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    Russia’s War on Ukraine Worsens Global Starvation

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    Moscow blocks most shipments from Ukraine, one of the world’s largest wheat producers, and its attacks on the country’s energy grid also disrupt the flow of food.ISTANBUL — Hulking ships carrying Ukrainian wheat and other grains are backed up along the Bosporus here in Istanbul as they await inspections before moving on to ports around the world.The number of ships sailing through this narrow strait, which connects Black Sea ports to wider waters, plummeted when Russia invaded Ukraine 10 months ago and imposed a naval blockade. Under diplomatic pressure, Moscow has begun allowing some vessels to pass, but it continues to restrict most shipments from Ukraine, which together with Russia once exported a quarter of the world’s wheat.And at the few Ukrainian ports that are operational, Russia’s missile and drone attacks on Ukraine’s energy grid periodically cripple the grain terminals where wheat and corn are loaded onto ships.An enduring global food crisis has become one of the farthest-reaching consequences of Russia’s war, contributing to widespread starvation, poverty and premature deaths.The United States and allies are struggling to reduce the damage. American officials are organizing efforts to help Ukrainian farmers get food out of their country through rail and road networks that connect to Eastern Europe and on barges traveling up the Danube River.But as deep winter sets in and Russia presses assaults on Ukraine’s infrastructure, the crisis is worsening. Food shortages are already being exacerbated by a drought in the Horn of Africa and unusually harsh weather in other parts of the world.The United Nations World Food Program estimates that more than 345 million people are suffering from or at risk of acute food insecurity, more than double the number from 2019.“We’re dealing now with a massive food insecurity crisis,” Antony J. Blinken, the U.S. secretary of state, said last month at a summit with African leaders in Washington. “It’s the product of a lot of things, as we all know,” he said, “including Russia’s aggression against Ukraine.”The food shortages and high prices are causing intense pain across Africa, Asia and the Americas. U.S. officials are especially worried about Afghanistan and Yemen, which have been ravaged by war. Egypt, Lebanon and other big food-importing nations are finding it difficult to pay their debts and other expenses because costs have surged. Even in wealthy countries like the United States and Britain, soaring inflation driven in part by the war’s disruptions has left poorer people without enough to eat.A line for food aid in Kabul. An enduring global food crisis has become one of the farthest-reaching consequences of Russia’s war.Agence France-Presse — Getty Images“By attacking Ukraine, the breadbasket of the world, Putin is attacking the world’s poor, spiking global hunger when people are already on the brink of famine,” said Samantha Power, the administrator of the United States Agency for International Development, or USAID.The State of the WarAerial Attacks: A deadly New Year’s Eve assault is the latest strike in Russia’s three-month campaign on Ukraine’s energy infrastructure, which analysts say is an effort to demoralize the Ukrainian population by plunging it into cold and darkness.A New Alliance: The United States is scrambling to stop Iran from producing drones, as officials believe the Middle Eastern nation is building a partnership with Russia.Hopes Dim for Peace Talks: Both Ukrainian and Russian officials say they are willing to discuss making peace, but their terms for sitting down at a negotiating table suggest otherwise.Clergymen or Spies?: To Ukraine’s security services, the Russian Orthodox Church poses a uniquely subversive threat — a trusted institution that is not only an incubator of pro-Russia sentiment but is also infiltrated by priests, monks and nuns who have aided Russia in the war.Ukrainians are likening the events to the Holodomor, when Joseph Stalin engineered a famine in Soviet-ruled Ukraine 90 years ago that killed millions.Mr. Blinken announced on Dec. 20 that the U.S. government would begin granting blanket exceptions to its economic sanctions programs worldwide to ensure that food aid and other assistance kept flowing. The action is intended to ensure that companies and organizations do not withhold assistance for fear of running afoul of U.S. sanctions.State Department officials said it was the most significant change to U.S. sanctions policy in years. The United Nations Security Council adopted a similar resolution on sanctions last month.But Russia’s intentional disruption of global food supplies poses an entirely different problem.Moscow has restricted its own exports, increasing costs elsewhere. Most important, it has stopped sales of fertilizer, needed by the world’s farmers. Before the war, Russia was the biggest exporter of fertilizer.Its hostilities in Ukraine have also had a major impact. From March to November, Ukraine exported an average of 3.5 million metric tons of grains and oilseeds per month, a steep drop from the five million to seven million metric tons per month it exported before the war began in February, according to data from the country’s Ministry of Agrarian Policy and Food.That number would be even lower if not for an agreement forged in July by the United Nations, Turkey, Russia and Ukraine, called the Black Sea Grain Initiative, in which Russia agreed to allow exports from three Ukrainian seaports.Russia continues to block seven of the 13 ports used by Ukraine. (Ukraine has 18 ports, but five are in Crimea, which Russia seized in 2014.) Besides the three on the Black Sea, three on the Danube are operational.The initial deal was only for four months but was extended in November for another four months. When Russia threatened to leave it in October, global food prices surged five to six percent, said Isobel Coleman, a deputy administrator at USAID.“The effects of this war are hugely, hugely disruptive,” she said. “Putin is pushing millions of people into poverty.”While increases in the price of food this past year have been particularly sharp in the Middle East, North Africa and South America, no region has been immune.“You’re looking at price increases of everything from 60 percent in the U.S. to 1900 percent in Sudan,” said Sara Menker, the chief executive of Gro Intelligence, a platform for climate and agriculture data that tracks food prices.Before the war, food prices had already climbed to their highest levels in over a decade because of pandemic disruptions in the supply chain and pervasive drought.The United States, Brazil and Argentina, key grain producers for the world, have experienced three consecutive years of drought. The level of the Mississippi River fell so much that the barges that carry American grain to ports were temporarily grounded.The weakening of many foreign currencies against the U.S. dollar has also forced some countries to buy less food on the international market than in years past.Russia attacked the port of Kherson, on Ukraine’s Black Sea coast, in November. Before the war, farmers shipped out 95 percent of the country’s wheat and grain exports through the Black Sea.Finbarr O’Reilly for The New York Times“There were a lot of structural issues, and then the war just made it that much worse,” Ms. Menker said.U.S. officials say the Russian military has deliberately targeted grain storage facilities in Ukraine, a potential war crime, and has destroyed wheat processing plants.Many farmers in Ukraine have gone to war or fled their land, and the infrastructure that processed and carried wheat and sunflower oil to foreign markets has broken down.At a farm 190 miles south of Kyiv, 40 of the 350 employees have enlisted in the army. And the farm is struggling with other shortages. Kees Huizinga, the Dutch co-owner, said Russia’s attacks on the energy grid have led to the shutdown of a plant that provides his farm and others with nitrogen fertilizer.Other fertilizer plants in Europe were forced to shut down or slow production last year as natural gas prices soared, a result of the war. Natural gas is critical for fertilizer production.“So this year’s harvest has already been reduced,” Mr. Huizinga said in November. “And if Russians continue like this, next year’s harvest might even be worse.”He added that transportation costs have risen sharply for farmers in Ukraine.Before the war, farmers shipped out 95 percent of the country’s wheat and grain exports through the Black Sea. Mr. Huizinga’s farm paid $23 to $24 per ton to transport its products to ports and onto ships. Now, the cost has more than doubled, he said. And an alternative route — by truck to Romania — costs $85 per ton.Mr. Huizinga said Russia’s compromise on Black Sea shipments has helped, but he suspects Moscow is hobbling operations by slowing inspections. Under the arrangement, each vessel leaving one of three Ukrainian ports on the Black Sea has to be inspected by joint teams of Ukrainian, Russian, Turkish and United Nations employees once the ship reaches Istanbul.The teams look for any unauthorized cargo or crew members, and vessels heading to Ukraine need to be empty of cargo, said Ismini Palla, a spokeswoman for the U.N. office overseeing the program.U.N. data shows that the rate of inspections has dropped in recent weeks. The parties agreed to deploy three teams each day, Ms. Palla said, adding that the United Nations has requested more.“We hope that this will change soon, so that the Ukrainian ports can operate again at higher capacity,” she said. “Ukrainian exports remain a vital element in combating global food insecurity.”Ms. Palla said the parties’ decision in November to extend the agreement contributed to a 2.8 percent drop in global wheat prices.Over the last six months, food prices have retreated from highs reached this spring, according to an index compiled by the United Nations. But they remain much higher than in previous years.An uncertainty for farmers this winter is the soaring price of fertilizer, one of their biggest costs.Farmers have passed on the higher cost by increasing the price of food products. And many farmers are using less fertilizer in their fields. That will result in lower crop yields in the coming seasons, pushing food prices higher.Subsistence farms, which produce nearly a third of the world’s food, are being hit even harder, Ms. Coleman said.Food rations were distributed in Sana, Yemen. The war in that country has left its people vulnerable to food insecurity.Yahya Arhab/EPA, via ShutterstockIn a communiqué issued at the close of their meeting in Bali, Indonesia, in November, leaders of the Group of 20 nations said they were deeply concerned by the challenges to global food security and pledged to support the international efforts to keep food supply chains functioning.“We need to strengthen trade cooperation, not weaken it,” Ngozi Okonjo-Iweala, the director general of the World Trade Organization, said at the summit.The U.S. government spends about $2 billion per year on global food security, and it started a program called Feed the Future after the last big food crisis, in 2010, that now encompasses 20 countries.Since the start of the Ukraine war, the United States has provided more than $11 billion to address the food crisis. That includes a $100 million program called AGRI-Ukraine, which has helped about 13,000 farmers in Ukraine — 27 percent of the total — gain access to financing, technology, transportation, seeds, fertilizer, bags and mobile storage units, Ms. Coleman said.The efforts could help rebuild the country while alleviating the global food crisis — one-fifth of Ukraine’s economy is in the agriculture sector, and a fifth of the country’s labor force is connected to it.“It’s hugely important for Ukraine’s economy,” she said, “and for Ukraine’s economic survival.”Edward Wong More

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    David Lipton, Economic Diplomat, Will Step Down From Treasury

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    Mr. Lipton, who served in senior roles in the Clinton and Obama administrations and at the I.M.F., is retiring.WASHINGTON — David A. Lipton, a longtime figure in the field of international economics, is stepping down on Wednesday from his job as international affairs counselor to Treasury Secretary Janet L. Yellen, according to two Treasury Department officials familiar with his plans.Mr. Lipton, one of Ms. Yellen’s closest aides, is departing at a critical moment for the global economy. He has become a key negotiator in some of Ms. Yellen’s biggest policy issues. He was deeply involved in international discussions about a global minimum tax last year and has been at the center of the talks among the Group of 7 nations to impose a cap on the price of Russian oil.An economist by training with a doctoral degree from Harvard, Mr. Lipton, 69, has held senior economic policymaking positions in the Clinton, Obama and Biden administrations. He was also a top official at the International Monetary Fund, where he served as the deputy managing director.Last year, Ms. Yellen recruited Mr. Lipton to return to the federal government to help steer the Treasury Department’s international portfolio while President Biden’s nominees to lead the international affairs division were awaiting Senate confirmation.In a statement, Ms. Yellen described Mr. Lipton as one of her closest advisers and lauded his career.The Biden PresidencyHere’s where the president stands after the midterm elections.Beating the Odds: President Biden had the best midterms of any president in 20 years, but he still faces the sobering reality of a Republican-controlled House.2024 Questions: Mr. Biden feels buoyant after the better-than-expected midterms, but as he turns 80, he confronts a decision on whether to run again that has some Democrats uncomfortable.The ‘Trump Project’: With Donald J. Trump’s announcement that he is officially running for president again, Mr. Biden and his advisers are planning to go on the offensive.Legislative Agenda: The Times analyzed every detail of Mr. Biden’s major legislative victories and his foiled ambitions. Here’s what we found.“He will be irreplaceable for the department, but I feel incredibly fortunate to have had his counsel in my first two years,” Ms. Yellen said. “During that time, David has helped shape our international agenda across a wide set of challenges — from the recovery from the pandemic to our response to Russia’s war against Ukraine.”Mr. Lipton first met Ms. Yellen while a graduate student at Harvard, where he took her introductory course in macroeconomics. Lawrence H. Summers, who would serve as Treasury secretary during the Clinton administration, was also in the class, and he and Mr. Lipton became friends.After graduating from Harvard with a Ph.D. in economics in 1982, Mr. Lipton joined the I.M.F., where he worked for eight years on assignments that involved stabilizing the economies of poor countries.In 1993, after a stint working with the economist Jeffrey D. Sachs advising Russia, Poland and Slovenia on their transitions to capitalism, Mr. Lipton joined the Clinton administration’s Treasury Department. He was recruited by Mr. Summers, who was then the deputy Treasury secretary under Robert E. Rubin. He initially focused on Eastern Europe and the former Soviet Union before turning his attention to easing turmoil stemming from the Asian financial crisis in 1997.While President George W. Bush was in office, Mr. Lipton worked at Citigroup and at the hedge fund Moore Capital Management. He joined the Obama administration as an economic adviser. In 2011, Christine Lagarde named him her top deputy at the I.M.F. when the fund was spending billions of dollars to prop up Greece’s economy and as the economic tension between the United States and China was intensifying.Mr. Lipton’s second term at the monetary fund was cut short in 2020 when Kristalina Georgieva reshuffled its senior leadership. His position at the fund, which is usually decided by the United States, was filled by Geoffrey Okamoto, a former Trump administration official.A longtime proponent of the benefits of a global economy and multilateralism, Ms. Yellen persuaded Mr. Lipton to join her team as the Biden administration sought to mend international relationships that had been frayed during the Trump era.“David Lipton has been an insufficiently sung hero of the international financial system for the last 30 years,” Mr. Summers said in a text message. “His quiet strength and wisdom both prevented and resolved numerous crises.”Mr. Lipton, who grew up in Wayland, Mass., was a star wrestler in high school, serving as a co-captain for two years. At Harvard, he and Mr. Summers bonded over squash and economics.During remarks introducing Mr. Lipton at the Peterson Institute for International Economics in 2016, Mr. Summers described his former classmate as an economic “fireman in chief” who maintained a “keep hope alive” attitude when economic diplomacy got tough.Known for a dry wit that belies his earnest demeanor, Mr. Lipton expressed appreciation for the high praise but recalled that when he met Mr. Summers on the first day of school he initially had his doubts.“After talking to Larry for about 15 minutes, my reaction was, ‘If they’re all like that, I’m really in trouble,’” Mr. Lipton joked. More

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    Gina Raimondo, a Rising Star in the Biden Administration, Faces a $100 Billion Test

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    WEST LAFAYETTE, Ind. — Gina Raimondo, the commerce secretary, was meeting with students at Purdue University in September when she spotted a familiar face. Ms. Raimondo beamed as she greeted the chief executive of SkyWater Technology, a chip company that had announced plans to build a $1.8 billion manufacturing facility next to the Purdue campus.“We’re super excited about the Indiana announcement,” she said. “Call me if you need anything.”These days, Ms. Raimondo, a former Rhode Island governor, is the most important phone call in Washington that many chief executives can make. As the United States embarks on its biggest foray into industrial policy since World War II, Ms. Raimondo has the responsibility of doling out a stunning amount of money to states, research institutions and companies like SkyWater.She is also at the epicenter of a growing Cold War with China as the Biden administration uses her agency’s expansive powers to try to make America’s semiconductor industry more competitive. At the same time, the administration is choking off Beijing’s access to advanced chips and other technology critical to China’s military and economic ambitions.China has responded angrily, with its leader, Xi Jinping, criticizing what he called “politicizing and weaponizing economic and trade ties” during a meeting with President Biden this month, according to the official Chinese summary of his comments.The Commerce Department, under Ms. Raimondo’s leadership, is now poised to begin distributing nearly $100 billion — roughly 10 times the department’s annual budget — to build up the U.S. chip industry and expand broadband access throughout the country.How Ms. Raimondo handles that task will have big implications for the United States economy going forward. Many view the effort as the best — and only — bet for the United States to position itself in industries of the future, like artificial intelligence and supercomputing, and ensure that the country has a secure supply of the chips necessary for national security.But the risks are similarly huge. Critics of the Biden administration’s plans have noted that the federal government may not be the best judge of which technologies to back. They have warned that if the administration gets it wrong, the United States may surrender its leadership in key technologies for good.“The essence of industrial policy is you’re gambling,” said William Reinsch, a trade expert at the Center for Strategic and International Studies, a think tank. “She’s going to be in a tough spot because there probably will be failures or disappointments along the way,” he said.The outcome could also have ramifications for Ms. Raimondo’s political ambitions. In less than two years in Washington, Ms. Raimondo, 51, has emerged as one of President Biden’s most trusted cabinet officials. Company executives describe her as a skillful and charismatic politician who is both engaged and accessible in an administration often known for its skepticism of big business.Ms. Raimondo’s work has earned her praise from Republicans and Democrats, along with labor unions and corporations. Her supporters say she could ascend to another cabinet position, run for the Senate or perhaps mount a presidential bid.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Biden’s ‘Made in America’ Policies Anger Key Allies

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    The president’s plans to bolster America’s electric vehicle and battery production have opened a rift in relationships in Asia and Europe.WASHINGTON — President Biden’s efforts to bolster domestic manufacturing are coming under diplomatic fire from key allies, with European governments accusing his administration of undercutting the trans-Atlantic alliance with “Made in America” policies that threaten their economies.The objections center on policies included in the Inflation Reduction Act, which aims to make the United States less reliant on foreign suppliers by providing financial incentives to locate factories and produce goods in the United States, including electric vehicles. Mr. Biden has touted the law as key to creating “tens of thousands of good-paying jobs and clean energy manufacturing jobs, solar factories in the Midwest and the South, wind farms across the plains and off our shores, clean hydrogen projects and more — all across America, every part of America.”But that has prompted cries of protectionism by foreign officials and accusations that the Biden administration is violating trade laws by giving preferential treatment to U.S.-based firms.“We are having concerns that a number of the provisions are discriminatory against E.U. companies, which of course obviously is a problem for us,” Valdis Dombrovskis, the European Union’s commissioner for trade, told reporters in Washington on Thursday.The disagreement represents the first major rift between the United States and Europe since Mr. Biden took office last year. The president, who promised to take a softer diplomatic touch than the Trump administration had with its “America First” agenda, has worked closely with European allies on a number of priorities, including punishing Russia for its invasion of Ukraine. In his first months in office, Mr. Biden quickly moved to repair relations with Europe, including by resolving a 17-year dispute over aviation subsidies.But the unified front between the United States and Europe showed signs of strain during this week’s annual meetings of the World Bank and International Monetary Fund. European officials complained to the top ranks of the Biden administration that provisions in the expansive climate and energy law to support domestic production of electric vehicles violate international trade rules that require countries to treat foreign and domestic companies equally. They argued the provisions are unfair to their domestic car industries.Mr. Dombrovskis said that he and other European officials would be directing their concerns to Treasury Secretary Janet L. Yellen, whose agency is responsible for implementing much of the law, along with Katherine Tai, the U. S. trade representative, and Gina Raimondo, the commerce secretary.Read More on Electric VehiclesRivian Recall: The electric-car maker said that it was recalling 13,000 vehicles after identifying an issue that could affect drivers’ ability to steer some of its vehicles.China’s Thriving E.V. Market: More electric cars will be sold in the country this year than in the rest of the world combined, as its domestic market accelerates ahead of the global competition.A Crucial Mine: A thousand feet below wetlands in northern Minnesota are ancient deposits of nickel, a sought-after mineral seen as key to the future of the U.S. electric car industry.Banning Gasoline Cars: California is leading the way in the push to electrify the nation’s car fleet with a plan to ban sales of new internal-combustion vehicles by 2035, but the rule will face several challenges.In a meeting with Mr. Dombrovskis on Thursday, Ms. Tai “shared her view that seriously combating the climate crisis will require increased investments in clean energy technologies,” the Office of the United States Trade Representative said in a statement. Both Ms. Tai and Mr. Dombrovskis “asked their teams to increase engagement” on the issue.European officials are discussing whether to contest the law, which was passed by Democrats along party lines, at the World Trade Organization, which could be time consuming and fruitless, or to formally raise the matter through the Trade and Technology Council that was formed last year.The crux of the international fight centers on more than $50 billion in tax credits to entice Americans to buy electric vehicles. The law restricts the credit to vehicles that are assembled in North America. It also has strict requirements surrounding the components that go into powering electric vehicles, including batteries and the critical minerals that are used to make them. That is creating new incentives for battery makers to build recycling and production facilities in the United States.Foreign companies that manufacture cars and car parts in the United States can also qualify for the credit. But some foreign carmakers, particularly those from Asia, tend to import more components for electric vehicles from outside the United States, meaning that fewer of their models qualify.That has sparked accusations that the terms of the law were written to benefit U.S. companies like General Motors or Ford, rather than foreign companies like Toyota and Honda, even though many foreign companies have invested heavily in the United States.“We understand that some trading partners have concerns with how the EV tax credit provisions in the law will operate in practice with respect to their producers,” said Eduardo Maia Silva, a spokesman for the National Security Council. “We are committed to working with our partners to better understand their concerns and keep open channels of engagement on these issues.”European officials are concerned that the U.S. law will drive a wedge between European companies and their home countries if carmakers such as Porsche are under pressure to set up shop in the United States instead of opening more factories in Germany. Since the law went into effect, Honda, Toyota and LG Energy Solutions of South Korea have all announced major battery investments in the United States.A previous version of the bill would have offered the tax credit to only U.S.-produced vehicles. But Canada and Mexico both lobbied against that draft version, and the measure was ultimately expanded to apply to vehicles produced throughout North America.Asian allies have also expressed concerns about the law.When Vice President Kamala Harris met with South Korean leaders in Tokyo and Seoul last month, the allies did not hesitate to express their frustration.Hours before Ms. Harris attended the funeral of former Prime Minister Shinzo Abe of Japan, Korean officials, including Prime Minister Han Duck-soo expressed their concerns about the legislation to the vice president in a closed-door meeting. The Japanese government has also expressed concerns.Frank Aum, a senior expert on Northeast Asia at the U.S. Institute of Peace, said the tax credit was a “direct harm” to South Korean companies like Hyundai and Kia that wouldn’t get the benefit of the tax credit.“South Korea is feeling very much betrayed because of the investments that they have made in the electric vehicle battery and semiconductor industries in the U.S. over the last couple years,” he said.Just months before he signed it into law, Mr. Biden stood with the chairman of Hyundai in Seoul to celebrate the South Korean company’s investment in a new electric vehicle and battery manufacturing facility in Savannah, Ga. In meetings with Mr. Han and later with President Yoon Suk Yeol of South Korea in Seoul, Ms. Harris said she would consult with South Korea as the law is implemented. The Biden administration has downplayed the tensions, saying that it is relying on its strong relationships with other governments to talk through those differences and fight the bigger battle of climate change.In an Oct. 7 speech at the Roosevelt Institute, a Washington think tank, Ms. Tai called out the European Union’s Carbon Border Adjustment Mechanism — a proposal that would encourage cleaner manufacturing by levying a tax on imported goods based on how many greenhouse gasses their production emits — saying that those European measure could also cause tensions with allies. But the United States and Europe should work through those differences to combat climate change together, she added.“As we seek to reduce our carbon footprints and benefit our industries, we’re each going to do things that cause anxiety, whether it’s the Carbon Border Adjustment Mechanism or the Inflation Reduction Act. But this also creates an opportunity for us to work together, to tackle this existential crisis that threatens all of us,” Ms. Tai said.Still, trade experts have warned that the U.S. efforts could potentially kick off a similar wave of protectionist measures to match those adopted by the United States.Bruno Le Maire, France’s finance minister, said last month that the European Union should consider adopting electric vehicle bonuses for cars that are produced within the E.U. and meet rigorous environmental standards.In that event, America’s policies could backfire in the long run, if American cars or components face similar barriers to being sold in Europe or Asia, said Chad P. Bown, a senior fellow at the Peterson Institute for International Economics.“I think the risk on the U.S. side is that if we don’t address some of their major concerns, that they’ll ultimately do the same thing,” he said.Wally Adeyemo, the deputy Treasury secretary, said at an event this week that he hopes that eventually U.S. allies will benefit from America’s investment in its production of goods such as critical minerals because it will also solidify their supply chains.A Treasury Department spokeswoman declined to comment on how Ms. Yellen responded to the complaints of her European counterparts this week. In remarks at her closing news conference on Friday, Ms. Yellen touted the ambitions of the Inflation Reduction Act without acknowledging the concerns in Europe and Asia.“It’s our nation’s most aggressive domestic action on climate,” Ms. Yellen said. “And it puts us on a strong path to meet our emissions reduction goals.” More

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    With New Crackdown, Biden Wages Global Campaign on Chinese Technology

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    U.S. officials pushed to choke off China’s access to critical semiconductor technology after internal debates and tough negotiations with allies.WASHINGTON — In conversations with American executives this spring, top officials in the Biden administration revealed an aggressive plan to counter the Chinese military’s rapid technological advances.China was using supercomputing and artificial intelligence to develop stealth and hypersonic weapons systems, and to try to crack the U.S. government’s most encrypted messaging, according to intelligence reports. For months, administration officials debated what they could do to hobble the country’s progress.They saw a path: The Biden administration would use U.S. influence over global technology and supply chains to try to choke off China’s access to advanced chips and chip production tools needed to power those abilities. The goal was to keep Chinese entities that contributed to potential threats far behind their competitors in the United States and in allied nations.The effort, no less than what the Americans carried out against Soviet industries during the Cold War, gained momentum this year as the United States tested powerful economic tools against Russia as punishment for its invasion of Ukraine, and as China broke barriers in technological development. The Russian offensive and Beijing’s military actions also made the possibility of a Chinese invasion of Taiwan seem more real to U.S. officials.The administration’s concerns about China’s tech ambitions culminated last week in the unveiling of the most stringent controls by the U.S. government on technology exports to the country in decades — an opening salvo that would ripple through global commerce and could frustrate other governments and companies outside China.In a speech on Wednesday on the administration’s national security strategy, Jake Sullivan, the national security adviser, talked about a “small yard, high fence” for critical technologies.“Choke points for foundational technologies have to be inside that yard, and the fence has to be high because these competitors should not be able to exploit American and allied technologies to undermine American and allied security,” he said.This account of how President Biden and his aides decided to wage a new global campaign against China, which contains previously unreported details, is based on interviews with two dozen current and former officials and industry executives. Most spoke on the condition of anonymity to discuss deliberations.The measures were particularly notable given the Biden administration’s preference for announcing policies in tandem with allies to counter rival powers, as it did with sanctions against Russia.With China, the administration spent months in discussions with allies, including the Dutch, Japanese, South Korean, Israeli and British governments, and tried to persuade some of them to issue restrictions alongside the United States.But some of those governments have been hesitant to cut off important commerce with China, one of the world’s largest technology markets. So the Biden administration decided to act alone, without public measures from allies.More on the Relations Between Asia and the U.S.Taiwan: American officials are intensifying efforts to build a giant stockpile of weapons in Taiwan in case China blockades the island as a prelude to an attempted invasion, according to current and former officials.North Korea: Pyongyang fired an intermediate range ballistic missile over Japan for the first time since 2017, when Kim Jong-un seemed intent on escalating conflict with Washington. But the international landscape has changed considerably since then.A Broad Partnership: The United States and 14 Pacific Island nations signed an agreement at a summit in Washington, putting climate change, economic growth and stronger security ties at the center of an American push to counter Chinese influence.South Korea: President Yoon Suk Yeol has aligned his country more closely with the United States, but there are limits to how far he can go without angering China or provoking North Korea.Gregory C. Allen, a former Defense Department official who is now at the Center for Strategic and International Studies, said the move came after consultation with allies but was “fundamentally unilateral.”“In weaponizing its dominant choke-point positions in the global semiconductor value chain, the United States is exercising technological and geopolitical power on an incredible scale,” he wrote in an analysis.The package of restrictions allows the administration to cut off China from certain advanced chips made by American and foreign companies that use U.S. technology.President Biden visited an IBM factory in Poughkeepsie, N.Y., last week.Erin Schaff/The New York TimesU.S. officials described the decision to push ahead with export controls as a show of leadership. They said some allies wanted to impose similar measures but feared retaliation from China, so the rules from Washington that encompass foreign companies did the hard work for them.Other rules bar American companies from selling Chinese firms equipment or components needed to manufacture advanced chips, and prohibit Americans and U.S. companies from giving software updates and other services to China’s cutting-edge chip factories.The measures do not directly restrict foreign makers of semiconductor equipment from selling products to China. But experts said the absence of the American equipment would most likely impede China’s nascent industry for making advanced chips. Eventually, though, that leverage could fade as China develops its own key production technologies.Some companies have chafed at the idea of losing sales in a lucrative market. In a call with investors in August, an executive at Tokyo Electron in Japan said the company was “very concerned” that restrictions could prevent its Chinese customers from producing chips. ASML, the Dutch equipment maker, has expressed criticisms.Chinese officials called the U.S. restrictions a significant step aimed at sabotaging their country’s development. The move could have broad implications — for example, limiting advances in artificial intelligence that propel autonomous driving, video recommendation algorithms and gene sequencing, as well as quashing China’s chip-making industry. China could respond by punishing foreign companies with operations there. And the way Washington is imposing the rules could strain U.S. alliances, some experts say.Top officials in the Biden administration have an aggressive plan to counter the Chinese military’s rapid technological advances.Kevin Frayer/Getty Images“Sanctions that put the United States at odds with its allies and partners today will both undercut their effectiveness and make it harder to enroll a broad coalition of states in U.S. deterrence efforts,” said Jessica Chen Weiss, a professor of government at Cornell University and a recent State Department official.Others have argued that the moves did not come soon enough. For years, U.S. intelligence reports warned that American technology was feeding China’s efforts to develop advanced weapons and surveillance networks that police its citizens.Last October, the intelligence community began highlighting the risks posed by Chinese advances in artificial intelligence, quantum computing and semiconductors in meetings with industry and government officials..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-ok2gjs{font-size:17px;font-weight:300;line-height:25px;}.css-ok2gjs a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}What we consider before using anonymous sources. Do the sources know the information? What’s their motivation for telling us? Have they proved reliable in the past? Can we corroborate the information? Even with these questions satisfied, The Times uses anonymous sources as a last resort. The reporter and at least one editor know the identity of the source.Learn more about our process.Mr. Sullivan and other officials began pushing to curb sales of semiconductor technology, according to current and former officials and others familiar with the discussions.But some officials, including Commerce Secretary Gina Raimondo and her deputies, wanted to first secure the cooperation of allies. Starting late last year, they said in meetings that by acting alone, the United States risked harming its companies without doing much to stop Chinese firms from buying important technology from foreign competitors.The Trump administration announced restrictions on the Chinese tech giant Huawei and singled out the company as a threat to national security.Qilai Shen for The New York TimesA Diplomatic PushEven as the Trump administration took some aggressive actions against Chinese technology, like barring international shipments to Huawei, it began quiet diplomacy on semiconductor production equipment. U.S. officials talked with their counterparts in Japan and then the Netherlands — countries where companies make critical tools — on limiting exports to China, said Matthew Pottinger, a deputy national security adviser in the Trump administration.Biden administration officials have continued those talks, but some negotiations have been difficult. U.S. officials spent months trying to persuade the Netherlands to prevent ASML from selling older lithography machines to Chinese semiconductor companies, but they were rebuffed.U.S. officials carried out separate negotiations with South Korea, Taiwan, Israel and Britain on restricting the sale and design of chips.Outside of the diplomacy, there was increasing evidence that a tool the United States had used to restrict China’s access to technology had serious flaws. Under President Donald J. Trump, the United States added hundreds of companies to a so-called entity list that prohibited American companies from selling them sensitive products without a license.But each listing was tied to a specific company name and address, making it relatively easy to evade the restrictions, said Ivan Kanapathy, a former China director for the National Security Council.Current and former U.S. officials suspect the Chinese military and previously sanctioned Chinese companies, including Huawei, have tried to gain access to restricted technology through front companies. Huawei declined to comment.Huawei could soon face additional restrictions: The Federal Communications Commission is expected to vote in the coming weeks on rules that would block the authorization of new Huawei equipment in the United States over national security concerns.Biden officials also believed the restrictions issued by the Trump administration against Semiconductor Manufacturing International Corporation, a major Chinese chip maker known as SMIC, had been watered down by industry and were allowing too many sales to continue, people familiar with the matter said.In a call with heads of American semiconductor equipment makers in March, Mr. Sullivan said that the United States was no longer satisfied with the status quo with China, and that it was seeking to freeze Chinese technology, said one executive familiar with the discussion.Mr. Sullivan, who had dialed into the call alongside Ms. Raimondo and Brian Deese, the director of the National Economic Council, told executives from KLA, Applied Materials and Lam Research that rules restricting equipment shipments to China would be done with allies, the executive said.In a statement, the National Security Council said the measures were “consistent with the message we delivered to U.S. executives because the administration has controlled only tools made by U.S. companies where there is no foreign competitor.”A semiconductor plant in Suining, China. The Biden administration took action in August to clamp down on the country’s semiconductor industry.Zhong Min/Feature China/Future Publishing, via Getty ImagesBreakthrough in ChinaAs negotiations with allied governments continued, experts at the Commerce, Defense, Energy and State Departments spent months poring over spreadsheets listing dozens of semiconductor tools made by U.S. companies to determine which could be used for advanced chip production and whether companies in Japan and the Netherlands produced comparable equipment.Then in July came alarming news. A report emerged that SMIC had cleared a major technological hurdle, producing a semiconductor that rivaled some complex chips made in Taiwan.The achievement prompted an explosion of dissatisfaction in the White House and on Capitol Hill with U.S. efforts to restrain China’s technological advancement.The Biden administration took action in August to clamp down on China’s semiconductor industry, sending letters to equipment manufacturers and chip makers barring them from selling certain products to China.Last week, the administration issued the ‌rules with global reach.Companies immediately began halting shipments to China. But U.S. officials said they would issue licenses on a case-by-case basis so some non-Chinese companies could continue supplying their Chinese facilities with support and components. Intel, TSMC, Samsung and SK Hynix said they had received temporary exemptions to the rules.The controls could be the beginning of a broad assault by the U.S. government, Mr. Pottinger said.“The Biden administration understands now that it isn’t enough for America to run faster — we also need to actively hamper the P.R.C.’s ambitions for tech dominance,” he said, referring to the People’s Republic of China. “This marks a serious evolution in the administration’s thinking.”Julian Barnes More

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    What Price Is Right? Why Capping Russian Oil Is Complicated.

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    Officials from the Group of 7 are striving to strike a delicate balance that encourages Russia to keep pumping oil but to sell it at a discount.WASHINGTON — As the United States and its Western counterparts race to finalize the mechanics of an oil price cap intended to starve Russia of revenue and stabilize global energy markets, a crucial question remains unresolved: How should the price be set?The Group of 7 countries that formally backed the price cap concept this month are deliberating how much Russia should be allowed to charge for its oil as they prepare to release more details of the plan. It has emerged as a central question that could determine the success of the novel idea, Russia’s response and the trajectory of oil prices as winter approaches. Setting the price will require aligning the complex array of economic and diplomatic forces that govern volatile oil markets.The consequences of getting the oil price cap wrong could be severe for the world economy, and time is running short. The Biden administration fears that if the cap is not in place by early December, oil prices around the world could skyrocket given Russia’s outsize role as an energy producer. That’s because when a European Union oil embargo and a ban on financial insurance services for Russian oil transactions take effect on Dec. 5, the removal of millions of barrels of Russian oil from the market could send prices soaring.European financing and insurance dominate the global oil market, so the looming sanctions could disrupt exports to parts of the world that do not have their own embargoes — by making it harder or more expensive to get Russian oil at a time when energy costs are already high. The price cap will essentially be an exception to Western sanctions, allowing Russian oil to be sold and shipped as long as it remains below a certain price.The idea has won plaudits from economists who see it as an elegant win-win strategy for the West. But many energy analysts and traders have expressed deep skepticism about the concept. They believe that a fear of sanctions could scare financial services companies off Russian oil, and that Russia and its trading partners will circumvent the cap through new forms of insurance or illicit transactions.The impact of the proposed oil price cap and the potential for unintended consequences are two of the biggest quandaries facing the nations that have been enduring soaring inflation prompted by supply chain disruptions and Russia’s war in Ukraine.The leaders of the Group of 7 in June. In a joint statement this month, the group’s finance ministers said the “initial” price cap would be based on a range of “technical inputs.”Kenny Holston for The New York Times“We are looking at a far more complex oil market,” said Paul Sheldon, a geopolitical risk analyst at S&P Global Platts Analytics. “This is an unprecedented dynamic where you have such a large supplier of oil under unprecedented sanctions. We’re in new territory on several levels.”Exactly how the price cap will be set remains unclear.In a joint statement this month, finance ministers from the Group of 7 said the “initial” price cap would be based on a range of “technical inputs” and decided on by the group of countries that join the agreement. The Treasury Department’s Office of Foreign Assets Control said last week that the price cap would be determined by a “range of factors” and that countries that were part of the price cap coalition would make the decision by consensus. The coalition would be headed by a rotating coordinator from among the countries.A Treasury official said the process for setting the level of the oil price cap would constitute the next phase of the agreement, after technical details about enforcement had been decided and more countries had signed on to the coalition.The State of the WarDramatic Gains for Ukraine: After Ukraine’s offensive in the country’s northeast drove Russian forces into a chaotic retreat, Ukrainian leaders face critical choices on how far to press the attack.In Izium: Following Russia’s retreat, Ukrainian investigators have begun documenting the toll of Russian occupation on the northeastern city. They have already found several burial sites, including one that could hold the remains of more than 400 people.Southern Counteroffensive: Military operations in the south have been a painstaking battle of river crossings, with pontoon bridges as prime targets for both sides. So far, it is Ukraine that has advanced.An Inferno in Mykolaiv: The southern Ukrainian city has been a target of near-incessant shelling since the war began. Firefighters are risking their lives to save as much of it as possible.As U.S. officials think about setting the price cap, they are focused on two numbers: Russia’s cost of producing oil and the price that the commodity historically fetched on global markets before the war in Ukraine sent prices higher.The Biden administration realizes that Russia will not have an incentive to keep producing oil if a cap is set so low that Russia cannot sell it for more than it costs to pump it. However, setting the cap too high will allow Russia to benefit from the upheaval it has caused and blunt the cap’s ability to sufficiently curtail Russia’s oil export revenues.Before the war and the pandemic, Russian crude, known as Urals, typically sold for between $55 and $65 a barrel. Determining Russia’s cost of production is more complicated because some of its wells are more expensive to operate than others. Most estimates are around $40 per barrel.The price cap could settle somewhere among those numbers.Officials are also discussing whether shipping costs should be included in the cap or if it should just include the oil itself. Separate caps would be enacted for Russia’s refined oil products, such as gas oil and fuel oil, that are used for operating machinery and heating homes.A tanker with imported crude oil in China. The Biden administration hopes that even if China does not formally participate in the price cap the country will use it as leverage to negotiate lower prices with Russia.Agence France-Presse — Getty ImagesOil prices have hovered around $90 a barrel in recent weeks. Russian oil is currently selling at a discount of about 30 percent. Some analysts believe that designing the cap as a mandated level below global benchmark prices could be more effective since oil prices can swing sharply.“If you fix it at a certain level, that could create some risks because the market can fluctuate,” said Ben Cahill, a senior fellow in the Energy Security and Climate Change Program at the Center for Strategic and International Studies, who noted that oil prices could fall below the cap level if it was set too high.“To increase the economic pain on Russia, you want to make the capped price substantially lower than the global average,” he said.As of now, the Treasury Department does not appear to support such an idea. The United States intends for the cap to be a fixed price — one that would be regularly reviewed and could be changed if the countries in the pact agreed to do so. The frequency of the reviews would depend on market volatility. Setting the cap at a discounted rate would introduce additional complexity and compliance burdens, the Treasury official said, because the cap rate could change hourly.Making sure the price cap is adhered to is another hurdle. Treasury Department officials have been holding discussions with banks and maritime insurers to develop a system in which buyers of Russian oil products would “attest” to the price that they had paid, releasing providers of financial services of the responsibility for violations of the cap.In its guidance last week, the Treasury Department said service providers for seaborne Russian oil would not face sanctions as long as they obtained documentation certifying that the cap was being honored. However, it did warn that buyers who knowingly made oil purchases above the price cap using insurance that was subject to the ban “may be a target for a sanctions enforcement action.”The impact of a price cap on global markets is difficult to predict. Mr. Cahill suggested that it could essentially create three tiers of crude, with some Russian oil being sold at the capped price, other Russian oil being sold illicitly or with alternative forms of financing and non-Russian oil being sold by other oil-producing nations.It is not clear how many countries beyond the Group of 7 will join the agreement. The Biden administration is hopeful that even if countries such as China and India do not formally participate they will use it as leverage to negotiate lower prices with Russia.Besides the oil cap’s price, the other big wild card is Russia’s response to it. Russian officials have said they will not sell oil to countries that are part of the price cap coalition, and analysts expect that the country will do its best to fan the volatility with some form of retaliation.The United States hopes that economic logic will prevail and that oil will keep flowing, albeit at a cheaper price.“Russia may bluster and say they won’t sell below the capped price, but the economics of holding back oil just don’t make sense,” Wally Adeyemo, the deputy Treasury secretary, said at a Brookings Institution event last week. “The price cap creates a clear economic incentive to sell under the cap.”Edward Fishman, a senior research scholar at the Center on Global Energy Policy at Columbia University, argued that the price cap could work because the incentives that it would create aligned most buyers, sellers and facilitators of oil transactions toward compliance. He suggested that global oil prices could end up organically gravitating toward the level of the price cap.However, Mr. Fishman acknowledged that Russia and its president, Vladimir V. Putin, might read the incentives differently.“There’s always a sliver of a doubt in people’s minds about Putin’s rationality and his willingness to set the global economy, and his own economy, ablaze in order to make a point,” Mr. Fishman said. More