Ukraine Update: The Crisis Could Wreak Global Economic Havoc For Decades, Warns China


Chinese leaders have brushed back pressure from the EU to take an anti-Russia stance in the Ukraine conflict, warning that cooperation between Beijing and Brussels is needed to prevent long-term damage to the global economy.

Speaking by videoconference on Friday in a summit meeting with EU leaders, Chinese President Xi Jinping reportedly said it could take years or even decades for the global economy to recover from the consequences of the Russia-Ukraine war. He noted that the Ukraine crisis has come amid the Covid-19 pandemic and a “faltering global recovery.”

European Council President Charles Michel and European Commission President Ursula von der Leyen pressed Xi and Chinese Premier Li Keqiang for assurances that Beijing would take a tougher stance against Moscow.

Von der Leyen demanded that China, at the very least, “do everything not to interfere” with Western sanctions against Russia. She warned that China would suffer “major reputational damage” if it helped Russia evade sanctions or otherwise enabled Moscow to wage war.

Li insisted that China would help push for an end to the Ukraine crisis “in its own way.” He added that Beijing had an independent foreign policy that included promoting peace, respecting the territorial integrity of all nations, and settling conflict through dialogue and negotiation.

Xi argued that tensions in Ukraine have built up over a period of decades, and resolving the conflict would require addressing the security concerns of all parties involved.

Xi called on the EU to adopt an independent policy toward Beijing.

Disbanding Of NATO

On Friday, Chinese Foreign Ministry spokesman Zhao Lijian told reporters that NATO should have been disbanded following the breakup of the Soviet Union three decades ago.“Neither the world nor Europe needs a new Cold War,” Zhao said“The Ukraine crisis has dragged on for more than one month, and the overwhelming majority of the international community hopes to promote peace talks and stop hostilities as soon as possible. NATO should reflect on what role it played in the European security issue and the Ukraine crisis.”

Zhao said Washington was the “leading instigator” of the Ukraine crisis, having led NATO in five rounds of eastward expansion since 1999. “Forcing others to take a side is ill-advised,” he added. “Adopting a black-and-white approach to divide others into friends or foes is unwise.”

Dollar Is At Risk Of Losing Its Dominance, And Could End Up A Lesser Player Like UK Pound, Warns Goldman Sachs

A Business insider report said:

Goldman Sachs has warned the U.S. dollar faces risks that could erode its global dominance, saying it is dealing with some of the same challenges that the British pound faced in the early 1900s.

The move by the U.S. and its allies to freeze Russia’s central bank out of much of its foreign currency reserves has raised concerns that countries could start moving away from using the dollar, due to worries about the power the currency grants the U.S.

Goldman’s research note, released Thursday, is a sign major investors are taking the risks to the dollar seriously.

The bank’s analysts, including economist Cristina Tessari, said the dollar faces a number of challenges similar to those faced by the British pound before it declined. The pound was once the world’s reserve currency, but was supplanted by the dollar in the middle of the 20th century.

Those challenges include the fact that the U.S. has a relatively small share of global trade compared to the dominance of the dollar in global payments. That the country has a deteriorating “net foreign asset position”, with rising foreign debts. And that it faces geopolitical problems, such as Russia’s war in Ukraine.

Tessari and her colleague Zac Pandl said the U.S.’s big debts, stemming from the fact that it is a big importer of goods, could be a particular problem.

International investors became more and more reluctant to hold the British pound after the country racked up major debts in World War II, the Goldman analysts said.

“If a reserve currency issuers’ debt is allowed to grow relative to GDP, eventually foreigners may grow reluctant to hold more of it,” they wrote.

Gita Gopinath, deputy director at the International Monetary Fund, told the Financial Times this week that Western sanctions against Russia could create a more fragmented global system that could damage the dollar.

She also said increased use of other currencies in world trade would cause national central banks to diversify the foreign reserves that they hold, at the expense of the greenback.

However, many analysts argue the dollar’s status as a global reserve currency is safe for the foreseeable future, given there is no viable alternative ready to step in, like the dollar did when it replaced the pound.

Goldman argued that the status of the dollar is largely in the U.S.’ hands. “Policies that allow unsustainable current account deficits to persist, lead to the accumulation of large external debts, and/or result in high U.S. inflation, could contribute to substitution into other reserve currencies,” the bank’s analysts said.

Agriculture Supplies Could Be Limited To Friends, Warns Putin Ally

A Reuters report said:

One of President Vladimir Putin’s allies warned on Friday that Russia, a major global wheat exporter, could limit supplies of agriculture products to “friendly” countries only, amid Western sanctions imposed on Moscow over the Ukraine crisis.

Dmitry Medvedev, who served as president from 2008 to 2012 and is now deputy secretary of Russia’s Security Council, said he would like to outline “some simple but important points about food security in Russia,” given the sanctions imposed.

Most of them have been part of the country’s agricultural policy for years.

“We will only be supplying food and agriculture products to our friends,” Medvedev said on social media. “Fortunately we have plenty of them, and they are not in Europe or North America at all.”

Russia already supplies wheat mainly to Africa and the Middle East. The European Union and Ukraine are its main competitors in the wheat trade.

The priority in food supply is Russia’s domestic market and price control within it, Medvedev said. Russia has been using grain export quotas and taxes since 2021 to try to stabilize high domestic food inflation.

Agriculture supplies to “friends” will be both in roubles and their national currency in agreed proportion, Medvedev said.

Currency of payment can already vary in each grain export contract subject to the needs of buyers and sellers. However, Medvedev’s remark comes after Russia’s recent demand for foreign buyers to pay for Russian gas in roubles.

Russia banned most Western food imports in 2014 when it annexed Crimea from Ukraine but may expand the list further now, Medvedev added.

Many foreign companies such as producers of chocolate halted sales of their brands in Russia last month.

Russia And India Will Find Ways To Trade Despite Sanctions, Says Lavrov

A Guardian report said on 1 Apr 2022:

The Indian Prime Minister, Narendra Modi, has afforded Russia’s foreign minister the honor of a meeting as Sergei Lavrov praised India’s refusal to condemn the Ukraine invasion.

Lavrov, who is visiting the country, predicted Moscow and Delhi would find ways to circumvent “illegal” western sanctions and continue to trade.

Modi had not met the string of other foreign ministers to arrive in Delhi in recent days, including the UK foreign secretary, Liz Truss, and the Chinese foreign minister, Wang Yi, so Lavrov looks to have been singled out for attention by the Indian leader.

The report said:

Truss, in India on Thursday, had tried to cast the battle as one between democracies and autocracies, but India, the world’s most populous democracy, does not seem willing to accept this, especially if it requires India to break with Russia on issues such as arms sales and a future realignment of the global security architecture in which the U.S. has a less prominent role.

Lavrov said: “These days our western colleagues would like to reduce any meaningful international issue to the crisis in Ukraine … [We] appreciate that India is taking this situation in the entirety of facts, not just in a one-sided way. I can only say that the balanced position of India which is not influenced by blackmail or diktat methods inspires our respect.”

Lavrov also claimed Ukraine was showing increasing understanding that joining NATO was not an option. “Friendship is the key word to describe the history of our relations, and our relations were very sustainable during many difficult times in the past,” he said.

His Indian counterpart, Dr S Jaishankar, reiterated “the importance of cessation of violence and ending hostilities” and said: “Disputes should be resolved through dialogue and diplomacy.”

Lavrov said Russia’s military offensive in Ukraine was not “just about Ukraine, its neutrality”, but rather a “question of world order”. He suggested that the US had now suppressed all attempts at establishing autonomy by Europe, with the latter now completely in lockstep with Washington, a status to which he said Europe was reconciled.

He said the west’s real endgame was the re-establishment of a unipolar world.

Lavrov said the U.S. and its allies were trying to conceal their true objectives, portraying their confrontation with Russia and some other nations as a “battle between democracies and autocracies”. However, according to the Russian foreign minister, the west itself has become one big autocracy with the US at the helm.

The report added:

But there are also tensions in the relationship between India and Russia. Western financial sanctions have reportedly made it difficult for India to pay Russia for imports including arms, oil, rough diamonds and fertilizers. Russia has written to India’s defence ministry requesting clearance of back payments worth $1.3bn, according to the Economic Times newspaper.

India and Russia have been working on a rupee-rouble mechanism to facilitate trade and get around western sanctions on Russian banks, according to media reports. Lavrov told reporters he was confident the two countries would find a solution.

“Many years ago we started moving in our relations with India, with China, with many other countries from using dollars and euros to more and more use of national currencies. Under these circumstances this trend I believe will be intensified,” he said. “We will be ready to supply to India any goods which India wants to buy … and I have no doubt that a way will be found to bypass the artificial impediments which illegal unilateral sanctions by the west create.”

Can U.S. And NATO Provide Ukraine With Enough Weapons?

An NBC News report said:

The Ukraine war have forced the U.S. and other NATO governments to consider providing military aid for Kyiv on a scale Western leaders never anticipated, current and former officials say.

It is not clear, however, that the U.S. and other NATO members can sustain even the current level of weapons deliveries.

The White House says that it has moved swiftly in an unprecedented way to get weapons in the hands of Ukrainians fighting the Russian troops, and that U.S. officials are working with NATO allies to keep the arms moving to Ukraine.

Since Feb. 24, U.S. cargo planes have unloaded hundreds of anti-aircraft Stingers, thousands of anti-tank weapons, millions of rounds of ammunition and other gear destined for Ukraine’s armed forces, according to the White House. The weapons deliveries to Eastern Europe came as President Joe Biden recently approved more than $1 billion of military assistance for Ukraine in less than a week.

But these commitments threaten to deplete the existing supplies of some munitions, according to John Schaus of the Center for Strategic and International Studies think tank.

Under recent decisions, the U.S. will deliver about 4,600 Javelin anti-tank missiles to Ukraine, the White House says. That would account for more than half of the 8,885 Javelins the Defense Department bought in the past 10 years, said Schaus.

Ukraine’s ambassador to Britain, Vadym Prystaiko, warned last week that its current supply of arms will run out soon as their forces are burning through the supplies at a rapid rate. Canada said it will now purchase military gear to send to Ukraine as it could not draw any further from its own supplies without undermining its own defense needs.

In Washington, lawmakers from both parties have expressed concern the Biden administration has yet to lay out a plan on how it will replenish the stocks of weapons being provided to Ukraine. The chairman of the House Armed Services Committee, Rep. Adam Smith, a Democrat from Washington, and the ranking Republican member, Rep. Mike Rogers of Alabama, recently wrote a letter to Defense Secretary Lloyd Austin demanding the Pentagon explain how it intends to ramp up production to replace Stingers sent to Ukraine.

Now members of Congress and officials in Kyiv are calling for a more ambitious approach that would help Ukrainian forces roll back the Russians instead of merely holding them to a stalemate, a goal that would require a wider range of weapons and long-term plans for an open-ended war.

A bipartisan group of lawmakers, including senators who visited Eastern Europe this week, are urging the administration to aim their efforts at helping Ukraine deliver a decisive defeat to Russia.

“The U.S. mission in Ukraine must go beyond ensuring the country merely has the means to defend itself against Russian aggression,” said a bipartisan letter from 25 lawmakers. “The strategy must deliver Ukraine necessary weapons to defend itself, counter the Russian forces’ advance, and give the Ukrainian people a chance to win this war,” the lawmakers wrote in a letter Tuesday.

Ben Hodges, a retired U.S. Army general who served in Afghanistan and oversaw troops in Europe, said the administration needed to shift its goals in Ukraine and give additional weapons that could take out incoming Russian missiles and warships off the coast.

“There is not the sense of urgency that is needed to help the Ukrainians turn the tide. It seems as if we are giving them enough to keep them from losing but not enough to help them win,” said Hodges.

U.S. lawmakers also have demanded a full accounting of the weapons sent to Ukraine so far and of what’s left in U.S. and European stocks.

The report said:

Critics, including Republican lawmakers, former U.S. diplomats and military officers and Ukrainian officials, say the Biden administration has consistently adopted an overly cautious stance on aiding Ukraine, hesitating to green-light the delivery of certain types of weapons — such as armed drones and Stingers — to avoid provoking an aggressive response from Moscow. They argue that the administration had to be pressured into almost every significant step it has taken so far to help Ukraine.

Despite appeals from Ukraine and from lawmakers, the administration did not approve American shipments of Stingers or armed “kamikaze” drones until after the Russian attack was launched in February. Significant numbers of anti-tank Javelin weapons did not start flowing until January.

As of Wednesday, small “kamikaze” Switchblade drones, recently approved by the administration, had yet to be delivered, according to the Pentagon. A larger, more powerful version of the Switchblade drone was not approved in the administration’s weapons package.

The administration initially chose not to share targeting intelligence with Ukraine, but after criticism from Congress, it relented.

In blunt language, Ukrainian President Volodymyr Zelenskyy has rebuked NATO countries, saying they are dithering about providing help while Russian shells and missiles rain down on Ukrainian cities.

Although Zelenskyy has made repeated public pleas, the White House remains opposed to helping Poland or other countries provide Soviet-era fighter jets to Ukraine, saying the planes are of limited utility and could risk escalating tensions with Moscow. Ukrainian pilots disagree, saying in interviews that their fighter aircraft are undermining Russia’s air attack but that they are outnumbered and need more planes and better radar.

Ukraine has also asked for more sophisticated S-300 air defense systems that can hit aircraft at a higher altitude, but Eastern European countries say they are not ready to deliver those to Ukraine until they acquire a replacement from the U.S. or other NATO states. U.S. officials say the issue remains under discussion.

Rogers, the ranking Republican on the House Armed Services Committee, said the Biden administration “has consistently slow-walked sending critical lethal aid to Ukraine.”

“The Biden White House should be haunted by the knowledge of the impact that U.S. Stingers, more Javelins, Switchblades, and air-defenses, would have had if they were provided pre-invasion,” Rogers said in an email.

Sen. Chris Murphy, D-Conn., a member of the Senate Foreign Relations Committee, defended the administration, saying it has moved rapidly in an unparalleled situation, with the United States explicitly arming an opposing force fighting the Russians. Even during the Cold War, the U.S. did not overtly provide weapons to Moscow’s adversaries, he said.

“There’s not a single country in the world that’s done more for Ukraine than the United States, even though we’re on the other side of the world,” Murphy said.

Murphy said there are “very few signs that the administration is taking its foot off the accelerator in order to send messages to Putin.”

John Herbst, a former U.S. ambassador to Ukraine who urged the administration to move more decisively to arm and equip Ukraine before the invasion, said the current effort to send weapons to Ukraine “may end up being enough, but it’s far from what it should be.”

The administration rejects accusations that it has moved too slowly, or that Ukraine is not getting the weapons it needs. It also points to military training carried out over the past several years by the United States and other allies that is now bearing fruit on the battlefield.

“Armchair generals keep searching for some magical weapon that would be the difference maker, when the actual difference maker is staring them in the face — it’s the thousands of weapons of all sorts we have already delivered, which have kept the Ukrainians in the fight, sent the Russians into retreat, and ultimately will lead to Putin’s failure,” said a U.S. official, who was not authorized to speak on the record.

Marc Polymeropoulos, who once oversaw clandestine operations in Russia and Europe for the CIA, said it was not realistic to provide Ukraine with everything it has asked for.

“Instead, we should be giving them what they actually require, based on the needs-based assessments of professional CIA and special operations officers who presumably maintain routine contact with their Ukrainian counterparts,” he said.

Polymeropoulos said the Biden administration’s caution has been frustrating at times, particularly amid reports of debates at the White House National Security Council over legal objections to various courses of action.

“It’s always nasty to see how the sausage is made, but ultimately it comes out tasting pretty good,” he said. “The administration was initially overly cautious over unfounded fears of escalation, but after pressure from the Hill, and in particular events on the ground, ultimately we wound up doing the right thing.”

U.S. Will Give Ukraine $500 Million In Budget Aid

The U.S. will provide $500 million in budgetary assistance to Ukraine, President Biden told Ukrainian President Volodymyr Zelensky on a call on Wednesday.

Biden and Zelensky spoke over the phone for nearly an hour. The two talked about U.S. efforts to provide military, economic and humanitarian assistance, according to a White House readout.

“The leaders discussed how the United States is working around the clock to fulfill the main security assistance requests,” the White House said in its statement.

“In addition, President Biden informed President Zelenskyy that the United States intends to provide the Ukrainian government with $500 million in direct budgetary aid. President Zelenskyy updated President Biden on the status of Ukraine’s negotiations with Russia.”

The budgetary aid intends to keep the Ukrainian government and economy stable as the invasion enters its second month.

The U.S. has also provided a total of $1 billion in military aid since the war began, supplying Ukraine with anti-tank and anti-aircraft defense systems, small arms and other weapons to defend itself against Russia.

Zelensky has asked Western nations for additional support, and the White House readout indicated the Biden administration may provide more defense systems in the days to come.

UK Will Send Long-range Weapons To Ukraine

A Telegraph report said:

Longer range artillery and armored vehicles will be sent to Ukraine in a significant ramping up of Western support, Ben Wallace announced on Thursday.

The Defence Secretary confirmed that Britain and its allies would send more lethal aid after he convened an international donor conference.

The aid will include the provision of air and coastal defence systems, longer-range artillery and counter battery weapons, armored vehicles as well as more training and logistical support.

Boris Johnson was said to have personally pushed for armored vehicles to be sent. Britain has been leading the way in calls for more lethal aid to Ukraine.

Whitehall sources have expressed concern that allies including the U.S., France and Germany are “over-eager” to secure an early peace deal and are pushing Ukraine to “settle”.

It came as a Ministry of Defence chief suggested Britain needs a national effort to boost its nuclear weapons programme.

While more than 30 international partners will pitch in with the latest donations, The Telegraph understands that the UK will send so-called loitering munitions such as drones, and will “lift and shift” other donations.

Prof Malcolm Chalmers, deputy director general at the Royal United Services Institute, told The Telegraph such kit would be “especially useful for Ukrainian counter offensive operations” against already retreating Russians.

“This is a significant step up in both quantitative and qualitative terms,” he added. “The provision of longer range artillery and armored vehicles could be of significant benefit to Ukrainian forces.”

Prof Chalmers cautioned that the war is “increasingly turning into one of attrition, where both sides risk running out of supplies of weapons and ammunition”.

A spokesman for the Ministry of Defence would not speculate on what types of armored vehicles the UK could supply to Ukraine, but said it would consist of various types of protective vehicles used to transport equipment.

Greenpeace Blocks Russian Oil Transfer

Another Reuters report said:

Greenpeace activists on Thursday blocked two oil tankers off the coast of Denmark from transferring 100,000 tonnes of Russian oil, in what the organization said was an attempt to stop funding Russia’s invasion of Ukraine.

In kayaks and rhib boats, the activists placed themselves between the oil tankers Seaoath and Pertamina Prime near Frederikshavn, Denmark, preventing the ship-to-ship oil transfer.

The Seaoath had arrived from Russia carrying 100,000 tonnes of Urals crude oil and was attempting to transfer the oil to the larger Pertamina Prime tanker, according to Greenpeace and Refinitiv ship tracking data.

Trade and shipping sources said Trafigura had chartered the Seaoath that loaded the Russian crude. Trafigura declined to comment on the specific shipment but said it condemns the war in Ukraine. Trafigura said it was not doing new oil and gas business in Russia but continues to comply with existing contracts agreed prior to the invasion.

Greenpeace said it had tracked 299 tankers carrying oil and gas from Russia since the start of what the Kremlin calls a “special military operation” in Ukraine on Feb. 24. Of those, 132 were headed to Europe, it said.

“It is shameful that we keep funding the war by buying Russian fossil fuel. This is happening in Denmark. They should not be allowed to be here,” said Martner.

Venezuela Seeks Oil Tankers

From Caracas and Houston a Reuters report said:

Venezuela’s state-run energy firm PDVSA is in talks to buy and lease several oil tankers amid a possible expansion in exports, according to three sources and a document seen by Reuters, a sign the country expects U.S. sanctions on its petroleum sector to be eased.

The Trump administration’s sanctions in 2020 led to a total cut of export authorizations covering most foreign energy firms in joint production with PDVSA. The suspension left companies including Chevron Corp, Eni SpA and Repsol SA with billions of dollars in unpaid dividends and debts that had been settled through Venezuelan oil cargoes.

Executives from PDVSA’s maritime arm, PDV Marina, and the company’s Trade and Supply division recently met with several firms offering tankers. All were willing to take Venezuelan crude or refined products as payment for the vessels, according to the document and sources who spoke on condition of anonymity.

PDVSA’s aging fleet, composed of about 30 owned tankers, has been forced to mostly remain in Venezuelan waters after underinvestment and lack of repairs for more than a decade, according to Refinitiv Eikon data and sources.

The country’s crude oil and petroleum exports have tumbled under U.S. sanctions, to about 650,000 barrels per day (bpd) last year, from more than 1.5 million bpd in 2018.

U.S. sanctions stopping PDVSA from renewing its vessels’ insurance and classification, which certifies they are seaworthy, have in recent years curtailed the firm’s ability to use the ships for exports, leading it to rely largely on a group of third-party tankers that often lift crude at Venezuelan ports, sources and documents from the state company showed.

In one of the proposals seen by Reuters, a company whose name was redacted from the document, offered five Aframax tankers, each with the capacity to transport up to 700,000 barrels of oil, under a lease contract with an option to buy them.

It required PDVSA to pay between $22,500 to $35,000 per day for up to 12 months to lease each vessel under a time-charter contract. Those ships would progressively be replaced by new ones after the first year with payment for the new tankers through four million barrels of Venezuelan fuel oil valued at $300 million, according to the proposal.

That company also proposed to blur PDVSA’s ownership of the new tankers through a chain of intermediaries, which would reduce the risk of retentions or seizures by the U.S. if sanctions remained in effect.

PDVSA in 2020 offered to ship its own oil, figuring in the costs in crude supply deals to help customers that struggled to hire vessels due to U.S. sanctions, but the contracts were short-lived due to lack of enough Venezuelan vessels.

Washington between 2019 and 2020 blacklisted vessel owners and operators that carried Venezuelan oil, but in the last year has not enforced similar maritime sanctions. Still, many shipping firms continue to avoid Venezuelan waters because of the U.S. measures, forcing large price discounts on the South American country’s oil.

U.S. Officials Circle Globe To Keep Pressure On Putin As Rouble Rises

Another Reuters report said:

Senior U.S. officials fanned out this week to press world leaders to keep piling pressure on Moscow or join the campaign of sanctions and other measures.

U.S. Deputy Treasury Secretary Wally Adeyemo met with senior officials in London, Brussels and Paris, and will finish the week in Berlin; the deputy national security adviser for international economics, Daleep Singh, pressed Indian officials in New Delhi, and Secretary of State Antony Blinken discussed with Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahyan in Morocco.

The effort comes as the initial impact of unexpectedly tough sanctions on Russia begins to wear off somewhat, and the U.S. considers its next economic steps to isolate Russian President Vladimir Putin.

The rouble has largely recovered to its level, propped up partly by Russian capital controls, government orders for export firms to sell foreign currency and companies gathering funds to make quarter-end tax payments. Shares on Russia’s stock market are trading again, although they have dropped in value.

Russian bank VTB, a principal sanctions target, remains open for business in Europe, where it has gathered billions of euros in deposits, mainly from German savers. Other Russian banks are considering China’s UnionPay credit card system after Visa and Mastercard suspended Russian operations.

The sanctions thus far have left Russia’s biggest economic lifeline untouched – energy sales to Europe, which could be up to 500 million euros ($555 million) a day at current prices. Russia is demanding payments in roubles for gas starting on Friday, which could boost the currency further.

The report said:

The Biden administration is making sure European allies are firmly aligned on punishing Putin, while working to sway leaders who have sat on the sidelines as the war stretches on, officials say.

Deputy Treasury Secretary Adeyemo’s discussions with his European counterparts centered on sanctions, the impact of India and China on Russia’s potential sanctions evasion efforts, and how to help countries like Germany cover their energy needs in the event of a Russian embargo, said one European official.

In India, White House economic adviser Singh, who led efforts to coordinate the Western response to the war, told officials Washington would not set any red lines about purchasing oil, but warned against rapid acceleration of purchases.

European Countries Take Steps Towards Rationing

A report by said:

The supply of critical commodities in Europe faces threat and global supply chains already struggling amid COVID-19, is in complete chaos.

The prices of everything from wheat to oil have soared, leading to multi-decade high inflation rates in places like Germany and Spain. The supply crunch in Europe is now so bad it is causing governments to begin laying the groundwork for rationing, with some stores already limiting supplies.

The German government took the first formal steps toward rationing its natural gas supplies this week as it attempts to wean itself off a decades-long reliance on Russian energy. And in Spain and Greece, supermarkets are rationing food including flour, milk, and sunflower oil.

While current European rationing has largely been preventative, as governments and businesses hope to limit the risk of panic buying and further shortages, Europeans are facing a volatile environment ahead as geopolitical tensions persist and COVID-19 lockdowns continue abroad.

German Gas

Germany pulled the first lever on its three stage emergency plan to conserve its natural gas supply on Wednesday, fearing a potential showdown with Russia over gas flows.

Germany’s Vice Chancellor Robert Habeck told reporters on Wednesday that current rationing is largely a preventative measure.

But even the first stage of rationing could lead to “targeted” shutdowns of “specified individual large consumers,” Deutsche Bank analyst Eric Heymann wrote in a note to clients on Wednesday.

Heymann added that if Germany is forced to regulate the flow of gas in the third stage of its emergency plan, it could cause even higher energy prices, along with job and income losses, and a reduction in overall economic demand from consumers.

Christian Kullmann, head of the German Chemical Industry Association said on Wednesday if natural gas is rationed chemical production facilities would also have to shut down for weeks or even months, causing a “huge domino effect through almost all industries.”

Greek Flour 

Four Greek supermarket chains—AB, Sklavenitis, Kritikos and My Market—have also started rationing critical food products including flour and sunflower oil after the war in Ukraine caused a supply crunch in the nation. However, like in Germany, current rationing is only a preventative measure at this time.

“The reason for the cap on these products is only precautionary, as our customers are concerned about the war in Ukraine,” an official at AB supermarket chain told Reuters last week. “We want to ensure we will be able to serve our customers’ needs in the future too.”

Greek Development Minister Adonis Georgiadis told Ant1 TV that demand for some products has jumped roughly 200% in recent weeks, as shoppers have rushed to stores to bolster their supplies.

“Flour and sunflower oil are the two products which, apart from energy, the war has affected more than anything else,” Georgiadis said. “There are already shortages throughout Europe.”

Spanish Sunflower Oil

Sporadic shortages of products like eggs, milk, and other dairy products also hit Spain since the war in Ukraine began. And major supermarkets including Mercadona and Makro began rationing sunflower oil earlier this month.

Now, stores will temporarily be allowed to limit “the number of goods that can be bought by a client,” according to information in the Official State Gazette published on Wednesday.

Ukraine is one of the most important trade partners for Spain, providing 30% of the country’s corn and 60% of its sunflower oil, according to Madrid-based economic consultancy AFI.

The news of the temporary rationing comes after weeks of disruption in Spanish supply chains caused by a truck drivers’ strike for better working conditions and increased pay. Many trucking companies shut down because they weren’t compensated for diesel price increases, also caused by the war in Ukraine, that made their businesses unsustainable.

As a result of the crippled Spanish supply chain, Inlac, the dairy farmers and industry association, has halted the production of milk over the past few weeks, but the association said on Wednesday they hoped supplies would be back to normal sometime in the next few days.

West Is Doing Its Best To Cripple Russia’s Economy With Sanctions, But Kremlin Is Still Making Good On Its Debt

Another Business Insider report said:

Even after the U.S. and its allies have imposed sweeping sanctions on Russia, President Vladimir Putin’s administration has been able to service the country’s debts.

Investors have been closely watching Russia’s debt payments in anticipation of a default that could ripple through the country’s financial system and beyond. But Russia once again averted a default on Thursday when it sent $447 million in dollar bond payments processed by JPMorgan, sources told Bloomberg.

“There have been questions about the ability and willingness to pay on the part of the Russian government, but this is all happening within the context of sanctions,” Hassan Malik, an expert in the Russian finance system and a senior sovereign analyst at Boston-based investment management consultancy Loomis Sayles, told Insider.

“That is what makes this current situation very different from a run-of-the-mill, emerging market debt crisis,” he added.

The Kremlin has on at least two occasions accused the West of trying to engineer an “artificial default” with those sanctions.

“The fact is that from the very beginning we have said that Russia has all the necessary funds and potential to prevent a default — there can be no defaults,” Kremlin spokesman Dmitry Peskov said on March 17, per Reuters. “Any default that could arise would have an entirely artificial character.”

Russia has so far been able to meet all its debt obligations, and it could be because a default event would matter more to the country than it would the rest of the world.

Greece and Russia: A Comparison

The country’s foreign debts are also pretty low, said Malik. Russia owed $39 billion through foreign currency bonds at the end of 2021, per JPMorgan estimates. In comparison, Greece defaulted on 205.6 billion euros ($277.5 billion) in sovereign debt in 2012.

Russia has been able to service its dollar debt in part because the US Office of Foreign Assets Control Treasury Department on March 2 issued a temporary license permitting U.S. persons to receive dividends and bond payments on Russian securities from the finance ministry, central bank, or national wealth fund.

That license is set to expire just after midnight on May 25, and Russia will still have about $2 billion worth of external sovereign bond payments to make before the end of 2022, according to Reuters.

The report said:

The Big Three credit rating agencies — S&P Global, Moody’s, and Fitch — have all slashed Russia’s credit rating to junk status. On March 23, Research firm MSCI said 23 investors still believed there was a 50% chance of Russia defaulting on its debt in the next 12 months.

China Rejects Sanctions

An AP report said:

China on Friday renewed its criticism of Western sanctions against Russia, as top EU officials sought assurances from Beijing that it would not help Moscow circumvent the economic measures imposed on Russia.

The Chinese Foreign Ministry also laid blame for the war in Ukraine at least partially on the U.S. for pushing to expand the NATO military alliance closer to Russia’s borders. Twenty-one of the EU’s 27 countries are also NATO member states.

China’s Foreign Ministry spokesperson Zhao Lijian earlier warned at a daily briefing that his country “disapproves of solving problems through sanctions, and we are even more opposed to unilateral sanctions and long-arm jurisdiction that have no basis in international law.”

Zhao said when it comes to Ukraine, Beijing would not be forced to “choose a side or adopt a simplistic friend-or-foe approach. We should, in particular, resist the Cold War thinking and bloc confrontation.”

“As the culprit and leading instigator of the Ukraine crisis, the U.S. has led NATO to engage in five rounds of eastward expansion in the last two decades after 1999,” he said, adding that NATO membership almost doubled from 16 to 30 countries, and pushed “Russia to the wall step by step.”

China says it is not taking sides in the conflict but it has declared a “no limits” partnership with Russia and refuses to condemn the invasion. Beijing routinely amplifies Russian disinformation about the conflict, and does not refer to it as an invasion or a war in keeping with Russian practice.

Michel and Von der Leyen did not say whether they received guarantees from Chinese officials that Beijing would not provide financial or military aid to Russia.

Underlying the EU’s expectations for China is the possibility of penalties against Chinese companies that undermine measures taken against Russia. EU officials point out that 13.7% of China’s total trade is done with the 27-nation bloc, and 12% with the United States, compared with just 2.4% with Russia.

All Foreign Leased Aircraft Will Remain In Russia, Says Moscow

All foreign leased aircraft still in Russia after the termination of Western leasing contracts will remain in Russia, Deputy Prime Minister Yuri Borisov said on Thursday.

Sanctions imposed by Western powers in response to Russia’s military campaign in Ukraine forced Western firms to terminate leasing contracts with Russian airlines for over 500 aircraft. Russia has said 78 of these planes were seized while abroad, meaning that well over 400 remain.

“The entire fleet, meaning foreign aircraft, will remain in Russia,” Borisov said on Russian television. “Some were impounded (abroad) as sanctions were being introduced, (but) the vast majority of Boeing and Airbus (planes) remain in Russia.”

Moscow has passed a law allowing the aircraft, worth almost $10 billion, to be entered on its own register, in contravention of international rules.

Bermuda and Ireland, where most of the planes are registered, have suspended airworthiness certificates, which usually means they should be grounded.

Russian airlines have thus been hesitant to use the law, fearing that they might jeopardize ties with foreign partners. But Borisov said all the leased foreign aircraft had been entered into the Russian register.

The sanctions also prevent Russian airlines buying aircraft parts or maintenance services from Europe or the United States, adding to the pressure on the world’s 11th largest aviation market from a ban on using North American and European airspace.

President Vladimir Putin said he had instructed the government to work out measures to ease the burden of leasing payments on Russia’s airlines.

Firms’ Foreign-listed Depositary Receipts Will Be Forced To Return To Russia, Says Kremlin

Russian companies whose depositary receipts are traded abroad will be obliged to return to Russia, unless other solutions arise, Russian Economy Minister Maxim Reshetnikov said on Friday.

Several major Russian companies have listings abroad, which has always been a matter of prestige for them. But since Russia began what it calls a “special military operation” in Ukraine on Feb. 24, Western bourses have halted trading of Russian securities.

Holders of depositary receipts in Russian companies that are traded abroad can convert them into shares on the Russian market, Reshetnikov said.

“When shares here (in Russia) are much more expensive, there is no sense in trading them there. That is why our Russian shares, Russian companies will be obliged to return here unless another government decision is made,” Reshetnikov said.

U.S.-based bank BNY Mellon has already offered clients who hold Russian equities on foreign bourses an option to withdraw from them and receive them in Moscow for a fee, according to a letter sent by the bank and seen by Reuters.

The offer, which is effective from March 30, covered depositary receipts in more than a dozen major Russian firms, including Gazprom, VTB and Novatek, according to the letter.

BNY said in the letter it would facilitate the swap only if holders attested they would remain the owners of the securities when they are transferred to Russia.

BNY Mellon declined to comment on the swap offer, which was first reported by the Financial Times on Thursday.

The London Stock Exchange suspended trading in the depositary receipts — which represent shares in a foreign company — of Russian companies in early March after prices crashed to record lows.

In London, depositary receipts in Russia’s largest lender Sberbank fell to almost zero days after Russian sent thousands of its troops to Ukraine.

Russia Wants Security Guarantees For All European States

Russia wants security guarantees for all European nations, not just itself and Ukraine, the country’s foreign minister told journalists on Friday.

Following talks with his Indian counterpart, Subrahmanyam Jaishankar, in New Delhi, Sergey Lavrov emphasized that other countries should also get such guarantees based on “those documents that have been adopted for many years in the OSCE framework, and which have proclaimed the principle that no country will strengthen its security at the expense of others’ security.”

Lavrov expressed cautious optimism regarding the ongoing negotiations between Russia and Ukraine, noting that Kiev and its Western supporters now appear to agree to Ukraine’s future neutral status, with no aspirations to join NATO.

Question Of World Order

Yet Russia’s military offensive in Ukraine is not “just about Ukraine, its neutrality,” but rather a “question of [the] world order,” Lavrov claimed. Russia’s top diplomat went on to suggest that the U.S. has now suppressed all attempts at establishing autonomy by Europe, with the EU states now completely in lockstep with Washington. According to Lavrov, the bloc’s members have reconciled themselves to this status.

The West’s real endgame is the establishment of a unipolar world, Lavrov opined.

The Russian foreign minister said that the U.S. and its allies were trying to conceal their true objectives, portraying their confrontation with Russia and some other nations as a “battle between democracies and autocracies.” However, according to Lavrov, the West itself has become one big autocracy with the U.S. at the helm.

Eurozone Inflation Hits Historic High

Consumer prices in the 19 countries that use the euro currency rose by an annual rate of 7.5% in March, according to data released on Friday by the EU statistics agency. Spiking energy costs are the main factor driving inflation higher, Eurostat said.

It is the fifth straight month that inflation in the eurozone has set a record, bringing it to the highest level since recordkeeping for the euro began in 1997. The latest reading smashed the 5.9% high set in February.

Consumer prices have been surging around the world lately, making it more difficult for people to afford everything from groceries to their utility bills.

Data shows food, alcohol, and tobacco costs across the Eurozone climbed 5% in March, compared with 4.2% in the prior month, while prices for goods like clothing, appliances, cars, computers, and books rose 3.4%, up from 3.1%. Service prices were also up by 2.7%, versus the previous 2.5%.

Some economists have been raising concerns whether the trade bloc will enter a recession in 2022, after energy prices skyrocketed 44.7% last month, up from 32% in February.

European Central Bank President Christine Lagarde said this week that “three main factors are likely to take inflation higher” going forward. According to Lagarde, “energy prices are expected to stay higher for longer,” “pressure on food inflation is likely to increase,” and “global manufacturing bottlenecks are likely to persist in certain sectors.”

Pakistani PM Commends India’s Independent Foreign Policy

Pakistani Prime Minister Imran Khan has complimented regional rival India for maintaining an “independent foreign policy” amid U.S. and allied pressure to adopt a harsher stance toward Russia.

Speaking Friday after accusing Washington of “interference” in Pakistan’s internal affairs, Khan went on to praise New Delhi’s unwillingness to go along with a barrage of sanctions and economic restrictions against Moscow.

“They protect their independent foreign policy which is centered on its people,” he said, as cited by local media.

He said: “No country is respected unless it stands on its own two feet.”

Facing a no-confidence vote on Sunday after losing his parliamentary majority following multiple defections from his party, Khan’s remark was quickly denounced by political opponents, with the leader of the opposition National Assembly, Shehbaz Sharif, blasting him for talking up the policy approach of Pakistan’s top adversary.

“His recurring praise for [Indian Prime Minister] Narendra Modi’s foreign policy is an insult to the sacrifices of valiant Kashmiris braving Hindutva,” he tweeted. “Among other things, the damage done to our foreign policy is incalculable,” Sharif added.

Khan, however, quickly shot back, saying that his rivals believe his “statements will anger America” and that “Pakistan cannot survive without its support.”

“They [the United States] order us. They say that if the no-confidence motion does not become successful, there will be consequences for Pakistan,” the PM went on, arguing that his administration will not join the “bloc politics to achieve the same objectives” against Russia.

The Pakistani leader previously said a “foreign country” was seeking to remove him from office and is driving the no-confidence vote, openly naming that nation as “America,” ostensibly by accident, during a televised address on Thursday.

Pakistan Summons U.S. Envoy Over ‘Meddling’

Islamabad has summoned its acting U.S. envoy, Assistant Secretary of State Donald Lu, to officially condemn his language regarding the upcoming no-confidence vote against PM Imran Khan, a Pakistan foreign ministry official confirmed on Friday.

Lu allegedly told the Pakistani ambassador to the U.S. that “relations with Pakistan cannot improve” as long as Khan was in power. If the former cricket star was ousted in the no-confidence vote, however, the country would be “forgiven for its mistakes,” local media reported.

Khan’s government opted to issue a “strong demarche” to the U.S. in return for his threatening remarks after the PM consulted with his national security committee on Thursday over the matter, which they denounced as “blatant interference in Pakistan’s internal affairs” by a foreign country.

Khan claimed to have received a briefing letter from the Pakistani ambassador to the U.S. that included a recording of a senior official from Washington suggesting the relationship between the U.S. and Pakistan would improve should Khan be toppled in the no-confidence vote.

“They say that ‘our anger will vanish if Imran Khan loses this no-confidence vote’,” Khan declared in his speech after appearing to reveal that “they” were Washington.

While the opening debates on the no-confidence vote will likely take place during parliament’s next meeting on Sunday.

However, PTI remains outnumbered, with several members having defected to the two major rival parties on the matter of the no-confidence vote.

Khan also claimed in a rally last week that a “foreign-backed conspiracy” was behind the move to oust him, noting that it was being financially backed by millions of dollars in foreign money and “our people are being used.” The PM suggested it was his refusal to join the U.S. and NATO in condemning Russia’s military operation in Ukraine that had triggered the conspiracy.

Adding credibility to his claim, Pakistani Information Minister Fawad Chaudhry revealed on Friday that the country’s security agencies had reported a plot to assassinate Khan, the second such claim this week. PTI leader Faisal Vawda had earlier claimed Khan’s refusal to “sell the country” was behind the bid to have him killed.

The no-confidence vote stems from a combination of longstanding economic issues and the recent spike in fuel prices triggered by the conflict in Ukraine. There is uncertainty over whether the International Monetary Fund will release the next installment of a $6 billion rescue package agreed upon in 2019, as the IMF has balked at a subsidy package Khan introduced to cushion the impact of surging oil and gas prices. However, Khan insists the subsidies are already paid for with existing funds.

Russia And Ukraine Swap Prisoners

Ukrainian and Russian forces on Friday exchanged prisoners under an agreement reached by the two countries’ negotiating groups earlier this week, said Kyrylo Tymoshenko, the deputy head of the Ukrainian president’s office.

“The exchange has just taken place. 86 Ukrainian servicemen, including 15 women, are now safe,” Tymoshenko said on Telegram.

Ukraine and Russia conducted their first prisoner swap last week since the start of the conflict on Feb. 24, Ukrainian authorities said.

Ukraine-Russia Peace Talks Resume

Negotiations between Russia and Ukraine are continuing in an online format, the head of Russia’s delegation at talks with Ukraine Vladimir Medinsky said Friday.

“We are continuing negotiations in a videoconference format. Our positions on Crimea and Donbass remain unchanged,” Medinsky wrote in a Telegram post.

On Thursday, Ukrainian negotiator, David Arakhamia, said that at the fresh talks, the Ukrainian and Russian delegations will intensify efforts to work out an agreement needed for a meeting between Ukrainian President Volodymyr Zelensky and Russian President Vladimir Putin.


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