In recent days, Taiwanese agricultural authorities have contacted grouper farmers to discuss ways that the government can help, including by providing low-interest loans and feed subsidies and expanding access to domestic consumers and overseas markets. Another idea being floated is to include the fish in individually packaged meal boxes sold at train stations and on trains by Taiwan’s railway administration. Taiwan’s Fisheries Agency said on Tuesday that the agency would spend more than $13 million to support the grouper industry.

Taiwan’s Council of Agriculture has said it would consider filing a complaint about the grouper ban to the World Trade Organization. Lin Kuo-ping, the deputy director general of the official Fisheries Agency, said the government had reached out to their Chinese counterparts to discuss the inspection process but had not heard back. China’s General Administration of Customs did not respond to an emailed request for comment.

Some grouper farmers said that if the ban was not lifted, they would have to settle for selling the fish on the domestic market at a huge loss. Until then, the fish will remain in the ponds. Mr. Lin, the grouper farmer, said he worried the groupers could die as a result of overcrowding.

He is now pinning his hopes on another kind of fish that he has been farming, the four-finger threadfin fish, which is also popular on the mainland. But he acknowledged that even this backup strategy was vulnerable to geopolitical shifts. Last year, Taiwan’s exports of the fish were worth nearly $40 million — and more than 70 percent went to China.

“Our biggest customer,” he said, “is still China.”

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What Happened on Day 97 of the War in Ukraine

BAKHMUT, Ukraine — The volunteers listened patiently to the pensioner and stuffed a frozen chicken into her shopping bag.

Olena Tyvaniuk, 70, a slight woman with a stoop, explained tearfully that she needed more than food. She needed drugs. “I have a son, he is 48, he is a paranoid schizophrenic,” she said. “I need medication for him.”

As the towns and cities of eastern Ukraine empty out in the face of the Russian offensive, some residents are choosing to stay on. Like Ms. Tyvaniuk, some are trapped by medical imperatives. Or they are too poor to leave. Or, disillusioned by the longstanding corruption of Ukrainian officials, they think things can’t be worse under the Russians.

Bakhmut, just 10 miles from the front, is largely deserted. There are few cars on the streets except for military vehicles; shops and banks are boarded up. Only one or two cafes and supermarkets are still open.

The only pharmacy is at the hospital where wounded soldiers are brought in from the front. Recently, bloodstained stretchers were propped up against a wall where a wounded soldier, his face bloody and swollen, swathed in bandages, smoked a cigarette with friends.

Yet in the middle of war, even as artillery booms not far away, civilians still walk by in the street, sometimes even with a child in tow.

Credit…Finbarr O’Reilly for The New York Times

Ms. Tyvaniuk said her son, who barely leaves his room, was refusing to leave. His medication was running out and the only pharmacy open in the town did not stock the medicine he needed, she said. He had enough left for only four days and was down to cutting slices from his remaining tablets.

“He does not understand the whole situation,” she said. “He does not even know his own address. I cannot leave him, and I never will leave him.”

Ukrainian officials have repeatedly called on civilians to leave eastern Ukraine as Russia has turned the full strength of its forces on seizing the region. But a portion of the population stubbornly refuses to go.

“Those who wanted to go have already gone,” said Ruslan, 42, a volunteer with the Union of Ukrainian Churches who drives people to shelters in western Ukraine. He said his group had evacuated 1,000 people from the Bakhmut area over the past month.

Yet of 20 people who had requested evacuation with his organization on Saturday, only nine took up the offer, he said. He had just risked the drive to the frontline town of Siversk to collect people, but came back empty. “No one wants to go,” he said.

Credit…Finbarr O’Reilly for The New York Times

He asked that only his first name be published for fear of retribution from the Russian side.

Most of those remaining are the poor, the old and the infirm, volunteers and health workers said.

“We mostly see the elderly people seeking all kinds of support,” said Islam Alaraj, program manager for psychosocial support in Ukraine for the International Committee of the Red Cross. “They are the most vulnerable and they have plenty of health issues, and they have added psychological issues above that.”

For the most part, Ukrainian health facilities around the country, including psychiatric facilities, are still functional and receiving outside support, Ms. Alaraj said. But as fighting shifts, reaching those in need is becoming more difficult.

“This context is changing in a very fast way,” she said, “and we don’t know all locations and we don’t have access to all locations.”

Many residents interviewed said they could not afford to rent an apartment elsewhere, and feared losing everything they owned if they abandoned their homes. They also voiced distrust of promises of assistance from aid groups or the government.

Credit…Finbarr O’Reilly for The New York Times

“They say they do not have money, and that people will deceive them when they get there,” Ruslan said.

“Some of them are waiting for the Russians,” he added. “Let’s face it, there are those who just sit in their basements and wait for someone to bring them humanitarian aid. And for them it does not matter who passes them a package of aid, Russia or Ukraine.”

Police officers serving until last week in the town of Sievierodonetsk said they saw the mood shifting as Russian forces were poised on the edge of the city. They abandoned a last evacuation when residents asked for extra guarantees.

“We don’t force anyone,” Chief Oleh Hryhorov of the regional police said. “Some sympathize with the other side.”

Russian troops were flying drones over the town to gather information on Ukrainian positions and some residents were acting as informers for Russia, he said. Already anticipating a Russian takeover, some residents were reluctant to talk to foreign journalists, he said.

In the town of Siversk, north of Bakhmut and close to the front line, a storekeeper suddenly shooed away customers and closed her doors in the middle of the morning for “stocktaking.” A volunteer ferrying medicines to families by bicycle said people were fearful of every interaction.

Credit…Finbarr O’Reilly for The New York Times

Several Ukrainians interviewed expressed bitter disaffection with their government. Many said they could barely survive on their pension, which amounts to as little as $70 a month.

Lyudmila Krilyshkina, 71, displaced after her home burned down in a rocket attack, wept as she complained that she was not able to draw her pension in Bakhmut. Since the shops were taking only cash, she could not buy food for herself and her parents, she said.

“They need to think of the people,” she said. “We understand there is a war but how are we supposed to survive?”

Another woman waiting to be evacuated complained that only voluntary organizations were helping the people, and that government officials were doing nothing. She asked not to be named for fear of retribution.

Disillusionment with previous corrupt governments helped propel President Volodymyr Zelensky to power in Ukraine. Since the Russian invasion, popular support for him has soared as the country has overwhelmingly backed his determination to fight. Yet there remains a deep, latent cynicism for the government and officials in Ukraine.

Ms. Tvyaniuk said she had spent 12 years fighting for justice after a corrupt court ruled against her and her daughter. Her daughter had successfully sued her former husband for alimony and child care payments but the police never enforced the court order and a judge helped falsify documents to overturn the ruling.

Credit…Finbarr O’Reilly for The New York Times

“The police protected the courts and the courts protected the police,” she said. “This happened under Ukrainian rule, and now I don’t know if it would be better under Russian rule or Ukrainian.”

“We don’t know what to expect,” said Ihor, 44, an unemployed laborer sitting outside his apartment block. But he said he and his partner, Olha, 60, would stay and live under Russian rule if its troops seized Bakhmut, adding, “What else is there?”

He complained that the Ukrainian leaders were corrupt and had robbed the country and its workers. “They stole and put everything in their pockets,” he said. “And if Russia takes over, that will be finished.”

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What Happened on Day 96 of the War in Ukraine

BRUSSELS — The European Union on Monday agreed to ban most imports of Russian oil, the harshest economic penalty yet imposed on Russia for its invasion of Ukraine, and potentially the biggest sacrifice by Europe, itself.

The deal is the latest and most far-reaching demonstration that over more than three months of war, in reaction to mounting Russian aggression and atrocities, European leaders have grown willing to take steps they considered too extreme when the invasion began. They have already barred imports of Russian natural gas, cut off Russian banks from global financial networks, frozen Russian assets and sent advanced weaponry to Ukraine.

After weeks of intense wrangling, E.U. leaders meeting in Brussels endorsed an embargo on Russian oil delivered by tankers, the primary method, with commitments to reduce imports by pipeline, according to a draft agreement seen by The New York Times. The deal was announced in a late-night tweet by Charles Michel, president of the European Council, though many details remain to be hashed out.

The endorsement came as a multipronged Kremlin assault closed in on the easternmost Ukrainian-controlled city, Sievierodonetsk. Russian forces continued their pattern of bombarding cities and towns, including civilian areas, reducing them to depopulated wastelands before attempting to seize control.

Credit…Finbarr O’Reilly for The New York Times

At the same time, Ukraine’s military mounted a counteroffensive to retake the strategic southern city of Kherson. And a car bombing in another Russian-held city, Melitopol, hinted at the kind of fierce resistance the occupiers may face.

President Vladimir V. Putin’s war machinery is financed by Russia’s sales of crude and refined petroleum and natural gas, which account for most of the country’s export revenue, collected primarily by state-controlled energy companies. With the war driving up prices, the European Union countries alone have been paying $23 billion a month for Russian oil.

Analysts say that Russia, offering discounts compared to the prices on world markets, will continue to find some buyers for its oil, but that sales volume and profits are likely to drop significantly once the embargo takes effect.

Europe relies heavily on Russian fuels — 27 percent of the crude oil imported to the European Union comes from Russia — and while E.U. countries are scrambling for alternatives, officials have warned that the financial cost to them will be high. Other sources are expected to be more expensive, if they can be arranged; gas and oil shortages are a real possibility.

The debate over an oil embargo has also exposed the potential vulnerability of the European bloc, just as Sweden’s and Finland’s requests to join NATO have shown fractures within that alliance. Diplomats express confidence that such differences can be resolved, but they offer reminders that the unity the United States and its allies have shown so far in opposing Russia is not guaranteed.

Hungary’s strongman leader, Viktor Orban, whose country depends more than Western Europe on Russian energy, had held up any agreement on an oil embargo, calling it an “atomic bomb” to the Hungarian economy.

The dispute illustrates how the E.U. practice of requiring unanimity among the 27 member nations for major decisions can become a weakness — particularly if Mr. Orban, who has a friendly relationship with Mr. Putin, is called on to take further steps to isolate Russia.

Credit…Johanna Geron/Reuters

The limited embargo that European leaders endorsed was tailored to win Mr. Orban’s support. Prohibiting Russian oil deliveries aboard tankers would eliminate two-thirds of E.U. imports, while having no effect on Hungary, a landlocked nation. Arriving at the E.U. summit meeting on Monday, Mr. Orban said of the pipeline exemption, “It’s a good approach.”

Slovakia, the Czech Republic and Germany, which also receive Russian oil by pipeline, were expected to commit to weaning themselves from that source; Hungary is not expected to give any such assurance.

In NATO, which also operates by consensus, Turkey has blocked the admission of Finland and Sweden, which have been sufficiently alarmed by Russia’s war on Ukraine to abandon their long-held neutrality. Western diplomats predict that President Recep Tayyip Erdogan of Turkey, who has been as contentious a partner to NATO as Mr. Orban has been to the European Union, will wring concessions from the allies but ultimately accede.

On the battlefields of the eastern Donbas region, where Russia is focused on seizing more territory, the most intense combat is around the battered, adjacent cities of Sievierodonetsk and Lysychansk, among the most important remaining pockets of Ukrainian control. After weeks of shelling, Russian forces have fought their way into “the northeastern and southeastern outskirts” of Sievierodonetsk, the Ukrainian defense ministry said in a statement, adding that Russia had funneled still more war matériel from Russia into the Donbas.

Fighting across Donbas reached “maximum intensity,” said Col. Oleksandr Motuzyanyk, the defense ministry spokesman. He added, “Russian invaders shelled the entire front line, trying to hit our deep defensive positions with artillery fire.”

Amid reports of Russian war crimes against civilians, Ukraine’s deputy prime minister, Iryna Vereshchuk, issued a call to residents of Russian-occupied territory to flee however they can to Ukrainian-controlled areas, as millions already have. It is hard and dangerous, she conceded, but “ultimately, it is a question of your safety and that of your children.”

Credit…Finbarr O’Reilly for The New York Times

A French journalist was killed on Monday near Lysychansk when a shell exploded near the evacuation bus he was riding in, according to Ukrainian and French officials, and his employer, the television news channel BFM TV. The journalist, Frédéric Leclerc-Imhoff, suffered a lethal shrapnel wound to the neck, said Serhiy Haidai, the Ukrainian governor of the Luhansk region, who said the shell was fired by Russian forces.

At least seven other journalists have been killed while covering the conflict, according to Reporters Without Borders.

The sheer weight of Russia’s military and the brutality of its tactics have yielded territorial gains in the east, but it has suffered heavy losses, and Western analysts say it is running short of ready resources.

“Russia has likely suffered devastating losses amongst its mid and junior ranking officers,” the British defense ministry said on Monday in the latest intelligence update it has made public. Battalions that the Russians are cobbling together “from survivors of multiple units are likely to be less effective.”

Perhaps most ominous for Moscow, the British cited “multiple credible reports of localized mutinies amongst Russia’s forces.”

Hoping to spread Russian forces thinner than they already are, Ukraine over the weekend launched a counteroffensive more than 300 miles away from Sievierodonetsk, aimed at retaking Kherson, a strategic port on the lower Dnipro River in south-central Ukraine. It was the first major city to fall to the Russians, less than a week after the invasion.

Credit…Associated Press

“The Ukrainian counterattack does not appear likely to retake substantial territory in the near term,” the Institute for the Study of War in Washington said in an assessment released on Sunday, but it will disrupt Russian operations across the south, “and potentially force Russia to deploy reinforcements to the Kherson region, which is predominantly held by substandard units.”

In Melitopol, the Kremlin-appointed regional administration said a car bombing had injured two aid workers and called it “a terrorist attack aimed at destabilizing the peaceful life of the city.” People have protested the occupation in Melitopol, where Russian forces have kidnapped local officials and replaced them.

Ivan Fyodorov, the mayor of Melitopol — who was abducted by Russian forces and then returned to Ukraine in a prisoner swap — said he did not know who was responsible for the bombing, but predicted that “the ground will burn” in Melitopol until Russians leave the city.

Russian forces have held onto most of the areas they conquered in the south early in the war. But one band of fighters held out for weeks in a steel mill complex in the southern city of Mariupol, tying down significant Russian forces before the survivors surrendered this month.

And in the first weeks of the war, Russian offensives in the north aimed at Kyiv, the capital, and Kharkiv, the second-largest city, became hopelessly bogged down. Moscow gave up on those campaigns, at least temporarily, to concentrate on Donbas, and Ukrainians have retaken some of the lost territory.

The failure of those offensives and the resistance in Mariupol contributed to a shift in Russian tactics to a slower, more grinding approach, with little apparent concern for civilian casualties or physical destruction.

Describing the constant shelling of Sievierodonetsk, President Volodymyr Zelensky of Ukraine said in a video posted online on Sunday night, “They don’t care how many lives they will have to pay.”

Matina Stevis-Gridneff reported from Brussels and Richard Pérez-Peña from New York. Reporting was contributed by Matthew Mpoke Bigg and Marc Santora from Krakow, Poland, Valerie Hopkins from Kyiv, Neil MacFarquhar from Istanbul, Cassandra Vinograd and Stanley Reed from London, Carlotta Gall from Druzhkivka, Ukraine, Aurelien Breeden from Paris, and Monika Pronczuk from Brussels.

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Illegal Immigration Is Down, Changing the Face of California Farms

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GONZALES, Calif. — It looks like a century-old picture of farming in California: a few dozen Mexican men on their knees, plucking radishes from the ground, tying them into bundles. But the crews on Sabor Farms radish patch, about a mile south of the Salinas River, represent the cutting edge of change, a revolution in how America pulls food from the land.

For starters, the young men on their knees are working alongside technology unseen even 10 years ago. Crouched behind what looks like a tractor retrofitted with a packing plant, they place bunches of radishes on a conveyor belt within arm’s reach, which carries them through a cold wash and delivers them to be packed into crates and delivered for distribution in a refrigerated truck.

The other change is more subtle, but no less revolutionary. None of the workers are in the United States illegally.

are not coming in the numbers they once did.

There are a variety of reasons: The aging of Mexico’s population slimmed the cohort of potential migrants. Mexico’s relative stability after the financial crises of the 1980s and 1990s reduced the pressures for them to leave, while the collapse of the housing bubble in the United States slashed demand for their work north of the border. Stricter border enforcement by the United States, notably during the Trump administration, has further dented the flow.

the economists Gordon Hanson and Craig McIntosh wrote.

As a consequence, the total population of unauthorized immigrants in the United States peaked in 2007 and has declined slightly since then. California felt it first. From 2010 to 2018, the unauthorized immigrant population in the state declined by some 10 percent, to 2.6 million. And the dwindling flow sharply reduced the supply of young workers to till fields and harvest crops on the cheap.

The state reports that from 2010 to 2020, the average number of workers on California farms declined to 150,000 from 170,000. The number of undocumented immigrant workers declined even faster. The Labor Department’s most recent National Agricultural Workers Survey reports that in 2017 and 2018, unauthorized immigrants accounted for only 36 percent of crop workers hired by California farms. That was down from 66 percent, according to the surveys performed 10 years earlier.

The immigrant work force has also aged. In 2017 and 2018, the average crop worker hired locally on a California farm was 43, according to the survey, eight years older than in the surveys performed from 2007 to 2009. The share of workers under the age of 25 dropped to 7 percent from a quarter.

hire the younger immigrants who kept on coming illegally across the border. (Employers must demand documents proving workers’ eligibility to work, but these are fairly easy to fake.)

That is no longer the case. There are some 35,000 workers on H-2A visas across California, 14 times as many as in 2007. During the harvest they crowd the low-end motels dotting California’s farm towns. A 1,200-bed housing facility exclusive to H-2A workers just opened in Salinas. In King City, some 50 miles south, a former tomato processing shed was retrofitted to house them.

“In the United States we have an aging and settled illegal work force,” said Philip Martin, an expert on farm labor and migration at the University of California, Davis. “The fresh blood are the H-2As.”

Immigrant guest workers are unlikely to fill the labor hole on America’s farms, though. For starters, they are costlier than the largely unauthorized workers they are replacing. The adverse effect wage rate in California this year is $17.51, well above the $15 minimum wage that farmers must pay workers hired locally.

So farmers are also looking elsewhere. “We are living on borrowed time,” said Dave Puglia, president and chief executive of Western Growers, the lobby group for farmers in the West. “I want half the produce harvest mechanized in 10 years. There’s no other solution.”

Produce that is hardy or doesn’t need to look pretty is largely harvested mechanically already, from processed tomatoes and wine grapes to mixed salad greens and tree nuts. Sabor Farms has been using machines to harvest salad mix for decades.

survey by the Western Growers Center for Innovation and Technology found that about two-thirds of growers of specialty crops like fresh fruits, vegetables and nuts have invested in automation over the last three years. Still, they expect that only about 20 percent of the lettuce, apple and broccoli harvest — and none of the strawberry harvest — will be automated by 2025.

Some crops are unlikely to survive. Acreage devoted to crops like bell peppers, broccoli and fresh tomatoes is declining. And foreign suppliers are picking up much of the slack. Fresh and frozen fruit and vegetable imports almost doubled over the last five years, to $31 billion in 2021.

Consider asparagus, a particularly labor-intensive crop. Only 4,000 acres of it were harvested across the state in 2020, down from 37,000 two decades earlier. The state minimum wage of $15, added to the new requirement to pay overtime after 40 hours a week, is squeezing it further after growers in the Mexican state of Sinaloa — where workers make some $330 a month — increased the asparagus acreage almost threefold over 15 years, to 47,000 acres in 2020.

H-2A workers won’t help fend off the cheaper Mexican asparagus. They are even more expensive than local workers, about half of whom are immigrants from earlier waves that gained legal status; about a third are undocumented. And capital is not rushing in to automate the crop.

“There are no unicorns there,” said Neill Callis, who manages the asparagus packing shed at the Turlock Fruit Company, which grows some 300 acres of asparagus in the San Joaquin Valley east of Salinas. “You can’t seduce a V.C. with the opportunity to solve a $2-per-carton problem for 50 million cartons,” he said.

While Turlock has automated where it can, introducing a German machine to sort, trim and bunch spears in the packing shed, the harvest is still done by hand — hunched workers walk up the rows stabbing at the spears with an 18-inch-long knife.

These days, Mr. Callis said, Turlock is hanging on to the asparagus crop mainly to ensure its labor supply. Providing jobs during the asparagus harvest from February to May helps the farm hang on to its regular workers — 240 in the field and about 180 in the shed it co-owns with another farm — for the critical summer harvest of 3,500 acres of melons.

Losing its source of cheap illegal immigrant workers will change California. Other employers heavily reliant on cheap labor — like builders, landscapers, restaurants and hotels — will have to adjust.

Paradoxically, the changes raking across California’s fields seem to threaten the undocumented local work force farmers once relied on. Ancelmo Zamudio from Chilapa, in Mexico’s state of Guerrero, and José Luis Hernández from Ejutla in Oaxaca crossed into the United States when they were barely in their teens, over 15 years ago. Now they live in Stockton, working mostly on the vineyards in Lodi and Napa.

They were building a life in the United States. They brought their wives with them; had children; hoped that they might be able to legalize their status somehow, perhaps through another shot at immigration reform like the one of 1986.

Things to them look decidedly cloudier. “We used to prune the leaves on the vine with our hands, but they brought in the robots last year,” Mr. Zamudio complained. “They said it was because there were no people.”

Mr. Hernández grumbles about H-2A workers, who earn more even if they have less experience, and don’t have to pay rent or support a family. He worries about rising rents — pushed higher by new arrivals from the Bay Area. The rule compelling farmers to pay overtime after 40 hours of work per week is costing him money, he complains, because farmers slashed overtime and cut his workweek from six days to five.

He worries about the future. “It scares me that they are coming with H-2As and also with robots,” he said. “That’s going to take us down.”

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Live Updates: Russian Attacks Intensify, Along With Accusations of Genocide

WASHINGTON — Three months into Russia’s invasion of Ukraine, America and its allies are quietly debating the inevitable question: How does this end?

In recent days, presidents and prime ministers as well as the Democratic and Republican Party leaders in the United States have called for victory in Ukraine. But just beneath the surface are real divisions about what that would look like — and whether “victory” has the same definition in the United States, in Europe and, perhaps most importantly, in Ukraine.

In the past few days alone there has been an Italian proposal for a cease-fire, a vow from Ukraine’s leadership to push Russia back to the borders that existed before the invasion was launched on Feb. 24, and renewed discussion by administration officials about a “strategic defeat” for President Vladimir V. Putin — one that would assure that he is incapable of mounting a similar attack again.

After three months of remarkable unity in response to the Russian invasion — resulting in a flow of lethal weapons into Ukrainian hands and a broad array of financial sanctions that almost no one expected, least of all Mr. Putin — the emerging fissures about what to do next are notable.

At their heart lies a fundamental debate about whether the three-decade-long project to integrate Russia should end. At a moment when the U.S. refers to Russia as a pariah state that needs to be cut off from the world economy, others, largely in Europe, are warning of the dangers of isolating and humiliating Mr. Putin.

That argument is playing out as American ambitions expand. What began as an effort to make sure Russia did not have an easy victory over Ukraine shifted as soon as the Russian military began to make error after error, failing to take Kyiv. The administration now sees a chance to punish Russian aggression, weaken Mr. Putin, shore up NATO and the trans-Atlantic alliance and send a message to China, too. Along the way, it wants to prove that aggression is not rewarded with territorial gains.

The differences over war aims broke into the open at the World Economic Forum in Davos this week, as Henry Kissinger, the 99-year old former secretary of state, suggested that Ukraine would likely have to give up some territory in a negotiated settlement, though he added that “ideally the dividing line should be a return to the status quo” before the invasion, which included the Russian annexation of Crimea in 2014 and the seizure of parts of the Donbas.

“Pursuing the war beyond that point would not be about the freedom of Ukraine, but a new war against Russia itself,’’ Mr. Kissinger concluded.

Almost immediately, President Volodymyr Zelensky of Ukraine accused Mr. Kissinger of appeasement, retorting angrily that “I get the sense that instead of the year 2022, Mr. Kissinger has 1938 on his calendar.’’ He was referring to the year Hitler began his sweep across Europe — the event that caused Mr. Kissinger, then a teenager, to flee with his family to New York. “Nobody heard from him then that it was necessary to adapt to the Nazis instead of fleeing them or fighting them.”

But Mr. Zelensky has at various moments voiced contradictory views on what it would take to end the war, even offering to commit his country to “neutrality” rather than aspiring to join NATO.

Differing objectives, of course, make it all the more difficult to define what victory — or even a muddled peace — would look like. And they foreshadow a coming debate about what position Mr. Zelensky and his Western allies would take if negotiations to end the conflict finally get going. If Mr. Zelensky agreed to some concessions, would the United States and its allies lift many of their crushing sanctions, including the export controls that have forced Russia to shutter some of its factories for building tanks? Or would doing that doom their hopes of crippling Russia’s future capabilities?

Credit…Fabrice Coffrini/Agence France-Presse — Getty Images

In the end, American officials say, the hard choices will have to be made by Mr. Zelensky and his government. But they are acutely aware that if Mr. Putin gets his land bridge to Crimea, or sanctions are partially lifted, Mr. Biden will be accused by Republican critics — and perhaps some Democrats — of essentially rewarding Mr. Putin for his effort to redraw the map of Europe by force.

The debate is breaking out just as the shape of the war is changing, once again.

Three months ago, Mr. Putin’s own strategic objective was to take all of Ukraine — a task he thought he could accomplish in mere days. When that failed in spectacular fashion, he retreated to Plan B, withdrawing his forces to Ukraine’s east and south. It then became clear that he could not take key cities like Kharkiv and Odesa. Now the battle has come down to the Donbas, the bleak, industrial heartland of Ukraine, a relatively small area where he has already made gains, including the brutal takeover of Mariupol and a land bridge to Crimea. His greatest leverage is his naval blockade of the ports Ukraine needs to export wheat and other farm products, a linchpin of the Ukrainian economy and a major source of food for the world.

So far, with Russia gaining ground, there is no evidence yet that Mr. Putin is willing to enter negotiations. But pressure will build as sanctions bite deeper into his energy exports, and the cutoff of key components hampers weapons production for his depleted military.

“Putin, whether we like it or not, will have to bring home some bacon, and Mariupol is a small slice, but a slice,” Dov S. Zakheim, a former senior official in the Defense Department, said in a recent interview. “And the cost to Ukraine of life and matériel will continue to increase. So it’s a difficult political decision for Ukraine.”

Credit…Doug Mills/The New York Times

From Biden, a Drive to Cripple Russia

For the first two months of the war, President Biden and his top aides largely spoke about providing Ukraine with whatever help it needed to defend itself — and about punishing Russia with sanctions on an unprecedented scale.

Every once in a while, there were hints of broader goals that went beyond pushing Russia back to its own borders. Even before the invasion, Jake Sullivan, the president’s national security adviser, warned that if Russia attempted to take Ukraine by force, “its long-term power and influence will be diminished.”

But on April 25, Defense Secretary Lloyd J. Austin III, speaking with a bluntness that took his colleagues by surprise, acknowledged that Washington wanted more than a Russian retreat. It wanted its military permanently damaged.

“We want to see Russia weakened to the degree it cannot do the kinds of things that it has done in invading Ukraine,” Mr. Austin said.

Mr. Austin’s candor prompted the White House to insist he wasn’t changing policy — just giving voice to the reality of what the sanctions and export controls were intended to do. But over time administration officials have gradually shifted in tone, talking more openly and optimistically about the possibility of Ukrainian victory in the Donbas.

Last week in Warsaw, the U.S. ambassador to NATO, Julianne Smith, a former national security aide to Mr. Biden, said: “We want to see a strategic defeat of Russia.”

Now, in meetings with Europeans and in public statements, administration officials are articulating more specific goals. The first is that Ukraine must emerge as a vibrant, democratic state — exactly what Mr. Putin was seeking to crush.

The second is Mr. Biden’s oft-repeated goal of avoiding direct conflict with Russia. “That’s called World War III,” Mr. Biden has said repeatedly.

Then come various versions of the goal Mr. Austin articulated: that Russia must emerge as a weakened state. In testimony earlier this month, Avril D. Haines, the director of national intelligence, explained Washington’s concern. “We assess President Putin is preparing for prolonged conflict in Ukraine, during which he still intends to achieve goals beyond the Donbas,” she said.

And increasingly, American officials talk about using the crisis to strengthen international security, winning over nations that were on the fence between allying with the West or with an emerging China-Russia axis.

As the United States hones its message, no one wants to get ahead of Mr. Zelensky, after months of administration proclamations that there will be “nothing decided about Ukraine without Ukraine.”

“President Zelensky is the democratically elected president of a sovereign nation, and only he can decide what victory is going to look like and how he wants to achieve it,” John F. Kirby, the Pentagon press secretary, said on April 29.

Credit…Marton Monus/Reuters

In Europe, Unity Begins to Fracture

NATO and the European Union have been surprisingly united so far in supporting Ukraine, both with painful economic sanctions aimed at Russia and in supplying an increasing quantity of weapons to Ukraine, though not jet fighters or advanced tanks.

But that unity is under strain. Hungary, which has supported five earlier sanctions packages, has balked at an embargo on Russian oil, on which it depends. And the Europeans are not even trying, at least for now, to cut off their imports of Russian gas.

The divisions are visible in war aims, too.

Leaders in central and eastern Europe, with its long experience of Soviet domination, have strong views about defeating Russia — even rejecting the idea of speaking to Mr. Putin. Estonia’s prime minister, Kaja Kallas, and Poland’s prime minister, Mateusz Morawiecki, speak of him as a war criminal, as Mr. Biden did.

“All these events should wake us from our geopolitical slumber and cause us to cast off our delusions, our old delusions, but is that enough?” Mr. Morawiecki said last week. “I hear there are attempts to allow Putin to somehow save face in the international arena. But how can you save something that has been utterly disfigured?” he asked.

But France, Italy and Germany, the biggest and richest countries of the bloc, are anxious about a long war or one that ends frozen in a stalemate, and nervous of the possible damage to their own economies.

Those countries also think of Russia as an inescapable neighbor that cannot be isolated forever. Following his re-election, Emmanuel Macron of France began hedging his bets, declaring that a future peace in Eastern Europe must not include an unnecessary humiliation of Russia, and could include territorial concessions to Moscow.

Italian Prime Minister Mario Draghi called this month for a cease-fire in Ukraine “as soon as possible” to enable a negotiated end to the war. Mr. Draghi, who has taken a hard line against Russia in traditionally Moscow-friendly Italy, said economic pressure was important “because we have to bring Moscow to the negotiating table.”

Zelensky’s Choice: Territorial Integrity or Grinding War

Mr. Zelensky has been careful not to expand his aims toward a larger degradation of Mr. Putin’s regime. He has said repeatedly that he wants the Russians pushed back to where they were on Feb. 23, before the large-scale invasion started.

Only then, he has said, would Ukraine be prepared to negotiate seriously again with Russia about a cease-fire and a settlement. He said again this week that the war will have to end with a diplomatic solution, not a sweeping military victory.

But even those aims are considered by some European officials and military experts to be ambitious. To get there, Ukraine would have to take back Kherson and the ravaged city of Mariupol. It would have to push Russia out of its land bridge to Crimea and stop Russia from annexing large parts of Donetsk and Luhansk.

Many experts fear that is beyond Ukraine’s capability.

While Ukraine did remarkably well in the first phase of the war, Donbas is very different. To go on the offensive normally requires a manpower advantage of 3 to 1, weaponry aside, which Ukraine does not now possess. The Russians are making slow but incremental gains, if at a high cost in casualties. (While Washington and London are happy to provide estimates of Russian casualties, sometimes rather high, according to some military experts, they say little about Ukrainian casualties. Ukraine is treating those figures as state secrets.)

“What is victory for Ukraine?” asked Daniel Fried, a former U.S. ambassador to Poland and longtime senior U.S. diplomat. “The Biden Administration’s comfort zone is not a bad place to be — that it’s up to the Ukrainians to decide,” Mr. Fried said. “I agree, because there’s no way a detailed conversation now on what is a just settlement will do any good, because it comes down to what territories Ukraine should surrender.”

David E. Sanger and Eric Schmitt reported from Washington. Steven Erlanger reported from Brussels. Julian Barnes and Helene Cooper contributed reporting from Washington.

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Analysis: Russia’s ‘political’ debt default sets emerging market precedent

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  • Russia says has paid $100 mln in interest due on May 27
  • The country was rated investment grade in early 2022
  • A defaults pushes up borrowing costs for issuers

NEW YORK/LONDON, May 27 (Reuters) – Russia is on the cusp of a unique kind of debt crisis which investors say would be a first time a major emerging market economy is pushed into a bond default by geopolitics, rather than empty coffers.

Until the Kremlin launched an attack on Ukraine on Feb. 24, few would have entertained the possibility of Russia defaulting on its hard currency bonds. Its strong solvency track record, bumper export revenues and an inflation-fighting central bank had made it a favourite of emerging market investors.

But the U.S. Treasury’s decision not to extend a licence allowing Russia to keep up debt payments despite wide-ranging sanctions, have set Moscow on the road to default.

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The Russian finance ministry has wired some $100 million in interest payments on two bonds due on Friday to its domestic settlement house. But unless money shows up in foreign bondholders’ accounts, it will constitute a default by some definitions.

And even if funds go through this time, payments of nearly $2 billion are due by the end of the year. One in late June is mandated to be settled outside Russia – a task experts predict will be impossible without the U.S. waiver. read more

Emerging market debt crises are nothing new — Russia itself reneged on its rouble bonds in 1998. Geopolitics too have spilled into the debt sphere before, forcing defaults in Venezuela and Iran for instance.

Yet in Iran’s case, small amounts of loan debt were hit by U.S. sanctions after its 1979 revolution, while Venezuela’s economy was already on its knees before U.S. curbs in 2019 pushed $60 billion in sovereign and sub-sovereign debt across the brink.

Russia meanwhile continues to rake in oil and metals earnings. Even with half its $640 billion reserves’ war chest frozen by sanctions, the central bank has enough cash to repay the $40 billion outstanding in sovereign hard currency debt.

“This is a completely different crisis from other emerging market crises, it’s not about ability or willingness to pay, they technically cannot pay,” said Flavio Carpenzano, investment director at Capital Group, an asset manager that – like many others – was exposed to Russia before war erupted. read more

The impact is amplified by the fact this would be Russia’s first major foreign bond default since just after its 1917 Bolshevik revolution. Sanctions on Russia and its own countermeasures have effectively severed it from global financial systems.

Comparisons with recent defaults such as Argentina in 2020 are inappropriate because most countries’ finances are strained when defaults happen, said Stephane Monier, chief investment officer at Lombard Odier.

“This would be the first externally and politically driven default in emerging markets’ history,” Monier said.

The Treasury license expiry means creditors may be unable to receive payments anyway, which Daniel Moreno, head of global emerging market debt at Mirabaud Asset Management, likened to “turning the world upside down.”

“Me, the creditor, is now not willing to accept the payment,” he added.

NO GOING BACK

Russia’s international bonds, most of which started the year trading above par, have dropped in value to between 13-26 cents on the dollar. They have also been ejected from indexes.

A key difference with past defaulters such as Argentina or Venezuela is that Russia’s attack on Ukraine — which it calls a special operation — has made it a pariah in many investors’ eyes, probably for years to come.

“There is a huge stigma in actually holding these bonds, with emerging markets asset managers under pressure from their clients asking them not to invest in Russia and to liquidate their positions,” said Gabriele Foa, portfolio manager for the Algebris Global Credit Opportunity Fund.

For now, a potential default is symbolic because Russia cannot borrow internationally anyway, nor does it need to. But what comes further down the line is crucial.

Regime change in Russia could at some point end Western sanctions and allow it back into the fold.

But first, creditors face a long and costly process to recover money, for instance by exchanging defaulted bonds with new ones. read more

A default stigma would also raise future borrowing costs.

By defaulting “you increase the cost of funding and it’s very likely this will happen to Russia too. They will need to pay a premium,” said Capital Group’s Carpenzano.

The White House expects a default to have minimal impact on the U.S. or global economy but Carpenzano reckons events around Russia are forcing a re-assessment of geopolitical risks in emerging markets. read more

“Geopolitical noise has increased and investors would like to be compensated for this higher risk,” he said, citing China’s hefty investment outflows in recent weeks.

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Reporting by Davide Barbuscia in New York and Sujata Rao, Karin Strohecker, Marc Jones and Jorgelina do Rosario in London
Editing by Susan Fenton

Our Standards: The Thomson Reuters Trust Principles.

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Live Updates: Biden Seeks $33 Billion More in Aid for Ukraine

WASHINGTON — President Biden signaled a vast increase in America’s commitment to defeating Russia in Ukraine on Thursday as he asked Congress to authorize $33 billion for more artillery, antitank weapons and other hardware as well as economic and humanitarian aid.

The request represented an extraordinary escalation in American investment in the war, more than tripling the total emergency expenditures and putting the United States on track to spend as much this year helping the Ukrainians as it did on average each year fighting its own war in Afghanistan, or more.

“The cost of this fight is not cheap,” Mr. Biden said at the White House. “But caving to aggression is going to be more costly if we allow it to happen. We either back the Ukrainian people as they defend their country or we stand by as the Russians continue their atrocities and aggression in Ukraine.”

Mr. Biden also sent Congress a plan to increase the government’s power to seize luxury yachts, aircraft, bank accounts and other assets of Russian oligarchs tied to President Vladimir V. Putin and use the proceeds to help the Ukrainians. Just hours later, Congress passed legislation allowing Mr. Biden to use a World War II-era law to supply weapons to Ukraine on loan quickly.

The latest American pledge came as Moscow raised the prospect of a widening conflict with the West. Russian officials accused the United States and Poland of working together on a covert plan to establish control over western Ukraine and asserted that the West was encouraging Ukraine to launch strikes inside Russia, where gas depots and a missile factory have burned or been attacked in recent days.

Credit…David Guttenfelder for The New York Times

A Russian missile strike setting off a fiery explosion in central Kyiv shattered weeks of calm in the capital and served as a vivid reminder that the violence in Ukraine has not shifted exclusively to the eastern and southern portions of the country, where Russia is now focusing its efforts to seize and control territory. Russian forces are making “slow and uneven” progress in that part of Ukraine but are struggling to overcome the same supply line problems that hampered their initial offensive, the Pentagon said.

The strike came on the same day that President Volodymyr Zelensky of Ukraine was meeting with António Guterres, the U.N. secretary general, just a few miles away in Kyiv, a visit that was no secret in Moscow. Mr. Guterres arrived in Ukraine, after sitting down with Mr. Putin in Moscow, in hopes of securing evacuation routes for besieged Ukrainian civilians and support for the prosecution of war crimes.

In the hours before the latest strike, Mr. Guterres toured the stunning wreckage in Borodianka, Bucha and Irpin, three suburbs of Kyiv that have borne the heavy cost of the fighting. Standing in front of a row of scorched buildings where dozens of people were killed, he called Russia’s invasion “an absurdity” and said, “There is no way a war can be acceptable in the 21st century.”

In his nightly address, Mr. Zelensky condemned the strike, saying it revealed Russia’s “true attitude to global institutions” and was an effort to “humiliate the U.N.” He vowed a “strong response” to that and other Russian attacks. “We still have to drive the occupiers out,” he said.

Credit…David Guttenfelder for The New York Times

Just as the United States was ramping up its flow of arms to the battlefield, the German Parliament voted overwhelmingly to deliver heavy weapons to Ukraine, a largely symbolic move to show unity after the government announced the plan earlier this week.

A day after Russia cut off gas supplies to Poland and Bulgaria, the German chancellor, Olaf Scholz, said his country must be prepared for the possibility that Germany could be next. “We have to be ready for it,” Mr. Scholz told reporters in Tokyo, where he paid Prime Minister Fumio Kishida of Japan a visit to shore up ties between the two countries.

Russian strikes and Ukrainian counterattacks continued to batter eastern and southern battlegrounds in Ukraine, but Russian troops are advancing cautiously in this latest phase, able to sustain only several kilometers of progress each day, according to a Pentagon official speaking on the condition of anonymity to discuss operational details.

Despite having much shorter supply lines now than they did during the war’s first several weeks in Ukraine’s north, the Russians have not overcome their logistics problem, the Pentagon official said, citing slow shipments of food, fuel, weapons and ammunition.

Moscow now has 92 battalion groups fighting in eastern and southern Ukraine — up from 85 a week ago, but still well below the 125 it had in the first phase of the war, the official said. Each battalion group has about 700 to 1,000 troops.

Russia has amassed artillery to support its troops near the city of Izium, according to the latest assessment by the Institute for the Study of War, a research group. Russian forces have used the city as a strategic staging point for their assault in the east and probably seek to outflank Ukrainian defensive positions, the analysts said.

Since Wednesday, Russian troops have captured several villages west of the city, according to Ukraine’s Defense Ministry, with the likely aim of bypassing Ukrainian forces on two parallel roads running south, toward the cities of Barvinkove and Sloviansk.

A senior American diplomat accused Russia of engaging in systematic campaigns to topple local governments in occupied Ukraine and to detain and torture local officials, journalists and activists in so-called “filtration camps,” where some of them have reportedly disappeared.

The diplomat, Michael R. Carpenter, the American ambassador to the Organization for Security and Cooperation in Europe, said the United States has information that Russia is dissolving democratically elected local governments and has forced large numbers of civilians in occupied areas into camps for questioning.

The Ukrainian military said it was moving more troops to the border with Transnistria, a small breakaway region in Moldova, on Ukraine’s southwest flank, hundreds of miles from the fighting on the eastern front.

Credit…Lynsey Addario for The New York Times

Ukraine ordered the reinforcements after it accused Russia this week of orchestrating a series of explosions in Transnistria, potentially as a pretext to attack Ukraine from the south and move on Odesa, Ukraine’s major Black Sea port. Russia has thousands of troops in Transnistria, which is controlled by Kremlin-backed separatists.

Russia sought to turn the tables by accusing Ukraine and its allies of being the ones to widen the war, citing the supposed secret Polish-American plan to control western Ukraine and the recent attacks on targets inside Russia. Maria Zakharova, the Russian Foreign Ministry’s spokeswoman, urged Kyiv and Western capitals to take seriously Russia’s statements “that further calls on Ukraine to strike Russian facilities would definitely lead to a tough response from Russia.”

Mykhailo Podolyak, an adviser to Mr. Zelensky, said Ukraine had a right to strike Russian military facilities and “will defend itself in any way.” Britain’s defense minister, Ben Wallace, also said Ukraine would be justified in using Western arms to attack military targets inside Russia, as he warned that the war could turn into a “slow-moving, frozen occupation, like a sort of cancerous growth in Ukraine.”

Speaking at the White House, Mr. Biden rejected Russian suggestions that the United States was waging a proxy war against Moscow. “It shows the desperation that Russia is feeling about their abject failure in being able to do what they set out to do in the first instance,” Mr. Biden said.

He likewise condemned Russian officials’ raising the specter of nuclear war. “No one should be making idle comments about the use of nuclear weapons or the possibility that they could use that,” Mr. Biden said. “It’s irresponsible.”

The massive aid package Mr. Biden unveiled on Thursday would eclipse all the spending by the United States so far on the war. There is widespread bipartisan support on Capitol Hill for more aid, but it remained uncertain whether the issue could get tied up in negotiations over ancillary issues like pandemic relief or immigration.

The request, more than twice the size of the $13.6 billion package lawmakers approved and Mr. Biden signed last month, was intended to last through the end of September, underscoring the expectations of a prolonged conflict.

It includes more than $20 billion for security and military assistance, including $11.4 billion to fund equipment and replenish stocks already provided to Ukraine, $2.6 billion to support the deployment of American troops and equipment to the region to safeguard NATO allies and $1.9 billion for cybersecurity and intelligence support.

The request also includes $8.5 billion in economic assistance for the government in Kyiv to provide basic economic support, including food and health care services, as the Ukrainian economy reels from the toll of the war. An additional $3 billion would be provided for humanitarian assistance and food security funding, including medical supplies and support for Ukrainian refugees and to help stem the impact of the disrupted food supply chain.

When combined with the previous emergency measure, the United States would be authorizing $46.6 billion for the Ukraine war, which represents more than two-thirds of Russia’s entire annual defense budget of $65.9 billion. Mr. Biden said he expected European allies to contribute more as well.

By comparison, the Pentagon last year estimated that the total war-fighting costs in Afghanistan from 2001 to 2020 at $816 billion, or about $40.8 billion a year. (That did not count non-Defense Department expenditures, and private studies have put the total cost higher.)

Without waiting for the latest aid plan, Congress moved on Thursday to make it easier for Mr. Biden to funnel more arms to Ukraine right away. The House voted 417 to 10 to invoke the Lend-Lease Act of 1941 to authorize Mr. Biden to speed military supplies to Ukraine. The Senate passed the legislation unanimously earlier this month, meaning it now moves to Mr. Biden’s desk for his signature.

The original act, proposed by Franklin D. Roosevelt, authorized the president to lease or lend military equipment to any foreign government “whose defense the president deems vital to the defense of the United States” and was used originally to aid Britain and later the Soviet Union in their battle against Nazi Germany.

“Passage of that act enabled Great Britain and Winston Churchill to keep fighting and to survive the fascist Nazi bombardment until the United States could enter the war,” said Representative Jamie Raskin, Democrat of Maryland. “President Zelensky has said that Ukraine needs weapons to sustain themselves, and President Biden has answered that call.”

The legislation targeting oligarchs would streamline ongoing efforts to find and confiscate bank accounts, property and other assets from the Russian moguls.

Among other things, it would create a new criminal offense for possessing proceeds from corrupt dealings with the Russian government. It would also add the crime of evading sanctions to the definition of “racketeering activity” in the Racketeer Influenced and Corrupt Organizations Act, known as RICO.

Reporting was contributed by Marc Santora from Krakow, Poland; Jeffrey Gettleman and Maria Varenikova from Kyiv, Ukraine; Emily Cochrane, Catie Edmondson, Eric Schmitt and Michael D. Shear from Washington; Ivan Nechepurenko from Tbilisi, Georgia; Shashank Bengali and Matthew Mpoke Bigg from London; and Farnaz Fassihi from New York.

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Factbox: How Western sanctions target Russia, article with image

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Skyscrapers of the Moscow International Business Centre, also known as “Moskva-City”, are seen from Ostankino tower on a frosty winter day in Moscow, Russia January 8, 2017. REUTERS/Maxim Shemetov/File Photo

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NEW YORK, April 6 (Reuters) – The West’s punishment of Moscow over its invasion of Ukraine ramped up this week following the discovery of civilians shot dead at close range in the Ukrainian town of Bucha, seized from Russian forces. read more

Below are details on Westernsanctions so far:

BANKS & FINANCIAL FIRMS read more

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The U.S. imposed “full blocking sanctions” on Sberbank (SBER.MM), which holds one-third of Russia’s total banking assets, and Alfabank, the country’s fourth largest financial institution. That means U.S. persons cannot do business with the lenders, while any of their assets that touch the U.S financial system are frozen.

Britain also on Wednesday froze Sberbank’s assets.

U.S. President Joe Biden on Wednesday was set to sign an executive order prohibiting new investment in Russia by U.S. persons, which includes a ban on venture capital and mergers, U.S. officials said. read more

Previous sanctions by the U.S., Britain and other Western allies in the days following Russia’s Feb. 24 invasion of Ukraine, which it calls “a special military operation,” kicked the vast majority of Russian banking assets out of those countries, although some activities were allowed to continue.

U.S. banks were required to sever correspondent banking ties, which allow banks to make payments between one another, with Sberbank. Russian lenders VTB, Otkritie, Novikombank and Sovcombank, were also subject to full blocking sanctions.

European Union sanctions hit 70% of the Russian banking system. read more

INDIVIDUALS

The United States on Wednesday announced sanctions on Russian President Vladimir Putin’s two adult daughters, Russian Foreign Minister Sergei Lavrov’s wife and daughter, and senior members of Russia’s security council.

Separately, the U.S. Justice Department on Wednesday said it charged Russian oligarch Konstantin Malofeyev with violating existing sanctions, saying he provided financing for Russians promoting separatism in Crimea. read more

The U.S. government on Feb. 25 joined European countries in slapping sanctions on Putin and Lavrov.

More than 100 Russian elites, including members of Putin’s inner circle, members of the Russian parliament, and Russian executives and businessmen, have been sanctioned since Feb. 24 by Western nations. read more

SWIFT BAR read more

The United States, Britain, Europe and Canada in February and March blocked certain Russian lenders’ access to the SWIFT international payment system, preventing the lenders from conducting most of their financial transactions worldwide.

The movealso placed restrictions on the Russian central bank’s international reserves, the nations said in a joint statement. read more

SWIFT is used by more than 11,000 financial institutions in over 200 countries.

SOVEREIGN DEBT & CAPITAL MARKETS

This week, the United States stopped the Russian government from paying holders of its sovereign debt more than $600 million from reserves held at U.S. banks.

Under earlier sanctions, foreign currency reserves held by the Russian central bank at U.S. lenders were frozen, but the Treasury had allowed Moscow to use those funds to make coupon payments on dollar-denominated sovereign debt on a case-by-case basis. On Monday, Washington decided to cut off Moscow’s access to the funds, according to a U.S. Treasury spokesperson.

In late February, Britain, the European Union and the United States put new restrictions on dealing in Russian sovereign debt. read more

Britain announced a ban on Russian sovereign debt sales in London, the European Union banned EU investors from trading in Russian state bonds, and U.S. investors, who were already barred from investing in Russian sovereign debt directly, were banned from purchasing it in the secondary market from March 1.

ENERGY

U.S. President Biden on March 8 imposed an immediate ban on Russian oil and other energy imports and Britain said it would phase out imports through the end of 2022. read more

Berlin on Feb. 22 halted the certification of the Nord Stream 2 Baltic Sea gas pipeline project designed to double the flow of Russian gas direct to Germany. The following day the United States imposed sanctions on the company in charge of building the pipeline. read more

The United States and the EU already had sanctions in place following Moscow’s 2014 annexation of Crimea on Russia’s energy and defense sectors, with state-owned gas company Gazprom (GAZP.MM), its oil arm Gazpromneft and oil producers Lukoil, Rosneft and Surgutneftegaz (SNGS.MM) facing various types of curbs on exports/imports and debt-raising.

CURBING TECHNOLOGY

Sanctions proposed by the European Union on Tuesday, which the bloc’s 27 member states must approve, would bar Russian imports worth 9 billion euros ($9.8 billion) and exports to Russia worth 10 billion euros, including semiconductors and computers, and stop Russian ships entering EU ports. read more

The EU earlier vowed to introduce measures to crimp Russia’s technological position in key areas – from high-tech components to cutting-edge software.

The U.S. Commerce Department imposed export controls that severely restrict Russia’s access to semiconductors, computers, telecommunications, information security equipment, lasers, and sensors that it needs to sustain its military capabilities.

Similar measures were deployed during the Cold War, when sanctions kept the Soviet Union technologically backward and crimped economic growth.

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Reporting by John McCrank in New York, Michelle Price in Washington, Karin Strohecker and Catherine Belton in London; Editing by Chris Reese

Our Standards: The Thomson Reuters Trust Principles.

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Ukraine Live Updates: Russia Continues Bombardment, but Its Forces Have Shrunk, Pentagon Says

WASHINGTON — When the Cold War ended, governments and companies believed that stronger global economic ties would lead to greater stability. But the Ukraine war and the pandemic are pushing the world in the opposite direction and upending those ideas.

Important parts of the integrated economy are unwinding. American and European officials are now using sanctions to sever major parts of the Russian economy — the 11th largest in the world — from global commerce, and hundreds of Western companies have halted operations in Russia on their own. Amid the pandemic, companies are reorganizing how they obtain their goods because of soaring costs and unpredictable delays in global supply chains.

Western officials and executives are also rethinking how they do business with China, the world’s second-largest economy, as geopolitical tensions and the Chinese Communist Party’s human rights abuses and use of advanced technology to reinforce autocratic control make corporate dealings more fraught.

The moves reverse core tenets of post-Cold War economic and foreign policies forged by the United States and its allies that were even adopted by rivals like Russia and China.

“What we’re headed toward is a more divided world economically that will mirror what is clearly a more divided world politically,” said Edward Alden, a senior fellow at the Council on Foreign Relations. “I don’t think economic integration survives a period of political disintegration.”

“Does globalization and economic interdependence reduce conflict?” he added. “I think the answer is yes, until it doesn’t.”

Opposition to globalization gained momentum with the Trump administration’s trade policies and “America First” drive, and as the progressive left became more powerful. But the pandemic and President Vladimir V. Putin’s invasion of Ukraine have brought into sharp relief the uncertainty of the existing economic order.

President Biden warned President Xi Jinping of China on Friday that there would be “consequences” if Beijing gave material aid to Russia for the war in Ukraine, an implicit threat of sanctions. China has criticized sanctions on Russia, and Le Yucheng, the vice foreign minister, said in a speech on Saturday that “globalization should not be weaponized.” Yet China increasingly has imposed economic punishments — Lithuania, Norway, Australia, Japan and South Korea have been among the targets.

The result of all the disruptions may well be a fracturing of the world into economic blocs, as countries and companies gravitate to ideological corners with distinct markets and pools of labor, as they did in much of the 20th century.

Mr. Biden already frames his foreign policy in ideological terms, as a mission of unifying democracies against autocracies. Mr. Biden also says he is enacting a foreign policy for middle-class Americans, and central to that is getting companies to move critical supply chains and manufacturing out of China.

The goal is given urgency by the hobbling of those global links over two years of the pandemic, which has brought about a realization among the world’s most powerful companies that they need to focus on not just efficiency and cost, but also resiliency. This month, lockdowns China imposed to contain Covid-19 outbreaks have once again threatened to stall global supply chains.

Credit…Kin Cheung/Associated Press

The economic impact of such a change is highly uncertain. The emergence of new economic blocs could accelerate a massive reorganization in financial flows and supply chains, potentially slowing growth, leading to some shortages and raising prices for consumers in the short term. But the longer-term effects on global growth, worker wages and supplies of goods are harder to assess.

The war has set in motion “deglobalization forces that could have profound and unpredictable effects,” said Laurence Boone, the chief economist of the Organization for Economic Cooperation and Development.

For decades, executives have pushed for globalization to expand their markets and to exploit cheap labor and lax environmental standards. China especially has benefited from this, while Russia profits from its exports of minerals and energy. They tap into enormous economies: The Group of 7 industrialized nations make up more than 50 percent of the global economy, while China and Russia together account for about 20 percent.

Trade and business ties between the United States and China are still robust, despite steadily worsening relations. But with the new Western sanctions on Russia, many nations that are not staunch partners of America are now more aware of the perils of being economically tied to the United States and its allies.

If Mr. Xi and Mr. Putin organize their own economic coalition, they could bring in other nations seeking to shield themselves from Western sanctions — a tool that all recent U.S. presidents have used.

“Your interdependence can be weaponized against you,” said Dani Rodrik, a professor of international political economy at Harvard Kennedy School. “That’s a lesson that I imagine many countries are beginning to internalize.”

The Ukraine war, he added, has “probably put a nail in the coffin of hyperglobalization.”

China and, increasingly, Russia have taken steps to wall off their societies, including erecting strict censorship mechanisms on their internet networks, which have cut off their citizens from foreign perspectives and some commerce. China is on a drive to make critical industries self-sufficient, including for technologies like semiconductors.

And China has been in talks with Saudi Arabia to pay for some oil purchases in China’s currency, the renminbi, The Wall Street Journal reported; Russia was in similar discussions with India. The efforts show a desire by those governments to move away from dollar-based transactions, a foundation of American global economic power.

For decades, prominent U.S. officials and strategists asserted that a globalized economy was a pillar of what they call the rules-based international order, and that trade and financial ties would prevent major powers from going to war. The United States helped usher China into the World Trade Organization in 2001 in a bid to bring its economic behavior — and, some officials hoped, its political system — more in line with the West. Russia joined the organization in 2012.

But Mr. Putin’s war and China’s recent aggressive actions in Asia have challenged those notions.

“The whole idea of the liberal international order was that economic interdependence would prevent conflict of this kind,” said Alina Polyakova, president of the Center for European Policy Analysis, a research group in Washington. “If you tie yourselves to each other, which was the European model after the Second World War, the disincentives would be so painful if you went to war that no one in their right mind would do it. Well, we’ve seen now that has proven to be false.”

“Putin’s actions have shown us that might have been the world we’ve been living in, but that’s not the world he or China have been living in,” she said.

The United States and its partners have blocked Russia from much of the international financial system by banning transactions with the Russian central bank. They have also cut Russia off from the global bank messaging system called SWIFT, frozen the assets of Russian leaders and oligarchs, and banned the export from the United States and other nations of advanced technology to Russia. Russia has answered with its own export bans on food, cars and timber.

The penalties can lead to odd decouplings: British and European sanctions on Roman Abramovich, the Russian oligarch who owns the Chelsea soccer team in Britain, prevent the club from selling tickets or merchandise.

Credit…Andy Rain/EPA, via Shutterstock

About 400 companies have chosen to suspend or withdraw operations from Russia, including iconic brands of global consumerism such as Apple, Ikea and Rolex.

While many countries remain dependent on Russian energy exports, governments are strategizing how to wean themselves. Washington and London have announced plans to end imports of Russian oil.

The outstanding question is whether any of the U.S.-led penalties would one day be extended to China, which is a far bigger and more integral part of the global economy than Russia.

Even outside the Ukraine war, Mr. Biden has continued many Trump administration policies aimed at delinking parts of the American economy from that of China and punishing Beijing for its commercial practices.

Officials have kept the tariffs imposed by Mr. Trump, which covered about two-thirds of Chinese imports. The Treasury Department has continued to impose investment bans on Chinese companies with ties to the country’s military. And in June, a law will go into effect in the United States barring many goods made in whole or in part in the region of Xinjiang.

Despite all that, demand for Chinese-made goods has surged through the pandemic, as Americans splurge on online purchases. The overall U.S. trade deficit soared to record levels last year, pushed up by a widening deficit with China, and foreign investments into China actually accelerated last year.

Some economists have called for more global integration, not less. Speaking at a virtual conference on Monday, Ngozi Okonjo-Iweala, director general of the World Trade Organization, urged a move toward “re-globalization,” saying, “Deeper, more diversified international markets remain our best bet for supply resilience.

But those economic ties will be further strained if U.S.-China relations worsen, and especially if China gives substantial aid to Russia.

Besides recent warnings to China from Mr. Biden and Secretary of State Antony J. Blinken, Commerce Secretary Gina Raimondo has said her agency would ban the sale of critical American technology to Chinese companies if China tried to supply forbidden technology to Russia.

In the meantime, the uncertainty has left the U.S.-China relationship in flux. While many major Chinese banks and private companies have suspended their interactions with Russia to comply with sanctions, foreign asset managers appear to have also begun moving their money out of China in recent weeks, possibly in anticipation of sanctions.

Mary Lovely, a senior fellow at the Peterson Institute for International Economics, said she did not expect China to “throw all in” with Russia, but that the war could still strain economic ties by worsening U.S.-China relations.

“Right now, there is great uncertainty as to how the U.S. and China will respond to the challenges posed by Russia’s increasingly urgent need for assistance,” she said. “That policy uncertainty is another push to multinationals who were already rethinking supply chains.”

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