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    Europe Wants to Build a Stronger Defense Industry, but Can’t Decide How

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    Conflicting political visions, competitive jockeying and American dominance stand in the way of a more coordinated and efficient military machine.France and Germany’s recent agreement to develop a new multibillion-dollar battlefield tank together was immediately hailed by the German defense minister, Boris Pistorius, as a “breakthrough” achievement.“It is a historic moment,” he said.His gushing was understandable. For seven years, political infighting, industrial rivalry and neglect had pooled like molasses around the project to build a next-generation tank, known as the Main Combat Ground System.Russia’s invasion of Ukraine more than two years ago jolted Europe out of complacency about military spending. After defense budgets were cut in the decades that followed the Soviet Union’s collapse, the war has reignited Europe’s efforts to build up its own military production capacity and near-empty arsenals.But the challenges that face Europe are about more than just money. Daunting political and logistical hurdles stand in the way of a more coordinated and efficient military machine. And they threaten to seriously hobble any rapid strengthening of Europe’s defense capabilities — even as tensions between Russia and its neighbors ratchet up.“Europe has 27 military industrial complexes, not just one,” said Max Bergmann, a program director at the Center for Strategic and International Studies in Washington.The North Atlantic Treaty Organization, which will celebrate its 75th anniversary this summer, still sets the overall defense strategy and spending goals for Europe, but it doesn’t control the equipment procurement process. Each NATO member has its own defense establishment, culture, priorities and favored companies, and each government retains final say on what to buy.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    U.S. and Europe Move Closer to Using Russian Assets to Help Ukraine

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    Finance ministers from the G7 nations are hoping to finalize a plan ahead of the group’s leaders meeting next month.The United States and Europe are coalescing around a plan to use interest earned on frozen Russian central bank assets to provide Ukraine with a loan to be used for military and economic assistance, potentially providing the country with a multibillion-dollar lifeline as Russia’s war effort intensifies.Treasury Secretary Janet L. Yellen said in an interview on Sunday that several options for using $300 billion in immobilized Russian assets remained on the table. But she said the most promising idea was for Group of 7 nations to issue a loan to Ukraine that would be backed by profits and interest income that is being earned on Russian assets held in Europe.Finance ministers from the Group of 7 will be meeting in Italy later this week in hopes of finalizing a plan that they can deliver to heads of state ahead of the group’s leaders meeting next month. The urgency to find a way to deliver more financial support to Ukraine has been mounting as the country’s efforts to fend off Russia have shown signs of faltering.“I think we see considerable interest among all of our partners in a loan structure that would bring forward the stream of windfall profits,” Ms. Yellen said during her flight to Germany, where she is holding meetings ahead of the Group of 7 summit. “It would generate a significant up-front amount that would help meet needs we anticipate Ukraine is going to have both militarily and through reconstruction.”For months, Western allies have been debating how far to go in using the Russian central bank assets. The United States believes that it would be legal under international law to confiscate the money and give it to Ukraine, but several European countries, including France and Germany, have been wary about the lawfulness of such a move and the precedent that it would set.Although the United States recently passed legislation that would give the Biden administration the authority to seize and confiscate Russian assets, the desire to act in unison with Europe has largely sidelined that idea.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Few Chinese Electric Cars Are Sold in U.S., but Industry Fears a Flood

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    Automakers in the United States and their supporters welcomed President Biden’s tariffs, saying they would protect domestic manufacturing and jobs from cheap Chinese vehicles.The Biden administration’s new tariffs on Chinese electric vehicles won’t have a huge immediate impact on American consumers or the car market because very few such cars are sold in the United States.But the decision reflects deep concern within the American automotive industry, which has grown increasingly worried about China’s ability to churn out cheap electric vehicles. American automakers welcomed the decision by the Biden administration on Tuesday to impose a 100 percent tariff on electric vehicles from China, saying those vehicles would undercut billions of dollars of investment in electric vehicle and battery factories in the United States.“Today’s announcement is a necessary response to combat the Chinese government’s unfair trade practices that endanger the future of our auto industry,” Senator Gary Peters, a Michigan Democrat, said in a statement. “It will help level the playing field, keep our auto industry competitive and support good-paying, union jobs here at home.”On Tuesday, President Biden announced a series of new and increased tariffs on certain Chinese-made goods, including a 25 percent duty on steel and aluminum and 50 percent levies on semiconductors and solar panels. The tariff on electric vehicles made in China was quadrupled from 25 percent. Chinese lithium-ion batteries for electric cars will now face a 25 percent tariff, up from 7.5 percent.The United States imports only a few makes — electric or gasoline — from China. One is the Polestar 2, an electric vehicle made in China by a Swedish automaker in which the Chinese company Zhejiang Geely has a controlling stake. In a statement, Polestar said it was evaluating the impact of Mr. Biden’s announcement.“We believe that free trade is essential to speed up the transition to more sustainable mobility through increased E.V. adoption,” the company said.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Chinese Exports Are Threatening Biden’s Industrial Agenda

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    The president is increasingly hitting back with tariffs and other measures meant to restrict imports, raising tensions with Beijing.President Biden’s trillion-dollar effort to invigorate American manufacturing and speed a transition to cleaner energy sources is colliding with a surge of cheap exports from China, threatening to wipe out the investment and jobs that are central to Mr. Biden’s economic agenda.Mr. Biden is weighing new measures to protect nascent industries like electric-vehicle production and solar-panel manufacturing from Chinese competition. On Wednesday in Pittsburgh, the president called for higher tariffs on Chinese steel and aluminum products and announced a new trade investigation into China’s heavily subsidized shipbuilding industry.“I’m not looking for a fight with China,” Mr. Biden said. “I’m looking for competition — and fair competition.”Unions, manufacturing groups and some economists say the administration may need to do much more to restrict Chinese imports if it hopes to ensure that Mr. Biden’s vast industrial initiatives are not swamped by lower-cost Chinese versions of the same emerging technologies.“It is a very clear and present danger, because the industrial policy of the Biden administration is largely focused on not the traditional low-skill, low-wage manufacturing, but new, high-tech manufacturing,” said Eswar Prasad, a Cornell University economist who specializes in trade policies.“Those are precisely the areas where China has upped its own investments,” he said.Both America and China are using large government subsidies to stoke economic growth and try to dominate what they believe will be the most important global markets of this century: the technologies meant to speed a global transition away from fossil fuels in order to avert catastrophic climate change.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    ‘Strike Madness’ Hits Germany While Its Economy Stumbles

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    A wave of strikes by German workers, feeling the sting of inflation and stagnant growth, is the latest sign of the bleak outlook for Europe’s economic powerhouse.For those striking at the gates of the SRW scrap metal plant, just outside Germany’s eastern city of Leipzig, time can be counted not just in days — 136 so far — but in the thousands of card games played, the liters of coffee imbibed and the armfuls of firewood burned.Or it can be measured by the length of Jonny Bohne’s beard. He vows not to shave until he returns to the job he has held for two decades. Wearing his red union baseball cap and tending the blaze inside an oil drum, Mr. Bohne, 56, looks like a scruffy Santa Claus.The dozens of workers at the SRW recycling center say their strike has become the longest in postwar German history — a dubious honor in a nation with a history of harmonious labor relations. (The previous record, 114 days, was held by shipyard workers in the northern city of Kiel who struck in the 1950s.)Jonny Bohne has vowed not to shave while on strike. It’s been awhile.Ingmar Nolting for The New York TimesWhile monthslong strikes may be commonplace in some other European countries like Spain, Belgium or France, where workers’ protests are something of a national pastime, Germany has long prided itself on nondisruptive collective bargaining.A wave of strikes this year has Germans asking whether that is now changing. By some measures, the first three months of 2024 have had the most strikes in the country in 25 years.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Flush With Investment, New U.S. Factories Face a Familiar Challenge

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    Worries are growing in Washington that a flood of Chinese products could put new American investments in clean energy and high-tech factories at risk.The Biden administration has begun pumping more than $2 trillion into U.S. factories and infrastructure, investing huge sums to try to strengthen American industry and fight climate change.But the effort is facing a familiar threat: a surge of low-priced products from China. That is drawing the attention of President Biden and his aides, who are considering new protectionist measures to make sure American industry can compete against Beijing.As U.S. factories spin up to produce electric vehicles, semiconductors and solar panels, China is flooding the market with similar goods, often at significantly lower prices than American competitors. A similar influx is also hitting the European market.American executives and officials argue that China’s actions violate global trade rules. The concerns are spurring new calls in America and Europe for higher tariffs on Chinese imports, potentially escalating what is already a contentious economic relationship between China and the West.The Chinese imports mirror a surge that undercut the Obama administration’s efforts to seed domestic solar manufacturing after the 2008 financial crisis and drove some American start-ups out of business. The administration retaliated with tariffs on solar equipment from China, sparking a dispute at the World Trade Organization.Some Biden officials are concerned that Chinese products could once again threaten the survival of U.S. factories at a moment when the government is spending huge sums to jump-start domestic manufacturing. Administration officials appear likely to raise tariffs on electric vehicles and other strategic goods from China, as part of a review of the levies former President Donald J. Trump imposed on China four years ago, according to people familiar with the matter. That review, which has been underway since Mr. Biden took office, could finally conclude in the next few months.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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    World Bank Warns of Energy Price Surge if Mideast War Spreads

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    A new economic report predicted a year of weak growth and said the world faced a decade of “wasted opportunity.”The global economy is at risk of a “wasted” decade and the weakest stretch of growth in 30 years, the World Bank warned on Tuesday, saying a sluggish recovery from the pandemic and crippling wars in Ukraine and the Middle East are expected to weigh heavily on output.In its semiannual Global Economic Prospects report, the World Bank projected that the growth in world output will slow further in 2024, declining to 2.4 percent from 2.6 percent. Although the global economy has been surprisingly resilient, the report warned that its forecasts were subject to heightened uncertainty because of the two wars, a diminished Chinese economy and the increasing risks of natural disasters caused by global warming.The converging crises in recent years have put the world economy on track for the weakest half-decade in 30 years.“Without a major course correction, the 2020s will go down as a decade of wasted opportunity,” said Indermit Gill, the World Bank Group’s chief economist.Global growth is projected to slow for the third straight year in 2024. Developing countries are bearing the brunt of the slowdown, with high borrowing costs and anemic trade volumes weighing on their economies.Although policymakers have made progress in bringing inflation down from its 2022 high, the war in Gaza between Israel and Hamas is threatening to become a broader conflict that could spur a new bout of price increases by causing the cost of oil and food to spike.“The recent conflict in the Middle East, coming on top of the Russian Federation’s invasion of Ukraine, has heightened geopolitical risks,” the report said. “Conflict escalation could lead to surging energy prices, with broader implications for global activity and inflation.”The recent drone and missile attacks in the Red Sea by the Iranian-backed Houthi militia have already affected international commerce by pushing up oil prices and freight and insurance rates while diverting maritime traffic to a much longer and costlier route around Africa.Economists at Capital Economics wrote in a report this month that the redirecting of trade ships away from the Red Sea is unlikely to lead to a resurgence of global inflation, but they suggested that if the war became a broader regional conflict it could pose inflationary risks.The disruptions to shipping routes follow a year in which, other than during worldwide recessions, global trade growth was the slowest in the past 50 years, according to the World Bank.If the conflict in the Middle East does not widen, the World Bank expects that global oil prices will edge lower this year as growth weakens and production of oil increases.Beyond the ongoing wars, signs of fragility in the Chinese economy also remain a worry. World Bank economists pointed to lingering weakness in China’s property sector and lackluster consumer spending as evidence that the world’s second-largest economy will continue to underperform this year. They suggested that could pose headwinds for some of China’s trading partners in Asia.Chinese growth is expected to slow to 4.5 percent this year from 5.2 percent in 2023. Outside the pandemic-induced downturn, that would be China’s slowest expansion in 30 years.Europe and the United States are also poised for another year of weak output in 2024.The World Bank projects that economic growth in the euro area will rise to 0.7 percent in 2024 from 0.4 percent in 2023. Despite easing inflation and rising wages, tight credit conditions are expected to constrain economic activity.Growth in the United States is expected to slow to 1.6 percent this year from 2.5 percent in 2023. The World Bank attributes the slowdown to elevated interest rates — which are at their highest level in 22 years — and a pullback in government spending. Businesses are expected to be cautious about investing because of economic and political uncertainty, including around the 2024 election.Despite such slow growth, Biden administration officials say they deserve credit for corralling inflation while keeping the economy afloat.“I think we’ve made tremendous progress,” Treasury Secretary Janet L. Yellen told reporters on Monday. “It’s very unusual to have a period in which inflation declines as much it has while the labor market remains strong.”She added: “But that’s what we’re seeing, and that’s why I say we’re enjoying a soft landing.” More

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    Red Sea Shipping Halt Is Latest Risk to Global Economy

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    Next year could see increasing volatility as persistent military conflicts and economic uncertainty influence voting in national elections across the globe.The attacks on crucial shipping traffic in the Red Sea straits by a determined band of militants in Yemen — a spillover from the Israeli-Hamas war in Gaza — is injecting a new dose of instability into a world economy already struggling with mounting geopolitical tensions.The risk of escalating conflict in the Middle East is the latest in a string of unpredictable crises, including the Covid-19 pandemic and the war in Ukraine, that have landed like swipes of a bear claw on the global economy, smacking it off course and leaving scars.As if that weren’t enough, more volatility lies ahead in the form of a wave of national elections whose repercussions could be deep and long. More than two billion people in roughly 50 countries, including India, Indonesia, Mexico, South Africa, the United States and the 27 nations of the European Parliament, will head to the polls. Altogether, participants in 2024’s elections olympiad account for 60 percent of the world’s economic output.In robust democracies, elections are taking place as mistrust in government is rising, electorates are bitterly divided and there is a profound and abiding anxiety over economic prospects.A ship crossing the Suez Canal toward the Red Sea. Attacks on the Red Sea have pushed up freight and insurance rates.Mohamed Hossam/EPA, via ShutterstockA billboard promoting presidential elections in Russia, which will take place in March.Dmitri Lovetsky/Associated PressEven in countries where elections are neither free nor fair, leaders are sensitive to the economy’s health. President Vladimir V. Putin’s decision this fall to require exporters to convert foreign currency into rubles was probably done with an eye on propping up the ruble and tamping down prices in the run-up to Russia’s presidential elections in March.The winners will determine crucial policy decisions affecting factory subsidies, tax breaks, technology transfers, the development of artificial intelligence, regulatory controls, trade barriers, investments, debt relief and the energy transition.A rash of electoral victories that carry angry populists into power could push governments toward tighter control of trade, foreign investment and immigration. Such policies, said Diane Coyle, a professor of public policy at the University of Cambridge, could tip the global economy into “a very different world than the one that we have been used to.”In many places, skepticism about globalization has been fueled by stagnant incomes, declining standards of living and growing inequality. Nonetheless, Ms. Coyle said, “a world of shrinking trade is a world of shrinking income.”And that raises the possibility of a “vicious cycle,” because the election of right-wing nationalists is likely to further weaken global growth and bruise economic fortunes, she warned.A campaign rally for former President Donald J. Trump in New Hampshire in December.Doug Mills/The New York TimesA line of migrants on their way to a Border Patrol processing center at the U.S.-Mexico border. Immigration will be a hot topic in upcoming elections.Rebecca Noble for The New York TimesMany economists have compared recent economic events to those of the 1970s, but the decade that Ms. Coyle said came to mind was the 1930s, when political upheavals and financial imbalances “played out into populism and declining trade and then extreme politics.”The biggest election next year is in India. Currently the world’s fastest-growing economy, it is jockeying to compete with China as the world’s manufacturing hub. Taiwan’s presidential election in January has the potential to ratchet up tensions between the United States and China. In Mexico, the vote will affect the government’s approach to energy and foreign investment. And a new president in Indonesia could shift policies on critical minerals like nickel.The U.S. presidential election, of course, will be the most significant by far for the world economy. The approaching contest is already affecting decision-making. Last week, Washington and Brussels agreed to suspend tariffs on European steel and aluminum and on American whiskey and motorcycles until after the election.The deal enables President Biden to appear to take a tough stance on trade deals as he battles for votes. Former President Donald J. Trump, the likely Republican candidate, has championed protectionist trade policies and proposed slapping a 10 percent tariff on all goods coming into the United States — a combative move that would inevitably lead other countries to retaliate.Mr. Trump, who has echoed authoritarian leaders, has also indicated that he would step back from America’s partnership with Europe, withdraw support for Ukraine and pursue a more confrontational stance toward China.Workers on a car assembly line in Hefei, China. Beijing has provided enormous incentives for electric vehicles.Qilai Shen for The New York TimesA shipyard in India, which is jockeying to compete with China as the world’s largest manufacturing hub.Atul Loke for The New York Times“The outcome of the elections could lead to far-reaching shifts in domestic and foreign policy issues, including on climate change, regulations and global alliances,” the consulting firm EY-Parthenon concluded in a recent report.Next year’s global economic outlook so far is mixed. Growth in most corners of the world remains slow, and dozens of developing countries are in danger of defaulting on their sovereign debts. On the positive side of the ledger, the rapid fall in inflation is nudging central bankers to reduce interest rates or at least halt their rise. Reduced borrowing costs are generally a spur to investment and home buying.As the world continues to fracture into uneasy alliances and rival blocs, security concerns are likely to loom even larger in economic decisions than they have so far.China, India and Turkey stepped up to buy Russian oil, gas and coal after Europe sharply reduced its purchases in the wake of Moscow’s invasion of Ukraine. At the same time, tensions between China and the United States spurred Washington to respond to years of strong-handed industrial support from Beijing by providing enormous incentives for electric vehicles, semiconductors and other items deemed essential for national security.A protest in Yemen on Friday against the operation to safeguard trade and protect ships in the Red Sea.Osamah Yahya/EPA, via ShutterstockThe drone and missile attacks in the Red Sea by Iranian-backed Houthi militia are a further sign of increasing fragmentation.In the last couple of months, there has been a rise in smaller players like Yemen, Hamas, Azerbaijan and Venezuela that are seeking to change the status quo, said Courtney Rickert McCaffrey, a geopolitical analyst at EY-Parthenon and an author of the recent report.“Even if these conflicts are smaller, they can still affect global supply chains in unexpected ways,” she said. “Geopolitical power is becoming more dispersed,” and that increases volatility.The Houthi assaults on vessels from around the world in the Bab-el-Mandeb strait — the aptly named Gate of Grief — on the southern end of the Red Sea have pushed up freight and insurance rates and oil prices while diverting marine traffic to a much longer and costlier route around Africa.Last week, the United States said it would expand a military coalition to ensure the safety of ships passing through this commercial pathway, through which 12 percent of global trade passes. It is the biggest rerouting of worldwide trade since Russia’s invasion of Ukraine in February 2022.Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the impact of the attacks had so far been limited. “From an economic perspective, we’re not seeing huge increase in oil and gas prices,” Mr. Vistesen said, although he acknowledged that the Red Sea assaults were the “most obvious near-term flashpoint.”Uncertainty does have a dampening effect on the economy, though. Businesses tend to adopt a wait-and-see attitude when it comes to investment, expansions and hiring.“Continuing volatility in geopolitical and geoeconomic relations between major economies is the biggest concern for chief risk officers in both the public and private sectors,” a midyear survey by the World Economic Forum found.With persistent military conflicts, increasing bouts of extreme weather and a slew of major elections ahead, it’s likely that 2024 will bring more of the same. More