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Wally Adeyemo, the Deputy Treasury Secretary, to Visit Nigeria

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Wally Adeyemo, the highest-ranking member of the African diaspora in the Biden administration, emigrated from Nigeria to the United States as a child.The Biden administration is dispatching Wally Adeyemo, the deputy Treasury secretary, to Nigeria next week as it seeks to deepen economic ties with Africa and counter China’s influence on the continent.The visit comes as Nigeria’s new president, Bola Tinubu, is embarking on reforms to revive his country’s sluggish economy and months after President Biden pledged to deepen the United States’ involvement with Africa with an investment of more than $50 billion over the next three years. The United States has been trying to make up lost ground in the geopolitical contest with China and Russia to cultivate relations in Africa.Nigeria, which is Africa’s largest economy, is key to those efforts. The Biden administration believes Nigeria, a democracy that is rich with natural resources, has the potential to be an economic anchor for the United States on the continent.Several Biden administration officials, including Secretary of State Antony J. Blinken, have visited Nigeria during Mr. Biden’s first term. However, Mr. Adeyemo is a unique emissary: He was born in Ibadan, one of Nigeria’s largest cities, and emigrated with his family to California when he was 2 years old.The trip will be Mr. Adeyemo’s first time going back to Nigeria in decades, he said, and he will be returning as the highest-ranking member of the African diaspora in the Biden administration. His ascension to the top ranks of the U.S. government has been watched with joy in Nigeria in recent years.“It’s one of those opportunities to go to a place that means a lot to me personally, but also to go to a place that means a lot to me professionally, just given that Nigeria is Africa’s largest economy with a huge demographic boom,” Mr. Adeyemo said in an interview with The New York Times. “It’s just a great chance for me to talk about how we can deepen the economic relationship and the strategic relationship at a moment when Nigeria has a government that’s already taken really important steps in terms of economic reform.”While in Lagos, Mr. Adeyemo plans to meet with government officials and executives from the technology, entertainment and finance sectors. He also plans to meet with American companies that operate in Nigeria and visit a local project that has received financing from the U.S. government.The Biden administration views Nigeria as an opportunity because of its large population of young workers. Nigeria’s government has tried to make the country more attractive to foreign investors by easing currency controls and removing fuel subsidies, which have for years strained its public finances.Mr. Adeyemo said that his message in Nigeria will be that “the United States wants to be your partner, not only to provide development assistance, but to think about how we deepen our investment and trade relationship.”While he is there, Mr. Adeyemo plans to talk to Nigerian officials about tackling corruption and protecting the financial system from illicit finance risks. He will also encourage Nigerian officials to continue to pursue ways of diversifying the economy away from its reliance on petroleum and embracing renewable energy.The outreach from the United States comes as Nigeria is grappling with the highest levels of inflation in nearly two decades and, like many African nations, a heavy debt burden.According to government statistics, Nigeria owes more than $20 billion to international financial institutions such as the World Bank and the International Monetary Fund. It also owes $4.7 billion to China, which is Nigeria’s largest bilateral creditor.The Biden administration has been pressuring China to offer debt relief to African countries. However, Nigeria has yet to seek debt relief through the “common framework” initiative that was established by the Group of 20 nations.Biden administration officials have been careful to avoid explicitly characterizing U.S. interests in Africa in the context of competition with China. During a trip to South Africa last year, Mr. Blinken said the administration’s Africa strategy was not centered on rivalry with China and Russia. But a White House document on Mr. Biden’s strategy in sub-Saharan Africa released the same day said the effort to strengthen “open societies” was partly intended to “counter harmful activities” by China, Russia and “other foreign actors.”Asked about China’s influence in Nigeria, Mr. Adeyemo underscored what the country shares with the United States and noted that both are large, multiethnic democracies with similar values. He pointed out that African countries are increasingly aware of China’s reluctance to restructure debt and that the United States is taking a different approach to its economic relationship with Nigeria.“We’re talking about investment and foreign direct investment in Nigerian companies, in Nigerian infrastructure, in a way that allows Nigerians to be able to build a thriving economy that isn’t overly reliant on external debt,” Mr. Adeyemo said. More

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    How Washington Decided to Rescue Silicon Valley Bank

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    Officials were initially unsure about the need for the measures they eventually announced to shore up the financial system, but changed their minds quickly.WASHINGTON — On Friday afternoon, the deputy Treasury secretary, Wally Adeyemo, met with Jamie Dimon, the chief executive of JPMorgan Chase & Company, at Mr. Dimon’s office in New York.The Biden administration and the Federal Reserve were considering what would be the most aggressive emergency intervention in the banking system since the 2008 financial crisis, and the question the two men debated was at the heart of that decision.Could the failure of Silicon Valley Bank, the mega start-up lender that had just collapsed, spread to other banks and create a systemic risk to the financial system?“There’s potential,” Mr. Dimon said, according to people familiar with the conversation.Mr. Adeyemo was one of many administration officials who entered last weekend unsure of whether the federal government needed to explicitly rescue Silicon Valley Bank’s depositors before markets opened on Monday morning.In the White House and the Treasury, some officials initially saw the bank’s swift plunge to insolvency as unlikely to spark an economic crisis — particularly if the government could facilitate a sale of the bank to another financial institution.They quickly changed their minds after signs of nascent bank runs across the country — and direct appeals from small businesses and lawmakers from both parties — convinced them the bank’s problems could imperil the entire financial system, not just rich investors in Silicon Valley.On Friday morning, aides met with President Biden in the Oval Office, where they warned that the panic engulfing Silicon Valley Bank could spread to other financial institutions, according to a White House official. Mr. Biden told them to keep him updated on developments.By Friday afternoon, before financial markets had even closed, the Federal Deposit Insurance Corporation had stepped in and shut down the bank.Still, the kind of rescue that the United States ultimately engineered would not materialize publicly until Sunday, after intense deliberations across the government.This account is based on interviews with current and former officials in the White House, Treasury and the Fed; financial services executives; members of Congress; and others. All were involved or close to the discussions that dominated Washington over a frenzied process that began Thursday evening and ended 72 hours later with an extraordinary announcement timed to beat the opening of financial markets in Asia.The episode was a test for the president — who risked criticism from the left and the right by greenlighting what critics called a bailout for banks. It also confronted Treasury Secretary Janet L. Yellen with the prospect of a banking crisis at a moment when she had become more optimistic that a recession could be avoided. And it was the starkest demonstration to date of the impact that the Fed’s aggressive interest rate increases were having on the economy.Wally Adeyemo, deputy Treasury secretary, was initially unsure whether the government would need to intervene to rescue Silicon Valley Bank’s depositors. Andrew Harnik/Associated PressSilicon Valley Bank failed because it had put a large share of customer deposits into long-dated Treasury bonds and mortgage bonds that promised modest, steady returns when interest rates were low. As inflation jumped and the Fed lifted interest rates from near zero to above 4.5 percent to fight it over the last year, the value of those assets eroded. The bank essentially ran out of money to make good on what it owed to its depositors.By Thursday, concern was growing at the Federal Reserve. The bank had turned to the Fed to borrow money through the central bank’s “discount window” that day, but it soon became clear that was not going to be enough to forestall a collapse.Officials including Jerome H. Powell, chairman of the Fed, and Michael S. Barr, its vice chair for supervision, worked through Thursday night and into Friday morning to try to find a solution to the bank’s unraveling. By Friday, Fed officials feared the bank’s failure could pose sweeping risks to the financial system.Compounding the worry: The prospects of arranging a quick sale to another bank in order to keep depositors whole dimmed through the weekend. A range of firms nibbled around the idea of purchasing it — including some of the largest and most systemically important.One large regional bank, PNC, tiptoed toward making an acceptable offer. But that deal fell through as the bank scrambled to scrub Silicon Valley Bank’s books and failed to get enough assurances from the government that it would be protected from risks, according to a person briefed on the matter.A dramatic government intervention seemed unlikely on Thursday evening, when Peter Orszag, former President Barack Obama’s first budget director and now chief executive of financial advisory at the bank Lazard, hosted a previously scheduled dinner at the bank’s offices in New York City’s Rockefeller Center..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.Among those in attendance were Mr. Adeyemo and a pair of influential senators: Michael D. Crapo, Republican of Idaho, and Mark Warner, Democrat of Virginia. Both were sponsors of a 2018 law that rolled back regulation on smaller banks that critics now say left Silicon Valley Bank vulnerable.Blair Effron, a large Democratic donor who had just been hired by Silicon Valley Bank to advise it on its liquidity crunch, was also there. Earlier that day, the bank had attempted to raise money to stave off collapse with the help of Goldman Sachs — an effort that, by Thursday evening, had clearly failed.The Federal Reserve ultimately opened a lending program to help keep money flowing through the banking system.Al Drago for The New York TimesMr. Effron and Mr. Adeyemo spoke as it became evident that Silicon Valley Bank was running out of options and that a sale — or some bigger intervention — might be necessary. Jeffrey Zients, Mr. Biden’s new chief of staff, and Lael Brainard, the new director of his National Economic Council, were also being pelted by warnings about the bank’s threat to the economy. As Silicon Valley Bank’s depositors raced to withdraw their money on Thursday, sending its stock into free fall, both Ms. Brainard and Mr. Zients began receiving a flurry of calls and texts from worried leaders in the start-up community that the bank heavily served.Ms. Brainard, who had experienced financial crises in other countries while serving in Mr. Obama’s Treasury Department and as a Federal Reserve Board member, had begun to worry about a new crisis emanating from SVB’s failure. She and Mr. Zients raised that possibility with Mr. Biden when they briefed him in the Oval Office on Friday morning.Other officials across the administration were more skeptical, worrying that the lobbying blitz Ms. Brainard and others were receiving was purely a sign of wealthy investors trying to force the government to backstop their losses. And there were concerns that any kind of government action could be seen as bailing out a bank that had mismanaged its risk, potentially encouraging risky behavior by other banks in the future.Ms. Brainard started fielding anxious calls again on Saturday morning and did not stop until late in the evening. She and Mr. Zients briefed Mr. Biden that afternoon — virtually this time, because the president was spending the weekend in his home state of Delaware.Mr. Biden also spoke Saturday with Gov. Gavin Newsom of California, who was pushing aggressively for government intervention in fear that a wide range of companies in his state would otherwise not be able to pay employees or other operational costs on Monday morning.Concerns mounted that day as regulators reviewed data that showed deposit outflows increasing at regional banks nationwide — a likely sign of systemic risk. They began pursuing two possible sets of policy actions, ideally a buyer for the bank. Without that option, they would need to seek a “systemic risk exception” to allow the F.D.I.C. to insure all of the bank’s deposits. To calm jittery investors, they surmised that a Fed lending facility would also be needed to buttress regional banks more broadly.“Because of the actions that our regulators have already taken, every American should feel confident that their deposits will be there if and when they need them,” President Biden said on Monday.Doug Mills/The New York TimesMs. Yellen on Saturday convened top officials — Mr. Powell, Mr. Barr and Martin J. Gruenberg, the chairman of the F.D.I.C.’s board of directors — to figure out what to do. The Treasury secretary was fielding back-to-back calls on Zoom from officials and executives and at one point described what she was hearing about the banking sector as hair-raising.F.D.I.C. officials initially conveyed reservations about their authority to back deposits that were not insured, raising concerns among those who were briefed by the F.D.I.C. that a rescue could come too late.By Saturday night, anxiety that the Biden administration was dragging its feet was bubbling over among California lawmakers.At the glitzy Gridiron Club Dinner in Washington, Representative Ro Khanna, a California Democrat, cornered Steve Ricchetti, a top White House aide and close adviser to the president, and urged Mr. Biden and his team to be decisive. He warned that many of Mr. Biden’s major achievements would be washed away if the banking system melted down.“I said, Steve, this is a massive issue not just for Silicon Valley, but for regional banks around America,” Mr. Khanna said, adding that Mr. Ricchetti replied: “I get it.”Privately, it was becoming clear to Mr. Biden’s economic team that banking customers were getting spooked. On Saturday evening, officials from the Treasury, the White House and the Fed tentatively agreed to two bold moves they finalized and announced late on Sunday afternoon: The government would ensure that all depositors would be repaid in full, and the Fed would offer a program providing attractive loans to other financial institutions in hopes of avoid a cascading series of bank failures.But administration officials wanted to ensure the rescue had limits. The focus, according to a person familiar with the conversation, was ensuring that businesses around the country would be able to pay their employees on Monday and that no taxpayer money would be used by tapping the F.D.I.C.’s Deposit Insurance Fund.It was a priority that the rescue not be viewed as a bailout, which had become a toxic word in the wake of the 2008 financial crisis. The depositors would be protected, but the bank’s management and its investors would not.By Sunday morning, regulators were putting the finishing touches on the rescue package and preparing to brief Congress. Ms. Yellen, in consultation with the president, approved the “systemic risk exception” that would protect all of the bank’s deposits. The bipartisan members of the Federal Reserve and the F.D.I.C. voted unanimously to approve the decision.That evening, they announced a plan to make sure all depositors at Silicon Valley Bank and another large failed financial institution, Signature Bank, were repaid in full. The Fed also said it would offer banks loans against their Treasury and many other asset holdings, whose values had eroded.“Because of the actions that our regulators have already taken, every American should feel confident that their deposits will be there if and when they need them,” Mr. Biden said during brief remarks at the White House.By Tuesday afternoon the intervention was showing signs of working. Regional bank stocks, which had fallen on Monday, had partially rebounded. The outflow of deposits from regional banks had slowed. And banks were pledging collateral at the Fed’s new loan program, which would put them in a position to use it if they decided that doing so was necessary.The financial system appeared to have stabilized, at least for the moment. More

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    China’s Economic Support for Russia Could Elicit More Sanctions

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    U.S. officials pledged to crack down on shipments to Russia that can be used for both civilian and military purposes, but that has proved hard to police.WASHINGTON — President Biden and his top officials vowed this week to introduce additional sanctions aimed at impeding Russia’s war efforts against Ukraine. But the administration’s focus is increasingly shifting to the role that China has played in supplying Russia with goods that have both civilian and military uses.As one of the world’s biggest manufacturers of products like electronics, drones and vehicle parts, China has proved to be a particularly crucial economic partner for Russia.Beijing has remained officially unaligned in the war. Yet China, along with countries like Turkey and some former Soviet republics, has stepped in to supply Russia with large volumes of products that either civilians or armed forces could use, including raw materials, smartphones, vehicles and computer chips, trade data shows.Administration officials are now expressing concern that China could further aid Russia’s incursion by providing Moscow with lethal weapons. While there is no clear evidence that China has given weapons and ammunition to Russia, Secretary of State Antony J. Blinken warned in recent days that China may be preparing to do so.President Biden, speaking in Kyiv on Monday, said the United States and its partners would announce new measures targeting sanctions evasion this week. He did not specify whether those actions would be directed at Moscow or its trading partners.“Together we have made sure that Russia is paying the price for its abuses,” he said the next day in Warsaw.And in a speech on Tuesday at the Council on Foreign Relations, Wally Adeyemo, the deputy Treasury secretary, said the United States would be working “to identify and shut down the specific channels through which Russia attempts to equip and fund its military.”“Our counterevasion efforts will deny Russia access to the dual-use goods being used for the war and cut off these repurposed manufacturing facilities from the inputs needed to fill Russia’s production gaps,” he said.The comments came on the same day that Wang Yi, China’s top diplomat, visited Moscow.The actions that the United States has taken against Russia in partnership with more than 30 countries constitute the broadest set of sanctions and export controls ever imposed against a major economy. But this regime still has its limits.One year into the war, the Russian economy is stagnant, but not crippled. The country has lost direct access to coveted Western consumer brands and imports of the most advanced technology, like semiconductors. But individuals and companies around the world have stepped in to provide Russia with black market versions of these same products, or cheaper alternatives made in China or other countries.Russia is unable to produce precision missiles today because the country no longer has access to leading-edge semiconductors, a U.S. official said.Maxim Shipenkov/EPA, via ShutterstockIn particular, the United States and its allies appear to have had limited success in stopping the trade of so-called dual-use technologies that can be used in both military equipment and consumer goods.The United States included many types of dual-use goods in the export controls it issued against Russia last February, because the goods can be repurposed for military uses. Aircraft parts that civilian airlines can use, for example, may be repurposed by the Russian Air Force, while semiconductors in washing machines and electronics might be used for tanks or other weaponry.The Chinese Spy Balloon ShowdownThe discovery of a Chinese surveillance balloon floating over the United States has added to the rising tensions between the two superpowers.Tensions Rise: In the aftermath of the U.S. downing of a Chinese spy balloon on Feb. 4 and three unidentified flying objects a week later, the nations have traded accusations over their spying programs.U.S.-China Meeting: Secretary of State Antony Blinken held a confrontational meeting with his Chinese counterpart on Feb. 18 in Munich, resuming diplomatic contact between Washington and Beijing.A ‘Military-Civil Fusion’: The international fracas over China’s spy balloon program has thrown a light on Beijing’s efforts to recruit commercial businesses to help strengthen the Chinese military.Unidentified Objects: As more objects were shot down after the balloon incident, experts warned that there was an “endless” array of potential targets crowding America’s skies. Here’s a look at some of them.Top U.S. officials warned their Chinese counterparts against supporting Russia’s war effort after the invasion of Ukraine last year, saying there would be firm consequences. While China has been careful not to cross that line, it has provided support for Russia in other ways, including through active trade in certain goods..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.The United States has cracked down on some of the companies and organizations providing goods and services to Russia. In January, it imposed sanctions on a Chinese company that had provided satellite imagery to the Wagner mercenary group, which has played a large role in the battle for eastern Ukraine. In December, it added two Chinese research institutes to a list of entities that supply the Russian military, which will restrict their access to U.S. technology.But tracking by research firms shows that trade in goods that the Russian military effort can use has flourished. According to the Observatory of Economic Complexity, an online data platform, shipments from China to Russia of aluminum oxide, a metal that can be used in armored vehicles, personal protective equipment and ballistic shields, soared by more than 25 times from 2021 to 2022.Shipments of minerals and chemicals used in the production of missile casings, bullets, explosives and propellants have also increased, according to the Observatory of Economic Complexity. And China shipped $23 million worth of drones and $33 million worth of certain aircraft and spacecraft parts to Russia last year, up from zero the prior year, according to the group’s data.Data from Silverado Policy Accelerator, a Washington nonprofit, shows that Russian imports of integrated circuits, or chips, which are crucial in rebuilding tanks, aircraft, communications devices and weaponry, plummeted immediately after the invasion but crept up over the past year.In December, Russia’s imports of chips had recovered to more than two-thirds of their value last February, just before the war began, according to Silverado. China and Hong Kong, in particular, together accounted for nearly 90 percent of global chip exports to Russia by value from March to December.Shipments from China to Russia of smart cards, light-emitting diodes, polysilicon, semiconductor manufacturing equipment and other goods have also risen, the firm said.Secretary of State Antony J. Blinken said he had shared concerns with Wang Yi, China’s top diplomat, that Beijing was considering providing weapons and ammunition to aid Russia’s campaign in Ukraine.Pool photo by Stefani ReynoldsRelations between the United States and China have soured in recent weeks after the flight of a Chinese surveillance balloon across the United States early this month. But divisions over Russia are further straining geopolitical ties. A meeting between Mr. Blinken and Mr. Wang, his Chinese counterpart, on the sidelines of the Munich Security Conference on Saturday night was particularly tense.U.S. officials have been sharing information on China’s activities with allies and partners in their meetings in Munich, a person familiar with the matter said.On “Face the Nation” on Sunday, Mr. Blinken said he had shared concerns with Mr. Wang that China was considering providing weapons and ammunition to aid Russia’s campaign in Ukraine, and that such an action would have “serious consequences” for the U.S.-Chinese relationship.“To date, we have seen Chinese companies — and, of course, in China, there’s really no distinction between private companies and the state — we have seen them provide nonlethal support to Russia for use in Ukraine,” Mr. Blinken said.“The concern that we have now is, based on information we have, that they’re considering providing lethal support,” he added. “And we’ve made very clear to them that that would cause a serious problem for us and in our relationship.”U.S. officials have emphasized that China by itself is limited in its ability to supply Russia with all the goods it needs. China does not produce the most advanced types of semiconductors, for example, and restrictions imposed by the United States in October will prevent Beijing from buying some of the most advanced types of chips, and the equipment used to make them, from other parts of the world.Russia is unable to produce precision missiles today because the country no longer has access to leading-edge semiconductors made by the United States, Taiwan, South Korea and other allied sources, a senior administration official said on Monday.“While we are concerned about Russia’s deepening ties with them, Beijing cannot give the Kremlin what it does not have, because China does not produce the advanced semiconductors Russia needs,” Mr. Adeyemo said during his remarks. “And nearly 40 percent of the less advanced microchips Russia is receiving from China are defective.”But Ivan Kanapathy, a former China director for the National Security Council, said that most of what Russia needed for its weapons were less advanced chips, which are manufactured in plenty in China.“The U.S. government is very well aware that our export control system is designed in a way that really relies on a cooperative host government, which we don’t have in this case,” Mr. Kanapathy said.He added that it was “quite easy” for parties to circumvent export control through the use of front companies, or by altering the names and addresses of entities. “China is quite adept at that.” More

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    Treasury Aims for Economic Pain on Russia, but Critics Question Effectiveness

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    The Treasury Department’s deputy secretary, Wally Adeyemo, has been leading the effort to crack down on evasion and to coordinate with Europe.WASHINGTON — When Russia imposed retaliatory sanctions on top American officials last month, its government targeted President Biden and his top national security advisers, along with Wally Adeyemo, the deputy Treasury secretary, whose agency has been crafting the punitive measures aimed at crippling Russia’s economy.Russia’s move, while wholly symbolic, underscored the central role that the Treasury Department has been playing in designing and enforcing the most expansive financial restrictions that the United States has ever imposed on a major economic power.Those restrictions amount to an economic war against Russia, which is entering a critical phase as the toll of fighting in Ukraine continues to escalate and as the Russian government tries to find ways to evade or mitigate fallout from Western sanctions.In an attempt to prevent Russia from skirting the penalties, Mr. Adeyemo, a 40-year-old former Obama administration official, spent last week crisscrossing Europe to coordinate a crackdown on Russia’s evasion tactics and to plot future sanctions. In meetings with counterparts, Mr. Adeyemo discussed plans by European governments to target the supply chains of Russian defense companies, some of which the U.S. placed under sanctions last week, and he talked about ways the United States could help provide more energy to Europe so European countries could scale back purchases of Russian oil and gas, a Treasury official said.On Wednesday, five days after Mr. Adeyemo returned, the Biden administration announced additional sanctions on Russian banks, state-owned enterprises and the adult daughters of President Vladimir V. Putin.Still, it remains to be seen whether the sweeping penalties aimed at neutering Russia’s economic power are working.Over the past six weeks, the United States and its allies in Europe and Asia have imposed sanctions on large financial institutions in Russia, its central bank, its military-industrial supply chain and Mr. Putin’s allies, seizing their yachts and planes. Imports of Russian oil to the United States have been banned, and Europe is developing plans to wean itself off Russian gas and coal, albeit slowly. This week, the Treasury Department prohibited Russia from making sovereign debt payments with dollars held at American banks, potentially pushing Russia toward its first foreign currency debt default in a century.But thus far Russia has kept paying its debts. Currency controls imposed by Mr. Putin’s central bank, which restricted Russians from using rubles to buy dollars or other hard currencies, along with continuing energy exports to Europe and elsewhere have allowed the ruble to stabilize and are replenishing Russia’s coffers with more dollars and euros. That has raised questions about whether the measures have been effective.“I think we’re grappling with the aftershocks of the shock and awe of the sanctions that were put in place and the recognition that sanctions take time to fully impact an economy,” said Juan C. Zarate, a former assistant secretary of the Treasury for terrorist financing and financial crimes. “It’s asking too much of sanctions to actually turn back the tanks, especially when sanctions have been implemented after the invasion.”At a speech in London last week, Mr. Adeyemo promoted the ability of sanctions to change behavior, describing the measures as a part of the equation that adversaries such as Russia need to consider when they violate international norms.“The idea that you can violate the sovereignty of another country and enjoy the privileges of integration into the global economy is one our allies and partners will not tolerate,” Mr. Adeyemo said at Chatham House, a think tank.Yet even the United States, which is not reliant on Russian energy, has wrestled with how far to go with its penalties.Within the Treasury Department, officials have been in a debate about how far to push the sanctions without creating unintended consequences that would rattle the financial system and inflame inflation, which is soaring across much of the world.The impact on the U.S. economy has been a top priority, and Janet L. Yellen, the Treasury secretary, has expressed concern about measures that would amplify inflation. The sanctions on Russia have already led to higher prices for gasoline, and officials are wary that they could bring spikes in food and car prices as Russian wheat and mineral exports are disrupted.“Our goal from the outset has been to impose maximum pain on Russia, while to the best of our ability shielding the United States and our partners from undue economic harm,” Ms. Yellen told lawmakers on Wednesday.As officials considered how to target the ruble, Ms. Yellen, a former Federal Reserve chair, argued against just imposing a ban on foreign exchange transactions, which would prevent Russia from buying dollars. She suggested instead that immobilizing Russia’s foreign reserves — savings that are held in U.S. dollars, euros and other liquid assets — while creating exemptions for Russia to accept payment for certain energy transactions would be the most effective way to inflict pain on Russia’s economy while minimizing the impact on the United States and its allies.At a congressional hearing this week, Republicans criticized those carve-outs for being giant loopholes that allow Russia to earn hundreds of millions of dollars per day through oil and gas sales.Treasury Department officials have been tracking measures that Russia has been using to prop up its economy, such as buying stocks and bonds, and monitoring signs of a growing black market for rubles, which indicates the currency’s actual diminished value. The Biden administration has watched with concern as the value of the ruble has rebounded in recent weeks, undercutting pronouncements made by Mr. Biden that sanctions reduced the Russian currency to “rubble.”“Of course that means that, having said that, when the ruble rebounds for reasons that do not necessarily indicate weakness of sanctions, people will say, ‘Well, see, they failed,’” said Daniel Fried, a former U.S. ambassador to Poland and assistant secretary of state for Europe.A Treasury official said the United States was also keeping a private list of oligarchs whose financial transactions were under surveillance in preparation for sanctions so they could gain a better understanding of the networks of people that helped those individuals conceal their money. The United States has yet to impose sanctions on Roman Abramovich, a Russian billionaire who is already subject to European Union sanctions.Economists at the Institute of International Finance wrote in a research note this week that Russia’s domestic markets appeared to be stabilizing as a result of tight monetary policy, severe capital controls and its current account surplus.Russia-Ukraine War: Key DevelopmentsCard 1 of 4Missile attack. More

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    White House Prepares Curbs on Russia’s Access to U.S. Technology

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    Biden administration officials have warned Russia that it could face further restrictions on technology that is critical to its economy and military.The Biden administration warned on Wednesday that it had prepared additional measures aimed at cutting off Russia from advanced technology critical to its economy and military in the event of further aggression by President Vladimir V. Putin toward Ukraine.The United States on Tuesday announced sanctions on two Russian banks and curbs on Russia’s sovereign debt, effectively isolating the country from Western financing. President Biden also announced further sanctions on the Nord Stream 2 natural gas pipeline and its corporate officers.Export controls could ratchet up the pressure on Russia by preventing the country from obtaining semiconductors and other advanced technology used to power Russia’s aerospace, military and tech industries.“If he chooses to invade, what we’re telling him very directly is that we’re going to cut that off, we’re going to cut him off from Western technology that’s critical to advancing his military, cut him off from Western financial resources that will be critical to feeding his economy and also to enriching himself,” Wally Adeyemo, the deputy Treasury secretary, said on CNBC on Wednesday.The Biden administration has not clarified what specific restrictions it would impose on the products Russia imports. But the actions and statements of administration officials suggest they could repurpose a novel measure that the Trump administration turned to to cripple the business of Huawei, a Chinese telecom company, in 2020, export control specialists said.The tool, called the foreign direct product rule, allows U.S. officials to block more than just exports from the United States to Russia, which totaled just $4.9 billion in 2020. It also allows American officials to restrict exports to Russia from any country in the world if they use American technology, including software or machinery.Companies can seek licenses to sidestep the restrictions but they are likely to be denied.Daleep Singh, the deputy national security adviser, said on Friday that the administration was “converging on the final package” of sanctions and export controls, and suggested that those controls would target tech products.“We produce the most sophisticated technological inputs across a range of foundational technologies — A.I., quantum, biotech, hypersonic flight, robotics,” Mr. Singh said. “As we and our partners move in lock step to deny these critical technology inputs to Russia’s economy, Putin’s desire to diversify outside of oil and gas — which is two-thirds of his export revenue, half of his budget revenues — that will be denied.”“He’s spoken many times about a desire for an aerospace sector, a defense sector, an I.T. sector,” Mr. Singh said of Mr. Putin. “Without these critical technology inputs, there is no path to realizing those ambitions.”Kevin Wolf, a partner in international trade at Akin Gump who worked in export controls under the Obama administration, said the White House could tailor its use of export controls to target certain strategic sectors, for example companies in the aerospace or maritime industry, while bypassing products used by the Russian populace, like washing machines.“They’re making it clear they’re not trying to take action that harms ordinary Russians,” Mr. Wolf said.Andy Shoyer, co-lead of global arbitration, trade and advocacy for Sidley Austin, said the restrictions appeared likely to focus on semiconductors and semiconductor equipment. The novel export controls that the United States wielded against Huawei have a powerful reach when it comes to semiconductors, since even chips made abroad are mostly manufactured and tested using machinery based on American designs, he said.“It’s not just what’s physically exported from the U.S.,” Mr. Shoyer said. “It could encompass a substantial amount of production, because so much of the semiconductor industry relies on U.S. technology.”The global semiconductor industry, which has been roiled by shortages and supply chain disruptions throughout the pandemic, could face more disruptions given Ukraine’s role in the semiconductor supply chain.The Ukraine Crisis’s Effect on the Global EconomyCard 1 of 6A rising concern. More

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    A Year After Ending Her Presidential Bid, Warren Wields Soft Power in Washington

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    The progressive Democrat’s proposals for taxing the rich will take center stage as talks on paying for an infrastructure bill ramp up.WASHINGTON — At Adewale Adeyemo’s confirmation hearing last month, Senator Elizabeth Warren pressed the deputy Treasury secretary nominee to commit to using the department’s regulatory powers to scrutinize the private equity industry, which she said posed a risk to low-income communities when buyout firms strip companies of assets, load them with debt and fire workers.Ms. Warren, a progressive Democrat from Massachusetts, has been a mentor to Mr. Adeyemo, who served as her chief of staff when she was establishing the Consumer Financial Protection Bureau a decade ago. But when he gave a noncommittal answer, she did not let him off the hook.“I don’t think you should waver about this,” Ms. Warren said emphatically. “Treasury should not be a bystander in this.”The exchange underscored Ms. Warren’s role in the new Washington, where the Biden administration and congressional Democrats control the levers of power. A year after ending her own presidential bid, and with her aspirations of becoming Treasury secretary unfulfilled, Ms. Warren now wields influence in her own way. She has shepherded a pipeline of progressive former staff members into powerful jobs across the government, and she releases a steady stream of legislative proposals that have kept her progressive ideas at the forefront of the policy conversation.Two months into the Biden presidency, it is not yet clear how much Ms. Warren’s sway will yield in terms of policy results. But many of her ideas for raising trillions of dollars of revenue by taxing the wealthy and big corporations will soon take center stage as the Biden administration and Congress consider ways to pay for the multitrillion-dollar infrastructure plan that they hope to pass this year.Marcus Stanley, the policy director of Americans for Financial Reform, an advocacy group, said the upcoming infrastructure and jobs legislation would be a real test of Ms. Warren’s influence.“We probably have a big bill coming up in the next couple of months, so when you talk about winning the policy fights, we’re going to see there,” Mr. Stanley said.If personnel is policy, as Ms. Warren likes to say, then she is winning so far. Many of the top officials and senior staff members at the nation’s most powerful economic policymaking and regulatory agencies are ideological allies who have been groomed by Ms. Warren.In addition to Mr. Adeyemo at the Treasury Department, Ms. Warren has worked closely in the past with Bharat Ramamurti, the deputy director of the National Economic Council, and Rohit Chopra, President Biden’s nominee to lead the Consumer Financial Protection Bureau.The impact of the hires can be seen in the progressive tilt of the $1.9 trillion economic relief law, which dismissed concerns about deficits and focused heavily on poverty reduction. Ms. Warren and her allies hope that having strong advocates for progressive views within the administration will help those ideas find purchase in a White House that thus far has been more open to tacking to the left than previous Democratic administrations.But it remains to be seen how far the Biden White House is willing to go, particularly with regard to tax increases, which is an area where the two former candidates disagreed.Although she has been off the campaign trail for more than a year, Ms. Warren has been reviving proposals that she promoted in Iowa and New Hampshire.This month, Ms. Warren and two House Democrats introduced legislation for an “ultra-millionaire tax” that is modeled after what she proposed as a candidate. The 2 percent annual wealth tax on the net worth of households and trusts valued at $50 million to $1 billion was unveiled with polling data to back up its popularity and letters supporting its constitutionality.This week, Ms. Warren plans to pitch new legislation to increase taxes on big companies. Her “real corporate income tax,” which was also part of her campaign platform, would require the most profitable companies to pay a 7 percent tax on their annual book value — the earnings that they report to their investors but not the Internal Revenue Service — above $100 million. The idea, which is similar to a proposal that Mr. Biden put forward during his campaign, is intended to stop companies from using accounting loopholes to lower their tax bills.When it appeared that Democrats were likely to lose the Senate after the 2020 election, some industry groups were relieved that Ms. Warren would not become the Treasury secretary. These days, however, they acknowledge that they are watching her moves closely.“Senator Warren is certainly well positioned to have an outsized influence in the Senate and the administration,” said James Maloney, a managing partner of Tiger Hill Partners, a public affairs firm focused on financial services. “Every item that she’s focused on should be a focus area for the industries whose policies can potentially be impacted.”Mr. Maloney, whose firm represents some private equity companies, noted that allies of Ms. Warren were spread across the Biden administration. He said businesses were closely watching the letters that Ms. Warren sends to regulatory agencies and the responses she receives.Mr. Biden has so far not been persuaded by her argument for using executive authority to waive student debt. And the White House has given mixed signals on Ms. Warren’s wealth tax.Treasury Secretary Janet L. Yellen, whose nomination Ms. Warren supported, has expressed skepticism about the feasibility of putting a wealth tax in place. Ms. Yellen’s recent hiring of Natasha Sarin, a protégé of Lawrence H. Summers who has been skeptical about how much revenue a wealth tax would generate, to join her economic policy team raised eyebrows among some in Ms. Warren’s orbit.In an interview, Ms. Warren said she was heartened by the early returns of the Biden era after four years of President Donald J. Trump’s deregulation and tax cuts.“People like progressive ideas and want to see them enacted,” Ms. Warren said. “That’s going to happen. Washington is beginning to catch up.”She said she planned to have a private conversation with Ms. Yellen about how to establish the tax.During the 2020 primary campaign, Ms. Warren and President Biden appeared to be at opposite ends of the Democratic Party’s ideological spectrum.Chang W. Lee/The New York Times“If that’s her biggest problem then we’re good,” Ms. Warren said. “It’s easy to implement. We just need to sit down and talk about it.”Ms. Warren acknowledged that helping to seed federal agencies with progressives was part of her strategy of making her policies happen. She said she made her staffing recommendations to the White House privately and repeated her refrain that “personnel is policy.”During the 2020 primary campaign, Ms. Warren and Mr. Biden appeared to be at opposite ends of the Democratic Party’s ideological spectrum. But their shared interest in uplifting the middle class and reducing income inequality has helped forge a strong working relationship.Jeff Hauser, the director of the Revolving Door Project, suggested that Ms. Warren’s ties to former Senator Ted Kaufman, Mr. Biden’s longtime Senate chief of staff who led his presidential transition team, had helped her steer many of her acolytes to important jobs. In 2008, when Ms. Warren was a Harvard Law School professor, she was appointed to join a congressional panel that was overseeing the $700 billion Troubled Asset Relief Program. When she left that job to stand up the consumer protection bureau, Mr. Kaufman replaced her and continued her rigorous oversight work.Allies of Ms. Warren say she is playing the long game with policy proposals such as the wealth tax, nudging them from European fringe ideas to the political mainstream in hopes that Democrats will have the votes to pass such legislation sooner rather than later.“She’s doing what she always does, which is going person by person in the Senate, person by person in the administration, explaining policy advantages, explaining the political advantages, making the case,” said Mike Lux, a Democratic political strategist and a friend of Ms. Warren’s.In the meantime, Ms. Warren feels a sense of relief after four years of being on defense. On the day she voted to advance Mr. Chopra’s nomination to lead the consumer bureau, she reflected on how different his tenure would be from that of Mick Mulvaney, whom Mr. Trump appointed to neuter the agency in 2017.Mr. Chopra helped Ms. Warren establish the bureau and worked for five years as its assistant director and student loan ombudsman. Mr. Mulvaney tried to cut its funding and scrambled its acronym out of spite.“Mick Mulvaney was doing everything he could to try to undercut the consumer agency, and he made no secret about that,” Ms. Warren said. “Now there’s someone who will be in charge of the C.F.P.B. who sees the need for a level playing field and a fair set of rules and who has the backbone to get in there and make it happen.” More

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    Biden Expected to Name Top Economic Officials This Week

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    WASHINGTON — President-elect Joseph R. Biden Jr. is expected to name top members of his economic team this week, including Cecilia Rouse, a Princeton labor economist, to run the Council of Economic Advisers, and Neera Tanden, the chief executive of the Center for American Progress, to lead the Office of Management and Budget, according to people familiar with the matter.The announcement — which will include Mr. Biden’s decision to name Janet L. Yellen, the former Federal Reserve chair, as Treasury secretary — will culminate in several women in top economic roles, including the first Black woman to lead the Council of Economic Advisers. All three jobs require Senate confirmation.With the picks, Mr. Biden is showcasing a commitment to diversity in his advisers and sending a clear message that economic policymaking in his administration will be shaped by liberal thinkers with a strong focus on worker empowerment as a tool for economic growth.Two of Mr. Biden’s top economic aides during his presidential campaign, Jared Bernstein and Heather Boushey, will also be named to the Council of Economic Advisers, which is a three-member team that advises the president on economic policy. Both Ms. Boushey and Mr. Bernstein come from a liberal, labor-oriented school of economics that views rising inequality as a threat to the economy and emphasizes government efforts to support and empower workers.In many ways, his team is unified by a commitment to running the economy hot — with strong growth and low unemployment — in order to drive up wages. And it is likely to signal an embrace of spending to help workers, businesses and local governments recover from the pandemic recession, regardless of the effect on the federal budget deficit.“President Biden’s appointments show that he is quadrupling down on his commitment to working people and raising wages,” said Jason Furman, an economist at Harvard University’s Kennedy School of Government and the former head of the Council of Economic Advisers under President Barack Obama. “He has appointed four of the best labor market economists in the country to head the Treasury and the Council of Economic Advisers.”In addition to those roles, Mr. Biden is expected to name Adewale Adeyemo, a senior international economic adviser in the Obama administration, as deputy Treasury secretary.Mr. Biden has also selected Brian Deese, a former Obama economic aide who helped lead that administration’s efforts to bail out the American automotive industry, to lead the National Economic Council, according to three people with knowledge of the selection.Mr. Deese, 42, is not an academic economist but a veteran of economic policymaking, having served as the acting head of the Office of Management and Budget and the deputy director of the Economic Council under Mr. Obama. He was also a special adviser on climate change to Mr. Obama, a role that could signal Mr. Biden’s commitment to fashioning an infrastructure bill for his legislative agenda that heavily features spending on clean energy initiatives.Mr. Biden on Sunday announced an all-female White House communications staff, with Jennifer Psaki, a veteran of the Obama administration, in the most visible role as White House press secretary.Kate Bedingfield, 39, who served as a deputy campaign manager for Mr. Biden, will serve as the White House communications director. Karine Jean Pierre, who previously served as the chief public affairs officer for MoveOn.org, will be the principal deputy press secretary. Pili Tobar, a former immigrant advocate with the group America’s Voice, will serve as the deputy White House communications director.Symone Sanders, a senior adviser to Mr. Biden on the campaign, will serve as the senior adviser and chief spokeswoman for Vice President-elect Kamala Harris. Ashley Etienne, a former senior adviser to Speaker Nancy Pelosi, will serve as the communications director for Ms. Harris.The appointments indicate Mr. Biden’s plan to include racial, gender and ideological diversity in top roles, fulfilling a campaign pledge to ensure that a broad swath of America is represented in policymaking decisions.But they could fall short of hopes within the progressive wing of the Democratic Party, which has been frustrated that their views are not being sufficiently represented in early personnel decisions. In particular, the decision to select Ms. Tanden, a divisive and partisan figure in the Democratic Party, could culminate in an intraparty fight, as well as a confirmation battle.Republicans, who are expected to retain control of the Senate, are unlikely to easily pass Ms. Tanden, an Indian-American who advised Hillary Clinton’s 2016 presidential campaign and has been one of the most outspoken critics of President Trump.The Presidential TransitionLatest UpdatesUpdated Nov. 29, 2020, 6:35 p.m. ETBiden names all-female communications team with Jen Psaki as press secretary.Biden sees orthopedic doctor after spraining his ankle while playing with family dog.Biden team wants to tackle child care, elder care, preschool in one overarching plan.She also faces a challenge from Senate Democrats given her role in the 2016 election: Many of those who worked for Senator Bernie Sanders of Vermont, who ran against Mrs. Clinton, remain convinced that Ms. Tanden was part of a group of Democrats working behind the scenes to scuttle his nomination.Mr. Sanders, who ran against — and ultimately endorsed — Mr. Biden, is the top Democrat on the Senate Budget Committee, which vets the director of the Office of Management and Budget, putting the fate of Ms. Tanden’s nomination under his watch.Josh Holmes, a former chief of staff to Senator Mitch McConnell of Kentucky, the majority leader, referred to Ms. Tanden on Twitter on Sunday as a “sacrifice to the confirmation gods,” suggesting that her downfall would sate Republican anger toward Mr. Biden’s presidency and allow other nominees to more easily win confirmation.Drew Brandewie, a spokesman for Senator John Cornyn, Republican of Texas, said on Twitter on Sunday evening that Ms. Tanden “stands zero chance of being confirmed.”The selection of Ms. Tanden, who was involved in the development of the Affordable Care Act as an adviser to the Department of Health and Human Services during the Obama administration, is likely to resurface questions about the funding of the Center for American Progress. The New York Times reported last year that from 2016 through 2018, the center accepted nearly $2.5 million from the United Arab Emirates to fund its National Security and International Policy initiative.In addition, hacked emails from Ms. Tanden that were released through WikiLeaks in 2016 could also provide additional fodder for her critics.Mr. Biden’s other picks are most likely less contentious. Ms. Rouse, a labor economist, worked on Mr. Obama’s Council of Economic Advisers from 2009 to 2011 and at the White House’s National Economic Council during the Clinton administration in the late 1990s.Claudia Goldin, a Harvard economist, a pioneer in research on the role of women in the American economy and one of Ms. Rouse’s thesis advisers in graduate school, called her a leading expert on labor markets and education.“She is a deeply thoughtful person and a superb listener who brings out the best of those around her,” Ms. Goldin said.Mr. Bernstein was Mr. Biden’s first chief economist when he was vice president and has written extensively on the power of low unemployment and strong economic growth to bolster workers and wages. Ms. Boushey runs the Washington Center for Equitable Growth, a liberal think tank focused on inequality, and was a top policy adviser to Mrs. Clinton in 2016. She has focused much of her research and writing on government initiatives meant to increase women’s participation in the labor force, such as paid leave programs.The appointments drew praise from Kevin A. Hassett, Mr. Trump’s first Council of Economic Advisers chairman.“They have put together a very strong team of experienced policymakers and smart economists,” Mr. Hassett said. “At this difficult time, it is great to know that a strong C.E.A. will be helping to guide policy.”Mr. Adeyemo is an immigrant from Nigeria and has extensive experience working at the Treasury Department during the Obama administration, when he was a senior adviser and deputy chief of staff. Mr. Adeyemo was also Mr. Obama’s chief negotiator for the macroeconomic policy provisions of the Trans-Pacific Partnership, which Democrats ultimately opposed, and served as the first chief of staff of the Consumer Financial Protection Bureau. After a two-year stint as a senior adviser at BlackRock, he joined the Obama Foundation in 2019 as its president.Michael D. Shear and Jeanna Smialek contributed reporting. More