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    Why Are Oil Prices So High and Will They Stay That Way?

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    HOUSTON — Oil prices are increasing, again, casting a shadow over the economy, driving up inflation and eroding consumer confidence.Crude prices rose more than 15 percent in January alone, with the global benchmark price crossing $90 a barrel for the first time in more than seven years, as fears of a Russian invasion of Ukraine grew.Though the summer driving season is still months away, the average price for regular gasoline is fast approaching $3.40 a gallon, roughly a dollar higher than it was a year ago, according to AAA.The Biden administration said in November that it would release 50 million barrels of oil from the nation’s strategic reserves to relieve the pressure on consumers, but the move hasn’t made much of a difference.Many energy analysts predict that oil could soon touch $100 a barrel, even as electric cars become more popular and the coronavirus pandemic persists. Exxon Mobil and other oil companies that only a year ago were considered endangered dinosaurs by some Wall Street analysts are thriving, raking in their biggest profits in years.Why are oil prices suddenly so high?The pandemic depressed energy prices in 2020, even sending the U.S. benchmark oil price below zero for the first time ever. But prices have snapped back faster and more than many analysts had expected in large part because supply has not kept up with demand.Oil prices are at their highest point since 2014.Price of a barrel of Brent crude, the global benchmark, and West Texas Intermediate, the U.S. standard

    Source: FactSetBy The New York TimesWestern oil companies, partly under pressure from investors and environmental activists, are drilling fewer wells than they did before the pandemic to restrain the increase in supply. Industry executives say they are trying not to make the same mistake they made in the past when they pumped too much oil when prices were high, leading to a collapse in prices.Elsewhere, in countries like Ecuador, Kazakhstan and Libya, natural disasters and political turbulence have curbed output in recent months.Understand Russia’s Relationship With the WestThe tension between the regions is growing and Russian President Vladimir Putin is increasingly willing to take geopolitical risks and assert his demands.Competing for Influence: For months, the threat of confrontation has been growing in a stretch of Europe from the Baltic Sea to the Black Sea. Threat of Invasion: As the Russian military builds its presence near Ukraine, Western nations are seeking to avert a worsening of the situation.Energy Politics: Europe is a huge customer of Russia’s fossil fuels. The rising tensions in Ukraine are driving fears of a midwinter cutoff.Migrant Crisis: As people gathered on the eastern border of the European Union, Russia’s uneasy alliance with Belarus triggered additional friction.Militarizing Society: With a “youth army” and initiatives promoting patriotism, the Russian government is pushing the idea that a fight might be coming.“Unplanned outages have flipped what was thought to be a pivot towards surplus into a deep production gap,” said Louise Dickson, an oil markets analyst at Rystad Energy, a research and consulting firm.On the demand side, much of the world is learning to cope with the pandemic and people are eager to shop and make other trips. Wary of coming in contact with an infectious virus, many are choosing to drive rather than taking public transportation.But the most immediate and critical factor is geopolitical.A potential Russian invasion of Ukraine has “the oil market on edge,” said Ben Cahill, a senior fellow at the Center for Strategic and International Studies in Washington. “In a tight market, any significant disruptions could send prices well above $100 per barrel,” Mr. Cahill wrote in a report this week.Russia produces 10 million barrels of oil a day, or roughly one of every 10 barrels used around the world on any given day. Americans would not be directly hurt in a significant way if Russian exports stopped, because the country sends only about 700,000 barrels a day to the United States. That relatively modest amount could easily be replaced with oil from Canada and other countries.A Russian invasion of Ukraine could interrupt oil and gas shipments, which would increase prices further.Brendan Hoffman for The New York TimesBut any interruption of Russian shipments that transit through Ukraine, or the sabotage of other pipelines in northern Europe, would cripple much of the continent and distort the global energy supply chain. That’s because, traders say, the rest of the world does not have the spare capacity to replace Russian oil.Even if Russian oil shipments are not interrupted, the United States and its allies could impose sanctions or export controls on Russian companies, limiting their access to equipment, which could gradually reduce production in that country.In addition, interruptions of Russian natural gas exports to Europe could force some utilities to produce more electricity by burning oil rather than gas. That would raise demand and prices worldwide.What can the United States and its allies do if Russian production is disrupted?The United States, Japan, European countries and even China could release more crude from their strategic reserves. Such moves could help, especially if a crisis is short-lived. But the reserves would not be nearly enough if Russian oil supplies were interrupted for months or years.Western oil companies that have pledged not to produce too much oil would most likely change their approach if Russia was unable or unwilling to supply as much oil as it did. They would have big financial incentives — from a surging oil price — to drill more wells. That said, it would take those businesses months to ramp up production.What is OPEC doing?President Biden has been urging the Organization of the Petroleum Exporting Countries to pump more oil, but several members have been falling short of their monthly production quotas, and some may not have the capacity to quickly increase output. OPEC members and their allies, Russia among them, are meeting on Wednesday, and will probably agree to continue gradually increasing production.In addition, if Russian supplies are suddenly reduced, Washington will most likely put pressure on Saudi Arabia to raise production independently of the cartel. Analysts think that the kingdom has several million barrels of spare capacity that it could tap in a crisis.What impact would higher oil prices have on the U.S. economy?A big jump in oil prices would push gasoline prices even higher, and that would hurt consumers. Working-class and rural Americans would be hurt the most because they tend to drive more. They also drive older, less fuel-efficient vehicles. And energy costs tend to represent a larger percentage of their incomes, so price increases hit them harder than more affluent people or city dwellers who have access to trains and buses.Rising oil and gas prices would pinch consumers, especially the less affluent and rural residents.Jim Lo Scalzo/EPA, via ShutterstockBut the direct economic impact on the nation would be more modest than in previous decades because the United States produces more and imports less oil since drilling in shale fields exploded around 2010 because of hydraulic fracturing. The United States is now a net exporter of fossil fuels, and the economies of several states, particularly Texas and Louisiana, could benefit from higher prices.What would it take for oil prices to fall?Oil prices go up and down in cycles, and there are several reasons prices could fall in the next few months. The pandemic is far from over, and China has shut down several cities to stop the spread of the virus, slowing its economy and demand for energy. Russia and the West could reach an agreement — formal or tacit — that forestalls a full-scale invasion of Ukraine.And the United States and its allies could restore a 2015 nuclear agreement with Iran that former President Donald J. Trump abandoned. Such a deal would allow Iran to sell oil much more easily than now. Analysts think the country could export a million or more barrels daily if the nuclear deal is revived.Ultimately, high prices could depress demand for oil enough that prices begin to come down. One of the main financial incentives for buying electric cars, for example, is that electricity tends to be cheaper per mile than gasoline. Sales of electric cars are growing fast in Europe and China and increasingly also in the United States. More

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    What a Disconnect From Swift Would Mean for Russia

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    A Belgian financial messaging service is once again at the center of an international sanctions fight.WASHINGTON — President Biden has pledged that if Russia invades Ukraine it will face “severe economic consequences,” with the United States likely to unleash a blistering package of sanctions that would effectively cut the Russian economy off from much of the global financial system.The United States has become increasingly reliant on sanctions in the last decade as a way to address diplomatic problems, but directing such tools at an economy the size of Russia’s would come with little precedent. The Biden administration has said that all options remain on the table, suggesting that it could impose an array of sanctions on Russian financial institutions and new restrictions on the exports of American products. But the biggest question among sanctions experts when it comes to inflicting economic pain on Russia is the fate of a critical financial conduit: Swift.In sanctions circles, a move by the United States and its European allies to cut Russia off from Swift has been characterized as a nuclear option. However, doing so is not as simple as it sounds and could yield unintended consequences because of Russia’s size and position in the world economy.“The Russian economy is a different beast,” said Adam M. Smith, who served as a senior sanctions official in the Obama administration’s Treasury Department. “It is twice the size of any economy the U.S. has ever sanctioned.”A Treasury Department spokeswoman said the Biden administration was assessing potential “spillovers” from any sanctions it imposes on Russia and exploring ways to reduce any unintended negative effects. Last week, Biden administration officials met with representatives from U.S. banks to discuss the risks and potential market impacts of sanctions on Russia, including the possible ramifications of cutting off Swift access for entities that had been hit with sanctions.Understand Russia’s Relationship With the WestThe tension between the regions is growing and Russian President Vladimir Putin is increasingly willing to take geopolitical risks and assert his demands.Competing for Influence: For months, the threat of confrontation has been growing in a stretch of Europe from the Baltic Sea to the Black Sea. Threat of Invasion: As the Russian military builds its presence near Ukraine, Western nations are seeking to avert a worsening of the situation.Energy Politics: Europe is a huge customer of Russia’s fossil fuels. The rising tensions in Ukraine are driving fears of a midwinter cutoff.Migrant Crisis: As people gathered on the eastern border of the European Union, Russia’s uneasy alliance with Belarus triggered additional friction.Militarizing Society: With a “youth army” and initiatives promoting patriotism, the Russian government is pushing the idea that a fight might be coming.What is Swift?Officially the Society for Worldwide Interbank Financial Telecommunications, Swift is a Belgian messaging service that connects more than 11,000 financial institutions as they transfer money around the world. It does not actually hold or transfer funds, but allows banks and other financial firms to alert one another of transactions that are about to take place.Swift is a global cooperative of financial institutions that is based in Belgium. It started in 1973 when 239 banks from 15 countries came together to figure out how to best handle cross-border payments.Despite its best efforts to be an apolitical cog in the international financial system, Swift has at times found itself embroiled in diplomatic disputes.Can Russia be booted from Swift?There have been continuing discussions between the United States and its allies in Europe over whether to block Russia’s access to Swift. However, the Biden administration could take that step unilaterally.If the United States decided to levy sanctions on Russian banks, it could then say that Swift was in violation of those sanctions by continuing to let those banks use its system. The Defending Ukraine Sovereignty Act of 2022, which Senate Democrats unveiled this month, would authorize sanctions on providers of specialized financial messaging services, such as Swift, but the Biden administration could also impose such sanctions without the approval of Congress.Cutting a country’s access to Swift is not without precedent.In 2012, Swift expelled as many as 30 Iranian financial institutions, including its central bank, in order to comply with European Union sanctions that were enacted in response to Iran’s disputed nuclear energy program. Services were reconnected after the 2015 nuclear deal, and then cut again in 2018 after the Trump administration withdrew from the pact and resumed sanctions.How would Russia respond to being removed?Russia has faced such threats before. In 2014, when Russia invaded and annexed Crimea, there were calls in Europe to exclude Russia from Swift. Dmitri A. Medvedev, then Russia’s prime minister, said at the time that such a move would be a “declaration of war.” According to the Carnegie Moscow Center, Russian forecasts at the time projected that being cut off from Swift would shrink the country’s gross domestic product by 5 percent.Last week, Nikolay Zhuravlev, the vice speaker of Russia’s Federation Council, told the government-run news agency TASS that removing Russia from Swift would also have economic consequences for European countries, which he said would not be able to receive imports of Russian oil, gas and metals as a result of Russia’s being unable to receive foreign currency.Mr. Smith, the former Treasury official, said the United States and Europe might look for ways to exempt certain Russian sectors, such as energy, from sanctions. However, moves to cut off Russia’s economy could have unintended consequences, such as Moscow retaliating, that could rattle global markets.“They are not without their own cards to play,” he said.A switch to Swift alternativesThe threat of being cut off from Swift might not be as dire as it was in the past.Several countries including Russia have developed their own financial messaging systems that, while less sophisticated than Swift, could allow Russian financial firms to maintain communications with the world. Russia began developing its system in 2014 amid threats of escalating sanctions from the United States.Mr. Medvedev, who is now the deputy chairman of the Security Council of Russia, said last week that the new system was functional and that financial flows would be able to continue within Russia if the country was cut off from Swift. He acknowledged that international financial transfers could be complicated if that happened.“Yes, they will be more difficult, it is obvious, but it won’t be a catastrophe,” Mr. Medvedev said.Some experts on Russia sanctions agree that Western officials are overplaying the potential effects of disconnecting Russia from Swift.“Cutting Russia off from Swift — it won’t be as painful for Russia as Western officials envision,” said Maria Snegovaya, a visiting scholar at George Washington University and a co-author of an Atlantic Council report on U.S. sanctions on Russia.Edward Wong More

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    U.S. Sanctions Aimed at Russia Could Take a Wide Toll

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    The boldest measures that President Biden is threatening to deter an invasion of Ukraine could roil the entire Russian economy — but also those of other nations.WASHINGTON — The most punishing sanctions that U.S. officials have threatened to impose on Russia could cause severe inflation, a stock market crash and other forms of financial panic that would inflict pain on its people — from billionaires to government officials to middle-class families.U.S. officials vow to unleash searing economic measures if Russia invades Ukraine, including sanctions on its largest banks and financial institutions, in ways that would inevitably affect daily life in Russia.But the strategy comes with political and economic risks. No nation has ever tried to enact broad sanctions against such large financial institutions and on an economy the size of Russia’s. And the “swift and severe” response that U.S. officials have promised could roil major economies, particularly those in Europe, and even threaten the stability of the global financial system, analysts say.Some analysts also warn of a potential escalatory spiral. Russia might retaliate against an economic gut punch by cutting off natural gas shipments to Europe or by mounting cyberattacks against American and European infrastructure.The pain caused by the sanctions could foment popular anger against Russia’s president, Vladimir V. Putin. But history shows that the country does not capitulate easily, and resilience is an important part of its national identity. U.S. officials are also sensitive to the notion that they could be viewed as punishing the Russian people — a perception that might fuel anti-Americanism and Mr. Putin’s narrative that his country is being persecuted by the West.From Cuba to North Korea to Iran, U.S. sanctions have a mixed record at best of forcing a change in behavior. And while the Biden administration and its European allies are trying to deter Mr. Putin with tough talk, some experts question whether they would follow through on the most drastic economic measures if Russian troops breached the border and moved toward Kyiv, Ukraine’s capital.President Biden has said he will not send American troops to defend Ukraine. Instead, U.S. officials are trying to devise a sanctions response that would land a damaging blow against Russia while limiting the economic shock waves around the world — including in the United States. Officials say that for now, the Biden administration does not plan to target Russia’s enormous oil and gas export industry; doing so could drive up gasoline prices for Americans already grappling with inflation and create a schism with European allies.But many experts on sanctions believe that the boldest sanctions against Russia’s financial industry, if enacted, could take a meaningful toll.“If the Biden administration follows through on its threat to sanction major Russian banks, that will reverberate across the entire Russian economy,” said Edward Fishman, who served as the top official for Russia and Europe in the State Department’s Office of Economic Sanctions Policy and Implementation during the Obama administration. “It will definitely affect everyday Russians.”Mr. Fishman added: “How are you going to change Putin’s calculus? By creating domestic disturbances. People will be unhappy: ‘Look what you did — all of a sudden my bank account is a fraction of what it was? Thanks, Putin.’”Understand Russia’s Relationship With the WestThe tension between the regions is growing and Russian President Vladimir Putin is increasingly willing to take geopolitical risks and assert his demands.Competing for Influence: For months, the threat of confrontation has been growing in a stretch of Europe from the Baltic Sea to the Black Sea. Threat of Invasion: As the Russian military builds its presence near Ukraine, Western nations are seeking to avert a worsening of the situation.Energy Politics: Europe is a huge customer of Russia’s fossil fuels. The rising tensions in Ukraine are driving fears of a midwinter cutoff.Migrant Crisis: As people gathered on the eastern border of the European Union, Russia’s uneasy alliance with Belarus triggered additional friction.Militarizing Society: With a “youth army” and initiatives promoting patriotism, the Russian government is pushing the idea that a fight might be coming.Sanctions imposed after Mr. Putin annexed Ukraine’s Crimean Peninsula in 2014 and gave military support to an insurgency in the country’s east created a modest drag on Russia’s economy. Those penalties and later ones took a surgical approach, heavily targeting Mr. Putin’s circle of elites as well as officials and institutions involved in aggression against Ukraine, in part to avoid making ordinary Russians suffer.U.S. officials say the impact of sanctions now would be categorically different.Washington is looking to take a sledgehammer to pillars of Russia’s financial system. The new sanctions that American officials are preparing would cut off foreign lending, sales of sovereign bonds, technologies for critical industries and the assets of elite citizens close to Mr. Putin.Previous sanctions heavily targeted Mr. Putin’s circle of elites as well as officials and institutions involved in aggression against Ukraine, in part to avoid making ordinary Russians suffer.Alexander Zemlianichenko/Associated PressBut the real damage to Russia’s $1.5 trillion economy would come from hitting the biggest state banks as well as the government’s Russian Direct Investment Fund, which has prominent Western executives on its advisory board. The Treasury Department would draw from its experience targeting Iranian banks under President Donald J. Trump, though Iran’s banks are much smaller and less integrated into the global economy than Russian banks.Once the department puts the Russian banks on what officials call its “game over” sanctions list, known as the S.D.N. list, foreign entities around the world would stop doing business with the banks, which would have a big effect on Russian companies.The United States would also enact sanctions to cut lending to Russia by foreign creditors by potentially $100 billion or more, according to Anders Aslund, an economist and an author of an Atlantic Council report on U.S. sanctions on Russia. Though Russia has taken steps since 2014 to rely less on foreign debt for expenses, such a loss could still devalue the ruble, shake the stock market and freeze bond trading, Mr. Aslund added.His report estimated that the 2014 sanctions reduced Russia’s annual economic growth by up to 3 percent, and new sanctions could bite much harder.For an average Russian, the harshest U.S. measures could mean higher prices for food and clothing, or, more dramatically, they could cause pensions and savings accounts to be severely devalued by a crash in the ruble or Russian markets.“It would be a disaster, a nightmare for the domestic financial market,” said Sergey Aleksashenko, a former first deputy chairman of the Central Bank of Russia and former chairman of Merrill Lynch Russia. He noted that the ruble had already fallen more than 10 percent from its October value against the dollar, amid increasing talk of Western sanctions.In a sign of the growing seriousness, officials from the National Security Council have been talking with executives from some of Wall Street’s largest banks, including Goldman Sachs, Citigroup, JPMorgan Chase and Bank of America, about the stability of the global financial system in the wake of potential sanctions.The European Central Bank has also warned bank lenders to Russia about risks if the United States imposes sanctions and has asked about the sizes of their loans.For now, though, American officials are not considering any immediate sanctions on the foundation of Russia’s economy: its oil and gas exports.​​European nations rely on natural gas from Russia, and several U.S. allies, notably Germany, prefer that Washington refrain from disrupting the Russian energy industry. Analysts say sanctions that limit Russia’s ability to export oil and gas would be by far the most powerful weapon against the Russian economy, and perhaps the most effective economic deterrent against an invasion of Ukraine, but they would also cause pain in Europe and the United States.“At some point, the West will have to sacrifice a little bit of its well-being if the goal is to deter Putin,” said Maria Snegovaya, a visiting scholar at George Washington University and an author of the Atlantic Council report.“U.S. inflation further constrains the administration’s actions,” she added. “Inflation is already unprecedented for the last 30 years. Any action against Russia that is dramatic will lead to changes in oil and gas prices.”Understand the Escalating Tensions Over UkraineCard 1 of 5A brewing conflict. More

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    Democrats Renew Push for Industrial Policy Bill Aimed at China

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    A major competitiveness bill passed the Senate last year with bipartisan support, only to stall. Democrats hope to revive it in the House, but first they will have to bridge big differences.WASHINGTON — Biden administration officials and Democrats in Congress are pushing to revive stalled legislation that would pour billions of dollars into scientific research and development and shore up domestic manufacturing, amid deep differences on Capitol Hill about the best way to counter China and confront persistent supply chain woes.House Democrats unveiled a 2,900-page bill on Tuesday evening that would authorize $45 billion in grants and loans to support supply chain resilience and American manufacturing, along with providing billions of dollars in new funding for scientific research. Speaker Nancy Pelosi said in a statement that she hoped lawmakers would quickly begin negotiations with the Senate, which passed its own version of the bill last June, to settle on compromise legislation that could be sent to President Biden for his signature.But the effort faces obstacles in Congress, where attempts to sink significant federal resources into scientific research and development to bolster competitiveness with China and combat a shortage of semiconductors have faltered. The Senate-passed measure fizzled last year amid ideological disputes with the House and a focus on efforts to pass Mr. Biden’s infrastructure and social policy bills. For months, the competitiveness measure was rarely even mentioned, except perhaps by Senator Chuck Schumer, Democrat of New York and the majority leader, who has personally championed it.But facing a disruptive semiconductor shortage that has broken down supply chains and helped fuel inflation, Democrats are now vigorously pressing ahead on the bill. With Mr. Biden’s domestic agenda sputtering, the party is eager for a legislative victory, and top administration officials and lawmakers have said they hope to send a compromise bill to the president’s desk in a matter of months.“We have no time to waste in improving American competitiveness, strengthening our lead in global innovation and addressing supply chain challenges, including in the semiconductor industry,” Mr. Schumer said.Both the House bill and the one that passed the Senate last year would send a lifeline to the semiconductor industry during a global chip shortage that has shut auto plants and rippled through the economy. The bills would offer chip companies $52 billion in grants and subsidies with few restrictions.The measures would also pour billions more into scientific research and development pipelines in the United States, create grants and foster agreements between companies and research universities to encourage breakthroughs in new technologies, and establish new manufacturing jobs and apprenticeships.“The proposals laid out by the House and Senate represent the sort of transformational investments in our industrial base and research and development that helped power the United States to lead the global economy in the 20th century,” Mr. Biden said in a statement. “They’ll help bring manufacturing jobs back to the United States, and they’re squarely focused on easing the sort of supply chain bottlenecks like semiconductors that have led to higher prices for the middle class.”The semiconductor shortage has disrupted the economy, broken down supply chains and helped fuel inflation.Sarahbeth Maney/The New York TimesLawmakers will still need to overcome differing views in the House and Senate over how best to take on China and, perhaps more crucially, how to fund the nation’s scientific research.“There are disagreements, legitimate disagreements,” Gina Raimondo, the commerce secretary, said in an interview. “How do we do this? How do we get it right? There doesn’t seem to be much disagreement over the core $52 billion appropriation for chips. There is disagreement around how we make investments in research and development in basic science.”One major difference is that while the Senate bill invests heavily in specific fields of cutting-edge technology, such as artificial intelligence and quantum computing, the House bill places few stipulations on the new round of funding, other than to say that it should go toward fundamental research.In a memo on the legislation, House aides wrote that their measure was “focusing on solutions first, not tech buzzwords.”Some experts argue that approach lacks urgency. Stephen Ezell, the vice president for global innovation policy at the Information Technology and Innovation Foundation, a policy group that receives funding from telecommunications and tech companies, called the House bill “not sufficient to enable the United States to win the advanced technology competition with China.” He argued that the focus on advanced technology in the Senate-passed bill would do more to increase American competitiveness.How the Supply Chain Crisis UnfoldedCard 1 of 9The pandemic sparked the problem. More

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    U.S. Effort to Combat Forced Labor Targets Corporate China Ties

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    The Biden administration is expected to face scrutiny as it decides how to enforce a new ban on products made with forced labor in the Xinjiang region of China.A far-reaching bill aimed at barring products made with forced labor in China became law after President Biden signed the bill on Thursday.But the next four months — during which the Biden administration will convene hearings to investigate how pervasive forced labor is and what to do about it — will be crucial in determining how far the legislation goes in altering the behavior of companies that source products from China.While it is against U.S. law to knowingly import goods made with slave labor, the Uyghur Forced Labor Prevention Act shifts the burden of proof to companies from customs officials. Firms will have to proactively prove that their factories, and those of all their suppliers, do not use slavery or coercion.The law, which passed the House and Senate nearly unanimously, is Washington’s first comprehensive effort to police supply chains that the United States says exploit persecuted minorities, and its impact could be sweeping. A wide range of products and raw materials — such as petroleum, cotton, minerals and sugar — flow from the Xinjiang region of China, where accusations of forced labor proliferate. Those materials are often used in Chinese factories that manufacture products for global companies.“I anticipate that there will be many companies — even entire industries — that will be taken by surprise when they realize that their supply chains can also be traced back to the Uyghur region,” said Laura Murphy, a professor of human rights and contemporary slavery at Sheffield Hallam University in Britain.If the law is enforced as written, it could force many companies to rework how they do business or risk having products blocked at the U.S. border. Those high stakes are expected to set off a crush of lobbying by companies trying to ease the burden on their industries as the government writes the guidelines that importers must follow.“Genuine, effective enforcement will most likely mean there will be pushback by corporations and an attempt to create loopholes,” said Cathy Feingold, the international director of the A.F.L.-C.I.O. “So the implementation will be key.”Behind-the-scenes negotiations before the bill’s passage provided an early indication of how consequential the legislation could be for some of America’s biggest companies, as business groups like the U.S. Chamber of Commerce and brand names like Nike and Coca-Cola worked to limit the bill’s scope.The Biden administration has labeled the Chinese government’s actions in Xinjiang — including the detention of more than a million Uyghurs and other predominantly Muslim minorities, as well as forced conversions, sterilization and arbitrary or unlawful killings — as genocide.Human rights experts say that Beijing’s policies of moving Uyghurs into farms and factories that feed the global supply chain are an integral part of its repression in Xinjiang, an attempt to assimilate minorities and strip them of their culture and religion..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-1g3vlj0{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-1g3vlj0{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-1g3vlj0 strong{font-weight:600;}.css-1g3vlj0 em{font-style:italic;}.css-1g3vlj0{margin-bottom:0;margin-top:0.25rem;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}In a statement last week, Jen Psaki, the White House press secretary, said that Mr. Biden welcomed the bill’s passage and agreed with Congress “that action can and must be taken to hold the People’s Republic of China accountable for genocide and human rights abuses and to address forced labor in Xinjiang.” She added that the administration would “work closely with Congress to implement this bill to ensure global supply chains are free of forced labor.”Yet some members of the administration argued behind closed doors that the bill’s scope could overwhelm U.S. regulators and lead to further supply chain disruptions at a time when inflation is accelerating at a nearly 40-year high, according to interviews with more than two dozen government officials, members of Congress and their staff. Some officials also expressed concerns that an aggressive ban on Chinese imports could put the administration’s goals for fighting climate change at risk, given China’s dominance of solar panels and components to make them, people familiar with the discussions said.John Kerry, Mr. Biden’s special envoy for climate change, and Wendy R. Sherman, the deputy secretary of state, separately conveyed some of those concerns in calls to Democratic members of Congress in recent months, according to four people familiar with the discussions.Senator Marco Rubio, Republican of Florida and one of the bill’s lead authors, criticized those looking to limit its impact, saying that companies that want to continue to import products and officials who are reluctant to rock the boat with China “are not just going to give up.” He added, “They’re all going to try to weigh in on how it’s implemented.”A solar farm near Wenquan, China. The Xinjiang region’s substantial presence in the solar supply chain has been a key source of tension in the Biden administration.Gilles Sabrié for The New York TimesOne reason the stakes are so high is because of the critical role that Xinjiang may play in many supply chains. The region, twice the size of Texas, is rich in raw materials like coal and oil and crops like tomatoes, lavender and hops; it is also a significant producer of electronics, sneakers and clothing. By some estimates, it provides one-fifth of the world’s cotton and 45 percent of the world’s polysilicon, a key ingredient for solar panels.Xinjiang’s substantial presence in the solar supply chain has been a key source of tension in the Biden administration, which is counting on solar power to help the United States reach its goal of significantly cutting carbon emissions by the end of the decade.In meetings this year, Biden administration officials weighed how difficult it would be for importers to bypass Xinjiang and relocate supply chains for solar goods and other products, according to three government officials. Officials from the Labor Department and the United States Trade Representative were more sympathetic to a far-reaching ban on Xinjiang goods, according to three people familiar with the discussions. Some officials in charge of climate, energy and the economy argued against a sweeping ban, saying it would wreak havoc on supply chains or compromise the fight against climate change, those people said.Ana Hinojosa, who was the executive director of Customs and Border Protection and led the government’s enforcement of forced labor provisions until she left the post in October, said that agencies responsible for “competing priorities” like climate change had voiced concerns about the legislation’s impact. Companies and various government agencies became nervous that the law’s broad authorities could prove “devastating to the U.S. economy,” she said.“The need to improve our clean energy is real and important, but not something that the government or the U.S. should do on the backs of people who are working under conditions of modern-day slavery,” Ms. Hinojosa added.In a call with Speaker Nancy Pelosi of California this year, Mr. Kerry conveyed concerns about disrupting solar supply chains while Ms. Sherman shared her concerns with Senator Jeff Merkley, Democrat of Oregon, according to people familiar with the conversations.Mr. Merkley, one of the lead sponsors of the bill, said in an interview that Ms. Sherman told him she was concerned the legislation was not duly “targeted and deliberative.” The conversation was first reported by The Washington Post.“I think this is a targeted and deliberative approach,” Mr. Merkley said. “And I think the administration is starting to see how strongly Republicans and Democrats in both chambers feel about this.”A State Department official said that Ms. Sherman did not initiate the call and did not express opposition to the bill. Whitney Smith, a spokeswoman for Mr. Kerry, said any accusations he lobbied against the Uyghur Forced Labor Prevention Act were “false.” Ms. Pelosi declined to discuss private conversations.Nury Turkel, a Uyghur-American lawyer who is the vice chairman of the U.S. Commission on International Religious Freedom, said the United States must “tackle both genocide and ecocide.”“Policymakers and climate activists are making it a choice between saving the world and turning a blind eye to the enslavement of Uyghurs,” he said. “It is false, and we cannot allow ourselves to be forced into it.”Administration officials have also argued that the United States can take a strong stance against forced labor while developing a robust solar supply chain. Emily Horne, a spokeswoman for the National Security Council, said that Mr. Biden “believes what is going on in Xinjiang is genocide” and that the administration had taken a range of actions to combat human rights abuses in the region, including financial sanctions, visa restrictions, export controls, import restrictions and a diplomatic boycott of the 2022 Beijing Olympics in February.“We have taken action to hold the P.R.C. accountable for its human rights abuses and to address forced labor in Xinjiang,” Ms. Horne said, using the abbreviation for the People’s Republic of China. “And we will continue to do so.”Farm workers picking cotton near Qapqal, China, in 2015. By some estimates, Xinjiang produces one-fifth of the world’s cotton.Adam Dean for The New York TimesThe law highlights the delicate U.S.-China relationship, in which policymakers must figure out how to confront anti-Democratic practices while the United States is economically dependent on Chinese factories. China remains the largest supplier of goods to the United States.One of the biggest hurdles for U.S. businesses is determining whether their products touched Xinjiang at any point in the supply chain. Many companies complain that beyond their direct suppliers, they lack the leverage to demand information from the Chinese firms that manufacture raw materials and parts.Government restrictions that bar foreigners from unfettered access to sites in Xinjiang have made it difficult for many businesses to investigate their supply chains. New Chinese antisanctions rules, which threaten penalties against companies that comply with U.S. restrictions, have made vetting even more difficult.The Chinese government denies forced labor is used in Xinjiang. Zhao Lijian, a government spokesman, said U.S. politicians were “seeking to contain China and hold back China’s development through political manipulation and economic bullying in the name of ‘human rights.’” He promised a “resolute response” if the bill became law.Lawmakers struggled over the past year to reconcile a more aggressive House version of the legislation with one in the Senate, which gave companies longer timelines to make changes and stripped out the S.E.C. reporting requirement, among other differences.The final bill included a mechanism to create lists of entities and products that use forced labor or aid in the transfer of persecuted workers to factories around China. Businesses like Apple had lobbied for the creation of such lists, believing they would provide more certainty for businesses seeking to avoid entities of concern.Lisa Friedman More

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    As Humanitarian Disaster Looms, U.S. Opens Door for More Afghanistan Aid

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    The Treasury Department and the United Nations offered new protection for aid from sanctions meant to pressure the Taliban.Facing pressure to prevent a humanitarian and economic catastrophe in Afghanistan, the Biden administration on Wednesday took steps to allow more aid to flow into the Taliban-led country.The measures exempt aid groups from stringent economic sanctions that were imposed against the Taliban before they seized control of the government and have been strangling Afghanistan’s economy under its leadership. But diplomats and activists said that easing the restrictions might not be enough to rescue the country from what one U.N. official on Wednesday called “shocking” need and suffering.At the same time, some Republicans said the Biden administration risked legitimizing and even funding Taliban leaders.The U.S. actions and mixed response underscore the challenge that Afghanistan continues to pose for the Biden administration four months after the last American troops withdrew from the country. Administration officials have been struggling to address the dire humanitarian needs without empowering the Taliban.The United States fought a 20-year war against the Taliban and does not recognize them as the legitimate government of Afghanistan. After the group’s takeover in August, the Biden administration halted most aid to Afghanistan, froze $9.5 billion of its foreign reserves and pressured the International Monetary Fund to delay emergency support.A combination of the coronavirus pandemic, a severe drought, the loss of foreign aid and frozen currency reserves have left Afghanistan’s fragile economy on the brink of collapse, with aid groups warning that the harsh winter could lead to mass starvation and a refugee crisis.After weeks of calls for swifter action, the Treasury Department said on Wednesday that it was issuing new “general licenses” that would make it easier for nongovernmental organizations, international aid groups and the U.S. government to provide relief to Afghans while maintaining economic leverage over the Taliban to prevent human rights abuses and terrorist activity..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-1g3vlj0{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-1g3vlj0{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-1g3vlj0 strong{font-weight:600;}.css-1g3vlj0 em{font-style:italic;}.css-1g3vlj0{margin-bottom:0;margin-top:0.25rem;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}The actions came soon after the United Nations Security Council passed a related resolution, sponsored by the United States, that exempts humanitarian activities in Afghanistan from international sanctions for a year.Biden administration officials note that the United States remains the world’s top provider of humanitarian aid to Afghanistan, even after it cut off most assistance after the Taliban takeover.“We are committed to supporting the people of Afghanistan,” Wally Adeyemo, the deputy Treasury secretary, said in a statement.The department’s general licenses allow financial transactions involving the Taliban and members of the Haqqani network, who share power in the new Afghan government, as long as the money is used for purposes such as projects to meet basic human needs, civil society development, environmental and natural resource protection and similar efforts. The United States considers both groups terrorist organizations.The Treasury move expands the type of relief activity that can take place in Afghanistan and broadens the level of contact that international groups can have with the Taliban. It also allows the Taliban to collect taxes related to that assistance.Alex Zerden, the Treasury Department’s financial attaché at the U.S. Embassy in Kabul from 2018 to 2019, called the move “absolutely a step in the right direction,” saying it addressed requests for clarity from private sector and nongovernmental organizations about how to operate in Afghanistan without violating U.S. sanctions and providing the Taliban with illegal revenue.But many close observers said far more remained to be done.“We need a bigger humanitarian response, but without a functioning economy and banking system, we are facing terrible odds,” David Miliband, the president and chief executive of the International Rescue Committee, wrote on Twitter. “Need massive economic stabilization package to stop the rip current.”The United States provided Afghanistan with $3.95 billion in foreign aid last year, about two-thirds of which was security assistance for the former government’s fight against the Taliban. U.S. humanitarian aid for the country and for Afghan refugees in the region has totaled nearly $474 million so far this year.“We’re very conscious of the fact that there is an incredibly difficult humanitarian situation right now, one that could get worse as winter sets in,” Secretary of State Antony J. Blinken said in a news conference on Tuesday.He added that the United States was determined to ensure “that the Taliban make good on the expectations of the international community,” including by respecting women’s rights, not carrying out reprisals against political enemies and denying safe haven to international terrorist groups.Morgan Ortagus, a State Department spokeswoman during the Trump administration, condemned the U.S. actions as “extremely dangerous.” She said on Twitter that the Treasury Department licenses “send the signal that if you take over enough territory with enough people in it, you too can gain legitimacy.”The Security Council resolution, which was adopted unanimously, seeks to reduce the legal and political risks of delivering aid to Afghanistan. It exempts humanitarian activities such as payments and delivery of goods and services from U.N. sanctions for a one-year period, and requires updates to ensure that aid is not diverted to the Taliban.China on Monday blocked a narrower version drafted by the United States that would have allowed only case-by-case exemptions.After passage of the broader measure, China’s U.N. ambassador, Zhang Jun, said on Twitter that the new resolution “can only fix the faucet, but to keep the water running, the international community need to make joint efforts.”Citing “shocking levels of need and suffering,” the top U.N. official for emergency humanitarian efforts, Martin Griffiths, said the effect that the 160 aid organizations working in Afghanistan could have “depends on the cooperation of the de facto authorities in the country and on the flexibility of the funding we receive.”Governments and international organizations have been accelerating their efforts to provide assistance in recent weeks.The World Bank has said that the Afghanistan Reconstruction Trust Fund donors would transfer $280 million to UNICEF and the World Food Program by the end of the year to provide humanitarian aid.The Treasury Department this month issued a license allowing personal remittance payments to be sent to people in Afghanistan. And the United States on Wednesday announced that it would donate another million Covid-19 vaccine doses to Afghanistan, bringing the total U.S. contribution to 4.3 million doses.But the need remains enormous. Three former U.S. military commanders in Afghanistan and several former ambassadors and other officials this month signed a letter, published by the Atlantic Council, calling on the Biden administration to show “the courage to act” and expedite creative steps to prop up the Afghan economy and feed the hungry without benefiting the Taliban.“We believe the United States has a reputational interest and a moral obligation in vigorously joining efforts to help the Afghan people preserve at least some of the social and economic gains made over the last 20 years,” the authors wrote. “We believe that ways to do so can be found, while erecting barriers to assistance being diverted to purposes other than those for which it is intended.”Such admonitions came as Taliban officials pleaded for swift international relief, which they said was also in the West’s self-interest.“The impact of the frozen funds is on the common people and not Taliban authorities,” the Taliban’s deputy foreign minister, Sher Mohammad Abbas Stanikzai, said on Sunday, according to Reuters.Mr. Stanikzai warned that if “the political and economic situation doesn’t change,” Afghan refugees would pour into neighboring countries and Europe.Rick Gladstone More

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    U.S. Threat to Squeeze Russia’s Economy Is a Tactic With a Mixed Record

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    Sanctions, like aiming to cut oil exports, could also hurt European allies. “It’s a limited toolbox,” one expert said.LONDON — When Russian soldiers crossed into Ukraine and seized Crimea in 2014, the Obama administration responded with a slate of economic penalties that ultimately imposed sanctions on hundreds of Russian officials and businesses and restricted investments and trade in the nation’s crucial finance, oil and military sectors.Now, with Russian troops massing on Ukraine’s border, the White House national security adviser has declared that President Biden looked Russia’s president, Vladimir V. Putin, in the eye this week “and told him things we didn’t do in 2014 we are prepared to do now.”Whether harsher measures would persuade Russia to stay out of Ukraine, however, is far from clear. Historically, economic sanctions have a decidedly mixed track record, with more failures than successes. And actions that would take the biggest bite out of the Russian economy — like trying to severely curb oil exports — would also be hard on America’s allies in Europe.“We’ve seen that over and over again, that sanctions have a hard time really coercing changes in major policies” said Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics who has spent decades researching the topic. “It’s a limited toolbox.”President Biden is looking at the options available to ratchet up economic penalties against Russia.Stefani Reynolds for The New York TimesThe best chances of success are when one country has significant economic leverage over the other and the policy goal is limited, Mr. Schott said — yet neither of those conditions really applies in this case. Mr. Putin has made clear that he considers Russia’s actions in Ukraine a matter of national security. And outside of the oil industry, Russia’s international trade and investments are limited, especially in the United States.With direct military intervention essentially off the table, Biden administration officials have listed a series of options that include financially punishing Mr. Putin’s closest friends and supporters, blocking the conversion of rubles into dollars, and pressuring Germany to block a new gas pipeline between Russia and Northern Europe from opening.Work on that pipeline — called Nord Stream 2 — has been completed, but it is waiting for approval from Germany’s energy regulator before it can begin operating.Any request from Washington would coincide with a leadership change in Berlin. The new chancellor, Olaf Scholz, and his cabinet were sworn into office on Wednesday. He has not yet made any definitive statements on the pipeline. Gas reserves are unusually low in Europe now, however, and there are worries about shortages and soaring prices as winter approaches.Russia supplies more than a third of Europe’s gas through the existing Nord Stream pipeline and has already been accused of withholding supplies as a way of pressuring Germany to approve Nord Stream 2.Washington could impose much more sweeping sanctions on particular companies and banks in Russia that would more severely curtail investment and production in the energy sector. The risk of tough sanctions on a company like Gazprom, which supplies natural gas, is that Russia could retaliate by cutting its deliveries to Europe.“That would hurt Russia a lot but also hurt Europe,” Mr. Schott said.In terms of ratcheting up the pressure, James Nixey, the director of the Russia-Eurasia program at the Chatham House think tank, suggested that financially squeezing the oligarchs who help Mr. Putin maintain power could be one way of bringing more targeted pressure.“I would place a great premium on going after the inner and outer circle around Putin, which have connections back to the regime,” he said.At the moment, the swirl of ambiguity about possible United States actions is useful, he added: “It’s quite good if the Russians are kept guessing.”Russia, the United States and the European Union — which on Wednesday proposed expanding its power to use economic sanctions — are all playing something of a guessing game in order to pursue their policy goals. Russia is deploying troops on the border and at the same time is insisting on a guarantee that Ukraine won’t join NATO, while the West is warning there will be painful economic consequences if an invasion occurs.Ukrainian soldiers patrolling along the Kalmius River, which divides Ukrainian government-controlled territory from non-government-controlled areas, in November.Brendan Hoffman for The New York TimesOne of the most extreme measures would be to cut off Russia from the system of international payments known as SWIFT that moves money around the world, as was done to Iran.In 2019, the Russian prime minister at the time, Dmitri A. Medvedev, labeled such a threat as tantamount to “a declaration of war.”Maria Shagina argued in a report for the Carnegie Moscow Center that such a move would be devastating to Russia, at least in the short term. “The cutoff would terminate all international transactions, trigger currency volatility, and cause massive capital outflows,” she wrote this year.The SWIFT system, which is based in Belgium, handles international payments among thousands of banks in more than 200 countries.Since 2014, Moscow has taken steps to blunt the threat by developing its own system to process domestic credit card transactions, she noted. But it is another measure that would affect European countries more than the United States because they do so much more business with Russia.Several economic and political analysts have said restricting access to SWIFT would be a last resort.Arie W. Kruglanski, a psychology professor at the University of Maryland, said that in assessing the impact of sanctions, economists too often overlook the crucial psychological aspect.“Sanctions can work when leaders are concerned about economic issues more than anything else,” he said, but he doesn’t think the Russian leader falls into that category. To Mr. Kruglanski, strongman authoritarians like Mr. Putin are motivated by a sense of their own significance, and threats are more likely to stiffen opposition rather than encourage compromise.When it comes to Ukraine-related sanctions so far, the impact has been negligible, Mr. Nixey of Chatham House said.“A lot of these things the Russians have learned to live with, partly because implementation has been slow or poor and effects on the Russian economy are manageable,” he added.Success can be defined in various ways. Mr. Nixey said that the 2014 measures most likely deterred the Kremlin from further military interventions in Ukraine. A report for the Atlantic Council, a think tank that focuses on international relations, released this spring came to the same that conclusion.Sanctions certainly did not compel Russia to reverse its annexation of Crimea, Mr. Nixey said, but they may have persuaded Mr. Putin from taking more aggressive actions — at least until now. More

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    Biden Sells Infrastructure Improvements as a Way to Counter China

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    Spending on roads, broadband internet and more will help revitalize U.S. competitiveness against its top economic adversary, the president says.President Biden said the newly signed infrastructure law would help the United States counter China in the battle to dominate the 21st-century economy, as broad swaths of his agenda remained stuck in Congress.Kenny Holston for The New York TimesWASHINGTON — President Biden on Tuesday began selling his $1 trillion infrastructure law, making the case that the money would do more than rebuild roads, bridges and railways. The law, he said, would help the United States regain its competitive edge against China.“We’re about to turn things around in a big way,” Mr. Biden said in remarks at a bridge over the Pemigewasset River, in snowy New Hampshire. “For example, because of this law, next year will be the first year in 20 years that American infrastructure investment will grow faster than China’s.”The president has cast the legislation as a giant leap for the United States in its battle with China to dominate the 21st-century economy, even though it does not include the full scope of his campaign promises to pour money into research and development and provide incentives for domestic manufacturing and other initiatives.“It’s an important step, although it’s not a huge one, if one thinks about the progress China has made in building up its physical and soft infrastructure,” said Eswar S. Prasad, an economist at Cornell University who specializes in trade policy. The infrastructure law “is a good defensive measure,” he added. “But will it fundamentally alter the dynamics? Not by itself.”Even as his administration begins spending the money in the law to upgrade bridges, broadband internet, water pipes and more, broad swaths of Mr. Biden’s agenda to compete economically with the Chinese remain stuck in Congress. A bill to significantly increase federal research and development spending on advanced batteries, semiconductors and other high-tech industries — which the president was forced to drop from his initial infrastructure proposal — has cleared the Senate but not the House, though administration officials expect it to eventually pass.Mr. Biden’s additional plans to stimulate more low-emissions energy production, including hundreds of billions of dollars in tax incentives, hinge on passage of a $1.85 trillion spending bill that Democrats have yet to find consensus on. That bill also contains spending on early childhood education, child care and other support for the work force that economists say will help the United States bolster the skills and productivity of its workers.If the president can shepherd those two bills through Congress, analysts say, he could have a foundation for a U.S. industrial policy that rivals Chinese investments in manufacturing and advanced technology. If he cannot, he will still have better transportation, energy and information sectors domestically, but his efforts to counter China will be incomplete.Chinese commentators have taken notice. An editorial this month in Global Times, a popular tabloid controlled by the country’s Communist Party, called the infrastructure bill a “feeble imitation of China” and said it was “tantamount to a fairy tale” that the measure alone would revitalize U.S. competitiveness.Mr. Biden has leaned into the issue as he sells Americans on the benefits of the law. Hours before he met virtually with President Xi Jinping of China on Monday, during a signing ceremony with hundreds of attendees at the White House, Mr. Biden put the countries’ economic rivalry front and center.“I truly believe that 50 years from now,” he said, “historians are going to look back at this moment and say, ‘That’s the moment America began to win the competition of the 21st century.’”Brian Deese, the director of Mr. Biden’s National Economic Council, said in an interview that the law would increase competitiveness and productivity through a variety of spending programs.“This bill is going to be a game-changer in getting Americans to work,” Mr. Deese said.He added that it would allow people to gain access to economic opportunities through better public transportation, roads and bridges, and provide high-speed internet, which he called “the lifeblood of the 21st-century economy.”China’s large investments in its own infrastructure, and its threat to U.S. dominance in new and longstanding global industries, loomed large over the congressional negotiations that produced the law. Democratic and Republican lawmakers are more attuned than ever to Chinese spending, thanks to Mr. Biden and President Donald J. Trump, who both put competition with China at the center of their presidential campaigns last year.Understand U.S.-China RelationsCard 1 of 6A tense era in U.S.-China ties. More