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    U.S. escalates sanctions with a freeze on Russian central bank assets.

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    The Treasury Department on Monday moved to further cut off Russia from the global economy, announcing that it would immobilize Russian Central Bank assets that are held in the United States and impose sanctions on the Russian Direct Investment Fund, a sovereign wealth fund that is run by a close ally of President Vladimir V. Putin.The moves are meant to curb Russia’s ability to use its war chest of international reserves to blunt the impact of sanctions that the United States and European allies have enacted in response to Russia’s invasion of Ukraine.“The unprecedented action we are taking today will significantly limit Russia’s ability to use assets to finance its destabilizing activities, and target the funds Putin and his inner circle depend on to enable his invasion of Ukraine,” Treasury Secretary Janet L. Yellen said in a statement.As a result of the sanctions, Americans are barred from taking part in any transactions involving the Russian Central Bank, Russia’s National Wealth Fund or the Russian Ministry of Finance.The moves represent a significant escalation of U.S. sanctions, although the Treasury Department said it was making an exemption to ensure that transactions related to Russia’s energy exports can continue. It is issuing a “general license” to authorize certain energy-related transactions with the Russian Central Bank.On Saturday, the European Commission, Britain, Canada, France, Germany, Italy and the United States said they would remove some Russian banks from the SWIFT financial messaging system, essentially barring them from international transactions, and impose new restrictions on Russia’s Central Bank to prevent it from using its large international reserves to sidestep sanctions.Russia has spent the last several years bolstering its defenses against sanctions, amassing $643 billion in foreign currency reserves in part by diverting its oil and gas revenues. New restrictions by the United States and its allies against selling rubles to Russia aim to undercut the country’s ability to support its currency in the face of new sanctions on its financial sector. More

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    Before Ukraine Invasion, Russia and China Cemented Economic Ties

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    Facing a wary United States and worried about depending on imports by sea, China is buying more energy and food from its northern neighbor.BEIJING — As Russia wreaks havoc in Ukraine, Moscow has a powerful economic ally to help it resist Western sanctions: China.Chinese purchases of oil from Russia in December surpassed its purchases from Saudi Arabia. Six days before the military campaign began, Russia announced a yearslong deal to sell 100 million tons of coal to China — a contract worth more than $20 billion. And hours before Russia began bombing Ukraine, China agreed to buy Russian wheat despite concerns about plant diseases.In a throwback to the 1950s, when Mao Zedong worked closely with Joseph Stalin and then Nikita Khrushchev, China is again drawing close to Russia. As the United States and the European Union have become wary of China, Beijing’s leaders have decided that their best geopolitical prospects lie in marrying their vast industrial might with Russia’s formidable natural resources.Recent food and energy deals are just the latest signals of China’s economic alignment with Russia.“What happened up to now is only a beginning for both the Russian expansionism by force and the Chinese economic and financial support to Russia,” Shi Yinhong, a professor of international relations at Renmin University in Beijing, said in a text message. “This does not mean that China directly supports in any degree that expansionism — this only means that Beijing strongly feels the necessity to maintain and boost strategic partnership with Moscow.”The United States and the European Union are hoping that sanctions force Russia to reconsider its policies. But Wang Wenbin, the Chinese foreign ministry’s spokesman, said at a briefing on Friday that China opposed the use of sanctions.“Sanctions are never an effective way to solve the problems,” he said. “I hope relevant parties will still try to solve the problem through dialogue and consultation.”At the same time, Russia’s invasion of Ukraine has imposed an awkward diplomatic quandary on China by violating the principle of national sovereignty that the Chinese leaders regard as sacrosanct. While President Xi Jinping of China has not criticized Russia publicly, he could use his country’s economic relationship with its northern neighbor as leverage to persuade the Russians to resolve the crisis quickly.Mr. Xi and President Vladimir V. Putin of Russia spoke by phone on Friday. An official Chinese statement said afterward that Mr. Xi had expressed support for Russia in negotiating an agreement with Ukraine — a stance that Mr. Putin has also favored, provided that Ukraine accepts his terms.Until now, much of China’s energy and food imports came across seas patrolled by the U.S. or Indian navies. As China’s leaders have focused lately on the possibility of conflict, with military spending last year growing four times as fast as other government spending, they have emphasized greater reliance on Russia for crucial supplies.China and Russia share a nearly 2,700-mile border, and in recent years China has become Russia’s largest source of imports and the biggest destination for its exports.“Given the geopolitical tensions, Russia is a very natural geopolitical partner,” said Andy Mok, a senior research fellow at the Center for China and Globalization in Beijing.Initial Western sanctions on Russia have focused on limiting technology exports and imposing financial penalties. For now, U.S. officials have avoided targeting consumer goods, agricultural products and energy, to try to avoid harming ordinary people and further fueling inflation.China is the world’s dominant manufacturer of electronics, machinery and other manufactured goods, and has been supplying them to Russia in exchange for food and energy.A train carrying coal in Yekaterinburg, Russia, in 2020. China’s imports of Russian coal have more than doubled in the past three years.Maxim Babenko for The New York TimesThe new cornerstone of relations between China and Russia is the Sino-Russian nonaggression pact concluded in Beijing on Feb. 4. Mr. Xi and Mr. Putin reached the deal hours before the opening ceremony of the Beijing Winter Olympics and issued a statement saying the countries’ friendship “has no bounds.”The pact freed Mr. Putin to move troops and military equipment from Russia’s border with China to its border with Ukraine while ushering in closer economic cooperation.“The joint statement is strong and has lasting consequences for the new world order,” said Jean-Pierre Cabestan, a research professor of political science at Hong Kong Baptist University.The Chinese and Russian governments share many values, particularly their antipathy to sanctions the West imposes on human-rights grounds. “The two sides firmly believe that defending democracy and human rights should not be used as a tool to exert pressure on other countries,” their pact on Feb. 4 said.When the Obama administration imposed sanctions on Russia after its invasion of Ukraine’s Crimea region in 2014, China helped Russia evade them.It is not clear if China will help Russia evade sanctions put in place this week. On Tuesday, the Biden administration added to previous measures by announcing sanctions against Russia’s two largest financial institutions and sweeping restrictions on advanced technologies that can be exported to Russia. The technological curbs, when taken in concert with allies, would block roughly a fifth of Russian imports, the administration said.Chinese companies that circumvent those rules could face escalating punishment by the United States, including criminal and civil penalties, said Martin Chorzempa, a senior fellow at the Peterson Institute for International Economics. Those businesses could also be cut off from American technology and the financial system.ZTE and Huawei, two Chinese firms that were barred from receiving American technological exports, attracted the attention of the U.S. government in part for evading sanctions on Iran.“The interesting question is: Is China going to comply with this?” Mr. Chorzempa said. China also has a law designed to penalize companies for following extraterritorial sanctions by countries like the United States, he said, all factors that “could put companies in a real bind.”“If they don’t comply with the U.S., they’re in trouble with the U.S., but if they don’t comply with China, they could also face penalties in China,” he said.Of course, collecting fines from companies that are unwilling to pay and monitoring whether businesses comply with the rules could be difficult, Mr. Chorzempa added. “It’s already proving difficult to monitor the things that are already controlled, and if you expand that list, that’s going to be a real challenge to verify what’s going to Russia,” he said.Russia’s Attack on Ukraine and the Global EconomyCard 1 of 6A rising concern. More

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    Ukraine War Strains North Africa Economies

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    Egypt imports most of its wheat from Russia and Ukraine, and is looking for alternative suppliers. And Tunisia was struggling to pay for grain imports even before the conflict.CAIRO — On the way to the bakery, Mona Mohammed realized Russia’s war on Ukraine might have something to do with her.Ms. Mohammed, 43, said she rarely pays attention to the news, but as she walked through her working-class Cairo neighborhood of Sayyida Zeinab on Friday morning, she overheard a few people fretting about the fact that Egypt imports most of its wheat from Russia and Ukraine.War meant less wheat; war meant more expensive wheat. War meant that Egyptians whose budgets were already crimped from months of rising prices might soon have to pay more for the round loaves of aish baladi, or country bread, that contribute more calories and protein to the Egyptian diet than anything else.“How much more expensive can things get?” Ms. Mohammed said as she waited to collect her government-subsidized loaves from the bakeryRussia’s invasion of Ukraine this week threatens to further strain economies across the Middle East already burdened by the pandemic, drought and conflict. As usual, the poorest have had it the worst, reckoning with inflated food costs and scarcer jobs — a state of affairs that recalled the lead-up to 2011, when soaring bread prices helped propel anti-government protesters into the streets in what came to be known as the Arab Spring.In a region where bread keeps hundreds of millions of people from hunger, anxiety at the bakeries spells trouble.In Egypt, the world’s top importer of wheat, the government was moving in the wake of the Russian invasion to find alternative grain suppliers. In Morocco, where the worst drought in three decades was pushing up food prices, the Ukraine crisis was set to exacerbate the inflation that has caused protests to break out. Tunisia was already struggling to pay for grain shipments before the conflict broke out; the war seemed likely to complicate the cash-strapped government’s efforts to avert a looming economic collapse.Harvesting wheat in Luxor, Egypt.Khaled Elfiqi/EPA, via ShutterstockBetween April 2020 and December 2021, the price of wheat increased 80 percent, according to data from the International Monetary Fund. North Africa and the Middle East, the largest buyers of Russian and Ukrainian wheat, were experiencing their worst droughts in over 20 years, said Sara Menker, the chief executive of Gro Intelligence, an artificial intelligence platform that analyzes global climate and crops.“This has the potential to upend global trade flows, further fuel inflation, and create even more geopolitical tensions around the world,” she said.After years of mismanaging their water supplies and agricultural industries, countries like Egypt, Algeria, Tunisia and Morocco cannot afford to feed their own populations without importing food — and heavily subsidizing it. In recent years, the number of undernourished people in the Arab world has increased because of the overreliance on food imports, as well as a scarcity of arable land and rapid population growth.Beyond its effect on the price of bread, the uncertainty and turmoil brought on by the war will push up interest rates and lower access to credit, which, in turn, would quickly force governments to spend more to service their high debts and squeeze essential spending on health care, education, wages and public investments, said Ishac Diwan, an economist specializing in the Arab world at Paris Sciences et Lettres university.He predicted a rise in economic pressure on Egypt, Tunisia, Jordan and Morocco, warning that Egypt and Tunisia in particular could see peril to their banking sectors, which hold a large share of the public debt.Egypt is also heavily dependent on tourism from Russia, which has helped its tourism industry recover from the Covid-19 pandemic, giving the country extra cause for alarm.Global inflation and supply chain issues stemming from the pandemic have also raised the price of pasta in Egypt by a third over the last month. Cooking oil was up. Meat was up. Nearly everything was up.But most important, bread, the cost of which had already risen by about 50 percent at non-subsidized bakeries over the last four months; a five-pound note (about 30 cents) now buys only about seven loaves of bread, down from 10, bakery employees said.Egyptians, about a third of whom live on less than $1.50 a day, rely on bread for a third of their calories and 45 percent of their protein, according to the Food and Agriculture Organization, a United Nations agency.Mona Fathy, 36, serving food to her children in her home, in the impoverished neighborhood of El-Ayyat in Giza, Egypt.Mohamed Abd El Ghany/ReutersGovernment officials said on Thursday that Egypt had enough grain reserves and domestically produced wheat to last the country until November. But because of rising import prices President Abdel Fatteh el-Sisi last year announced that Egypt would raise subsidized bread prices this year, risking public fury.“Of course I’m worried,” said Karim Khalaf, 23, who was collecting and stacking baladi loaves as they slipped out of the oven, steaming slightly, in a bakery in Sayyida Zeinab on Friday morning. “My salary hasn’t changed, but now I’m spending more than I’m making.”Morocco, where the all-important agriculture sector employs about 45 percent of the work force, is facing an economic crisis precipitated by global inflation, a surge of food and oil prices, and the worst drought in three decades.Anti-government protests that erupted on Sunday suggested that many Moroccans have lost patience with their six-month-old government as they struggle to make ends meet two years into a pandemic that annihilated the once-lucrative tourism industry.Understand Russia’s Attack on UkraineCard 1 of 7What is at the root of this invasion? More

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    Why the Toughest Sanctions on Russia Are the Hardest for Europe to Wield

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    Moscow relies on the money it makes by selling oil and gas, but that energy fuels Europe’s economy and heats its homes.The punishing sanctions that the United States and European Union have so far announced against Russia for its invasion of Ukraine include shutting the government and banks out of global financial markets, restricting technology exports and freezing assets of influential Russians. Noticeably missing from that list is a reprisal that might cause Russia the most pain: choking off the export of Russian fuel.The omission is not surprising. In recent years, the European Union has received nearly 40 percent of its gas and more than a quarter of its oil from Russia. That energy heats Europe’s homes, powers its factories and fuels its vehicles, while pumping enormous sums of money into the Russian economy.How each country’s dependence on Russian gas has changedShare of total natural gas imports from Russia More

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    Why didn’t the U.S. cut off Russia from SWIFT? It’s complicated.

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    President Biden said on Thursday that the United States and Europe were united in their efforts to confront Russian aggression toward Ukraine with aggressive sanctions. However, there was one area where he suggested disagreement: SWIFT.The Belgian messaging service, formally known as the Society for Worldwide Interbank Financial Telecommunications, connects more than 11,000 financial institutions around the world. It is viewed as a potential nuclear option in the world of sanctions because, if Russia was kicked off SWIFT, the nation would essentially be severed from much of the global financial system.But doing so would not be simple and could come with its own set of costly complications for countries outside Russia, many of which are dependent on the country for energy, wheat and other commodities. That has made some nations skittish about pulling the trigger.SWIFT is a global cooperative of financial institutions that began in 1973 when 239 banks from 15 countries got together to figure out how to best handle cross-border payments. It does not actually hold or transfer funds, but it allows banks and other financial companies to alert one another of transactions that are about to take place.Blocking Russia from SWIFT would curb its ability to conduct international financial transactions by forcing importers, exporters and banks to find new ways to transmit payment instructions. Because of Europe’s heavy reliance on Russian energy exports, analysts said, there is a reluctance among some euro area leaders to take that step and risk those purchases by making doing business with Russia more costly and complicated.The Financial Times reported on Thursday that Prime Minister Boris Johnson of Britain was pushing hard for Russia to be removed from SWIFT, while Chancellor Olaf Scholz of Germany said such a move should not be included in a European Union sanctions package.Mr. Biden made the case on Thursday that the sanctions the United States imposed on Russian financial institutions would be as consequential as excising Russia from SWIFT. He said kicking Russia off the platform remains “an option” but that most of Europe opposes such a move for now.“It is always an option,” Mr. Biden said. “But right now, that’s not the position that the rest of Europe wishes to take.”The United States and Europe disagreed on whether to oust a country from SWIFT before, most recently in 2018, when the Trump administration wanted to cut Iran’s access. Ultimately, SWIFT cut ties to Iranian banks out of fear of being in violation of sanctions against that country.Still, sanctions experts said that SWIFT was often overhyped as a tool and that cutting access could actually backfire by forcing Russia to find alternate ways to participate in the global economy, including forging stronger ties with China or developing a digital currency.Russia’s Attack on Ukraine and the Global EconomyCard 1 of 6A rising concern. More

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    Ukraine Crisis: What Happens Next for the Rest of the World?

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    Europe faces a new refugee crisis, and harsh economic penalties to punish Russia are expected to reverberate worldwide.WASHINGTON — Much of the world woke up on Thursday to the specter of an all-out war in Europe after President Vladimir V. Putin of Russia ordered his troops to invade Ukraine. That left millions of people — in Ukraine and Eastern Europe, but also in the United States and elsewhere — wondering how the conflict would affect their lives.At least 40 Ukrainian solders were reported killed in the hours after the invasion, with estimates of tens of thousands of deaths over the course of the conflict. But beyond the anticipated bloodshed, economic penalties to punish Russia will reverberate worldwide.Rising energy costs and potentially slowing supply chains will take their toll on consumers. Russian cyberattacks could cripple electronic infrastructure. A new refugee crisis will require international assistance. And an era of relative calm in the West that has pervaded since the end of the Cold War might be coming to a close.Here is what might happen next on the military, economic and diplomatic fronts.More military forces head to NATO’s eastern borders.Many of the U.S. troops who arrived in Poland this month have been working with Polish forces to set up processing centers to help people fleeing Ukraine.Czarek Sokolowski/Associated PressNATO announced on Thursday that it was sending reinforcements to its eastern flank, joining some 6,500 U.S. troops the Pentagon has already dispatched to Eastern Europe and the Baltics.“We are deploying additional defensive land and air forces to the eastern part of the alliance, as well as additional maritime assets,” NATO said in a statement. “We have increased the readiness of our forces to respond to all contingencies.”The Pentagon is also repositioning about 1,000 troops in Europe. About 800 U.S. troops are moving to the Baltics from Italy; 20 Apache helicopters are heading to the Baltics from Germany, and 12 Apaches are going to Poland from Greece. Eight F-35 strike fighters are heading to Lithuania, Estonia and Romania from Germany, the Pentagon said.In addition, U.S. Army troops, including those from the 82nd and 101st Airborne divisions, are preparing to move closer to Poland’s border with Ukraine to help process people fleeing the country, an Army spokesman said on Thursday.Many of the 5,500 troops from the 18th Airborne Corps who arrived in Poland this month have been working with the State Department and Polish forces to set up three processing centers near the border to help deal with tens of thousands of people, including Americans, who are expected to flee Ukraine.In Jasionka, Poland, an indoor arena has been outfitted with bunk beds and supplies for up to 500 people; U.S. officials say that capacity could be quickly expanded. In Austria, Chancellor Karl Nehammer said on Wednesday that he was prepared to accept refugees. The State Department and the U.S. Agency for International Development are funding relief organizations that are currently providing food, water, shelter and emergency health care to people in the region who have fled to escape the violence.In the days to come, the C.I.A. will assess what kind of assistance it can provide to Ukraine. If a Ukrainian resistance develops in parts of the country that Russia seeks to control, the agency could secretly supply partisan forces with intelligence and, potentially, armaments.“We need to support the resistance to the invasion and the occupation in all ways possible,” said Mick Mulroy, a former C.I.A. paramilitary officer and senior Pentagon official in the Trump administration. “Our special operations and intelligence assets with an extensive knowledge base from 20 years of fighting insurgencies should be put to immediate use.”‘Severe’ sanctions from the U.S. and Europe.The Treasury Department is likely to put one or more Russian state-owned banks on the agency’s list for the harshest sanctions.Natalia Kolesnikova/Agence France-Presse — Getty ImagesPresident Biden on Thursday plans to announce “severe sanctions” against Russia to try to deter Moscow from carrying out further violence in Ukraine and to punish it for its actions, U.S. officials said.The next set of economic sanctions is expected to be much harsher than what U.S. officials had described as a first tranche that was imposed on Monday and Tuesday. Mr. Biden is likely to order the Treasury Department to put one or more large Russian state-owned banks on the agency’s list for the harshest sanctions, known as the S.D.N. list. That would cut off the banks from commerce and exchanges with much of the world and affect many other Russian business operations.The Biden administration said on Tuesday that it was imposing that kind of sanctions on two banks, VEB and PSB, but those are policy banks with no retail operations in Russia.Administration officials have studied how sanctions would affect each of the big banks, including Sberbank and VTB, Russia’s two largest banks. Sberbank has about a third of the assets in the country’s banking sector, and VTB has more than 15 percent. Some experts are skeptical that the administration would put those two banks on the S.D.N. list for fear of the consequences for the Russian and global economies. For now, U.S. officials are not ready to cut off all Russian banks from Swift, the important Belgian money transfer system used by more than 11,000 financial institutions worldwide.The Treasury Department has other sanctions lists that would impose costs while inflicting less widespread suffering. For example, it could put a bank on a list that prevents it from doing any transactions involving dollars. Many international commercial transactions are done in U.S. dollars, the currency that underpins the global economy.The Treasury Department is also expected to put more Russian officials, businesspeople and companies on the sanctions lists.By Thursday afternoon in Russia, the nation’s stock market had fallen nearly 40 percent.The Commerce Department has been making plans to restrict the export of certain American technologies to Russia, a tactic that the Trump administration used to hobble Huawei, the Chinese telecommunications company. The controls would damage the supply chain for some Russian sectors. U.S. officials said their targets included the defense industry and the oil and gas industry.European officials are expected to announce sanctions similar to many of the ones planned by the United States, as they did this week. However, they have been more wary of imposing the harshest sanctions because of the continent’s robust trade with Russia.Although Mr. Biden has said he will contemplate any possible sanctions, U.S. officials for now do not plan big disruptions to Russia’s energy exports, which are the pillar of the country’s economy. Europe relies on the products, and surging oil prices worldwide would cause greater inflation and more problems for politicians. However, Germany announces this week that it would not certify Nord Stream 2, a new natural gas pipeline that connects Russia and Western Europe. On Wednesday Mr. Biden announced sanctions on a subsidiary of Gazprom, the large Russian energy company, which built the pipeline and had planned to operate it.Understand Russia’s Attack on UkraineCard 1 of 7What is at the root of this invasion? 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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    What Russia's Conflict in Ukraine Means for the U.S. Economy

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    Russia’s threatened invasion of Ukraine could have economic repercussions globally and in the United States, ramping up uncertainty, roiling commodity markets and potentially pushing up inflation as gas and food prices rise around the world.Russia is a major producer of oil and natural gas, and the brewing geopolitical conflict has sent prices of both sharply higher in recent weeks. It is also the world’s largest wheat exporter, and is a major food supplier to Europe.The United States imports relatively little directly from Russia, but a commodities crunch caused by a conflict could have knock-on effects that at least temporarily drive up prices for raw materials and finished goods when much of the world, including the United States, is experiencing rapid inflation.Global unrest could also spook American consumers, prompting them to cut back on spending and other economic activity. If the slowdown were to become severe, it could make it harder for the Federal Reserve, which is planning to raise interest rates in March, to decide how quickly and how aggressively to increase borrowing costs. Central bankers noted in minutes from their most recent meeting that geopolitical risks “could cause increases in global energy prices or exacerbate global supply shortages,” but also that they were a risk to the outlook for growth.The magnitude of the potential economic fallout is unclear, because the scope and scale of the conflict remain anything but certain. But a foreign conflict could further delay a return to normalcy after two years in which the coronavirus pandemic has buffeted both the global and U.S. economies. Tension between Russia and Ukraine is escalating when American consumers are already contending with quickly rising prices, businesses are trying to navigate roiled supply chains and people report feeling pessimistic about their financial outlooks despite strong economic growth.“The level of economic uncertainty is going to rise, which is going to be negative for households and firms,” said Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics. He noted that the effect would be felt most acutely in Europe and to a lesser degree in the United States.A major and immediate economic implication of a showdown in Eastern Europe ties back to oil and gas. Russia produces 10 million barrels of oil a day, roughly 10 percent of global demand, and is Europe’s largest supplier of natural gas, which is used to fuel power plants and provide heat to homes and businesses.The United States imports comparatively little Russian oil, but energy commodity markets are global, meaning a change in prices in one part of the world influences how much people pay for energy elsewhere.It is unclear how much a conflict would push up prices, but energy markets have already been jittery — and fuel prices have risen sharply — on the prospect of an invasion.If oil increases to $120 per barrel by the end of February, past the $95 mark it hovered around last week, inflation as measured by the Consumer Price Index could climb close to 9 percent in the next couple months, instead of a currently projected peak of a little below 8 percent, said Alan Detmeister, an economist at UBS who formerly led the prices and wages section at the Fed.“It becomes a question of: How long do oil prices, natural gas wholesale prices stay elevated?” he said. “That’s anybody’s guess.”The $120-a-barrel mark for oil is a reasonable estimate of how high prices could go, said Patrick De Haan, head of petroleum analysis at GasBuddy. That would translate to roughly $4 per gallon at the pump on average, he said. It might be difficult to determine how much of the change in energy prices is attributable to the budding conflict. Omair Sharif at Inflation Insights noted that oil and gas prices had already been going up this year.“I don’t know when you want to start the clock on Ukraine becoming a major headline,” Mr. Sharif said. Plus, from an American inflation perspective, how much the conflict matters “all depends on how much the United States gets involved.”Oil may be the major story when it comes to the inflationary effects of a Russian conflict, but it is not the only one. Ukraine is also a significant producer of uranium, titanium, iron ore, steel and ammonia, and a major source of Europe’s arable land.Trucks loaded with wheat at the port. Russia and Ukraine together make up nearly 30 percent of global wheat exports.Brendan Hoffman for The New York TimesChristian Bogmans, an economist at the International Monetary Fund, said a conflict in Ukraine could further inflate global food prices, which were set to stabilize after skyrocketing last year.Russia and Ukraine together are responsible for nearly 30 percent of global wheat exports, while Ukraine alone accounts for more than 15 percent of global corn exports, he said. And many of Ukraine’s growing regions for wheat and corn are near the Russian border.The rising price of gas and fertilizer, as well as droughts and adverse weather in some regions, like the Dakotas, had already helped to push up the global price of wheat and other commodities. Ukraine is also a significant producer of barley and vegetable oil, which goes into many packaged foods.“In case of a conflict, production might be interrupted, and shipping may be affected as well,” Mr. Bogmans said. If other countries impose sanctions on Russian food items, that could further limit global supplies and inflate prices, he said.But because food costs make up a small portion of inflation, that may not matter as much to overall price data, Mr. Detmeister at UBS said. It is also hard to guess exactly how import prices would shape up because of the potential for currency movements.The Ukraine Crisis’s Effect on the Global EconomyCard 1 of 6A rising concern. More