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    U.S. and Allies Impose Sanctions on Russia as Biden Condemns ‘Invasion’ of Ukraine

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    President Biden warned President Vladimir V. Putin of Russia that more sanctions would follow if he did not withdraw his forces and engage in diplomatic efforts to resolve the crisis.WASHINGTON — The United States and its allies on Tuesday swiftly imposed economic sanctions on Russia for what President Biden denounced as the beginning of an “invasion of Ukraine,” unveiling a set of coordinated punishments as Western officials confirmed that Russian forces had begun crossing the Ukrainian border.Speaking from the White House, Mr. Biden condemned President Vladimir V. Putin of Russia and said the immediate consequences for his aggression against Ukraine included the loss of a key natural gas pipeline and cutting off global financing to two Russian banks and a handful of the country’s elites.“Who in the Lord’s name does Putin think gives him the right to declare new so-called countries on territory that belonged to his neighbors?” Mr. Biden said on Tuesday afternoon, joining a cascade of criticism from global leaders earlier in the day. “This is a flagrant violation of international law and demands a firm response from the international community.”Mr. Biden warned Mr. Putin that more sanctions would follow if the Russian leader did not withdraw his forces and engage in diplomatic efforts to resolve the crisis.But that prospect remained dim by the end of the day, as Secretary of State Antony J. Blinken canceled plans to meet with the Russian foreign minister on Thursday, saying that it does not “make sense” to hold talks while Russian forces are on the move.“To put it simply, Russia just announced that it is carving out a big chunk of Ukraine,” Mr. Biden said, adding, “He’s setting up a rationale to take more territory by force.”President Biden called Russia’s actions a “flagrant violation of international law” and unveiled tough sanctions aimed at punishing the country.Al Drago for The New York TimesThe global response began early on Tuesday, just hours after Mr. Putin recognized the self-declared separatist states in eastern Ukraine and Russian forces started rolling into their territory, according to NATO, European Union and White House officials. It was the first major deployment of Russian troops across the internationally recognized border since the current crisis began.At a news conference in Moscow, Mr. Putin said that he had not decided to send in troops “right at this moment.” But officials said the invasion started overnight, just hours before Mr. Putin’s Parliament formally granted him the authority to deploy the military abroad. Ukrainians near the territory controlled by Kremlin-backed separatists have already endured days of shelling, and as Ukrainian troops hunkered down in their trenches and civilians took shelter in basements, the country’s military said that one soldier had been killed so far and six wounded.Financial markets around the world wobbled on Tuesday in the wake of the Russian actions and the response from Western governments. In the United States, the news pushed stocks lower, leaving the S&P 500 in correction territory, more than 10 percent below its January peak. Oil prices, which had risen to nearly $100 a barrel in anticipation of a global disruption, settled at $96.84 a barrel, up 1.5 percent.Mr. Biden and his counterparts in Germany, England and other European nations described the package of global sanctions as severe. They include financial directives by the United States to deny Russia the ability to borrow money in Western markets and to block financial transactions by two banks and the families of three wealthy Russian elites.Chancellor Olaf Scholz of Germany put the Nord Stream 2 gas pipeline on hold. The $11 billion conduit from Russia to Germany — completed but not yet operational — is crucial to Moscow’s plans to increase energy sales to Europe. European Union foreign ministers and the British government approved sanctions against legislators in Moscow who voted to authorize the use of force, as well as Russian elites, companies and organizations.“It will hurt a lot,” said the E.U. foreign policy chief, Josep Borrell Fontelles.The governments of Japan, Taiwan and Singapore also issued a joint statement saying they would limit technology exports to Russia in an effort to pressure Mr. Putin with damaging restrictions on his ambitions to compete in high-tech industries.But the moves in Washington and other capitals around the world were limited in scope and fell short of the more sweeping economic warfare that some — including members of Congress and other supporters of Ukraine — have repeatedly demanded in recent weeks.Mr. Biden and his counterparts have said they must balance the need to take swift and severe action with preserving the possibility of even greater sanctions on Russia if Mr. Putin escalates the conflict by trying to seize more territory claimed by the separatists, or even the entire country — a war that could kill tens of thousands of people.“This is the beginning of a Russian invasion of Ukraine,” he said, adding that “we’ll continue to escalate sanctions if Russia escalates.”European leaders also vowed to get tougher if Mr. Putin’s forces continued to advance. Prime Minister Boris Johnson described British sanctions as just “the first tranche.”Mr. Biden’s use of the word “invasion” was significant. In the past, he had angered the Ukrainian leadership when he suggested that there might be lesser penalties for a “minor incursion.” Now that Mr. Putin has ordered forces into eastern Ukraine, Mr. Biden, in his choice of words, is making clear that there is nothing minor about the operation.Russian self-propelled howitzers being loaded onto a train car on Tuesday near Taganrog, Russia.The New York TimesBut that still leaves open the question of how to calibrate the sanctions — because so far there have been no mass casualties. Jonathan Finer, the president’s deputy national security adviser, said early Tuesday that the administration could hold back some of its promised punishments in the hopes of deterring further, far more violent aggression by Mr. Putin aimed at taking the rest of the country.“We’ve always envisioned waves of sanctions that would unfold over time in response to steps Russia actually takes, not just statements that they make,” Mr. Finer said on CNN. “We’ve always said we’re going to watch the situation on the ground and have a swift and severe response.”Crucially, it remains unclear how far Mr. Putin — who has argued that Ukraine itself is a phony country, wrongly carved away from Russia — is prepared to go. On Tuesday, he said ominously that he recognized the so-called Donetsk and Luhansk republics’ sovereignty over not only the land they control, but also the much larger portion of Ukraine that they lay claim to, home to 2.5 million people.Maps: Russia and Ukraine Edge Closer to WarRussia has built an enormous military force along Ukraine’s border that appears prepared to attack from the north, east and south.At a hastily called news conference on Tuesday, Mr. Putin demanded that Ukraine vow never to join NATO, give up the advanced weapons the West has delivered to it, recognize Russia’s annexation of Crimea and negotiate directly with the Luhansk and Donetsk separatists, who are seen in Kyiv and Western capitals as illegitimate Kremlin proxies.“The most important point is a known degree of demilitarization of Ukraine today,” Mr. Putin said. “This is the only objectively controllable factor that can be observed and reacted to.”Understand How the Ukraine Crisis DevelopedCard 1 of 7How it all began. 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    Will Biden’s Sanctions Halt a Russian Invasion of Ukraine?

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    President Vladimir V. Putin has learned from earlier U.S.-led sanctions, and his allies could benefit from a more isolated Russia.WASHINGTON — When the Obama administration imposed sanctions on Russia for invading Ukraine in 2014, American officials were hopeful they would deter President Vladimir V. Putin from further aggression.Some of the officials argue today that the sanctions prevented Mr. Putin from ordering Russian forces beyond where they had halted on the Crimean Peninsula and in the eastern Donbas region. But Mr. Putin held on to Crimea. And on Monday, he ordered more troops into an insurgent-controlled area of eastern Ukraine where thousands of Russian soldiers have been operating and said the Kremlin was recognizing two enclaves as independent states.Now, President Biden, who as vice president helped oversee Ukraine policy in 2014, has to weigh what sanctions might compel Mr. Putin to halt his new offensive, which the White House has judged to be an “invasion.” The White House is taking a step-by-step approach, trying to calibrate each tranche of measures to Mr. Putin’s actions.“I’m going to begin to impose sanctions in response, far beyond the steps we and our allies and partners implemented in 2014,” Mr. Biden said on Tuesday in announcing a new set of sanctions. “And if Russia goes further with this invasion, we stand prepared to go further.”While American officials have studied the effects of sanctions imposed since 2014 and sharpened techniques, Mr. Putin has had years to make his country’s $1.5 trillion economy more insular so that parts of Russia would be shielded from tough penalties. Speaking to reporters on Friday, he boasted that his country had grown more self-sufficient in the face of “illegitimate” Western sanctions, according to Russia’s Tass news service. He added that in the future, it would be “important for us to raise the level of our economic sovereignty.”And perhaps most notably, Mr. Putin and his closest aides and partners in Moscow might not suffer much themselves from sanctions, analysts say.Mr. Putin’s decision on Monday to press ahead with the troop movement suggests that he has concluded that the costs of new sanctions are tolerable, despite U.S. talk of “massive consequences” for his country. Several of his top aides made that point in choreographed speeches to him in a meeting of his Security Council on Monday in Moscow.If Russian officials are firm in that mind-set, the Biden administration might find it has to impose the absolute harshest sanctions — ones that would inflict suffering on many ordinary citizens — or look for a noneconomic option, such as giving greater military aid to an insurgency in Ukraine. Mr. Biden has said he will not send American troops to defend Ukraine.Some of the hard-line nationalist men around Mr. Putin were already on a Treasury Department sanctions list and accept that they and their families will no longer have substantial ties to the United States or Europe for the rest of their lives, said Alexander Gabuev, the chair of the Russia in the Asia-Pacific Program at the Carnegie Moscow Center.“They are the powerful everybodies in today’s Russia,” he said. “There is a lot of posh richness. They’re totally secluded. They’re the kings, and that can be secured in Russia only.”Furthermore, because of their roles in state-owned enterprises and their business ties, they are “the very guys who are directly benefiting from the economy becoming more insulated, more detached from the outside world,” he added.They have also adopted a siege mentality rooted in an ideological belief about the United States and its sanctions policies that Mr. Putin regularly pushes. “He says, ‘It’s not because of actions I take, but it’s because we’re rising as a power, and the Americans want to punish us for standing up to hegemonism,’” Mr. Gabuev said. “I think that’s genuine. The bulk of my contacts in the government believe that.”The sanctions announced by the United States on Tuesday include penalties against three sons of senior officials close to Mr. Putin and two state-owned banks, as well as further restrictions on Russia’s ability to raise revenue by issuing sovereign debt. The costs are not expected to be felt widely in Russia — the two banks are policy institutions and do not have retail operations — but American officials could eventually announce more painful steps.That announcement followed an executive order issued by Mr. Biden on Monday night that prohibits business dealings between Americans and entities in the Russia-backed eastern enclaves in Ukraine. The Biden administration would also have the authority to impose sanctions on anyone operating in those areas, a U.S. official said.Britain announced Tuesday that it was freezing the assets of five Russian banks and imposing sanctions on three Russian billionaires and certain members of Parliament. And Germany said it was halting certification of the Nord Stream 2 natural gas pipeline that would connect to Russia.A severe economic disruption could test Mr. Putin’s control of his country. But many analysts are skeptical that the United States and its European allies will follow through with the toughest options that they have considered.Sputnik, via Associated PressOfficials from the White House, State Department and Treasury Department have spent weeks coordinating a response with European leaders and major financial institutions and say they are able to act almost immediately as Russia escalates its actions.Some experts say that if the Biden administration follows through on the most severe options that officials have suggested are possible — most notably severing the country’s top banks, including Sberbank and VTB, from transactions with non-Russian entities — Russia could suffer a financial panic that triggers a stock market crash and rapid inflation. The effects would most likely strike not only billionaire oligarchs but also middle-class and lower-income families. Russian enterprises would also be unable to receive payment for energy exports.Besides isolating Russian state-owned banks, the escalatory sanctions that U.S. officials have prepared would also cut off the ability to purchase critical technologies from American companies.If the United States imposes the harshest penalties, “there will be unexpected and unpredictable consequences for global markets,” said Maria Snegovaya, a visiting scholar at George Washington University who co-wrote an Atlantic Council paper on U.S. sanctions on Russia.Edward Fishman, a top State Department sanctions official in the Obama administration, called Mr. Biden’s action on Tuesday a modest first step intended as “a shot across the bow.”Mr. Fishman said the administration’s move against one of the two targeted banks — VEB, the country’s main development bank — was the first time the United States had fully cut off a state-owned Russian financial institution. “I interpret that as a warning that the Biden administration is prepared to cut off other major Russian banks from the U.S. financial system,” Mr. Fishman said.“Biden is giving Putin an opportunity to step away from the brink,” he added. “But he’s also signaling that, if Putin unleashes a full-scale war, the economic costs will be immense.”Sberbank is a possible target of U.S. sanctions. Some experts say that if the Biden administration imposes particularly harsh measures, Russia could suffer a financial panic.Evgenia Novozhenina/ReutersA severe economic disruption could test Mr. Putin’s control of his country. But many analysts are skeptical that the United States and its European allies will follow through with the toughest options that they have considered, as they may be discouraged by fears over collateral damage to their own economies.And no Western officials have even proposed choking the lifeblood of Russia’s economy by cutting off its lucrative energy exports. Experts say that a move against Russian energy revenues would have the biggest impact, but that it would also lead to a precarious political situation for Mr. Biden and other world leaders as oil and gas prices rise in a period of high global inflation.The Russian government has spent years trying to reconfigure its budget and finances so that it can withstand further sanctions, efforts that have been aided by high market prices for oil and gas. It has relatively low debt and relies less on loans from foreign entities than it did before 2014. Most importantly, the central bank has accumulated foreign currency reserves of $631 billion, the fourth-largest such reserve in the world.Some important Russian state-owned enterprises and private companies have actually benefited from U.S. sanctions. Kremlin policies aimed at replacing Western imports with Russian and non-Western products wind up raising the profits of those businesses. And some of Mr. Putin’s allies and their families have done well under the initiatives. One example is Dmitry Patrushev, the minister of agriculture, whose family has become wealthier from new agriculture industry policies, Mr. Gabuev said.President Xi Jinping of China, who has been strengthening his nation’s ties with Russia, could help Mr. Putin get around some of the sanctions or bolster Russia’s economy with greater energy purchases. When the two leaders met in Beijing at the start of the Winter Olympics, their governments announced a 30-year contract in which China would purchase gas through a new pipeline running across Siberia. Chinese companies might also be able to fill some of the supply chain gaps created by a stoppage in certain U.S. technology exports to Russia, though those companies are unable to replicate more advanced American products.Chinese leaders would probably be careful about having its large state-owned banks continue to do business overtly with any Russian banks that are under U.S. sanctions, but China has ways to keep some transactions hidden.“They’ve developed a lot of e-payment and digital workarounds,” said Daniel Russel, a former assistant secretary of state for East Asian and Pacific affairs and an executive at the Asia Society. “There are all kinds of fairly sophisticated barter systems they’ve been employing. Thirdly, they can hide behind a lot of black market stuff.” More

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    Russia’s Moves in Ukraine Unsettle Energy Companies and Prices

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    Oil and gas prices are up, and Western energy giants with operations and investments in Russia could find it harder to keep doing business there.Russia’s recognition of two breakaway regions in eastern Ukraine could threaten important investments of Western oil giants and further drive up global energy prices in the next few weeks.Since the closing days of the Cold War, Russia’s energy-based economy has become entwined with Europe’s. European energy companies like BP, TotalEnergies and Shell have major operations and investments in Russia. Though expansion of those holdings was largely halted after Russia’s 2014 annexation of Crimea, they remain important profit centers and could now be at risk.Seeking to isolate President Vladimir V. Putin of Russia, President Biden and the European Union imposed new sanctions on the Russian government and the country’s political and business elite on Tuesday. The measures do not directly target the energy industry. That’s why oil and gas prices settled only modestly higher on Tuesday afternoon in New York.But analysts said the energy industry could still be hurt if the crisis dragged on, particularly if Mr. Putin decided to send troops into the rest of Ukraine or sought to take control of the capital, Kyiv. Such aggressive action would most likely force Mr. Biden and other Western leaders to ratchet up their response.European leaders are already taking aim at some Russian energy exports. Chancellor Olaf Scholz said on Tuesday that Germany would halt certification of the Nord Stream 2 pipeline, which is supposed to deliver Russian gas. The decision will not have an immediate impact on European energy supplies because the pipeline is not yet operating. But Russian gas shipments through Ukraine could be halted, especially if Mr. Putin’s troops push farther into Ukraine or if he cuts off gas to Europe in retaliation for Western sanctions.Russia supplies one out of every 10 barrels of oil used around the world. After Western officials said Russian troops had entered eastern Ukrainian regions held by separatists, oil prices quickly jumped early Tuesday to nearly $100 a barrel, their highest level in more than seven years, before moderating.Energy experts say oil prices could easily rise another $20 a barrel if Mr. Putin seeks to occupy more or all of Ukraine. Such an outcome would also cause huge problems for Western oil companies that do business in Russia.“In that environment, the legal and reputational risk faced by Western energy companies operating in Russia will rise sharply,” said Robert McNally, who was an energy adviser to President George W. Bush and is now president of the Rapidan Energy Group, a consulting firm. “For oil markets, this means slower supply growth and even tighter global balances and higher prices in the coming years.”TotalEnergies, which is based near Paris, owns nearly 20 percent of Novatek, Russia’s largest liquefied natural gas company, and Shell has a strategic alliance with Gazprom, Russia’s natural gas monopoly.The Salym oil field, which Shell operates jointly with Gazprom in western Siberia.Alexander Zemlianichenko Jr./BloombergThe Western oil company most involved in Russia is BP, which owns nearly 20 percent of Rosneft, the state-controlled energy company managed by Igor Sechin, who is widely considered a close Putin ally and adviser. BP’s chief executive, Bernard Looney, and its former chief executive Bob Dudley sit on Rosneft’s board with Mr. Sechin and Alexander Novak, Russia’s deputy prime minister.Rosneft contributed $2.4 billion in profits and $600 million in dividends to BP in 2021, and has a secondary listing on the London Stock Exchange. About a third of BP’s oil production, or 1.1 million barrels a day, came from Russia last year.BP executives have so far expressed calm. “We have been there over 30 years and our job is to focus on our business, and that is what we are doing,” Mr. Looney said in a recent conference call with analysts. “If something comes down the road, then obviously we will deal with it as it comes.”Most oil companies have been reporting bumper profits because of rising oil and gas prices. European firms are using some of their profits to invest more in wind, solar, hydrogen and other forms of cleaner energy. But the current crisis could be a major distraction, if not worse.Doing business in Russia has always been complicated, especially as Mr. Putin reasserted state control over energy, squeezing private investors.Shell was forced to give up control of its premier Russian liquefied natural gas project on Sakhalin Island, in eastern Russia, to Gazprom in 2006. Shell retains a modest stake in the facility, and it appears to want to keep the door open to more business in Russia. Along with four other European companies, it helped finance the estimated $11 billion Nord Stream 2 pipeline to Germany.TotalEnergies has continued investing in a $27 billion natural gas complex in the Yamal Peninsula, in the Arctic, that Novatek controls. The project sidestepped earlier Western sanctions by obtaining financing from Chinese banks. It began producing gas for European and Asian customers in 2017.Share prices of BP and Total closed on Tuesday down more than 2 percent, and Shell was down about 1 percent.Prospects for Western oil companies seeking to do business in Russia were once far brighter. Exxon Mobil, Italy’s ENI and other foreign oil companies teamed up with Rosneft in 2012 and 2013 to explore Arctic oil and gas fields.BP owns nearly 20 percent of Rosneft, which operates this refinery in Novokuibyshevsk, Russia.Andrey Rudakov/BloombergBut U.S. and European Union sanctions imposed after Russia’s seizure of Crimea forced many Western companies to stop expanding in Russia in part by limiting access to financing and technology for deepwater exploration.Exxon formally abandoned exploration ventures with Rosneft in 2018, and took a $200 million after-tax loss.Understand How the Ukraine Crisis DevelopedCard 1 of 7How it all began. More

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    What’s at Stake for the Global Economy as Conflict Looms in Ukraine

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    Countries that depend on the region’s rich supply of energy, wheat, nickel and other staples could feel the pain of price spikes.After getting battered by the pandemic, supply chain chokeholds and leaps in prices, the global economy is poised to be sent on yet another unpredictable course by an armed clash on Europe’s border.Even before the Kremlin ordered Russian troops into separatist territories of Ukraine on Monday, the tension had taken a toll. The promise of punishing sanctions in return by President Biden and the potential for Russian retaliation had already pushed down stock returns and driven up gas prices.An outright attack by Russian troops could cause dizzying spikes in energy and food prices, fuel inflation fears and spook investors, a combination that threatens investment and growth in economies around the world.However harsh the effects, the immediate impact will be nowhere near as devastating as the sudden economic shutdowns first caused by the coronavirus in 2020. Russia is a transcontinental behemoth with 146 million people and a huge nuclear arsenal, as well as a key supplier of the oil, gas and raw materials that keep the world’s factories running. But unlike China, which is a manufacturing powerhouse and intimately woven into intricate supply chains, Russia is a minor player in the global economy.Italy, with half the people and fewer natural resources, has an economy that is twice the size. Poland exports more goods to the European Union than Russia.“Russia is incredibly unimportant in the global economy except for oil and gas,” said Jason Furman, a Harvard economist who was an adviser to President Barack Obama. “It’s basically a big gas station.”An underground gas storage facility in Kasimov, east of Moscow. Russia supplies nearly 40 percent of Europe’s natural gas.Andrey Rudakov/BloombergOf course, a closed gas station can be crippling for those who depend on it. The result is that any economic damage will be unevenly spread, intense in some countries and industries and unnoticed in others.Europe gets nearly 40 percent of its natural gas and 25 percent of its oil from Russia, and is likely to be walloped with spikes in heating and gas bills, which are already soaring. Natural gas reserves are at less than a third of capacity, with weeks of cold weather ahead, and European leaders have already accused Russia’s president, Vladimir V. Putin, of reducing supplies to gain a political edge.And then there are food prices, which have climbed to their highest level in more than a decade largely because of the pandemic’s supply chain mess, according to a recent United Nations report. Russia is the world’s largest supplier of wheat, and together with Ukraine, accounts for nearly a quarter of total global exports. For some countries, the dependence is much greater. That flow of grain makes up more than 70 percent of Egypt and Turkey’s total wheat imports.This will put further strain on Turkey, which is already in the middle of an economic crisis and struggling with inflation that is running close to 50 percent, with skyrocketing food, fuel and electricity prices.And as usual, the burden falls heaviest on the most vulnerable. “Poorer people spend a higher share of incomes on food and heating,” said Ian Goldin, a professor of globalization and development at Oxford University.Ukraine, long known as the “breadbasket of Europe,” actually sends more than 40 percent of its wheat and corn exports to the Middle East or Africa, where there are worries that further food shortages and price increases could stoke social unrest.Lebanon, for example, which is experiencing one of the most devastating economic crises in more than a century, gets more than half of its wheat from Ukraine, which is also the world’s largest exporter of seed oils like sunflower and rapeseed.On Monday, the White House responded to Mr. Putin’s decision to recognize the independence of two Russian-backed territories in the country’s east by saying it would begin imposing limited sanctions on the so-called Donetsk and Luhansk People’s Republics. Jen Psaki, the White House press secretary, said Mr. Biden would soon issue an executive order prohibiting investment, trade and financing with people in those regions.Analysts watching the unfolding conflict have mapped out a range of scenarios from mild to severe. The fallout on working-class families and Wall Street traders depends on how an invasion plays out: whether Russian troops stay near the border or attack the Ukrainian capital, Kyiv; whether the fighting lasts for days or months; what kind of Western sanctions are imposed; and whether Mr. Putin responds by withholding critical gas supplies from Europe or launching insidious cyberattacks.“Think about it rolling out in stages,” said Julia Friedlander, director of the economic statecraft initiative at the Atlantic Council. “This is likely to play out as a slow motion drama.”As became clear from the pandemic, minor interruptions in one region can generate major disruptions far away. Isolated shortages and price surges— whether of gas, wheat, aluminum or nickel — can snowball in a world still struggling to recover from the pandemic.“You have to look at the backdrop against which this is coming,” said Gregory Daco, chief economist for EY-Parthenon. “There is high inflation, strained supply chains and uncertainty about what central banks are going to do and how insistent price rises are.”Ukraine’s port of Mykolaiv. The Middle East and Africa are especially reliant on Ukraine’s exports of wheat and corn.  Brendan Hoffman for The New York TimesThe additional stresses may be relatively small in isolation, but they are piling on economies that are still recovering from the economic body blows inflicted by the pandemic.What’s also clear, Mr. Daco added, is that “political uncertainty and volatility weigh on economic activity.”That means an invasion could have a dual effect — slowing economic activity and raising prices.In the United States, the Federal Reserve is already confronting the highest inflation in 40 years, at 7.5 percent in January, and is expected to start raising interest rates next month. Higher energy prices set off by a conflict in Europe may be transitory but they could feed worries about a wage-price spiral.“We could see a new burst of inflation,” said Christopher Miller, a visiting fellow at the American Enterprise Institute and an assistant professor at Tufts University.Also fueling inflation fears are possible shortages of essential metals like palladium, aluminum and nickel, creating another disruption to global supply chains already suffering from the pandemic, trucker blockades in Canada and shortages of semiconductors.The price of palladium, for example, used in automotive exhaust systems, mobile phones and even dental fillings, has soared in recent weeks because of fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, used to make steel and electric car batteries, has also been jumping.It’s too early to gauge the precise impact of an armed conflict, said Lars Stenqvist, the chief technology officer of Volvo, the Swedish truck maker. But he added, “It is a very, very serious thing.”“We have a number of scenarios on the table and we are following the developments of the situation day by day,” Mr. Stenqvist said Monday.The West has taken steps to blunt the impact on Europe if Mr. Putin decides to retaliate. The United States has ramped up delivery of liquefied natural gas and asked other suppliers like Qatar to do the same.A front line position in Luhansk Oblast, in eastern Ukraine, a scene of mortar attacks. “This is likely to play out as a slow motion drama,” said one analyst.Tyler Hicks/The New York TimesThe demand for oil might add momentum to negotiations to revive a deal to curb Iran’s nuclear program. Iran, which is estimated to have as many as 80 million barrels of oil in storage, has been locked out of much of the world’s markets since 2018, when President Donald J. Trump withdrew from the nuclear accord and reimposed sanctions.Some of the sanctions against Russia that the Biden administration is considering, such as cutting off access to the system of international payments known as SWIFT or blocking companies from selling anything to Russia that contains American-made components, would hurt anyone who does business with Russia. But across the board, the United States is much less vulnerable than the European Union, which is Russia’s largest trading partner.Americans, as Mr. Biden has already warned, are likely to see higher gasoline prices. But because the United States is itself a large producer of natural gas, those price increases are not nearly as steep and as broad as elsewhere. And Europe has many more links to Russia and engages in more financial transactions — including paying for the Russian gas.Oil companies like Shell and Total have joint ventures in Russia, while BP boasts that it “is one of the biggest foreign investors in Europe,” with ties to the Russian oil company Rosneft. Airbus, the European aviation giant, gets titanium from Russia. And European banks, particularly those in Germany, France and Italy, have lent billions of dollars to Russian borrowers.“Severe sanctions that hurt Russia painfully and comprehensively have potential to do huge damage to European customers,” said Adam Tooze, director of the European Institute at Columbia University.Depending on what happens, the most significant effects on the global economy may manifest themselves only over the long run.One result would be to push Russia to have closer economic ties to China. The two nations recently negotiated a 30-year contract for Russia to supply gas to China through a new pipeline.“Russia is likely to pivot all energy and commodity exports to China,” said Carl Weinberg, chief economist at High Frequency Economics.The crisis is also contributing to a reassessment of the global economy’s structure and concerns about self-sufficiency. The pandemic has already highlighted the downsides of far-flung supply chains that rely on lean production.Now Europe’s dependence on Russian gas is spurring discussions about expanding energy sources, which could further sideline Russia’s presence in the global economy.“In the longer term, it’s going to push Europe to diversify,” said Jeffrey Schott, a senior fellow working on international trade policy at the Peterson Institute for International Economics. As for Russia, the real cost “would be corrosive over time and really making it much more difficult to do business with Russian entities and deterring investment.” More

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    Black Farmers Fear Foreclosure as Debt Relief Remains Frozen

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    Lawsuits from white farmers have blocked $4 billion of pandemic aid that was allocated to Black farmers in the American Rescue Plan.WASHINGTON — For Brandon Smith, a fourth-generation cattle rancher from Texas, the $1.9 trillion stimulus package that President Biden signed into law nearly a year ago was long-awaited relief.Little did he know how much longer he would have to wait.The legislation included $4 billion of debt forgiveness for Black and other “socially disadvantaged” farmers, a group that has endured decades of discrimination from banks and the federal government. Mr. Smith, a Black father of four who owes about $200,000 in outstanding loans on his ranch, quickly signed and returned documents to the Agriculture Department last year, formally accepting the debt relief. He then purchased more equipment for his ranch, believing that he had been given a financial lifeline.Instead, Mr. Smith has fallen deeper into debt. Months after signing the paperwork he received a notice informing him that the federal government intended to “accelerate” foreclosure on his 46-acre property and cattle if he did not start making payments on the loans he believed had been forgiven.“I trusted the government that we had a deal, and down here at the end of the day, the rug gets pulled out from under me,” Mr. Smith, 43, said in an interview.Black farmers across the nation have yet to see any of Mr. Biden’s promised relief. While the president has pledged to pursue policies to promote racial equity and correct decades of discrimination, legal issues have complicated that goal.In May 2021, the Agriculture Department started sending letters to borrowers who were eligible to have their debt cleared, asking them to sign and return forms confirming their balances. The payments, which also are supposed to cover tax liabilities and fees associated with clearing the debt, were expected to come in phases beginning in June.But the entire initiative has been stymied amid lawsuits from white farmers and groups representing them that questioned whether the government could offer debt relief based on race.Courts in Wisconsin and Florida have issued preliminary injunctions against the initiative, siding with plaintiffs who argued that the debt relief amounted to discrimination and could therefore be illegal. A class-action lawsuit against the U.S.D.A. is proceeding in Texas this year.The Biden administration has not appealed the injunctions but a spokeswoman for the Agriculture Department said it was continuing to defend the program in the courts as the cases move forward.The legal limbo has created new and unexpected financial strains for Black farmers, many of whom have been unable to make investments in their businesses given ongoing uncertainty about their debt loads. It also poses a political problem for Mr. Biden, who was propelled to power by Black voters and now must make good on promises to improve their fortunes.The law was intended to help remedy years of discrimination that nonwhite farmers have endured, including land theft and the rejection of loan applications by banks and the federal government. The program designated aid to about 15,000 borrowers who receive loans directly from the federal government or have their bank loans guaranteed by the U.S.D.A. Those eligible included farmers and ranchers who have been subject to racial or ethnic prejudice, including those who are Black, Native American, Alaskan Native, Asian American, Pacific Islander or Hispanic.After the initiative was rolled out last year, it met swift opposition.Banks were unhappy that the loans would be repaid early, depriving them of interest payments. Groups of white farmers in Wisconsin, North Dakota, Oregon and Illinois sued the Agriculture Department, arguing that offering debt relief on the basis of skin color is discriminatory, suggesting that a successful Black farmer could have his debts cleared while a struggling white farm could go out of business. America First Legal, a group led by the former Trump administration official Stephen Miller, filed a lawsuit making a similar argument in U.S. District Court for the Northern District of Texas.Last June, before the money started flowing, a federal judge in Florida blocked the program on the basis that it applied “strictly on racial grounds” irrespective of any other factor.The delays have angered the Black farmers that the Biden administration and Democrats in Congress were trying to help. They argue that the law was poorly written and that the White House is not defending it forcefully enough in court out of fear that a legal defeat could undermine other policies that are predicated on race.Those concerns became even more pronounced late last year when the government sent thousands of letters to minority farmers who were behind on their loan payments warning that they faced foreclosure. The letters were sent automatically to any borrowers who were past due on their loans, including about a third of the 15,000 socially disadvantaged farmers who applied for the debt relief, according to the Agriculture Department.Leonard Jackson, a cattle farmer in Muskogee, Okla., received such a letter despite being told by the U.S.D.A. that he did not need to make loan payments because his $235,000 in debt would be paid off by the government. The letter was jarring for Mr. Jackson, whose father, a wheat and soybean farmer, had his farm equipment foreclosed on by the government years earlier. The prospect of losing his 33 cows, house and trailer was unfathomable.“They said that they were paying off everybody’s loans and not to make payments and then they sent this,” Mr. Jackson, 55, said.The legal fight over the funds has stirred widespread confusion, with Black and other farmers stuck in the middle. This year, the Federation of Southern Cooperatives has been fielding calls from minority farmers who said their financial problems have been compounded. It has become even harder for them to get access to credit now, they say, that the fate of the debt relief is unclear.“It has definitely caused a very significant panic and a lot of distress among our members,” said Dãnia Davy, director of land retention and advocacy at the Federation of Southern Cooperatives/Land Assistance Fund.Mr. Smith bought more equipment for his ranch when he thought aid was finally on the way. But now he’s deeper in debt.Montinique Monroe for The New York TimesThe Agriculture Department said that it was required by law to send the warnings but that the government had no intention of foreclosing on farms, citing a moratorium on such action that was put in place early last year because of the pandemic. After The New York Times inquired about the foreclosure letters, the U.S.D.A. sent borrowers who had received notices another letter late last month telling them to disregard the foreclosure threat.“We want borrowers to know the bottom line is, actions such as acceleration and foreclosure remain suspended for direct loan borrowers due to the pandemic,” Kate Waters, a department spokeswoman, said. “We remain under the moratorium, and we will continue to communicate with our borrowers so they understand their rights and understand their debt servicing options.”The more than 2,000 minority farmers who receive private loans that are guaranteed by the U.S.D.A. are not protected by the federal moratorium and could still face foreclosure. Once the moratorium ends, farmers will need to resume making their payments if the debt relief program or an alternative is not in place.Some Black farmers argue that the Agriculture Department, led by Secretary Tom Vilsack, was too slow to disburse the debt relief and allowed critics time to mount a legal assault on the law.The Biden administration has been left with few options but to let the legal process play out, which could take months or years. The White House had been hopeful that a new measure in Mr. Biden’s sweeping social policy and climate bill would ultimately provide the farmers the debt relief they have been expecting. But that bill has stalled in the Senate and is unlikely to pass in its current form.“While we continue to defend in court the relief in the American Rescue Plan, getting the broader relief provision that the House passed signed into law remains the surest and quickest way to help farmers in economic distress across the nation, including thousands and thousands of farmers of color,” Gene Sperling, the White House’s pandemic relief czar, said in a statement.For Black farmers, who have seen their ranks fall from more than a million to fewer than 40,000 in the last century amid industry consolidation and onerous loan terms, the disappointment is not surprising. John Boyd, president of the National Black Farmers Association, said that rather than hearing about more government reports on racial equity, Black farmers want to see results.“We need implementation, action and resources to farm,” Mr. Boyd said. More

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    Why Companies Struggled to Navigate Olympics Sponsorships

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    The debacle over Olympic sponsorship shows how the U.S.-China relationship has turned into a minefield for companies trying to do business in both countries.WASHINGTON — Companies usually shell out for Olympic sponsorship because it helps their business and reflects well on their brands. But this year, with the Olympics in Beijing, Procter & Gamble paid even more to try to prevent any negative fallout from being associated with China’s repressive and authoritarian government.The company, one of 13 “worldwide Olympic partners” that make the global sports competition possible, hired Washington lobbyists last year to successfully defeat legislation that would have barred sponsors of the Beijing Games from selling their products to the U.S. government. The provision would have blocked Pampers, Tide, Pringles and other Procter & Gamble products from military commissaries, to protest companies’ involvement in an event seen as legitimizing the Chinese government.“This amendment would punish P.&G. and the Olympic movement, including U.S. athletes,” Sean Mulvaney, the senior director for global government relations at Procter & Gamble, wrote in an email to congressional offices in August.Some of the world’s biggest companies are caught in an uncomfortable situation as they attempt to straddle a widening political gulf between the United States and China: What is good for business in one country is increasingly a liability in the other.China is the world’s biggest consumer market, and for decades, Chinese and American business interests have described their economic cooperation as a “win-win relationship.” But gradually, as China’s economic and military might have grown, Washington has taken the view that a win for China is a loss for the United States.The decision to locate the 2022 Olympic Games in Beijing has turned sponsorship, typically one of the marketing industry’s most prestigious opportunities, into a minefield.Companies that have sponsored the Olympics have attracted censure from politicians and human rights groups, who say such contracts imply tacit support of atrocities by the Chinese Communist Party, including human rights violations in Xinjiang, censorship of the media and mass surveillance of dissidents.“One thing our businesses, universities and sports leagues don’t seem to fully understand is that, to eat at the C.C.P.’s trough, you will have to turn into a pig,” Yaxue Cao, editor of ChinaChange.org, a website that covers civil society and human rights, told Congress this month.The tension is playing out in other areas as well, including with regards to Xinjiang, where millions of ethnic minorities have been detained, persecuted or forced into working in fields and factories. In June, the United States will enact a sweeping law that will expand restrictions on Xinjiang, giving the United States power to block imports made with any materials sourced from that region.Multinational firms that are trying to comply with these new import restrictions have found themselves facing costly backlashes in China, which denies any accusations of genocide. H&M, Nike and Intel have all blundered into public relations disasters for trying to remove Xinjiang from their supply chains.Explore the Games Propaganda Machine: China has used a variety of tools such as bots and fake social media accounts to promote a vision of the Games that is free of controversy.Aussie Pride: Australia has won more medals than ever before at the 2022 Winter Games. Could the country turn into a winter sports wonderland?At High Speed: The ‘Snow Dream’ train line, built to serve the Winter Olympics, has been a source of excitement — and a considerable expense.Reporter’s View: A typical day in Beijing for our reporters may include a 5 a.m. alarm, six buses, a pizza lunch and lots of live-blogging. For some, it’s the first time back in China in a while.Harsher penalties could be in store. Companies that try to sever ties with Xinjiang may run afoul of China’s anti-sanctions law, which allows the authorities to crack down on firms that comply with foreign regulations they see as discriminating against China.Beijing has also threatened to put companies that cut off supplies to China on an “unreliable entity list” that could result in penalties, though to date the list doesn’t appear to have any members.“Companies are between a rock and a hard place when it comes to complying with U.S. and Chinese law,” said Jake Colvin, the president of the National Foreign Trade Council, which represents companies that do business internationally.President Biden, while less antagonistic than his predecessor, has maintained many of the tough policies put in place by President Donald J. Trump, including hefty tariffs on Chinese goods and restrictions on exports of sensitive technology to Chinese firms.The Biden administration has shown little interest in forging trade deals to help companies do more business abroad. Instead, it is recruiting allies to ramp up pressure on China, including by boycotting the Olympics, and promoting huge investments in manufacturing and scientific research to compete with Beijing. The pressures are not only coming from the United States. Companies are increasingly facing a complicated global patchwork of export restrictions and data storage laws, including in the European Union. Chinese leaders have begun pursuing “wolf warrior” diplomacy, in which they are trying to teach other countries to think twice before crossing China, said Jim McGregor, chairman of APCO Worldwide’s greater China region.He said his company was telling clients to “try to comply with everybody, but don’t make a lot of noise about it — because if you’re noisy about complying in one country, the other country will come after you.”Some companies are responding by moving sensitive activities — like research that could trigger China’s anti-sanctions law, or audits of Xinjiang operations — out of China, said Isaac Stone Fish, the chief executive of Strategy Risks, a consultancy.An NBC production crew in Beijing. An effort to prevent Olympic sponsors, like NBC, from doing business with the U.S. government was cut from a defense bill last year.Gabriela Bhaskar/The New York TimesOthers, like Cisco, have scaled back their operations. Some have left China entirely, though usually not on terms they would choose. For example, Micron Technology, a chip-maker that has been a victim of intellectual property theft in China, is closing down a chip design team in Shanghai after competitors poached its employees.“Some companies are taking a step back and realizing that this is perhaps more trouble than it’s worth,” Mr. Stone Fish said.But many companies insist that they can’t be forced to choose between two of the world’s largest markets. Tesla, which counts China as one of its largest markets, opened a showroom in Xinjiang last month.“We can’t leave China, because China represents in some industries up to 50 percent of global demand and we have intense, deep supply and sales relationships,” said Craig Allen, the president of the U.S.-China Business Council.Companies see China as a foothold to serve Asia, Mr. Allen said, and China’s $17 trillion economy still presents “some of the best growth prospects anywhere.”“Very few companies are leaving China, but all are feeling that it’s risk up and that they need to be very careful so as to meet their legal obligations in both markets,” he said.American politicians of both parties are increasingly bent on forcing companies to pick a side.“To me, it’s completely appropriate to make these companies choose,” said Representative Michael Waltz, a Florida Republican who proposed the bill that would have prevented Olympic sponsors from doing business with the U.S. government.Mr. Waltz said participation in the Beijing Olympics sent a signal that the West was willing to turn a blind eye to Chinese atrocities for short-term profits.The amendment was ultimately cut out of a defense-spending bill last year after active and aggressive lobbying by Procter & Gamble, Coca-Cola, Intel, NBC, the U.S. Chamber of Commerce and others, Mr. Waltz said.Procter & Gamble’s lobbying disclosures show that, between April and December, it spent more than $2.4 million on in-house and outside lobbyists to try to sway Congress on a range of tax and trade issues, including the Beijing Winter Olympics Sponsor Accountability Act.Lobbying disclosures for Coca-Cola, Airbnb and Comcast, the parent company of NBC, also indicate the companies lobbied on issues related to the Olympics or “sports programming” last year.Procter & Gamble and Intel declined to comment. Coca-Cola said it had explained to lawmakers that the legislation would hurt American military families and businesses. NBC and the Chamber of Commerce did not respond to requests for comment.Many companies have argued they are sponsoring this year’s Games to show support for the athletes, not China’s system of government.In a July congressional hearing, where executives from Coca-Cola, Intel, Visa and Airbnb were also grilled about their sponsorship, Mr. Mulvaney said Procter & Gamble was using its partnership to encourage the International Olympic Committee to incorporate human rights principles into its oversight of the Games.“Corporate sponsors are being a bit unfairly maligned here,” Anna Ashton, a senior fellow at the Asia Society Policy Institute, said in an event hosted by the Center for Strategic and International Studies, a Washington think tank.Companies had signed contracts to support multiple iterations of the Games, and had no say over the host location, she said. And the funding they provide goes to support the Olympics and the athletes, not the Chinese government.“Sponsorship has hardly been an opportunity for companies this time around,” she said. More

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    Biden Administration Says China Failed Trade Commitments

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    In a new report, the administration detailed China’s violations of promises made both to the World Trade Organization and under a 2020 trade deal with the U.S.WASHINGTON — The Biden administration criticized China in a new report released Wednesday morning for failing to uphold a wide range of trade commitments, including promises it had made when it joined the World Trade Organization in 2001 and others in a trade deal signed with the Trump administration in 2020.In its annual assessment of China’s compliance with its obligations to the W.T.O., the Office of the United States Trade Representative excoriated the Chinese government for flouting the global trade body’s rules and its transparent, market-oriented approach. Instead, China expanded its state-led approach to its economy and trade, causing serious harm to workers and businesses around the world, particularly in industries targeted by its industrial plans, Katherine Tai, the U.S. trade representative, said in a statement.“China has not moved to embrace the market-oriented principles on which the W.T.O. and its rules are based, despite the representations that it made when it joined 20 years ago,” Ms. Tai said.Katherine Tai, the United States trade representative, accused China of failing to embrace the market-oriented principles of the World Trade Organization, which it joined in 2001.Fabrice Coffrini/Agence France-Presse — Getty ImagesThe report also criticized the trade deal signed by the Trump administration, in one of the first written assessments the Biden administration has provided of China’s progress toward the terms set out in that deal.The Biden administration has said it intends to hold China to the terms of that agreement, while also calling for a different approach to trade. But it has not clarified just how assertively it would enforce a deal it has described as fundamentally flawed.The report said that the deal had failed to address the most fundamental concerns the United States has with China’s approach to trade, and that the United States had serious concerns with China’s implementation of several of its commitments. Those included pledges to purchase U.S. goods and services, as well as promised reforms related to agriculture, particularly biotechnology, and an assessment China promised to conduct on the use in swine and cattle of ractopamine, a feed additive widely used in the United States that Beijing has banned.The United States has raised concerns about China’s progress during regular meetings between officials at various levels of government, the report said.Data released this month showed that China fell far short of satisfying commitments it had made in the trade deal signed with the Trump administration to purchase an additional $200 billion of goods and services by the end of last year. The Biden administration said its patience with China was wearing thin, but it has not yet clarified what action, if any, it would take in response.The report echoed many of the criticisms of China issued under the prior administration, including spelling out the World Trade Organization’s shortcomings in disciplining China’s trade violations and calling for measures to take on China outside the organization.But the report also appeared to take issue with the Trump administration’s attempt to decouple from China, arguing that the United States needed to invest in American workers and infrastructure to compete with China in an integrated global economy.“We cannot build a wall between the United States and China and assume that it will address the problems posed by China,” the report said.Beyond efforts at the World Trade Organization, the United States was pursuing several strategies to hold China to account, the report said. They included bilateral dialogues with China, including over its progress toward the commitments of the 2020 trade deal; cooperation with allies like Japan and Europe; and efforts to repurpose and expand domestic trade tools, like using tariffs to encourage companies to reduce their carbon emissions.“It is also apparent that existing trade tools need to be strengthened, and new trade tools need to be forged,” the report said. “China pursues unfair policies and practices that were not contemplated when many of the U.S. trade statutes were drafted decades ago, and we are therefore exploring ways in which to update our trade tools to counter them.” More

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    Fed nominees commit to not taking part in finance’s revolving door.

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    Three of President Biden’s nominees to the Federal Reserve committed to lawmakers that, if confirmed to their posts, they would not work in financial services for four years after leaving the Fed.The pledge comes amid growing concern about the revolving door between Washington and Wall Street.The three potential Fed governors in question — the economists Lisa D. Cook and Philip N. Jefferson and a longtime government official and lawyer, Sarah Bloom Raskin — said they would “commit not to seek employment or compensation” from any financial services company after leaving the board, which oversees the largest banks.Their promises came at the urging of Senator Elizabeth Warren, the Massachusetts Democrat who has criticized the so-called revolving door between government and finance. Fed officials regularly go to work for Wall Street after leaving the institution, making the commitment notable.“These are the strongest ethics standards ever agreed to by Federal Reserve Board nominees,” Ms. Warren said in a statement on Wednesday. “U.S. Senators and the American people can be confident that these public servants will make sound economic policy decisions in the public’s best interest.”Republicans have been questioning Ms. Raskin’s nomination by highlighting her stint on the board of directors for a financial technology company, Reserve Trust.The company got a critical account with the Fed — known as a master account — while Ms. Raskin was on the company’s board. The account provided the firm with advertisable benefits, like access to the Fed’s payments system.During her confirmation hearing before the Senate Committee on Banking, Housing and Urban Affairs last week, senators questioned whether she had used her previous positions at the Fed and Treasury to help secure the account. Ms. Raskin did not confirm or deny whether she had been in touch with the company’s local Fed bank while she sat on its board.The Federal Reserve Bank of Kansas City, which approved the master account, has said that it “did not deviate from its review process in evaluating this request.”Senator Patrick J. Toomey, Republican of Pennsylvania, asked Ms. Raskin to respond in writing by Wednesday about the Reserve Trust situation.Ms. Raskin, in her response, said she did “not recall any communications I made to help Reserve Trust obtain a master account. Had I done so, I would have abided by all applicable ethics rules in such communications.”Amanda Thompson, the communications director for Republicans on the Banking Committee, called those responses a “case of selective amnesia.”The White House has continued to stand behind its nominees. Christopher Meagher, a spokesman for the White House, called the Republican questioning “smears” and said that they “continue to fall flat in the face of scrutiny and facts.”Dr. Cook, Dr. Jefferson and Ms. Raskin are up for confirmation alongside Jerome H. Powell — who Mr. Biden renominated to be Fed chair — and Lael Brainard, a Fed governor who is the Biden administration’s pick for vice chair.Senator Sherrod Brown, Democrat of Ohio and the chairman of the Banking Committee, said last week that all five candidates would face a key committee vote on Feb. 15. More