Russia

More stories

  • 125 Shares199 Views

    in Economy

    Ukraine War and Pandemic Force Nations to Retreat From Globalization

    by

    WASHINGTON — When the Cold War ended, governments and companies believed that stronger global economic ties would lead to greater stability. But the Ukraine war and the pandemic are pushing the world in the opposite direction and upending those ideas.Important parts of the integrated economy are unwinding. American and European officials are now using sanctions to sever major parts of the Russian economy — the 11th largest in the world — from global commerce, and hundreds of Western companies have halted operations in Russia on their own. Amid the pandemic, companies are reorganizing how they obtain their goods because of soaring costs and unpredictable delays in global supply chains.Western officials and executives are also rethinking how they do business with China, the world’s second-largest economy, as geopolitical tensions and the Chinese Communist Party’s human rights abuses and use of advanced technology to reinforce autocratic control make corporate dealings more fraught.The moves reverse core tenets of post-Cold War economic and foreign policies forged by the United States and its allies that were even adopted by rivals like Russia and China.“What we’re headed toward is a more divided world economically that will mirror what is clearly a more divided world politically,” said Edward Alden, a senior fellow at the Council on Foreign Relations. “I don’t think economic integration survives a period of political disintegration.”“Does globalization and economic interdependence reduce conflict?” he added. “I think the answer is yes, until it doesn’t.”Opposition to globalization gained momentum with the Trump administration’s trade policies and “America First” drive, and as the progressive left became more powerful. But the pandemic and President Vladimir V. Putin’s invasion of Ukraine have brought into sharp relief the uncertainty of the existing economic order.President Biden warned President Xi Jinping of China on Friday that there would be “consequences” if Beijing gave material aid to Russia for the war in Ukraine, an implicit threat of sanctions. China has criticized sanctions on Russia, and Le Yucheng, the vice foreign minister, said in a speech on Saturday that “globalization should not be weaponized.” Yet China increasingly has imposed economic punishments — Lithuania, Norway, Australia, Japan and South Korea have been among the targets.The result of all the disruptions may well be a fracturing of the world into economic blocs, as countries and companies gravitate to ideological corners with distinct markets and pools of labor, as they did in much of the 20th century.Mr. Biden already frames his foreign policy in ideological terms, as a mission of unifying democracies against autocracies. Mr. Biden also says he is enacting a foreign policy for middle-class Americans, and central to that is getting companies to move critical supply chains and manufacturing out of China.The goal is given urgency by the hobbling of those global links over two years of the pandemic, which has brought about a realization among the world’s most powerful companies that they need to focus on not just efficiency and cost, but also resiliency. This month, lockdowns China imposed to contain Covid-19 outbreaks have once again threatened to stall global supply chains.The Chinese city of Shenzhen was shut down due to Covid concerns last week, threatening the global supply chain.Kin Cheung/Associated PressThe economic impact of such a change is highly uncertain. The emergence of new economic blocs could accelerate a massive reorganization in financial flows and supply chains, potentially slowing growth, leading to some shortages and raising prices for consumers in the short term. But the longer-term effects on global growth, worker wages and supplies of goods are harder to assess.The war has set in motion “deglobalization forces that could have profound and unpredictable effects,” said Laurence Boone, the chief economist of the Organization for Economic Cooperation and Development.For decades, executives have pushed for globalization to expand their markets and to exploit cheap labor and lax environmental standards. China especially has benefited from this, while Russia profits from its exports of minerals and energy. They tap into enormous economies: The Group of 7 industrialized nations make up more than 50 percent of the global economy, while China and Russia together account for about 20 percent.Trade and business ties between the United States and China are still robust, despite steadily worsening relations. But with the new Western sanctions on Russia, many nations that are not staunch partners of America are now more aware of the perils of being economically tied to the United States and its allies.If Mr. Xi and Mr. Putin organize their own economic coalition, they could bring in other nations seeking to shield themselves from Western sanctions — a tool that all recent U.S. presidents have used.“Your interdependence can be weaponized against you,” said Dani Rodrik, a professor of international political economy at Harvard Kennedy School. “That’s a lesson that I imagine many countries are beginning to internalize.”The Ukraine war, he added, has “probably put a nail in the coffin of hyperglobalization.”China and, increasingly, Russia have taken steps to wall off their societies, including erecting strict censorship mechanisms on their internet networks, which have cut off their citizens from foreign perspectives and some commerce. China is on a drive to make critical industries self-sufficient, including for technologies like semiconductors.And China has been in talks with Saudi Arabia to pay for some oil purchases in China’s currency, the renminbi, The Wall Street Journal reported; Russia was in similar discussions with India. The efforts show a desire by those governments to move away from dollar-based transactions, a foundation of American global economic power.For decades, prominent U.S. officials and strategists asserted that a globalized economy was a pillar of what they call the rules-based international order, and that trade and financial ties would prevent major powers from going to war. The United States helped usher China into the World Trade Organization in 2001 in a bid to bring its economic behavior — and, some officials hoped, its political system — more in line with the West. Russia joined the organization in 2012.But Mr. Putin’s war and China’s recent aggressive actions in Asia have challenged those notions.“The whole idea of the liberal international order was that economic interdependence would prevent conflict of this kind,” said Alina Polyakova, president of the Center for European Policy Analysis, a research group in Washington. “If you tie yourselves to each other, which was the European model after the Second World War, the disincentives would be so painful if you went to war that no one in their right mind would do it. Well, we’ve seen now that has proven to be false.”“Putin’s actions have shown us that might have been the world we’ve been living in, but that’s not the world he or China have been living in,” she said.The United States and its partners have blocked Russia from much of the international financial system by banning transactions with the Russian central bank. They have also cut Russia off from the global bank messaging system called SWIFT, frozen the assets of Russian leaders and oligarchs, and banned the export from the United States and other nations of advanced technology to Russia. Russia has answered with its own export bans on food, cars and timber.The penalties can lead to odd decouplings: British and European sanctions on Roman Abramovich, the Russian oligarch who owns the Chelsea soccer team in Britain, prevent the club from selling tickets or merchandise.Ticket sales for Chelsea Football Club games were stopped after Britain and the European Union imposed sanctions on the club’s owner, Roman Abramovich, a Putin ally. Andy Rain/EPA, via ShutterstockAbout 400 companies have chosen to suspend or withdraw operations from Russia, including iconic brands of global consumerism such as Apple, Ikea and Rolex.Russia-Ukraine War: Key DevelopmentsCard 1 of 4Russia’s shrinking force. More

  • 150 Shares199 Views

    in Economy

    U.S. warns servicing or refueling some Russian-owned planes may violate trade restrictions.

    by

    The Commerce Department said on Friday that it had identified 100 commercial and private aircraft that violated U.S. export controls by flying into Russia and that their owners, operators and servicers were at risk of substantial jail time, fines, loss of export privileges or other restrictions.The announcement said it was putting the world “on notice” not to repair or refuel the planes, highlighting the scope of the new limitations.Since March 2, the department identified a number of commercial and private flights to Russia that most likely violated the restrictions, including on aircraft owned or operated by Aeroflot, AirBridgeCargo, Aviastar-TU, Azur Air, Nordwind, Utair and Roman Abramovich, a Russian billionaire with ties to President Vladimir V. Putin, according to the announcement. Most of the planes were made by Boeing.On Feb. 24, the department imposed broad restrictions on technology that could be exported to Russia, part of an effort to cripple the country’s military and strategic industries. In addition to semiconductors, telecommunications equipment and sensors, the restrictions bar aircraft and some aircraft parts that are made in the United States from being sent to Russia.As a result of the rules, any aircraft manufactured in the United States, or manufactured in a foreign country that used certain American parts or technology, must receive a license to travel to Russia.And any entity providing services to those aircraft, including maintenance, repair and refueling, would also be in violation of the rules, the Commerce Department said.Because the aircraft are prevented from receiving any service, flights to and from Russia on these aircraft are effectively grounded, the department said.“We will not allow Russian and Belarusian companies and oligarchs to travel with impunity in violation of our laws,” Commerce Secretary Gina M. Raimondo said in a statement. More

  • 138 Shares149 Views

    in Economy

    Ukraine Energy Company C.E.O. Tries to Keep Lights On During War

    by

    Keeping millions of customers in Ukraine supplied with electric power amid the Russian invasion is, to say the least, challenging. Especially when the electrical grid itself becomes a target. “What we see now is that they attack transmission lines, substations, power generating stations,” said Maxim Timchenko, chief executive of DTEK, a large private Ukrainian energy company. In the early days of the war, he said, the Russian military seemed to be wary of wrecking critical civilian infrastructure.Now, he said, “they are not selective anymore.”In a video call from an undisclosed location in western Ukraine, Mr. Timchenko described how DTEK, which supplies about 20 percent of Ukraine’s electricity, and other Ukrainian utilities were scrambling to keep the lights on during the Russian onslaught.Amid the urgency, Ukraine, which is not a member of the European Union, has also managed to achieve something in a matter of weeks that it had worked on for years: a linkup to the power grids of neighboring E.U. countries, including, according to Mr. Timchenko, Romania, Slovakia, Poland and Hungary.“This will help Ukraine to keep their electricity system stable, homes warm and lights on during these dark times,” said Europe’s energy commissioner, Kadri Simson, in a statement. “In this area, Ukraine is now part of Europe,” she added.In case of a major hit to its power system, Ukraine could now apply for emergency electricity supplies from the European system, Mr. Timchenko said. Ukraine also severed its electricity links to Russia and Belarus just before the invasion to establish independence from power sources in hostile countries.When its transmission lines are damaged or severed, DTEK arranges for Ukrainian soldiers to escort its emergency repair crews, dressed in flak jackets, to reach affected sites. Mr. Timchenko said six of DTEK’s roughly 60,000 employees had been killed during the war, although not while performing duties for the company.The Russia-Ukraine War and the Global EconomyCard 1 of 6Rising concerns. More

  • 75 Shares149 Views

    in Economy

    Russia’s Central Bank Projects Economic Decline 

    by

    Russia’s central bank governor, Elvira Nabiullina, said on Friday that the country’s economy would decline in the coming quarters and that inflation would jump further as sanctions imposed after the invasion of Ukraine took their toll. Earlier, the bank’s board of directors held interest rates at 20 percent.The bank said the doubling in interest rates on Feb. 28, from 9.5 percent, and capital controls curbing the movement of money had helped sustain financial stability in Russia and stop uncontrolled price increases. But the latest inflation data shows that, as of March 11, prices in Russia had risen 12.5 percent from a year earlier.Russia’s war against Ukraine has led to strict economic sanctions by the United States and Europe, encouraged a large number of Western companies and banks to retreat from the country, and isolated Russia from much of the global financial system.“The Russian economy is entering the phase of a large-scale structural transformation, which will be accompanied by a temporary but inevitable period of increased inflation,” the Russian central bank said in a statement Friday.Gross domestic product “will decline in the next quarters,” Ms. Nabiullina said later. Two consecutive quarters of economic decline are generally considered to be a recession.The effects of the sanctions are being keenly felt in Russia.“Today, almost all companies are experiencing disruptions in production and logistical chains and in their settlements with foreign counterparties,” Ms. Nabiullina said. Inflation was driven higher, she said, by a rise in demand for cars, household appliances, electronic devices and other goods as people rushed to buy because they feared prices would rise higher and supplies would run out. The ruble has lost about 30 percent of its value against the U.S. dollar this year.President Vladimir V. Putin put Ms. Nabiullina forward for another term as central bank governor on Friday. She has held the position since 2013. Ms. Nabiullina also said on Friday that stock trading on the Moscow Exchange would remain closed but that government bond trading will restart on Monday. Stocks haven’t been traded on the exchange since Feb. 25. More

  • 150 Shares179 Views

    in Economy

    How the War in Ukraine Could Slow the Sales of Electric Cars

    by

    The price of nickel, an essential ingredient in most batteries, has soared because of fear that Russian supplies could be cut off.Russia’s invasion of Ukraine has shaken the global market for nickel just as the metal gains importance as an ingredient in electric car batteries, raising fears that high prices could slow the transition away from fossil fuels.The price of nickel doubled in one day last week, prompting the London Metal Exchange to freeze trading and effectively bring the global nickel market to a standstill. After two years of supply chain chaos caused by the pandemic, the episode provided more evidence of how geopolitical tensions are destroying trading relationships that companies once took for granted, forcing them to rethink where they get the parts and metals they use to make cars and many other products.Automakers and other companies that need nickel, as well as other battery raw materials like lithium or cobalt, have begun looking for ways to shield themselves against future shocks.Volkswagen, for example, has begun to explore buying nickel directly from mining companies, Markus Duesmann, chief executive of the carmaker’s Audi division, said in an interview on Thursday. “Raw materials are going to be an issue for years to come,” he said.The prospect of prolonged geopolitical tensions is likely to accelerate attempts by the United States and Europe to develop domestic supplies of commodities that often come from Russia. There are nickel deposits, for example, in Canada, Greenland and even Minnesota.“Nickel, cobalt, platinum, palladium, even copper — we already realized we need those metals for the green transition, for mitigating climate change,” said Bo Stensgaard, chief executive of Bluejay Mining, which is working on extracting nickel from a site in western Greenland in a venture with KoBold Metals, whose backers include Jeff Bezos and Bill Gates. “When you see the geopolitical developments with Ukraine and Russia, it’s even more obvious that there are supply risks with these metals.”But establishing new mining operations is likely to take years, even decades, because of the time needed to acquire permits and financing. In the meantime, companies using nickel — a group that also includes steel makers — will need to contend with higher prices, which will eventually be felt by consumers.An average electric-car battery contains about 80 pounds of nickel. The surge in prices in March would more than double the cost of that nickel to $1,750 a car, according to estimates by the trading firm Cantor Fitzgerald.Russia accounts for a relatively small proportion of world nickel production, and most of it is used to make stainless steel, not car batteries. But Russia plays an outsize role in nickel markets. Norilsk Nickel, also known as Nornickel, is the world’s largest nickel producer, with vast operations in Siberia. Its owner, Vladimir Potanin, is one of Russia’s wealthiest people. Norilsk is among a limited number of companies authorized to sell a specialized form of nickel on the London Metal Exchange, which handles all nickel trading.Unlike other oligarchs, Mr. Potanin has not been a target of sanctions, and the United States and Europe have not tried to block nickel exports, a step that would hurt their economies as well as Russia’s. The prospect that Russian nickel could be cut off from world markets was enough to cause panic.Analysts expect prices to come down from their recent peaks but remain much higher than they were a year ago. “The trend would be to come down to a level close to where we last left off,” around $25,000 a metric ton compared to the peak of $100,000 a ton, said Adrian Gardner, a principal analyst specializing in nickel at Wood Mackenzie, a research firm.A plant owned by Nornickel, the world’s leading producer of nickel and palladium, in Norilsk, Russia.Tatyana Makeyeva/ReutersNickel was on a tear even before the Russian invasion as hedge funds and other investors bet on rising demand for electric vehicles. The price topped $20,000 a ton this year after hovering between $10,000 and $15,000 a ton for much of the past five years. At the same time, less nickel was being produced because of the pandemic.After Russia invaded Ukraine in late February, the price rose above $30,000 in a little over a week. Then came March 8. Word spread on the trading desks of brokerage firms and hedge funds in London that a company, which turned out to be the Tsingshan Holding Group of China, had made a huge bet that the price of nickel would drop. When the price rose, Tsingshan owed billions of dollars, a situation known on Wall Street as a short squeeze.The price shot up to a little over $100,000 a ton, threatening the existence of many other companies that had bet wrong and prompting the London Metal Exchange to halt trading.The Russia-Ukraine War and the Global EconomyCard 1 of 6Rising concerns. More

  • 113 Shares159 Views

    in Economy

    Exports to Russia Blocked by U.S. and Its Allies

    by

    To try to halt the war in Ukraine, the U.S. and its allies have imposed the most sweeping export controls seen in decades on Russia. Now they have to enforce them.WASHINGTON — The United States, in partnership with its allies, has hit Russia with some of the most sweeping export restrictions ever imposed, barring companies across the world from sending advanced technology in order to penalize President Vladimir V. Putin for his invasion of Ukraine.The restrictions are aimed at cutting off the flow of semiconductors, aircraft components and other technologies that are crucial to Russia’s defense, maritime and aerospace industries, in a bid to cripple Mr. Putin’s ability to wage war. But the extent to which the measures hinder Russia’s abilities will depend on whether companies around the globe follow the rules.Enforcing the new restrictions poses a significant challenge as governments try to police thousands of companies. But the task could be made easier because the United States is acting in concert with so many other countries.The European Union, Japan, Australia, Canada, New Zealand, Britain and South Korea have joined the United States in imposing their own restrictions. And governments including Singapore and Taiwan, a major global producer of semiconductors, have indicated they will support the rules.“Because we have the full cooperation and alignment with so many countries, it makes enforcement a lot easier,” Gina Raimondo, the U.S. secretary of commerce, said in an interview. “Every country is going to be doing enforcement.”“That’s part of the power, if you will, of having so much collaboration,” she added.Officials from the Commerce Department, which is in charge of enforcing the U.S. rules, have already begun digging through shipping containers and detaining electronics, aircraft parts and other goods that are destined for Russia. On March 2, federal agents detained two speedboats at the Port of Charleston valued at $150,000 that were being exported to Russia, according to senior U.S. officials.To look for any potential violators, federal agents will be combing through tips from industry sources and working with Customs and Border Protection to find anomalies in export data that might point to shipments to Russia. They are also reaching out to known exporters to Russia to get them on board with the new restrictions, speaking to about 20 or 30 companies a day, U.S. officials said.Their efforts extend beyond U.S. borders. On March 3, Commerce Department officials spoke to a gathering of 300 businesspeople in Beijing about how to comply with the new restrictions. U.S. officials have also been coordinating with other governments to ensure that they are taking a tough stance on enforcement, senior U.S. officials said.Emily Kilcrease, director of the Energy, Economics and Security Program at the Center for a New American Security, said that the level of allied cooperation in forging the export controls was “completely unprecedented,” and that international coordination would have an important upside.“The allied countries will be active partners in enforcement efforts, rather than the United States attempting to enforce its own unilateral rules extraterritorially,” she said.It remains to be seen how effective the rules are in degrading Russia’s military capability or dissuading its aggression against Ukraine. But in their initial form, the broad scope of the measures looks like a victory for the multilateralism that President Biden promised to restore.Mr. Biden entered office pledging to mend ties with Europe and other allies that had been alienated by former President Donald J. Trump’s “America first” approach. A key part of the argument was that the United States could exert more pressure on countries like China when it was not acting alone.That approach has been particularly important for export controls, which experts argue can do more harm than good when imposed by only one country — a criticism that was sometimes leveled at the export controls the Trump administration issued on China.“Because we have the full cooperation and alignment with so many countries, it makes enforcement a lot easier,” Commerce Secretary Gina Raimondo said.Doug Mills/The New York TimesThe Russian invasion of Ukraine has unified Western governments like few issues before. But even with countries eager to penalize Russia, coordinating restrictions on a vast array of complex technologies among more than 30 governments was not simple. The Commerce Department held more than 50 discussions with officials from other countries between the end of January and Feb. 24, when the controls were announced, as they hashed out the details, senior U.S. officials said.Much of that effort fell to Matthew S. Borman, a three-decade employee of the Commerce Department, who in late January began near-daily conversations with the European Commission and other countries.In mid-February, Mr. Borman and a senior aerospace engineer flew to Brussels for meetings with Peter Sandler, the European director general of trade, and other staff. As a “freedom convoy” protesting coronavirus restrictions attempted to roll into Brussels, they worked from early in the morning until late in the night amid reams of paper and spreadsheets of complex technological descriptions.Each country had its own byzantine regulations, and its own interests, to consider. The European Commission had to consult the European Union’s 27 member countries, especially tech powers like Germany, France, the Netherlands and Finland, on which products could be cut off. Officials debated whether to crack down on the Russian oil industry, at a time of soaring gas prices and inflation.As Russia’s neighbors, the Europeans wanted to ensure that Russia still had access to certain goods for public safety, like nuclear reactor components to avoid a Chernobyl-style meltdown. At least one country insisted that auto exports to Russia should continue, a senior administration official said.The breakthrough came when American officials offered a compromise. The Biden administration planned to issue a rule that would bar companies anywhere around the world from exporting certain products to Russia if they were made using American technology. But those measures would not apply in countries that joined the United States and Europe in issuing their own technological restrictions on Russia.In an interview, Mr. Borman said that American allies had historically been concerned with the extraterritorial reach of U.S. export controls, and that the exclusions for countries that imposed their own rules “was really the key piece.”The Russia-Ukraine War and the Global EconomyCard 1 of 6Rising concerns. More

  • 125 Shares149 Views

    in Economy

    Dollars or Rubles? Russian Debt Payments Are Due, and Uncertain.

    by

    Citing sanctions, the Russian government warned it might pay foreign debt obligations in rubles. Credit rating agencies say a default is imminent. Russia is teetering on the edge of a possible sovereign debt default, and the first sign could come as soon as Wednesday.The Russian government owes about $40 billion in debt denominated in U.S. dollars and euros, and half of those bonds are owned by foreign investors. And Russian corporations have racked up approximately $100 billion in foreign currency debt, JPMorgan estimates.On Wednesday, $117 million in interest payments on dollar-denominated government debt are due.But Russia is increasingly isolated from global financial markets, and investors are losing hope that they will see their money. As the government strives to protect what’s left of its access to foreign currency, it has suggested it would pay its dollar- or euro-denominated debt obligations in rubles instead. That has prompted credit rating agencies to warn of an imminent default.The Russian currency has lost nearly 40 percent of its value against the U.S. dollar in the past month. Even if the payments were made, economic sanctions would make it difficult for Western lenders to access the rubles if they are in Russian bank accounts.“It is not that Russia doesn’t have money,” Kristalina Georgieva, managing director of the International Monetary Fund, told reporters last week. The problem is, Russia can’t use a lot of its international currency reserves, she said, because they have been frozen by sanctions. “I’m not going to speculate what may or may not happen, but just to say that no more we talk about Russian default as an improbable event.”Last week, the chief economist of the World Bank said Russia and Belarus were squarely in “default territory,” and Fitch Ratings said a default was imminent because sanctions had diminished Russia’s willingness to repay its foreign debts.Russia last defaulted on its debt in 1998, when a currency crisis led it to default on ruble-denominated debt and temporarily ban foreign debt payments. The crisis shocked the financial world, leading to the collapse of the U.S. hedge fund Long-Term Capital Management, which required Federal Reserve intervention and a multibillion-dollar bailout. If Russia failed to make payments on its foreign currency debt, it would be its first such default since the 1917 Russian Revolution.Foreign investor interest in Russian assets fell in 2014 when sanctions were imposed after the country annexed Crimea, and never fully recovered before more sanctions were imposed by Washington in 2019. But holdings aren’t negligible. Russian government bonds were considered investment grade as recently as a few weeks ago, and were included in indexes used to benchmark other funds. JPMorgan estimates that international investors own 22 percent of Russian companies’ foreign currency debt.BlackRock, the world’s largest asset manager, has already incurred losses on Russian assets and equities.Jeenah Moon/BloombergFunds managed by BlackRock, the world’s largest asset manager, have incurred $17 billion in losses on Russian assets, including equities, in recent weeks, according to the firm. The loss in value has a number of causes, including investors selling their holdings.But so far, regulators have said the risk to global banking systems from a Russian default wouldn’t be systemic because of the limited direct exposure to Russian assets. The larger ramifications from the war in Ukraine and Russia’s economic isolation are from higher energy and food prices.Still, financial companies have been scrambling to assess their exposure, according to Daniel Tannebaum, a partner at Oliver Wyman who advises banks on sanctions.“I’m seeing a lot of clients that had exposure to the Russian market wondering what type of default scenarios might be coming up,” said Mr. Tannebaum, who is also a former Treasury Department official. In the case of a default, “those bonds become worthless, for lack of a better term,” he said.On Monday, Russia’s finance minister, Anton Siluanov, accused the countries that have frozen the country’s internationally held currency reserves of trying to create an “artificial default.” The government has the money to meet its debt obligations, he said, but sanctions were hampering its ability to pay. Mr. Siluanov had also said over the weekend that the country had lost access to about $300 billion of its $640 billion currency reserves.The government insists investors will be paid. The finance ministry said on Monday it would send instructions to banks to issue the payment due on dollar- or euro-denominated bonds in dollars or euros, but if the banks don’t execute the order then it will be recalled and payment will be made in rubles instead. The statement also said that the payments could be made in rubles and then converted to another currency only when the country’s gold and foreign exchange reserves are unfrozen.Russia’s finance minister, Anton Siluanov, accused the countries that have frozen the country’s internationally held currency reserves of trying to create an “artificial default.”Alberto Pizzoli/Agence France-Presse — Getty Images“In any case, obligations to our investors will be met. And the ability to receive the funds in foreign currency will depend on the imposed restrictions,” Mr. Siluanov said.But the statement doesn’t provide a clear vision of what might happen on Wednesday. American sanctions allow for the receipt of payments of debt obligations until late May, and so the reasoning behind the Russian finance ministry’s claim that banks might refuse the payments is unclear. The payments due on Wednesday also have a 30-day grace period, so a default wouldn’t technically happen until mid-April. But Russia has already blocked interest payments on ruble-denominated bonds to nonresidents, a sign of its hesitancy to transfer funds abroad.While the Russian finance ministry said it could meet its obligations by paying in rubles, others disagreed.“In order to avoid a default, the only way that Russia can really navigate this is to send the full payment in dollars,” said Trang Nguyen, an emerging markets strategist at JPMorgan.Some Russian bonds issued in recent years do have provisions that allow for repayment in other currencies, including the ruble, if Russia can’t make payments in dollars for reasons “beyond its control.” The Russia-Ukraine War and the Global EconomyCard 1 of 6Rising concerns. More

  • 175 Shares169 Views

    in Economy

    Russia Asked China for Military and Economic Aid for Ukraine War, U.S. Officials Say

    by

    WASHINGTON — Russia asked China to give it military equipment and support for the war in Ukraine after President Vladimir V. Putin began a full-scale invasion last month, according to U.S. officials.Russia has also asked China for additional economic assistance, to help counteract the battering its economy has taken from broad sanctions imposed by the United States and European and Asian nations, according to an official.American officials, determined to keep secret their means of collecting the intelligence on Russia’s requests, declined to describe further the kind of military weapons or aid that Moscow is seeking. The officials also declined to discuss any reaction by China to the requests.President Xi Jinping of China has strengthened a partnership with Mr. Putin and has stood by him as Russia has stepped up its military campaign in Ukraine, destroying cities and killing hundreds or thousands of civilians. American officials are watching China closely to see whether it will act on any requests of aid from Russia. Jake Sullivan, the White House national security adviser, is scheduled to meet on Monday in Rome with Yang Jiechi, a member of the Chinese Communist Party’s elite Politburo and director of the party’s Central Foreign Affairs Commission.Mr. Sullivan intends to warn Mr. Yang about any future Chinese efforts to bolster Russia in its war or undercut Ukraine, the United States and their partners.“We are communicating directly, privately to Beijing that there will absolutely be consequences for large-scale sanctions evasion efforts or support to Russia to backfill them,” Mr. Sullivan said on CNN on Sunday.“We will not allow that to go forward and allow there to be a lifeline to Russia from these economic sanctions from any country, anywhere in the world,” he said.Mr. Sullivan did not make any explicit mention of potential military support from China, but other U.S. officials spoke about the request from Russia on the condition of anonymity because of the sensitivity of diplomatic and intelligence matters.Liu Pengyu, a spokesman for the Chinese Embassy in Washington, said he had never heard of the request from Russia. “The current situation in Ukraine is indeed disconcerting,” he said, adding that Beijing wants to see a peaceful settlement. “The high priority now is to prevent the tense situation from escalating or even getting out of control.”The Biden administration is seeking to lay out for China the consequences of its alignment with Russia and penalties it will incur if it continues or increases its support. Some U.S. officials argue it might be possible to dissuade Beijing from ramping up its assistance to Moscow. Chinese leaders may be content to offer rhetorical support for Moscow and may not want to further enmesh themselves with Mr. Putin by providing military support for the war, those U.S. officials say.Mr. Sullivan said China “was aware before the invasion took place that Vladimir Putin was planning something,” but added that the Chinese might not have known the full extent of the Russian leader’s plans. “It’s very possible that Putin lied to them, the same way he lied to Europeans and others,” he said.Mr. Xi has met with Mr. Putin 38 times as national leaders, more than with any other head of state, and the two share a drive to weaken American power.Traditionally, China has bought military equipment from Russia rather than the other way around. Russia has increased its sales of weaponry to China in recent years. But China has advanced missile and drone capabilities that Russia could use in its Ukraine campaign.Although Russia on Sunday launched a missile barrage on a military training ground in western Ukraine that killed at least 35 people, there has been some evidence that Russian missile supplies have been running low, according to independent analysts.Last week, the White House criticized China for helping spread Kremlin disinformation about the United States and Ukraine. In recent days, Chinese diplomats, state media organizations and government agencies have used a range of platforms and official social media accounts to amplify a conspiracy theory that says the Pentagon has been financing biological and chemical weapons labs in Ukraine. Right-wing political figures in the United States have also promoted the theory.On Friday, Russia called a United Nations Security Council meeting to present its claims about the labs, and the Chinese ambassador to the U.N., Zhang Jun, supported his Russian counterpart.“Now that Russia has made these false claims, and China has seemingly endorsed this propaganda, we should all be on the lookout for Russia to possibly use chemical or biological weapons in Ukraine, or to create a false flag operation using them,” Jen Psaki, the White House press secretary, wrote on Twitter last Wednesday.China is also involved in the Iran nuclear negotiations, which have stalled because of new demands from Russia on relief from the sanctions imposed by Western nations in response to the Ukraine war.American officials are trying to determine to what degree China would support Russia’s position in those talks. Before Russia raised the requests, officials from the nations involved had been close to clinching a return to a version of the Obama-era nuclear limits agreement from which President Donald J. Trump withdrew. Mr. Sullivan might bring up Iran with Mr. Yang on Monday.Current and former U.S. officials say the Rome meeting is important, given the lives at stake in the Ukraine war and the possibility of Russia and China presenting a geopolitical united front against the United States and its allies in the years ahead.“This meeting is critical and possibly a defining moment in the relationship,” said Evan Medeiros, a Georgetown University professor who was a senior Asia director on the National Security Council during the Obama administration.“I think what the U.S. is probably going to do is lay out the costs and consequences of China’s complicity and possible enabling of Russia’s invasion,” he said. “I don’t think anyone in the administration has illusions that the U.S. can pull China away from Russia.”Some U.S. officials are looking for ways to compel Mr. Xi to distance himself from Mr. Putin on the war. Others see Mr. Xi as a lost cause and prefer to treat China and Russia as committed partners, hoping that might galvanize policies and coordination among Asian and European allies to contain them both.Chinese officials have consistently voiced sympathy for Russia during the Ukraine war by reiterating Mr. Putin’s criticism of NATO and blaming the United States for starting the conflict. They have refrained from any mention of a Russian “war” or “invasion,” even as they express general concern for the humanitarian crisis.They mention support for “sovereignty and territorial integrity,” a common catchphrase in Chinese diplomacy, but do not say explicitly which nation’s sovereignty they support — meaning the phrase could be interpreted as backing for Ukraine or an endorsement of Mr. Putin’s claims to restoring the territory of imperial Russia.Russia-Ukraine War: Key Things to KnowCard 1 of 3Expanding the war. More