A flotilla of tankers carrying liquefied natural gas have been parked in a maritime traffic jam off the coast of Spain in recent days, waiting to unload their precious cargo for Europe’s power grid. In Finland, where sweltering sauna baths are a national pastime, the government is urging friends and families to take saunas together to save energy.
Both efforts are emblematic of the measures Europe is taking to increase energy supplies and conserve fuel before a winter without Russian gas.
The tactic by President Vladimir V. Putin of Russia to weaponize energy against countries supporting Ukraine has produced a startling transformation in how Europe generates and saves power. Countries are banding together to buy, borrow and build additional power supplies, while pushing out major conservation programs that recall the response to the 1970s oil crisis.
forcing shutdowns at energy-intensive businesses, including the production of steel, chemical and glass. Companies are furloughing workers. Governments are issuing more debt to shield households and businesses from pain. There are growing projections that the energy crisis will tilt Europe into a recession next year.
went on a buying spree, has put so much gas into reserve that there’s no longer room to store the incoming fuel. Europe still gets a small supply — around 7 percent — of natural gas from Russia through pipelines running beneath Ukraine. If that flow is severed, several countries will be in a bind.
And some Europeans may decide that they aren’t so willing after all to make personal sacrifices for Ukraine as household energy bills spiral higher. Street protests against the soaring cost of living have broken out in Paris, Prague and elsewhere, chipping away at Europe’s united front for sanctions against Russia.
fill most of their gas reserves — enough to provide around three months of power — despite dwindling Russian flows. Unseasonably warm weather in Europe is delaying the need for early heating, so the stock may last longer than expected.
The consulting group Rystad Energy has calculated that Europe has enough gas stored to survive this winter unless it gets very cold, while natural gas prices have fallen to their lowest levels since June.
even tougher winter next year as natural gas stocks are used up and as new supplies to replace Russian gas, including increased shipments from the United States or Qatar, are slow to come online, the International Energy Agency said in its annual World Energy Outlook, released last week.
Europe’s activity appears to be accelerating a global transition toward cleaner technologies, the I.E.A. added, as countries respond to Russia’s invasion of Ukraine by embracing hydrogen fuels, electric vehicles, heat pumps and other green energies.
But in the short term, countries will be burning more fossil fuels in response to the natural gas shortages.
gas fields in Groningen, which had been slated to be sealed because of earthquakes triggered by the extraction of the fuel.
Eleven countries, including Germany, Finland and Estonia, are now building or expanding a total of 18 offshore terminals to process liquid gas shipped in from other countries. Other projects in Latvia and Lithuania are under consideration.
Nuclear power is winning new supportin countries that had previously decided to abandon it, including Germany and Belgium. Finland is planning to extend the lifetime of one reactor, while Poland and Romania plan to build new nuclear power plants.
European Commission blueprint, are voluntary and rely on buy-ins from individuals and businesses whose utility bills may be subsidized by their governments.
Energy use dropped in September in several countries, although it is hard to know for sure if the cause was balmy weather, high prices or voluntary conservation efforts inspired by a sense of civic duty. But there are signs that businesses, organizations and the public are responding. In Sweden, for example, the Lund diocese said it planned to partially or fully close 150 out of 540 churches this winter to conserve energy.
Germany and France have issued sweeping guidance, which includes lowering heating in all homes, businesses and public buildings, using appliances at off-peak hours and unplugging electronic devices when not in use.
Denmark wants households to shun dryers and use clotheslines. Slovakia is urging citizens to use microwaves instead of stoves and brush their teeth with a single glass of water.
website.“Short showers,” wrote one homeowner; another announced: “18 solar panels coming to the roof in October.”
“In the coming winter, efforts to save electricity and schedule the consumption of electricity may be the key to avoiding electricity shortages,” Fingrad, the main grid operator, said.
Businesses are being asked to do even more, and most governments have set targets for retailers, manufacturers and offices to find ways to ratchet down their energy use by at least 10 percent in the coming months.
Governments, themselves huge users of energy, are reducing heating, curbing streetlight use and closing municipal swimming pools. In France, where the state operates a third of all buildings, the government plans to cut energy use by two terawatt-hours, the amount used by a midsize city.
Whether the campaigns succeed is far from clear, said Daniel Gros, director of the Centre for European Policy Studies, a European think tank. Because the recommendations are voluntary, there may be little incentive for people to follow suit — especially if governments are subsidizing energy bills.
In countries like Germany, where the government aimsto spend up to €200 billion to help households and businesses offset rising energy prices starting next year, skyrocketing gas prices are hitting consumers now. “That is useful in getting them to lower their energy use,” he said.But when countries fund a large part of the bill, “there is zero incentive to save on energy,” he said.
BEIJING — When Suriname couldn’t make its debt payments, a Chinese state bank seized the money from one of the South American country’s accounts.
As Pakistan has struggled to cope with a devastating flood that has inundated a third of the country, its loan repayments to China have been rising fast.
When Kenyans and Angolans went to the polls in presidential elections in August, the countries’ Chinese loans, and how to repay them, were a hot-button political issue.
Across much of the developing world, China finds itself in an uncomfortable position, a geopolitical giant that now holds significant sway over the financial futures of many nations but is also owed huge sums of money that may never be repaid in full.
the lender of choice for many nations over the past decade, doling out funds for governments to build bullet trains, hydroelectric dams, airports and superhighways. As inflation has climbed and economies have weakened, China has the power to cut them off, lend more or, in its most accommodating moments, forgive small portions of their debts.
The economic distress in poor countries is palpable, given the lingering effects of the pandemic, coupled with high food and energy prices after Russia’s invasion of Ukraine. Many borrowed heavily from China. In Pakistan, overall public debt has more than doubled over the past decade, with loans from China growing fastest; in Kenya, public debt is up ninefold and in Suriname tenfold.
two hydroelectric dams in southern Patagonia. Bradley Parks, the executive director of AidData, a research institute atWilliam and Mary, auniversity in Williamsburg, Va., estimated that Argentina’s twice-a-year interest payment was $87 million in January and $137 million in July.
Argentina will owe a payment of over $170 millionon the loan in January if interest rates keep rising at the same pace, he calculated. Argentina’s finance ministry did not respond to emails and text messages about the loan.
According to the I.M.F., three-fifths of the world’s developing countries are now having considerable trouble repaying loans or have already fallen behind on their debts. More than half the world’s poor countries owe more to China than to all Western governments combined.
For now, Chinese officials in poor countries face unpleasant jobs as debt collectors.
“You have a lot more influence when you’re providing the loan,” said Brad Setser, an international payments specialist at the Council on Foreign Relations, “than when you’re begging for repayment.”
Abdi Latif Dahir in Nairobi, Emily Schmall in New Delhi, Skandha Gunasekara in Colombo, Sri Lanka, Salman Masood in Islamabad, Pakistan, contributed reporting. Li You and Ana Lankes contributed research.
Israel and Lebanon have been at war since 1948, but the countries are close to an agreement that could increase production of natural gas, helping energy-starved Europe.
Officials from the two countries have said they are close to resolving long-running disputes over their maritime borders, which would allow energy companies to extract more fossil fuels from offshore fields in the Mediterranean Sea.
The increased production won’t make up for the gas that Europe is no longer getting from Russia. But energy experts say an Israel-Lebanon agreement should give a vital push to efforts to produce more gas in that part of the world. Over the last four years, energy production in the eastern Mediterranean has been growing as Israel, Egypt, Jordan and Cyprus have worked together to take advantage of oil and gas buried under the sea.
“This is a very important step for the region to come into its own,” said Charif Souki, the Lebanese-American executive chairman of Tellurian, a liquefied natural gas company based in Houston. “Players are finally realizing that it’s better to cooperate than to continuously fight.”
The Israel-Lebanon negotiations will most directly affect the Karish field, which is set to produce gas for Israel’s domestic use. That fuel is expected to displace gas produced from other fields, which can then be exported. The new field is also expected to produce a small amount of oil.
Chevron, the second-largest U.S. oil and gas company, and several smaller businesses are already producing gas from two larger fields off Israel’s coast. That fuel has increasingly replaced coal in the country’s power plants and factories. Israel now has so much gas that it has become a net exporter of energy, sending fuel to neighbors like Jordan and Egypt. Some of that gas has also found its way to Europe and other parts of the world from L.N.G. export terminals in Egypt.
The U.S. government, across several administrations, has encouraged the growth of the gas trade in the region by helping to negotiate deals between countries that have long had tense relations. The Ukraine crisis has accelerated efforts to explore and produce natural gas because of the soaring cost of the fuel in Europe, where countries are desperate to end their dependence on Russian gas.
Chevron and its Israeli partners are discussing the possibility of building a floating liquefied natural gas platform in the Leviathan gas field, Israel’s largest. The companies are expected to make a decision on the project in a few months.
But getting the gas out of the region will not be easy. Floating export terminals are vulnerable to terrorist attack. And, even if they could be adequately secured, the terminals will not be able to process as much gas as the larger coastal facilities used in major gas producers like the United States, Qatar and Australia. Building terminals on land can take several years, if not often longer, because of opposition from environmental and other groups.
“Energy infrastructure offshore is very volatile and vulnerable,” said Gal Luft, a former Israeli military officer who is the co-director of the Institute for the Analysis of Global Security in Washington. “You have to manage risk.”
Theoretically, transporting gas by pipelines would be easier than liquefying natural gas for export before converting it back into gas at its destination. But building long-distance pipelines is expensive and difficult. A long-running conflict between Turkey, Cyprus and Greece, for example, has made constructing a pipeline from Israel to southern Europe incredibly challenging, if not impossible.
Even an Israel-Lebanon border agreement faces risks. Hezbollah has threatened to attack the Karish field, and it sent unarmed drones over it in July; Israeli officials said they had shot down the aircraft.
Still, Israeli and Lebanese officials have said in recent days that they are pressing on with the negotiations, with officials from the Biden administration acting as a go-between, and are close to a deal. The talks gathered momentum during the United Nations General Assembly last week.
Prime Minister Najib Mikati of Lebanon said on Thursday at the United Nations that he was confident about reaching an agreement with Israel. “Lebanon is well aware of the importance of the promising energy market in the eastern Mediterranean for the prosperity of all countries in the region,” he said, “but also to meet the needs of importing nations.”
U.S. and other Western oil companies have long shied away from Israel, in part because they do not want to alienate Arab countries. But, as relations between Israel and countries like Egypt, Jordan and, more recently, the United Arab Emirates have improved more companies have expressed interest in the eastern Mediterranean.
An agreement between Israel and Lebanon could accelerate that trend.
“I think it will appease many minds,” said Leslie Palti-Guzman, chief executive of Gas Vista, a consulting firm. “Companies that have been reluctant to invest could be more incentivized to develop additional projects.”
Gas fields in the Mediterranean are one of several new suppliers that Europe will need as it seeks a long-term replacement for Russian gas. Other suppliers include energy companies operating in the United States, Qatar, Africa, the Caspian Sea and the North Sea.
“There is no silver bullet,” said Paddy Blewer, spokesman for Energean, a London-based exploration company that hopes to begin producing gas in the Karish field. “The East Mediterranean is one of a series of marginal gains that Europe has to look at.”
Energean plans to begin production in the next few weeks, and has said it expects to produce up to 8 billion cubic meters of gas a year by 2025. If it is successful, the company could significantly add to Israel’s output. The country will produce roughly 22 billion cubic meters this year. Once an importer of almost all of its energy, Israel increased gas production by 22 percent in the first half of the year compared with the same period in 2021. It exported roughly 40 percent of its gas, earning the government royalties of $250 million.
The agreement between Israel and Lebanon will also open the way to drilling in Lebanese waters by a consortium led by Eni of Italy and TotalEnergies of France. Lebanese officials view natural gas as a critical financial tool in its attempts to revive the country’s depressed economy. The government has wanted to drill offshore since at least 2014, but disputes with Israel over the border have delayed exploration.
“It’s not for sure Lebanon will find gas,” said Chakib Khelil, a former president of the Organization of the Petroleum Exporting Countries. “But, if they do, Lebanon will get a big boost.”
Gazprom said on Friday that it would postpone restarting the flow of natural gas through a closely watched pipeline that connects Russia and Germany, an unexpected delay that appeared to be part of a larger struggle between Moscow and the West over energy and the war in Ukraine.
The Russian-owned energy giant had been expected to resume the flow of gas through the Nord Stream 1 pipeline on Saturday after three days of maintenance. But hours before the pipeline was set to reopen, Gazprom said that problems had been found during inspections, and that the pipeline would be closed until they were eliminated. It did not give a timeline for restarting.
The announcement had the hallmarks of a tit-for-tat move. Earlier on Friday, finance ministers for the Group of 7 countries said that they had agreed to impose a price cap mechanism on Russian oil in a bid to choke off some of the energy revenue Moscow is still collecting from Europe.
Eric Mamer, a spokesman for the European Commission, said that the “fallacious pretenses” for the latest delay were “proof of Russia’s cynicism.”
Russia has, during Mr. Putin’s long tenure, used energy for geopolitical ends, often with the goal of gaining leverage over European policies toward Ukraine. Mr. Putin has taken a keen interest in the oil and natural gas industries, often negotiating deals personally with energy giants in ways that barely hide the political subtext. The Nord Stream pipelines, which are designed to bypass Ukraine by sending gas directly to Germany under the Baltic Sea, have been central to the Kremlin’s political use of energy.
In its statement Friday, Gazprom said it found oil leaks around a turbine used to pressurize the pipeline, forcing it to call off the restart. The German company Siemens Energy, the maker of the turbine, cast doubt on that account. “As the manufacturer of the turbines, we can only state that such a finding is not a technical reason for stopping operation,” the company said late Friday. Siemens also said there were additional turbines available that could be used to keep the pipeline operating.
OPEC Plus group of oil producing countries, headed by Saudi Arabia and Russia, have been hinting that they might pivot away from their gradual post-pandemic production increases and cut output to bolster falling prices. The group is expected to meet on Monday to set oil production levels.
“Putin will endeavor to demonstrate that he has not played his last card and that there are many open windows in his energy war with the West,” Helima Croft, head of commodities at RBC Capital Markets, wrote in a note to clients on Friday.
The latest action by Gazprom will raise fears of a permanent shutdown of the pipeline, which had been the key conduit for gas to Germany, a country heavily dependent on Russian natural gas. Like other European Union nations, Germany has been rushing to fill storage facilities before winter as insurance against Russian cutoffs.
since late July. Well after Russia invaded Ukraine in late February, the pipeline was typically transporting around five times that level.
Britain’s energy regulator said that fuel bills for 24 million households would rise by 80 percent beginning in October, putting pressure on the next prime minister, expected to be Liz Truss, to turn immediate attention to coming up with a massive aid package to head off a catastrophic winter.
Britain’s government is not the only one working to mitigate the energy crisis in Europe. Facing dire circumstances, lawmakers and regulators across the continent are increasingly intervening in the energy markets to protect consumers.
Read More About Oil and Gas Prices
At the same time, the European natural gas market has changed substantially over the last year as Russia crimped supplies and Europe turned to other sources. Flows from Russia to Europe have declined sharply.
imports of liquefied natural gas shipped by sea from the United States and elsewhere, and increased pipeline flows from producers including Norway and Azerbaijan. The problem is that the shifts have forced gas prices higher, as Europe vies with Asia for limited supplies of liquefied gas.
Until Friday’s announcement there was increasing optimism about the prospect for navigating the winter with less Russian gas, leading to the fall in natural gas prices in recent days.Wood Mackenzie, an energy research firm, has projected that Russian pipeline gas imports will steadily decline from supplying more than a third of European demand in recent years to around 9 percent in 2023.
Even the importance of Nord Stream has diminished. Analysts say that Gazprom has so constrained Nord Stream volumes this summer that the pipeline’s performance is no longer crucial to the overall fundamentals of the market. But news about the conduit still has a psychological impact, and some analysts expect gas prices to jump when markets open on Monday.
“A complete shutdown will obviously have implications on market sentiment given how tight the market is,” said Massimo Di Odoardo, vice president for global gas at Wood Mackenzie. Such an event, he added, would “increase the risk of further cuts via other pipelines bringing Russian gas to the E.U. via Ukraine and Turkey.”
In retaliation for Speaker Nancy Pelosi’s visit to Taiwan last week, China conducted large-scale military exercises around the self-governing island democracy and suspended some trade between the sides.
The exercises led to a few shipping disruptions, but they did not affect traffic at Taiwanese or Chinese ports, analysts say. And the trade bans were notable mainly for what they did not target: Taiwan’s increasingly powerful semiconductor industry, a crucial supplier to Chinese manufacturers.
The bans that Beijing did impose — on exports of its natural sand to Taiwan, and on imports of all Taiwanese citrus fruits and two types of fish — were hardly an existential threat to the island off its southern coast that it claims as Chinese territory.
Taiwanese pineapples, wax apples and grouper fish, among other products.
a self-governing island democracy of 23 million people, as its territory and has long vowed to take it back, by force if necessary. The island, to which Chiang Kai-shek’s Chinese forces retreated after the Communist Revolution of 1949, has never been part of the People’s Republic of China.
Understand the China-Taiwan Tensions
What does Xi Jinping want? China’s leader has made it clearer than any of his predecessors that he sees unifying Taiwan with China to be a primary goal of his rule — and a key to what he calls China’s “national rejuvenation.” Mr. Xi is also keen to project an image of strength ahead of his expected confirmation to an unprecedented third term this fall.
Understand the China-Taiwan Tensions
How is the U.S. involved? In an intentionally ambiguous diplomatic arrangement adopted in 1979, the United States maintains a “one China” policy that acknowledges, but does not endorse, Beijing’s claim over Taiwan. U.S. leaders have remained vague about how they would help Taiwan if China attacked, but President Biden has pledged to defend the island.
Understand the China-Taiwan Tensions
Why are tensions rising now? Speaker Nancy Pelosi’s recent trip to Taiwan — the highest level visit to the island by an American official since 1997 — has ignited regional tensions, prompting China to conduct its largest-ever military exercises near Taiwan. A chorus of official Chinese bodies portrayed her trip as part of an American effort to sabotage China’s efforts at unification with Taiwan.
“The political message is greater than the economic hit,” said Chiao Chun, a former trade negotiator for the Taiwanese government.
Even though about 90 percent of Taiwan’s imported gravel and sand comes from China, most of that is manufactured. China accounted for only about 11 percent of Taiwan’s natural sand imports in the first half of this year, according to the Bureau of Mines.
The two types of Taiwanese fish exports that China restricted last week — chilled white striped hairtail and frozen horse mackerel — are collectively worth about $22 million, less than half the value of the Taiwanese grouper trade that was banned earlier this year. They are also less dependent on the Chinese market.
As for Taiwan’s half-a-billion-dollar citrus industry, its shipments to China account for only 1.1 percent of the island’s total agricultural exports, according to Taiwan’s Agriculture Council. A popular theory is that Beijing singled out citrus farmers because most orchards are in southern Taiwan, a stronghold for the governing political party, the Democratic Progressive Party, a longtime target of Beijing’s anger.
Future bans may become more targeted to punish industries in counties that are D.P.P. strongholds, said Thomas J. Shattuck, an expert on Taiwan at the University of Pennsylvania’s Perry World House. There may also be less retaliation against counties run by the Kuomintang opposition party “in an attempt to put a finger on the scale for Taiwan’s local, and even national, elections,” he added.
increasingly indispensable node in the global supply chains for smartphones, cars and other keystones of modern life. One producer, the Taiwan Semiconductor Manufacturing Company, makes roughly 90 percent of the world’s most advanced semiconductors, and sells them to both China and the West.
simulated a blockade of Taiwan.
Even though some of the exercises took place in the Taiwan Strait, a key artery for international shipping, they did not disrupt access to ports in Taiwan or southern China, said Tan Hua Joo, an analyst at Linerlytica, a company in Singapore that tracks data on the container shipping industry. He added that port congestion would build only if the strait was completely blocked, port access was restricted or port operations were hampered by a labor or equipment shortage.
“None of these are happening at the moment,” he said.
Vessels that chose to avoid the Taiwan Strait last week because of the Chinese military’s “chest beating” activities would have faced a 12- to 18-hour delay, an inconvenience that would generally be considered manageable, said Niels Rasmussen, the chief shipping analyst at Bimco, an international shipping association.
If Beijing were to escalate tensions in the future, it would indicate that it was willing to put at risk China’s own economy as well as its trade and relations with Japan, South Korea, Europe and the United States, Mr. Rasmussen said by phone from his office near Copenhagen.
“That’s just difficult to accept that they would take that decision,” he added. “But then again, I didn’t expect Russia to invade Ukraine.”
WASHINGTON — The Biden administration’s push to form an international buyers’ cartel to cap the price of Russian oil is facing resistance amid private sector concerns that it cannot be reliably enforced, posing a challenge for the U.S.-led effort to drain President Vladimir V. Putin’s war chest and stabilize global energy prices.
The price cap has been a top priority of Treasury Secretary Janet L. Yellen, who has been trying to head off another spike in global oil costs at the end of the year. The Biden administration fears that the combination of a European Union embargo on Russian oil imports and a ban on the insurance and financing of Russian oil shipments will send prices soaring by taking millions of barrels of that oil off the market.
But the untested concept has drawn skepticism from energy experts and, in particular, the maritime insurance sector, which facilitates global oil shipments and is key to making the proposal work. Under the plan, it would be legal for them to grant insurance for oil cargo only if it was being sold at or below a certain price.
Mike Salthouse, global claims director at The North of England P&I Association Limited, a leading global marine insurer. “If you have sophisticated state actors wanting to deceive people, it’s very easy to do.”
He added: “We’ve said it won’t work. We’ve explained to everybody why.”
That has not deterred Ms. Yellen and her top aides, who have been crisscrossing the globe to make their case with international counterparts, banks and insurers that an oil price cap can — and must — work at a moment of rapid inflation and the risk of recession.
“At a time of global anxiety over high prices, a price cap on Russian oil is one of the most powerful tools we have to address inflation by preventing future spikes in energy costs,” Ms. Yellen said in July.
The Biden administration is trying to mitigate fallout from sanctions adopted by the European Union in June, which would ban imports of Russian oil and the financing and insuring of Russian oil exports by year’s end. Britain was expected to enact a similar ban but has not yet done so.
not solve the world’s oil supply problems. European officials, who have been skeptical, continue to say they are analyzing its viability.
restricted natural gas flows to parts of Europe in retaliation for sanctions, would curb oil exports because of their importance to its economy.
senior fellow at the Atlantic Council who works in the financial services industry, said of Russia’s cooperation with a price cap. “If that were the case, he wouldn’t have invaded Ukraine in the first place.”
But proponents believe that if the European Union bans insurance transactions, an oil price cap may be the best chance to mitigate the economic fallout.
John E. Smith, former director of the foreign assets control unit, said the key was ensuring that financial services firms and maritime insurers were not responsible for vetting every oil transaction, as well as providing guidance on complying with the sanctions.
“The question is will enough jurisdictions agree on the details to move this forward,” said Mr. Smith, who is now co-head of Morrison & Foerster’s national security practice. “If they do, it could be a win for everyone but Russia.”
Matina Stevis-Gridneff contributed reporting from Brussels.
For Didi, once hailed as an innovator and disrupter in China’s staid transportation sector, it has been a fast fall from grace. The company was considered the pride of China’s spunky, and valuable, start-up scene in 2016 when it beat its American rival, Uber, and bought the firm’s Chinese operations. At the time, its executives vowed that the data it collected would be used to unsnarl traffic jams and eventually help develop driverless cars.
As Beijing has asserted greater control over internet firms like Didi, it has sought to shape a private sector more in line with the Communist Party’s focus on political security and meeting its policy goals. Popular attitudes about China’s tech sector, once an emblem of future achievement, appear to have shifted, too.
After the punishment was announced, a number of professors and tech commentators took to Weibo to call for even harsher punishments.
Jin Canrong, a professor of international relations at Renmin University, called the revelations of Didi’s violations “really shocking!” Didi “disregarded national security, disregarded national laws and disregarded citizens’ privacy,” he added. Others went further, wondering whether a company that jeopardized national security should be allowed to exist at all.
In the short term, the government will probably relent on Didi, allowing it to restore its apps in stores. But the company will still have to show that it has addressed the regulator’s concerns over data security and other issues, said Linghao Bao, an analyst at Trivium China, a China-focused policy research team.
“Big tech platforms are getting a break as the economy is not doing so well. Regulators are shifting from a campaign-style crackdown toward a more rules-based governance,” he said. “But tech regulation is here to stay over the long term.”
By targeting Russia’s central bank with sanctions, experts said, American and European leaders have taken aim at what could be one of President Vladimir V. Putin’s greatest weaknesses: the country’s currency.
In Russian cities, anxious customers started lining up on Sunday in front of A.T.M.s, hoping to withdraw the money they had deposited in banks, fearful it would run out. The panic spread on Monday. To try to restore calm, the Bank of Russia posted a notice on its website: “The volume of bank notes ready for loading into A.T.M.s is more than sufficient. All customer funds on bank accounts are fully preserved and available for any transactions.”
Even before the sanctions were announced over the weekend, the ruble had weakened. On Monday it plunged further, with the value of a single ruble dropping to less than 1 cent at one point. As the value of any currency drops, more people will want to get rid of it by exchanging it for one that is not losing value — and that, in turn, causes its value to drop further.
In Russia today, as the purchasing power of the ruble drops sharply, consumers who hold it are finding that they can buy less with their money. In real terms, they become poorer. Such economic instability could stoke popular unhappiness and even unrest.
nuclear forces on a higher level of alert. The United States, the European Commission, Britain and Canada agreed to remove some Russian banks from the international system of payments known as SWIFT and to restrict Russia’s central bank from using its storehouse of hundreds of billions of dollars’ worth of international reserves to undermine the sanctions.
Kicking banks out of SWIFT has gotten the most public attention, but the measures taken against the central bank are potentially the most devastating. Ursula von der Leyen, the president of the European Commission, said it would“freeze its transactions” and “make it impossible for the central bank to liquidate its assets.”
On Monday, the U.S. Treasury Department offered more details on how the sanctions would work, saying they would paralyze the Bank of Russia’s assets in the United States and stop Americans from engaging in transactions involving the central bank, Russia’s National Wealth Fund or the Russian Ministry of Finance. As expected, there are exemptions for transactions related to energy exports, on which Europe relies.
British government banned transactions with the Russian central bank, the foreign ministry and the sovereign wealth fund.
But if the allies were to impose a full-fledged freeze of the vast amount of dollars, euros, pounds and yen that are owned by Russia but held in Western banks, it could devastate the Russian economy, causing spiraling inflation and a severe recession.
At the heart of the move to restrict the Bank of Russia are its foreign exchange reserves. These are the vast haul of convertible assets — other nations’ currencies and gold — that Russia has built up, financed in large part through the money it earns selling oil and gas to Europe and other energy importers.
Lenin himself reportedly made more than a century ago, which was repeated by the economist John Maynard Keynes: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.”
The Bank of Russia can try to prop up the value of the ruble by using its reserves to buy up rubles that people are selling. But it can do that only as long as it has access to foreign reserves.
dizzying spikes in prices for energy and food and could spook investors. The economic damage from supply disruptions and economic sanctions would be severe in some countries and industries and unnoticed in others.
The cost of energy. Oil prices already are the highest since 2014, and they have risen as the conflict has escalated. Russia is the third-largest producer of oil, providing roughly one of every 10 barrels the global economy consumes.
Gas supplies. Europe gets nearly 40 percent of its natural gas from Russia, and it is likely to be walloped with higher heating bills. Natural gas reserves are running low, and European leaders have accused Russia’s president, Vladimir V. Putin, of reducing supplies to gain a political edge.
Shortages of essential metals. The price of palladium, used in automotive exhaust systems and mobile phones, has been soaring amid fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, another key Russian export, has also been rising.
Financial turmoil. Global banks are bracing for the effects of sanctions designed to restrict Russia’s access to foreign capital and limit its ability to process payments in dollars, euros and other currencies crucial for trade. Banks are also on alert for retaliatory cyberattacks by Russia.
Yet the central bank has just about $12 billion of cash in hand — an astonishingly small amount, he said. As for the rest of Russia’s foreign exchange reserves, roughly $400 billion is invested in assets held outside the country. Another $84 billion is invested in Chinese bonds, and $139 billion is in gold.
took steps on Monday to restore confidence, and more than doubled interest rates to 20 percent from 9.5 percent in order to offset the rapid depreciation of the ruble. The bank also released an additional $7 billion worth of reserves that had been set aside as collateral for loans and closed down the Moscow stock exchange for the day. Meanwhile, the foreign ministry moved to order companies to sell 80 percent of their foreign currencies, in a bid to gin up demand for rubles and prevent them from stockpiling dollars and euros.
Mr. Bernstam warned that the West’s attack on the Russian ruble needed to be handled with care. “We don’t want to destroy them,” he said. “We don’t want the political system to collapse.”
“If they don’t comply with the U.S., they’re in trouble with the U.S., but if they don’t comply with China, they could also face penalties in China,” he said.
Of course, collecting fines from companies that are unwilling to pay and monitoring whether businesses comply with the rules could be difficult, Mr. Chorzempa added. “It’s already proving difficult to monitor the things that are already controlled, and if you expand that list, that’s going to be a real challenge to verify what’s going to Russia,” he said.
Russia’s Attack on Ukraine and the Global Economy
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A rising concern. Russia’s attack on Ukraine could cause dizzying spikes in prices for energy and food and could spook investors. The economic damage from supply disruptions and economic sanctions would be severe in some countries and industries and unnoticed in others.
The cost of energy. Oil prices already are the highest since 2014, and they have risen as the conflict has escalated. Russia is the third-largest producer of oil, providing roughly one of every 10 barrels the global economy consumes.
Gas supplies. Europe gets nearly 40 percent of its natural gas from Russia, and it is likely to be walloped with higher heating bills. Natural gas reserves are running low, and European leaders have accused Russia’s president, Vladimir V. Putin, of reducing supplies to gain a political edge.
Shortages of essential metals. The price of palladium, used in automotive exhaust systems and mobile phones, has been soaring amid fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, another key Russian export, has also been rising.
Financial turmoil. Global banks are bracing for the effects of sanctions designed to restrict Russia’s access to foreign capital and limit its ability to process payments in dollars, euros and other currencies crucial for trade. Banks are also on alert for retaliatory cyberattacks by Russia.
The Biden administration’s export controls apply to goods produced in any country as long as they use U.S. technology — including chip makers like Taiwan Semiconductor Manufacturing Company and the Shanghai-based Semiconductor Manufacturing Industry Corporation.
Both of those companies continue to rely on the United States for certain components and manufacturing technology, said Gabriel Wildau, a managing director at Teneo, a consulting firm. If they continue supplying to Russia, SMIC and other Chinese companies could be cut off from U.S. technology, the same kind of penalty that crippled Huawei. On Friday, Taiwan Semiconductor said it was committed to complying with the export controls.
“If Beijing is viewed as Moscow’s enabler, pressure will rise in the U.S. Congress to extend these restrictions,” Mr. Wildau wrote in a note to clients. Beijing would also face the risk that other major technology exporters, like Japan, South Korea and the Netherlands, “would adopt Washington’s tougher line,” he said.
China’s state-owned banks could also face risks for continuing to lend to Russia. China and Russia have been settling more of their trade using the renminbi and the ruble. Beijing has also been trying to develop the digital use of its currency as an alternative to the dollar, which could help Russia limit the effect of financial sanctions.
But Chinese banks are still deeply reliant on the U.S. dollar. While major Chinese banks already appeared to be pulling back their financing for Russia, Mr. Wildau said, Beijing could choose to support Russia using smaller state-owned banks that don’t do a lot of international business that requires the use of the dollar.
For the second year in a row, the World Economic Forum scrapped its annual meeting in the Alpine resort town of Davos, Switzerland, because of the pandemic.
The gathering is an essential stop on the annual circuit for the global elite, a weeklong schmoozefest where billionaires and autocrats mingle over canapés while activists protest in the frigid mountain air. Companies make climate pledges. Economists discuss inequality. Everyone walks on the same slippery, slushy roads.
the patrician founder of the World Economic Forum, said in a statement on Thursday.
So far, however, there is little sign that the pandemic is beginning to wane. And for a second year in a row, with Davos the event on hold, the town of Davos, Switzerland, is stuck in limbo.
a study by University of St. Gallen that was commissioned by the forum. The bulk of that, roughly $70 million, was spent in Davos, which has a year-round population of about 11,000 people. That number essentially doubles when the forum comes to town.
Hotels, and in particular the Steigenberger Grandhotel Belvédère, will feel the pain particularly acutely. During the annual meeting, the Belvédère has its own center of gravity, erecting temporary structures to accommodate additional meeting rooms, allowing television networks to set up on its roof and hosting a constant string of receptions in its various bars.
Normally, it is all but impossible to get a room there during the third week of January, with rooms ranging from $1,000 to $10,000, if they are available. Now, during what is usually its busiest time of the year, rooms at the Belvédère are available for less than $300 a night on Expedia.com.
“Davos Man” has come to describe individuals so wealthy and powerful that they play by their own set of rules, and write the rules for the rest of us. The annual meeting has come to define the place more than the mountains, the ski slopes or the mulled wine served in chalet taverns. Even onetime critics of the World Economic Forum have come around and now embrace its singular place in Davos.
“In my early days, I was demonstrating during the W.E.F. for better action against climate change and social justice,” Philipp Wilhelm, the mayor of Davos, told the Guardian after last year’s event was canceled. “Now, I am trying to get the W.E.F. back to Davos.”
