainian president was ousted in Kyiv.It was not immediately clear whether Russian troops would stay in territory controlled by the separatists, or seek to capture territory beyond them, a move that would increase the likelihood of conflict. A deputy Russian foreign minister wasquoted by Interfax news agency as saying Russia was sticking to the boundaries the separatists control. Putin has long worked to restore Russia’s influence over nations that emerged after the collapse of the Soviet Union, with Ukraine holding an important place in his ambitions. Russia annexed Crimea from Ukraine in 2014, triggering Western sanctions. More

BRUSSELS (Reuters) -The European Union is close to agreeing sanctions on Russia that would put politicians and officials on blacklists, ban trading in Russian state bonds, and target imports and exports with separatist entities, senior EU officials said on Tuesday.Responding to Russia’s formal recognition of two breakaway regions in eastern Ukraine, the EU said it was reacting “with robustness and speed to the illegal actions of Russia in close coordination with international partners”.Russian President Vladimir Putin’s announcement on Monday, followed by his signing a decree on the deployment of Russian troops to Donetsk and Luhansk, is “illegal and unacceptable,” European Council President Charles Michel and European Commission President Ursula von der Leyen said in a statement.The EU had repeatedly said it was ready to impose “massive consequences” on Russia’s economy if Moscow invaded Ukraine but has also cautioned that, given the EU’s close energy and trade ties to Russia, it wanted to increase sanctions in stages.The package of sanctions, which EU foreign ministers will discuss in Paris from 1500 GMT and aim to finalise “without delay”, includes putting on an EU blacklist those who were involved in the decision to recognise the breakaway regions, the joint statement said.That could involve all members of the lower house of the Russian parliament who voted in favour of the recognition, one EU official said.The package of measures under discussion also aims “to target the ability of the Russian state and government to access the EU’s capital and financial markets and services, to limit the financing of escalatory and aggressive policies,” the statement saidBanks involved in financing separatist activities in eastern Ukraine could also be targeted.The two regions could also be removed from a free trade deal between the EU and Ukraine, “to ensure that those responsible clearly feel the economic consequences of their illegal and aggressive actions,” the statement said.Meanwhile, German Chancellor Olaf Scholz put certification of the Nord Stream 2 gas pipeline on ice, in one of the most far-reaching reactions to Moscow’s moves.Not all of the bloc’s 27 member states have the same relation to Russia or dependency on its gas, which could eventually complicate the adoption of sanctions.EU officials and diplomats said some EU countries, including Austria, Hungary and Italy, Russia’s closest allies in the bloc, would prefer more limited sanctions in response to Putin’s move on eastern Ukraine.Others want to see a fuller, tougher range of measures discussed in recent weeks for the event of a Russian invasion of Ukraine to be rolled out now. Baltic, central and eastern European states say tough sanctions should be imposed immediately as Russia is already showing military aggression towards Ukraine.Italian Prime Minister Mario Draghi, whose country relies on Russian for much of its gas, told a news conference in Rome that any sanctions should not include energy imports.”How we react as European Union will define our character and indeed the future of Europe,” Lithuanian vice minister of foreign affairs Arnoldas Pranckevicius said at a meeting in Brussels.The sanctions “should not be symbolic. If we want to deter further actions from president Putin, if we want to stop the war from happening, we need to move ahead with serious measures.”Irish EU affairs minister Thomas Byrne said earlier on Tuesday: “We’ve got to ensure that whatever happens, Russia will feel the pain … to make sure Russia has absolutely no incentive to go further.” More

BERLIN (Reuters) -German Chancellor Olaf Scholz halted the Nord Stream 2 gas pipeline project designed to bring more Russian gas to Germany on Tuesday after Russia formally recognised two breakaway regions in eastern Ukraine.Europe’s most divisive energy project was finished in September, but has remained idle since then pending certification by Germany and the European Union.The project is designed to double the amount of gas flowing from Russia straight to Germany under the Baltic Sea, bypassing traditional transit nation Ukraine. Germany obtains half its gas from Russia and had argued that Nord Stream 2 was primarily a commercial project to diversify energy supplies for Europe.But it faced opposition within the European Union and from the United States on the grounds that it would increase Europe’s energy dependence on Russia, as well as denying Ukraine transit fees and making it more vulnerable to Russian invasion.”This a huge change for German foreign policy with massive implications for energy security and Berlin’s broader position towards Moscow,” said Marcel Dirsus, non-resident fellow at Kiel University’s Institute for Security Policy.”It suggests that Germany is actually serious about imposing tough costs on Russia.”Scholz said he had asked the economy ministry to take steps to ensure that certification could not take place at the moment.”There can be no certification of the pipeline and without this certification, Nord Stream 2 cannot begin operating,” he told a news conference with his Irish counterpart.”The appropriate departments of the economy ministry will make a new assessment of the security of our supply in light of what has changed in last few days.”Economy Minister Robert Habeck said Germany’s gas supply was secured even without additional delivery via Nord Stream 2.But he told journalists in Duesseldorf that gas prices were another matter, and likely to rise further in the short term.Germany’s Federal Network Agency – which regulates the electricity, gas, telecommunications, post and railway sectors – in November suspended the process to certify the pipeline, saying the operator must register a legal entity in Germany.Energy analysts had expected it to pick up the procedure in mid-year after the operator followed through on those instructions.Asked in recent weeks if possible sanctions in the event of a Russian attack would include the project, Scholz had said all options were on the table but avoided mentioning Nord Stream 2.”This is a morally, politically and practically correct step in the current circumstances,” Ukrainian Foreign Minister Dmytro Kuleba tweeted. “True leadership means tough decisions in difficult times. Germany’s move proves just that.”Ukraine’s ambassador to Germany, Andrij Melnyk, also welcomed Scholz’s move but told Reuters: “The question is whether the message comes too late, because action should have been taken much earlier.” More