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    Seizing Russian Assets to Help Ukraine Sets Off White House Debate

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    WASHINGTON — The devastation in Ukraine brought on by Russia’s war has leaders around the world calling for seizing more than $300 billion of Russian central bank assets and handing the funds to Ukraine to help rebuild the country.But the movement, which has gained momentum in parts of Europe, has run into resistance in the United States. Top Biden administration officials warned that diverting those funds could be illegal and discourage other countries from relying on the United States as a haven for investment.The cost to rebuild Ukraine is expected to be significant. Its president, Volodymyr Zelensky, estimated this month that it could be $600 billion after months of artillery, missile and tank attacks — meaning that even if all of Russia’s central bank assets abroad were seized, they would cover only half the costs.In a joint statement last week, finance ministers from Estonia, Latvia, Lithuania and Slovakia urged the European Union to create a way to fund the rebuilding of cities and towns in Ukraine with frozen Russian central bank assets, so that Russia can be “held accountable for its actions and pay for the damage caused.”Confiscating the Russian assets was also a central topic at a gathering of top economic officials from the Group of 7 nations at a meeting this month, with the idea drawing public support from Germany and Canada.The United States, which has led a global effort to isolate Russia with stiff sanctions, has been far more cautious in this case. Internally, the Biden administration has been debating whether to join an effort to seize the assets, which include dollars and euros that Moscow deposited before its invasion of Ukraine. Only a fraction of the funds are kept in the United States; much of it was deposited in Europe, including at the Bank for International Settlements in Switzerland.Russia had hoped that keeping more than $600 billion in central bank reserves would help bolster its economy against sanctions. But it made the mistake of sending half those funds out of the country. By all accounts, Russian officials were stunned at the speed at which they were frozen — a very different reaction from the one it faced after annexing Crimea in 2014, when it took a year for weak sanctions to be imposed.Those funds have been frozen for the past three months, keeping the government of President Vladimir V. Putin from repatriating the money or spending it on the war. But seizing or actually taking ownership of them is another matter.At a news conference in Germany this month, Treasury Secretary Janet L. Yellen appeared to close the door on the United States’ ability to participate in any effort to seize and redistribute those assets. Ms. Yellen, a former central banker who initially had reservations about immobilizing the assets, said that while the concept was being studied, she believed that seizing the funds would violate U.S. law.Treasury Secretary Janet L. Yellen has cautioned against seizing Russian central bank assets to help pay for Ukraine’s reconstruction.Ina Fassbender/Agence France-Presse — Getty Images“I think it’s very natural that given the enormous destruction in Ukraine and huge rebuilding costs that they will face, that we will look to Russia to help pay at least a portion of the price that will be involved,” she said. “It’s not something that is legally permissible in the United States.”But within the Biden administration, one official said, there was reluctance “to have any daylight between us and the Europeans on sanctions.” So the United States is seeking to find some kind of common ground while analyzing whether a seizure of central bank funds might, for example, encourage other countries to put their central bank reserves in other currencies and keep it out of American hands.In addition to the legal obstacles, Ms. Yellen and others have argued that it could make nations reluctant to keep their reserves in dollars, for fear that in future conflicts the United States and its allies would confiscate the funds. Some national security officials in the Biden administration say they are concerned that if negotiations between Ukraine and Russia begin, there would be no way to offer significant sanctions relief to Moscow once the reserves have been drained from its overseas accounts.Treasury officials suggested before Ms. Yellen’s comments that the United States had not settled on a firm position about the fate of the assets. Several senior officials, speaking on the condition of anonymity to discuss internal debates in the Biden administration, suggested that no final decision had been made. One official said that while seizing the funds to pay for reconstruction would be satisfying and warranted, the precedent it would set — and its potential effect on the United States’ status as the world’s safest place to leave assets — was a deep concern.In explaining Ms. Yellen’s comments, a Treasury spokeswoman pointed to the International Emergency Economic Powers Act of 1977, which says that the United States can confiscate foreign property if the president determines that the country is under attack or “engaged in armed hostilities.”Legal scholars have expressed differing views about that reading of the law.Laurence H. Tribe, an emeritus law professor at Harvard University, pointed out that an amendment to International Emergency Economic Powers Act that passed after the Sept. 11, 2001, terrorist attacks gives the president broader discretion to determine if a foreign threat warrants confiscation of assets. President Biden could cite Russian cyberattacks against the United States to justify liquidating the central bank reserves, Mr. Tribe said, adding that the Treasury Department was misreading the law.“If Secretary Yellen believes this is illegal, I think she’s flatly wrong,” he said. “It may be that they are blending legal questions with their policy concerns.”Mr. Tribe pointed to recent cases of the United States confiscating and redistributing assets from Afghanistan, Iran and Venezuela as precedents that showed Russia’s assets did not deserve special safeguards.Russia-Ukraine War: Key DevelopmentsCard 1 of 4On the ground. More

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    U.S. Will Start Blocking Russia’s Bond Payments to American Investors

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    WASHINGTON — The Biden administration will start blocking Russia from paying American bondholders, increasing the likelihood of the first default of Russia’s foreign debt in more than a century.An exemption to the sweeping sanctions that the United States imposed on Russia as punishment for its invasion of Ukraine has allowed Moscow to keep paying its debts since February. But that carve-out will expire on Wednesday, and the United States will not extend it, according to a notice published by the Treasury Department on Tuesday. As a result, Russia will be unable to make billions of dollars of debt and interest payments on bonds held by foreign investors.The move represents an escalation of U.S. sanctions at a moment when the war in Ukraine continues to drag on, with Russia showing few signs of relenting. Biden administration officials had debated whether to extend what’s known as a general license, which has allowed Russia to pay interest on the debt it sold. By extending the waiver, Russia would have continued to deplete its U.S. dollar reserves and American investors would have continued to receive their guaranteed payments. But officials, who have been trying to intensify pressure on Russia’s economy, ultimately determined that a Russian default would not have a significant impact on the global economy.Treasury Secretary Janet L. Yellen signaled how the Biden administration was leaning at a news conference in Europe last week, when she said that the exemption was created to allow for an “orderly transition” so that investors could sell securities. It was always intended to be for a limited time, she said. And she noted that Russia’s ability to borrow money from foreign investors has already essentially been cut off through other sanctions imposed by the United States.“If Russia is unable to find a legal way to make these payments, and they technically default on their debt, I don’t think that really represents a significant change in Russia’s situation,” Ms. Yellen said. “They’re already cut off from global capital markets, and that would continue.”Although the economic impact of a Russian default might be minimal, it was an outcome that Russia had been trying to avoid and the Biden administration’s move represents an escalation of U.S. sanctions. Russia has already unsuccessfully tried to make bond payments in rubles and has threatened to take legal action, arguing that it should not be deemed in default on its debt if it is not allowed to make payments.“We can only speculate what worries the Kremlin most about defaulting: the stain on Putin’s record of economic stewardship, reputational damage, the financial and legal dominoes a default sets in motion and so on,” said Tim Samples, a legal studies professor at the University of Georgia’s Terry College of Business and an expert on sovereign debt. “But one thing is rather clear: Russia was keen to avoid this scenario, willing even to make payments with precious non-sanctioned foreign currency to avoid a major default.”Sanctions experts have estimated that Russia has about $20 billion worth of outstanding debt that is not held in rubles. It is not clear if the European Union and Britain will follow the lead of the United States, which would exert even more pressure on Russia and leave a broader swath of investors unpaid, but most of the recent sanctions actions have been tightly coordinated.The prospect of a Russian default has already saddled some big U.S. investors with losses. Pimco, the investment management firm, has seen the value of its Russian bond holdings decline by more than $1 billion this year and pension funds and mutual funds with exposure to emerging market debt have also experienced declines.In the near term, Russia has two foreign-currency bond payments due on Friday, both of which have clauses in their contracts that allow for repayment in other currencies if “for reasons beyond its control” Russia is unable to make payments in the originally agreed currency.Russia owes about $71 million in interest payments for a dollar-denominated bond that will mature in 2026. The contract has a provision to be paid in euros, British pounds and Swiss francs. Russia also owes 26.5 million euros ($28 million) in interest payments for a euro-denominated bond that will mature in 2036, which can be paid back in alternative currencies including the ruble. Both contracts have a 30-day grace period for payments to reach creditors.The Russian finance ministry said on Friday that it had sent the funds to its payment agent, the National Settlement Depository, a Moscow-based institution, a week before the payment was due.The finance ministry said it had fulfilled these debt obligations. But more transactions are required with international financial institutions before the payments can reach bondholders.Adam M. Smith, who served as a senior sanctions official in the Obama administration’s Treasury Department, said he expected that Russia would most likely default sometime in July and that a wave of lawsuits from Russia and its investors were likely to ensue.Although a default will inflict some psychological damage on Russia, he said, it will also raise borrowing costs for ordinary Russians and harm foreign investors who were not involved in Russia’s invasion Ukraine.“The interesting question to me is, What is the policy goal here?” Mr. Smith said. “That’s what’s not entirely clear to me.”Alan Rappeport reported from Washington, and Eshe Nelson from London. More

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    G7 Nations Pledge $20 Billion to Ukraine

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    KÖNIGSWINTER, Germany — The Group of 7 economic powers agreed on Friday to provide nearly $20 billion to support Ukraine’s economy over the coming months to help keep the country’s government running while it fights to repel a Russian invasion.In a joint statement after two days of meetings, finance ministers from the Group of 7 affirmed their commitment to help Ukraine with a mix of grants and loans. Ukraine needs approximately $5 billion per month to maintain basic government services, according to the International Monetary Fund.The $19.8 billion of financing was agreed on after the United States, which is contributing more than $9 billion in short-term financing, pressed its allies to do more to help secure Ukraine’s future. The statement did not break down how much the other Group of 7 nations will contribute.The European Commission, however, previously agreed to provide up to 9 billion euros of financial assistance. The European Bank for Reconstruction and Development and the International Finance Corporation plan to provide an additional $3.4 billion to Ukrainian state-owned enterprises and the private sector.“We will continue to stand by Ukraine throughout this war and beyond and are prepared to do more as needed,” the statement said.The economic policymakers also acknowledged that more fallout from the war lies ahead, and they pledged on Friday to keep markets open as they combat rising food and energy prices around the world. They also said that their central banks would be closely monitoring inflation measures and the impact that rising prices are having on their economies.“We are very concerned about crises and macroeconomic developments,” Christian Lindner, Germany’s finance minister, said during a closing news conference on Friday, according to an English translation.The two-day summit on the outskirts of Bonn came at a pivotal time for the world economy, with concern mounting that a combination of war, supply chain problems and the lingering effects of the pandemic could lead to a contraction in global output. Finance ministers discussed ways to keep pressure on Russia while minimizing the damage to their economies as they debated the merits of a European embargo on Russian oil and whether seized Russian assets could be used to pay for Ukraine’s reconstruction.“The values of the international community have been totally discarded by Russia,” Mr. Lindner said.Officials from the world’s leading advanced economies discussed other areas for possible collaboration, such as combating climate change and making progress on a global tax agreement that was reached last year but faces implementation problems.But the complicated mix of foreign policy challenges and economic headwinds dominated the meetings.Treasury Secretary Janet L. Yellen warned this week that Europe could be vulnerable to a recession because of its exposure to Russian energy. She does not expect a recession in the United States but said on Thursday that a “soft landing” was not guaranteed as the Federal Reserve raises interest rates to tame inflation.“I think it’s conceivable there could be a soft landing, that requires both skill and luck,” Ms. Yellen told reporters on the sidelines of the Group of 7 summit. “It’s a very difficult economic situation.” More

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    Treasury Secretary Yellen Looks to Get Global Tax Deal Back on Track

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    The Treasury secretary is traveling to Warsaw, Brussels and Bonn, Germany, this week at an uncertain time for the global economy.WARSAW — Treasury Secretary Janet L. Yellen arrived in Europe this week to join U.S. allies in confronting multiple threats to the world economy: Russia’s war in Ukraine, soaring inflation and food shortages.But one of Ms. Yellen’s first orders of business during a stop in Poland will be trying to get the global tax deal that she brokered last year back on track after months of fledgling deliberations about how to enact it. The two-pronged pact among more than 130 countries that was reached last October aimed to eliminate corporate tax havens by enacting a 15 percent global minimum tax. It would also shift taxing rights among countries so that corporations pay taxes based on where their goods and services are sold rather than where their headquarters are.Turning the agreement into a reality is proving to be a steep challenge.The European Union has already delayed its timeline for putting the tax changes in place by a year and progress has been halted over objections by Poland, which last month vetoed a plan to enact the new tax rate by the end of next year. Despite initially signing on to the deal, Poland has voiced reservations, including whether the minimum tax will actually prevent big tech companies from seeking out lower-tax jurisdictions. Polish officials have also expressed concern that the two parts of the tax agreement are moving ahead at different paces, as well as trepidation about the impact that raising its tax rate will have on its economy at a time when the country is absorbing waves of Ukrainian refugees.In meetings in Warsaw on Monday, Ms. Yellen pressed top Polish officials to let the process move ahead, making clear that the tax deal continues to be a priority of the United States. She is meeting with Poland’s prime minister, Mateusz Morawiecki, and the finance minister, Magdalena Rzeczkowska.According to the Treasury Department, Ms Yellen told Mr. Morawiecki that international tax reform and the global minimum tax would raise crucial revenues to benefit the citizens of both Poland and the United States.The meetings come at the beginning of a weeklong trip that also includes stops in Brussels and Bonn, Germany, which is hosting the Group of 7 finance ministers’ summit. Ms. Yellen will be focusing on coordinating sanctions against Russia with European allies and addressing growing concerns about how disruptions to energy and food supplies could affect the global economy.Poland’s finance minister, Magdalena Rzeczkowska, former head of the country’s tax agency. Her country has raised concerns over potential loopholes and the impact of the global tax plan.Radek Pietruszka/EPA, via ShutterstockThe tax agreement has been one of Ms. Yellen’s top priories as Treasury secretary. Gaining Poland’s support is critical because the European Union requires consensus among its member states to enact the tax changes.“I think the reality of turning a political commitment into binding domestic legislation is a lot more complex,” said Manal Corwin, a Treasury official in the Obama administration who now heads the Washington national tax practice at KPMG. “The E.U. has moved and gotten over most of the objections, but they still have Poland and it’s not clear whether they’re going to be able to get the last vote.”With President Emmanuel Macron of France heading the European Union’s rotating presidency until June, his administration was eager to get a deal implemented. But at a meeting of European finance ministers in early April, Poland became the sole holdout, saying there were no ironclad guarantees that big multinational companies wouldn’t still be able to take advantage of low-tax jurisdictions if the two parts of the agreement did not move ahead in tandem, undercutting the global effort to avoid a race to the bottom when it comes to corporate taxation.Poland’s stance was sharply criticized by European officials, particularly France, whose finance minister, Bruno Le Maire, suggested that Warsaw was instead holding up a final accord in retaliation for a Europe-wide political dispute. Poland has threatened to veto measures requiring unanimous E.U. votes because of an earlier decision by Brussels to block pandemic recovery funds for Poland.The European Union had refused to disburse billions in aid to Poland since late last year, citing separate concerns over Warsaw’s interference with the independence of its judicial system. Last week, on the eve of Ms. Yellen’s visit to Poland, the European Commission came up with an 11th-hour deal unlocking 36 billion euros in pandemic recovery funds for Poland, which pledged to meet certain milestones such as judiciary and economic reforms, in return for the money.Negotiators from around the world have been working for months to resolve technical details of the agreement, such as what kinds of income would be subject to the new taxes and how the deal would be enforced. Failure to finalize the agreement would likely mean the further proliferation of the digital services taxes that European countries have imposed on American technology giants, much to the dismay of those firms and the Biden administration, which has threatened to impose tariffs on nations that adopt their own levies.“It’s fluid, it’s moving, it’s a moving target,” Pascal Saint-Amans, the director of the center for tax policy and administration at the Organization for Economic Cooperation and Development, said of the negotiations at the D.C. Bar’s annual tax conference this month. “There is an extremely ambitious timeline.”Countries like Ireland, with a historically low corporate tax rate, have been wary of increasing their rates if others do not follow suit, so it has been important to ensure that there is a common understanding of the new tax rules to avoid opening the door to new loopholes.“The idea of having multiple countries put the same rules in place is a new concept in tax,” said Barbara Angus, the global tax policy leader at Ernst & Young and a former chief tax counsel on the House Ways and Means Committee. She added that it was important to have a multilateral forum so countries could agree on how to interpret and apply the levies.Yet, while Ms. Yellen is pushing foreign nations to adopt the tax agreement, it remains unclear whether the United States will be able to pass its own legislation to come into compliance.An earlier effort by House Democrats to adopt a tax plan that would satisfy terms of the agreement fell apart in the Senate, where Democrats continue to disagree over the scope and cost of a tax and spending bill that President Biden has proposed.Rep. Kevin Brady of Texas, the ranking member on the House Ways and Means Committee, has led Republican opposition to an international tax agreement, saying it makes the United States “less competitive.”Anna Moneymaker/Getty ImagesRepublicans in Congress have made clear that they are unlikely to support any agreement that the Biden administration has brokered and called on the Treasury Department to consult with them before trying to move ahead.“As it is, there’s very little chance of a global minimum tax agreement — there is already resistance to approval at the E.U., which should be the easiest part of these discussions, and it will only get harder going forward,” said Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee. “Meanwhile, here in the U.S., there’s little political support for an agreement that makes the U.S. less competitive and takes a big bite out of our tax base.”Ms. Yellen is expected to convey to her counterparts this week that the agreement is still a priority for the Biden administration and that she hopes that the United States can make the tax changes needed to comply with the agreement in a small spending package later this year, according to a person familiar with the negotiations. 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    Fed Officials Are on the Defensive as High Inflation Lingers

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    Christopher Waller, a governor at the Federal Reserve, faced an uncomfortable task on Friday night: He delivered remarks at a conference packed with leading academic economists titled, suggestively, “How Monetary Policy Got Behind the Curve and How to Get Back.”Fed officials — who set America’s monetary policy — have found themselves on the defensive in Washington, on Wall Street and within the economics profession as inflation has run at its fastest rate in 40 years. Friday’s event, at Stanford University’s Hoover Institute, was the clearest expression yet of the growing sense of skepticism around the Fed’s recent policy approach.The Fed is raising interest rates, and on Wednesday lifted them by the largest increment since 2000. But prominent economists on Friday blasted America’s central bankers for being slow to realize that inflation was going to run meaningfully higher in 2021 as big government spending goosed consumer demand. They criticized the Fed for taking monetary policy support away from the economy too haltingly once it began to react. Some suggested that it was still moving tentatively when more decisive action was warranted.Mr. Waller defended and explained the decisions the Fed made last year. Many inflation forecasters failed to predict the 2021 price burst, he noted, pointing out that the Fed pivoted toward removing policy support starting as early as September, when it became clear that inflation was a problem.“The Fed was not alone in underestimating the strength of inflation that revealed itself in late 2021,” said Mr. Waller, who expected inflation to be slightly higher than many of his colleagues. He noted that the Fed’s policy-setting committee had to coalesce around policy moves, which can take time given its size: It has 12 regional presidents and up to seven governors in Washington.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: Times readers sent us their questions about rising prices. Top experts and economists weighed in.Interest Rates: As it seeks to curb inflation, the Federal Reserve began raising interest rates for the first time since 2018. Here is what the increases mean for consumers.How Americans Feel: We asked 2,200 people where they’ve noticed inflation. Many mentioned basic necessities, like food and gas.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.“This process may lead to more gradual changes in policy as members have to compromise in order to reach a consensus,” Mr. Waller said.Such explanations have done little to shield the Fed so far. Lawrence H. Summers, a former Harvard president and Treasury secretary, suggested earlier Friday that an economic overheating was predictable last year as the government spent heavily and that “it was reasonable to expect that the bathtub would overflow.” Kevin Warsh, a former Fed governor, called inflation “a clear and present danger to the American people,” and declared the Fed’s reaction “slow.”And even as the Fed comes under fire for responding too ploddingly as inflation pressures began to build, a new debate is evolving over how quickly — and how much — rates need to increase to catch up and wrestle fast price increases back under control.The Fed lifted interest rates half a percentage point this week and forecast more to come. Still, Jerome H. Powell, the Fed chair, said officials were not discussing an even larger, 0.75-point move — suggesting that central bankers are still hoping to control inflation without choking off growth abruptly and shocking the economy.“If supply constraints unwind quickly, we might only need to take policy back to neutral or go modestly above it to bring inflation back down,” Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, wrote in a post on Friday. “Neutral” refers to the policy setting that neither stokes nor slows the economy.Inflation F.A.Q.Card 1 of 6What is inflation? More

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    Fed Raises Interest Rate Half a Percentage Point, Largest Increase Since 2000

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    #g-target-rate-recessions-box , #g-target-rate-recessions-box .g-artboard { margin:0 auto; } #g-target-rate-recessions-box p { margin:0; } #g-target-rate-recessions-box .g-aiAbs { position:absolute; } #g-target-rate-recessions-box .g-aiImg { position:absolute; top:0; display:block; width:100% !important; } #g-target-rate-recessions-box .g-aiSymbol { position: absolute; box-sizing: border-box; } #g-target-rate-recessions-box .g-aiPointText p { white-space: nowrap; } #g-target-rate-recessions-335 { position:relative; overflow:hidden; } #g-target-rate-recessions-335 p { font-family:nyt-franklin,arial,helvetica,sans-serif; font-weight:700; line-height:15px; height:auto; opacity:1; […] More

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    Trump Officials Gave Pandemic Loan to Trucking Company Despite Objections

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    WASHINGTON — Democratic lawmakers on Wednesday released a report alleging that top Trump administration officials had awarded a $700 million pandemic relief loan to a struggling trucking company in 2020 over the objections of career officials at the Defense Department.The report, released by the Democratic staff of the House Select Subcommittee on the Coronavirus Crisis, describes the role of corporate lobbyists during the early months of the pandemic in helping to secure government funds as trillions of dollars of relief money were being pumped into the economy. It also suggests that senior officials such as Steven Mnuchin, the former Treasury secretary, and Mark T. Esper, the former defense secretary, intervened to ensure that the trucking company, Yellow Corporation, received special treatment despite concerns about its eligibility to receive relief funds.“Today’s select subcommittee staff report reveals yet another example of the Trump administration disregarding their obligation to be responsible stewards of taxpayer dollars,” Representative James E. Clyburn of South Carolina, the Democratic chairman of the subcommittee, said in a statement. “Political appointees risked hundreds of millions of dollars in public funds against the recommendations of career D.O.D. officials and in clear disregard of provisions of the CARES Act intended to protect national security and American taxpayers.”The $2.2 trillion pandemic relief package that Congress passed in 2020 included a $17 billion pot of money set up by Congress and controlled by the Treasury Department to assist companies that were considered critical to national security. In July 2020, the Treasury Department announced it was giving a $700 million loan to the trucking company YRC Worldwide, which has since changed its name to Yellow.Lobbyists for Yellow had been in close touch with White House officials throughout the loan process and had discussed how the company employs Teamsters as its drivers, according to the report.Mark Meadows, the White House chief of staff, was a “key actor” coordinating with Yellow’s lobbyists, according to correspondences that the committee obtained. The report also noted that the White House’s political operation was “almost giddy” in its effort to assist with the application.The loan raised immediate questions from watchdog groups because of the company’s close ties to the Trump administration and because it had faced years of financial and legal turmoil. The firm had lost more than $100 million in 2019 and was being sued by the Justice Department over claims that it had defrauded the federal government for a seven-year period. It recently agreed to pay $6.85 million to resolve allegations “that they knowingly presented false claims to the U.S. Department of Defense by systematically overcharging for freight carrier services and making false statements to hide their misconduct.”To qualify for a national security loan, a company needed certification by the Defense Department.According to the report, defense officials had recommended against certification because of the accusations that the company had overcharged the government. They also noted that the work that the company had been doing for the federal government — which included shipping meal kits, protective equipment and other supplies to military bases — could be replaced by other trucking firms.But the day after a defense official notified a Treasury official that the company would not be certified, one of Mr. Mnuchin’s aides set up a telephone call between him and Mr. Esper.The report indicated that Mr. Esper was not initially familiar with the status of Yellow’s certification. Before the call, aides prepared a summary of the analysis and recommendations of the department’s career officials that concluded that the certification should be rejected. Before those reached Mr. Esper, Ellen M. Lord, the department’s under secretary for acquisition and sustainment who was appointed by Mr. Trump, intervened and requested a new set of talking points that argued that the company should receive the financial support “to both support force readiness and national economic security.” Ms. Lord could not immediately be reached for comment.After the call with Mr. Mnuchin, Mr. Esper certified that the company was critical to national security, and a week later the approval of the loan was announced.Mr. Mnuchin then sent an email to Mr. Meadows that included news reports praising the loan. He highlighted positive comments from James P. Hoffa, the longtime president of the Teamsters union, who according to documents in the report made a direct plea to President Donald J. Trump about the loan.Mr. Esper and Mr. Mnuchin declined to comment. A former Treasury official familiar with the process said the loan saved 25,000 union jobs during an economic crisis and prevented disruption to the national supply chain that the Defense Department, businesses and consumers had depended on. The former official said that because of the terms of the loan, taxpayers were profiting from the agreement.A spokesman for Mr. Esper said that the company met the criteria to be eligible for the loan and emphasized that the report made clear that senior staff at the Defense Department recommended that he certify it. The Treasury Department made the final decision to issue the loan, the spokesman added.The Trump InvestigationsCard 1 of 6Numerous inquiries. More

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

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