Plastic letters arranged to read “Inflation” are placed on U.S. Dollar banknote in this illustration taken, June 12, 2022. REUTERS/Dado Ruvic/Illustration
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LONDON, June 26 (Reuters) – The world’s central bank umbrella body, the Bank for International Settlements (BIS), has called for interest rates to be raised “quickly and decisively” to prevent the surge in inflation turning into something even more problematic.
The Swiss-based BIS has held its annual meeting in recent days, where top central bankers met to discuss their current difficulties and one of the most turbulent starts to a year ever for global financial markets.
Surging energy and food prices mean inflation in many places is now its hottest in decades. But the usual remedy of ramping up interest rates is raising the spectre of recession, and even of the dreaded 1970s-style “stagflation”, where rising prices are coupled with low or negative economic growth.
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“The key for central banks is to act quickly and decisively before inflation becomes entrenched,” Agustín Carstens, BIS general manager, said as part of the body’s post-meeting annual report published on Sunday.
Carstens, former head of Mexico’s central bank, said the emphasis was to act in “quarters to come”. The BIS thinks an economic soft landing – where rates rise without triggering recessions – is still possible, but accepts it is a difficult situation.
“A lot of it will depend on precisely on how permanent these (inflationary) shocks are,” Carstens said, adding that the response of financial markets would also be crucial.
“If this tightening generates massive losses, generates massive asset corrections, and that contaminates consumption, investment and employment – of course, that is a more difficult scenario.”
World markets are already suffering one of the biggest sell-offs in recent memory as heavyweight central banks like the U.S. Federal Reserve – and from next month the ECB – move away from record low rates and almost 15 years of back-to-back stimulus measures.
Global stocks (.MIWD00000PUS) are down 20% since January and some analysts calculate that U.S. Treasury bonds, the benchmark of world borrowing markets, could be having their biggest losing first half of a year since 1788.
Carstens said the BIS’s own recent warnings about frothy asset prices meant the current correction was “not necessarily a complete surprise”. That there hadn’t been “major market disruptions” so far was also reassuring, he added.
Part of the BIS report published already last week said that the recent implosions in the cryptocurrency markets were an indication that long-warned-about dangers of decentralised digital money were now materialising.
Those collapses aren’t expected to cause a systemic crisis in the way that bad loans triggered the global financial crash. But Carstens stressed losses would be sizeable and that the opaque nature of the crypto universe fed uncertainty.
Returning to the macro economic picture, he added that the BIS didn’t currently expect a period of widespread stagflation to take hold.
He also said that though many global central banks and the BIS itself had significantly underestimated how quick global inflation has spiralled over the last six to 12 months, they weren’t about to lose hard-earned credibility overnight.
“Yes, you can argue a little bit here about an error of timing of certain actions and the responses of the central banks. But by and large, I think that the central banks have responded forcefully in a very agile fashion,” Carstens said.
“My sense is that central banks will prevail at the end of the day, and that would be good for their credibility.”
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Reporting by Marc Jones; Editing by David Holmes
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The Samara Metallurgical Plant, a sprawling complex in southwestern Russia that spans an area the size of a dozen city blocks, is a cornerstone of Russian industry. It is the country’s largest supplier of aluminum commercial and industrial products.
It is also a source of critical parts for the Russian warplanes and missiles that are now tearing through Ukraine. And atop its edifice, spelled out in giant blue letters, is the name of its American owner: Arconic, a Pittsburgh-based, Fortune 500 company that is one of America’s largest metalworking firms even after splitting out from the industrial giant Alcoa in 2016.
Arconic does not make weapons. But its sophisticated forges are among a handful of machines in Russia that can form lightweight metals into large aerospace parts like bulkheads and wing mounts.
Under an agreement with the Russian government, the company has from the start of its operations at Samara, in 2004, been legally required to supply the country’s defense industry as a condition of operating a plant whose mostly nonmilitary output has proved tremendously lucrative.
Even as Russia turned its military toward ever more aggressive ends around the world and the relationship between the United States and the Kremlin soured, Arconic maintained the Samara operation, despite the growing legal and political complications of operating there.
Now, however, with Russia’s invasion of Ukraine polarizing the world, Arconic’s leadership has found that its business at Samara is, finally, unsustainable.
Though there is no indication that Arconic is in breach of American or other Western sanctions, those penalties have made it difficult to keep the plant supplied and operating. But shutting down production could expose its employees there to jail time under Russian laws on maintaining strategic production. And Russia has already cut off Arconic’s access to profits from the Samara plant.
“The conflict in Ukraine has made our continued presence in Russia untenable, which led to our decision to pursue a sale,” Timothy Myers, Arconic’s chief executive, said in a written statement on Friday.
Company documents acquired by The New York Times, along with financial filings and other public materials, reveal Arconic’s struggles to keep the plant running. The documents were provided by a whistleblower employee who objected to Arconic’s continued involvement in Russia even after the invasion of Ukraine.
On Wednesday, the day after The Times approached Arconic with details of its work in Russia, its board approved a plan that, according to internal documents, had been under internal consideration for weeks: to sell the plant outright. The company announced this decision on Thursday.
But any sale remains hypothetical, as the company does not yet have a buyer. And finding one would require regulatory approval at the highest levels from both the United States and Russia.
That is perhaps fitting, as those governments had cooperated to pave the way for Arconic’s ownership of Samara in the first place.
Now, the long-coming divorce, accelerated by the war in Ukraine, is proving costly, with European energy consumers and companies like Arconic caught between now-hostile powers.
“The era in which the United States and Russia saw each other as an enemy or strategic threat has ended,” Presidents George W. Bush and Vladimir V. Putin announced at a 2002 summit meeting in Moscow. Now, they said, “We are partners,” praising each other as like-minded allies in the war on terrorism.
Mr. Bush encouraged American companies to buy up Russian industries that had fallen into disrepair. Economic integration, it was widely thought, would bind Russia and the West for good.
American corporations snapped up whole factory compounds, once the engines of Soviet power. Moscow welcomed this, believing American financing and know-how might reconstitute Russian industrial might.
The American industrial giant Alcoa joined the gold rush in 2004, buying two complexes in Russia, including the one at Samara. It purchased both factories for $257 million but spent twice that rebuilding Samara, which it found running at one-third capacity.
Within the facility was a nine-story metal behemoth: a huge forge press that had been built right into the foundation, able to form the parts that make up the largest airplanes and missiles. It is one of only a handful like it in the world, including just two in Russia.
“These machines are essential to the defense industry,” Martino Barbon, a representative of the manufacturing firm Gasparini Industries, said, calling them “the backbone” of production.
In an interview, Mr. Myers said that Samara’s giant press had seen little use in recent years. Still, its presence, along with a number of smaller forges, underscores that Samara, like many Soviet-era facilities, had been designed to combine commercial and military work.
When it bought the Samara plant, Alcoa — which split part of its operations, including those in Russia, into the name Arconic in 2016 — did not explicitly seek to become a Russian military supplier. Rather, this was Moscow’s condition for the sale.
That condition remains in force, according to company documents that describe a legal obligation to “manufacture aerospace and defense products” for sale to Russia’s weapons industry.
Mr. Myers — who is now the chief executive and had been among the first employees to visit Samara in the early 2000s — said that the U.S. government knew about Moscow’s terms when it approved Alcoa’s purchase. The company’s Russian subsidiary sells most products through other distributors and therefore Arconic cannot control how those products are used, he said.
But company documents show that Arconic has known throughout that the Samara operation was supplying Russia’s military, even if it was only a small part of the company’s overall business.
Moscow required the company to sign an agreement, as a condition of purchase, that it would pledge to indefinitely supply programs that it deemed essential. Mr. Myers acknowledged these terms in an interview with a Russian news outlet just last year.
“The main condition of the deal,” Mr. Myers said, “was the obligation to ensure uninterrupted supplies” for “state defense and aerospace programs.”
The agreement included a supplemental document, a copy of which The Times acquired, detailing mandatory production contracts.
The file lists more than a half-dozen of Russia’s largest weapons-makers, such as N.P.O. Novator and Komsomolsk-on-Amur Aviation Plant. Altogether, the companies provide the bulk of Russia’s cruise missiles, ICBMs, attack helicopters, strategic bombers and other hardware.
The file applied to both plants, the second of which Alcoa later sold. But it underscores Russia’s insistence on steady military supplies — and the American company’s willingness to comply.
For Moscow, the greatest benefit may have been modernization: Western financing and know-how brought the plant from derelict to state-of-the-art.
For Alcoa/Arconic, this was the cost of admission to Russia. In financial terms, it paid off handsomely.
Last year alone, Samara brought in nearly $1 billion, accounting for 16 percent of Arconic’s third-party sales worldwide, according to financial filings.
Before long, a string of Russian military interventions, chiefly its annexation of Crimea in 2014 and its entry to the Syrian war the next year, transformed Western views of Russia.
Arconic found itself supplying, however indirectly, a Russian military that was now seen as a global threat.
Still, the company remained in Russia.
Moscow was no longer so welcoming. It codified sweeping “antimonopoly” laws allowing it to restrict or expel foreign companies involved in sensitive industries.
American companies became especially likely to face official investigation. This often came with supposedly temporary injunctions that make doing business difficult.
Richard Aboulafia, an aerospace industry consultant, said that Russia has since effectively seized control of many foreign-owned plants through what he termed “oligarchization.”
Rather than outright nationalize those businesses, Moscow coerces them into selling themselves off to Kremlin-linked firms, sometimes for pennies on the dollar. Just this week, the French automaker Renault sold a factory in the country to a Russian government-linked firm for one ruble.
In 2020, Arconic was hit with one such investigation. Russian officials barred Arconic from disbursing its profits from Samara or even restaffing leadership at the Russian subsidiary that runs the plant.
Richard Connolly, a University of Birmingham economist who advises companies on doing business in Russia, called it “very surprising” that Arconic, unlike many other American companies, had not yet been forced out of Russia.
From the Kremlin’s point of view, coercing Samara’s owners to sell the plant, as it has with several other American-owned business over the years, does carry some risk. It could disrupt production at a time when Russia already faces battlefield setbacks. But tolerating Arconic would mean leaving critical infrastructure in the hands of an American corporation.
Dr. Connolly suggested that Russian leaders may still see American knowledge and technology as too critical to lose at Samara, especially as battlefield losses wipe out advanced weapons that, because of sanctions, Russia may struggle to replace.
“They realize they might not be able to produce everything themselves,” he said.
Russia’s invasion of Ukraine, in February, forced difficult conversations within Arconic, according to internal documents and the account of a whistleblower employee who asked not to be named because the employee did not have the company’s permission to speak.
At the end of 2021, amid Mr. Putin’s buildup to war with Ukraine, Samara’s forging division had its best quarter on record, reporting an 82 percent increase in production from the prior year. An internal presentation touting the rise listed it under the heading “Aerospace.”
That constituted roughly one percent of the plant’s overall output, making it something of a financial afterthought compared with the rest of the company’s business.
Still, with Russian warplanes and missiles employed in shocking attacks in Ukraine considered to constitute possible war crimes, ethical considerations weighed heavily, according to the employee.
By March, even as sales poured in, Arconic’s leadership was exploring ways to leave Russia entirely, according to internal memos.
But any purchase would require the approval of the Russian government, as well as VSMPO-Avisma, the Kremlin-linked firm with which Arconic had formed a joint partnership.
Selling would also require a license from the Treasury Department to avoid violating sanctions.
Even as Arconic sought an exit, internal documents show that the company went to some lengths to keep Samara running.
As early as March, with shipping companies ceasing operations in Russia, the company began seeking new ways to supply the plant with production materials.
A few weeks later, the company concluded that, because of new sanctions, U.S.- and Europe-based employees could no longer work on efforts to supply the plant with materials, even from abroad.
The company shifted this work to its division in China, where employees were thought to be unconstrained by Western sanctions.
By early May, an internal presentation reported, Samara was hitting “numerous production volume records.” And sales were up: $233 million in the first quarter of 2022, from $195 million the year before. This likely reflected the commercial work that makes up most of Samara’s output, rather than military projects, but it underscored Arconic’s success in keeping the plant spinning at full speed.
Still, the company concluded around the same time, according to Mr. Myers, its chief executive, that the war would continue for a long stretch, and with it both the sanctions and Russian government restrictions constraining Arconic’s ability to operate. Mr. Myers said that moral considerations also factored into Arconic’s decision to seek to leave Russia.
That the partnership between Arconic and Russia ever seemed workable underscores how far the world has moved on from the notion that first brought them together: that economic integration would end a century of Russian-Western enmity and finally secure lasting peace.
Mr. Connolly, the economist, compared Arconic’s stake in Russia to Europe’s decision to build its energy grids atop Russian gas pipelines and oil shipments, which was thought to make conflict unthinkable.
Instead, European energy consumers are effectively funding Russia’s government even as they punish it with sanctions, much as Arconic appears caught up in Russian militarism that Washington had once hoped American investment might temper.
“It’s a really graphic illustration,” Dr. Connolly said, “of the dashed hopes of that era.”
AerCap logo is seen displayed in front of the model of an airplane and a Russian flag in this illustration taken, May 4, 2022. REUTERS/Dado Ruvic/Illustration
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Irish lessor had largest Russia exposure
AerCap submitted $3.5 bln insurance claim in March
Plans to vigorously pursue all claims
May 17 (Reuters) – The world’s top aircraft lessor AerCap (AER.N) said on Tuesday it booked a pretax charge of $2.7 billion in the first quarter as it recognised a loss on its more than 100 jets that remain stranded in Russia.
AerCap is the latest leasing company to take an immediate hit on its Russian exposure, something the firms had previously been expected to defer until they had more clarity over the amount that could be reclaimed from insurers. read more
But with lessors and insurers gearing up for an historic battle over record potential claims worth an estimated $10 billion, industry executives said some lessors had been advised by lawyers to take writedowns as soon as possible to buttress claims that could drag through the courts for years. read more
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Dublin-based AerCap had the largest exposure of any lessor, accounting for 5% of its fleet by value. It submitted a $3.5 billion insurance claim in March and said on Tuesday it had not recognized any receivables relating to the claims. read more
“We have filed insurance claims related to these assets and will vigorously pursue all available remedies to recover our losses,” AerCap Chief Executive Officer Aengus Kelly said in a statement, describing the Russian hit as an undoubted setback, but a manageable one.
Over 400 leased planes worth almost $10 billion remained in Russia after a March 28 deadline to cancel the contracts in line with Western sanctions over the war in Ukraine.
AerCap’s charge comprised of an impairment loss and complete write off of flight equipment that remains in Russia. It removed 22 aircraft and three engines that were based outside of Russia when the sanctions were announced, but has 113 aircraft and 11 engines still stuck in the country.
The charge was partially offset by $210 million in payments from letters of credit related to the Russian-based assets. AerCap said it had initiated legal proceedings against one financial institution which rejected its payment demands.
AerCap said that excluding the charge, its first quarter net income was $540 million and Kelly said he expected to see demand for travel continue to grow as a broad-based recovery progresses.
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Reporting by Nathan Gomes in Bengaluru, Padraic Halpin in Dublin and Tim Hepher in Paris
Editing by Maju Samuel and Mark Potter
Our Standards: The Thomson Reuters Trust Principles.
BANGKOK — Each morning in her market stall in the Bangkok Noi district of the Thai capital, Jintana Rapsomruay rolls balls of dough into a snack known for its resemblance to the eggs of an oversize lizard. The sweet treat, which looks like a doughnut hole, was supposedly invented by a consort of the first king of the Chakri Dynasty, which continues to reign 240 years later.
The 18th-century monarch liked to nosh on the eggs of water monitor lizards, so the story goes, but the concubine couldn’t get her hands on any, so she substituted dough stuffed with sweet bean paste. The king — among whose accomplishments was moving the Thai capital to its present location — was pleased.
The snack remains popular to this day, but Ms. Jintana can barely get by. Like millions of Thais struggling amid the coronavirus pandemic, her income has plummeted by half.
Prime Minister Prayuth Chan-ocha, a former military chief and leader of the 2014 coup — approved the Royal Society’s ruling with its own decree, making a parenthetical Bangkok the law of the land.
The shift from semicolon to parentheses has provoked public dissatisfaction. But it’s not the name itself to which anyone really objects; the capital is universally known to Thai speakers as Krung Thep, or, by the initials “Kor Tor Mor.”
Rather, the way an elite clique did the update is what bothered some in a populace that appears increasingly unwilling to accept diktats from royalist, tradition-bound institutions.
turned up dead. Dozens of young protest leaders have been imprisoned.
Prosecutions of royal defamation have increased sharply, with a former civil servant sentenced last year to more than four decades in prison. Some protest leaders have called for the monarchy to submit to the Constitution and are now facing, collectively, hundreds of years in prison for lèse-majesté, which criminalizes criticism of senior members of the royal family.
“People across Thailand, not just the young, recognize the argument of reforming the monarchy,” said Netiwit Chotiphatphaisal, who was elected president of the Student Union at Chulalongkorn University in Bangkok. “It’s not marginal, it’s mainstream.”
Mr. Netiwit lost his position in February after the school administration determined that he was connected to an event involving activists who have called for monarchical reform.
Some Thais are more enthusiastic about the government espousing the longer name.
On a recent morning, Vichian Bunthawi, 88, a retired palace guard, sat cross-legged on a bench at the sleepy railway station in Bangkok Noi. The capital should be known around the world as Krung Thep Maha Nakhon, he said, remembering how his primary schoolteacher would write the full name on the chalkboard.
“Krung Thep Maha Nakhon is the name of the capital,” he said. “It is where the king lives.”
The first king of the Chakri Dynasty, Rama I, moved the capital in 1782, from the left bank of the Chao Phraya River, where the Bangkok Noi district is, to the east bank. On marshy ground, he and his successors built gilded, jeweled palaces. The full name of Krung Thep Maha Nakhon includes a paean to “an enormous royal palace resembling the heavenly abode in which the reincarnated god reigns.” In Thai tradition, the king is semi-divine.
In 1932, absolute monarchy was abolished, but the royal family still retains an enormous presence in Thai life. Giant posters of King Maha Vajiralongkorn Bodindradebayavarangkun and Queen Suthida Vajiralongkorn Na Ayudhya, the current king’s fourth wife, tower over public places.
The king, whose lavish lifestyle contrasts with the austerity forced upon many Thais by the pandemic, spends most of his time in Germany.
Whether as Krung Thep Maha Nakhon or Bangkok, the character of the capital has changed drastically over the decades. City planners filled in the canals that used to be the city’s transportation arteries. Rice paddies gave way to malls and condominiums.
In a back alley behind a Buddhist temple in Bangkok Noi, Chana Ratsami still plays a Thai xylophone. His wife’s family of palace attendants lived in Bangkok Noi for generations.
Now, he said, the lane’s residents are mostly migrants from upcountry.
“They don’t know the history of this place,” he said, describing how the traffic-choked road at the end of the lane used to be a canal with boats floating past, filled with flowers and fruit. “I miss the old city, no matter what it’s called.”
Nokia said this month that it would stop its sales in Russia and denounced the invasion of Ukraine. But the Finnish company didn’t mention what it was leaving behind: equipment and software connecting the government’s most powerful tool for digital surveillance to the nation’s largest telecommunications network.
The tool was used to track supporters of the Russian opposition leader Aleksei A. Navalny. Investigators said it had intercepted the phone calls of a Kremlin foe who was later assassinated. Called the System for Operative Investigative Activities, or SORM, it is also most likely being employed at this moment as President Vladimir V. Putin culls and silences antiwar voices inside Russia.
For more than five years, Nokia provided equipment and services to link SORM to Russia’s largest telecom service provider, MTS, according to company documents obtained by The New York Times. While Nokia does not make the tech that intercepts communications, the documents lay out how it worked with state-linked Russian companies to plan, streamline and troubleshoot the SORM system’s connection to the MTS network. Russia’s main intelligence service, the F.S.B., uses SORM to listen in on phone conversations, intercept emails and text messages, and track other internet communications.
The documents, spanning 2008 to 2017, show in previously unreported detail that Nokia knew it was enabling a Russian surveillance system. The work was essential for Nokia to do business in Russia, where it had become a top supplier of equipment and services to various telecommunications customers to help their networks function. The business yielded hundreds of millions of dollars in annual revenue, even as Mr. Putin became more belligerent abroad and more controlling at home.
For years, multinational companies capitalized on surging Russian demand for new technologies. Now global outrage over the largest war on European soil since World War II is forcing them to re-examine their roles.
The conflict in Ukraine has upended the idea that products and services are agnostic. In the past, tech companies argued it was better to remain in authoritarian markets, even if that meant complying with laws written by autocrats. Facebook, Google and Twitter have struggled to find a balance when pressured to censor, be it in Vietnam or in Russia, while Apple works with a state-owned partner to store customer data in China that the authorities can access. Intel and Nvidia sell chips through resellers in China, allowing the authorities to buy them for computers powering surveillance.
The lessons that companies draw from what’s happening in Russia could have consequences in other authoritarian countries where advanced technologies are sold. A rule giving the U.S. Commerce Department the power to block companies, including telecom equipment suppliers, from selling technology in such places was part of a bill, called the America Competes Act, passed by the House of Representatives in February.
“We should treat sophisticated surveillance technology in the same way we treat sophisticated missile or drone technology,” said Representative Tom Malinowski, a New Jersey Democrat who was an assistant secretary of state for human rights in the Obama administration. “We need appropriate controls on the proliferation of this stuff just as we do on other sensitive national security items.”
Andrei Soldatov, an expert on Russian intelligence and digital surveillance who reviewed some of the Nokia documents at the request of The Times, said that without the company’s involvement in SORM, “it would have been impossible to make such a system.”
“They had to have known how their devices would be used,” said Mr. Soldatov, who is now a fellow at the Center for European Policy Analysis.
Nokia, which did not dispute the authenticity of the documents, said that under Russian law, it was required to make products that would allow a Russian telecom operator to connect to the SORM system. Other countries make similar demands, the company said, and it must decide between helping make the internet work or leaving altogether. Nokia also said that it did not manufacture, install or service SORM equipment.
The company said it follows international standards, used by many suppliers of core network equipment, that cover government surveillance.It called on governments to set clearer export rules about where technology could be sold and said it “unequivocally condemns” Russia’s invasion of Ukraine.
“Nokia does not have an ability to control, access or interfere with any lawful intercept capability in the networks which our customers own and operate,” it said in a statement.
MTS did not respond to requests for comment.
The documents that The Times reviewed were part of almost two terabytes of internal Nokia emails, network schematics, contracts, license agreements and photos. The cybersecurity firm UpGuard and TechCrunch, a news website, previously reported on some of the documents linking Nokia to the state surveillance system. Following those reports, Nokia played down the extent of its involvement.
But The Times obtained a larger cache showing Nokia’s depth of knowledge about the program. The documents include correspondence on Nokia’s sending engineers to examine SORM, details of the company’s work at more than a dozen Russian sites, photos of the MTS network linked to SORM, floor plans of network centers and installation instructions from a Russian firm that made the surveillance equipment.
After 2017, which is when the documents end, Nokia continued to work with MTS and other Russian telecoms, according to public announcements.
SORM, which dates to at least the 1990s, is akin to the systems used by law enforcement around the world to wiretap and surveil criminal targets. Telecom equipment makers like Nokia are often required to ensure that such systems, known as lawful intercept, function smoothly within communications networks.
In democracies, the police are generally required to obtain a court order before seeking data from telecom service providers. In Russia, the SORM system sidesteps that process, working like a surveillance black box that can take whatever data the F.S.B. wants without any oversight.
In 2018, Russia strengthened a law to require internet and telecom companies to disclose communications data to the authorities even without a court order. The authorities also mandated that companies store phone conversations, text messages and electronic correspondence for up to six months, and internet traffic history for 30 days. SORM works in parallel with a separate censorship system that Russia has developed to block access to websites.
Civil society groups, lawyers and activists have criticized the Russian government for using SORM to spy on Mr. Putin’s rivals and critics. The system, they said, is almost certainly being used now to crack down on dissent against the war. This month, Mr. Putin vowed to remove pro-Western Russians, whom he called “scum and traitors,” from society, and his government has cut off foreign internet services like Facebook and Instagram.
Nokia is best known as a pioneer of mobile phones, a business it sold in 2013 after Apple and Samsung began dominating the market. It now makes the bulk of its $24 billion in annual sales providing telecom equipment and services so phone networks can function. Roughly $480 million of Nokia’s annual sales come from Russia and Ukraine, or less than 2 percent of its overall revenue, according to the market research firm Dell’Oro.
Last decade, the Kremlin had grown serious about cyberspying, and telecom equipment providers were legally required to provide a gateway for spying. If Nokia did not comply, competitors such as the Chinese telecom giant Huawei were assumed to be willing to do so.
By 2012, Nokia was providing hardware and services to the MTS network, according to the documents. Project documentation signed by Nokia personnel included a schematic of the network that depicted how data and phone traffic should flow to SORM. Annotated photos showed a cable labeled SORM plugging into networking equipment, apparently documenting work by Nokia engineers.
Flow charts showed how data would be transmitted to Moscow and F.S.B. field offices across Russia, where agents could use a computer system to search people’s communications without their knowledge.
Specifics of how the program is used have largely been kept secret. “You will never know that surveillance was carried out at all,” said Sarkis Darbinyan, a Russian lawyer who co-founded Roskomsvoboda, a digital rights group.
But some information about SORM has leaked out from court cases, civil society groups and journalists.
In 2011, embarrassing phone calls made by the Russian opposition leader Boris Y. Nemtsov were leaked to the media. Mr. Soldatov, who covered the incident as an investigative reporter, said the phone recordings had come from SORM surveillance. Mr. Nemtsov was murdered near the Kremlin in 2015.
In 2013, a court case involving Mr. Navalny included details about his communications that were believed to have been intercepted by SORM. In 2018, some communications by Mr. Navalny’s supporters were tracked by SORM, said Damir Gainutdinov, a Russian lawyer who represented the activists. He said phone numbers, email addresses and internet protocol addresses had been merged with information that the authorities collected from VK, Russia’s largest social network, which is also required to provide access to user data through SORM.
“These tools are used not just to prosecute somebody but to fill out a dossier and collect data about somebody’s activities, about their friends, partners and so on,” said Mr. Gainutdinov, who now lives in Bulgaria. “Officers of the federal security service, due to the design of this system, have unlimited access to all communication.”
By 2015, SORM was attracting international attention. That year, the European Court of Human Rights called the program a “system of secret surveillance” that was deployed arbitrarily without sufficient protection against abuse. The court ultimately ruled, in a case brought by a Russian journalist, that the tools violated European human rights laws.
In 2016, MTS tapped Nokia to help upgrade its network across large swaths of Russia. MTS set out an ambitious plan to install new hardware and software between June 2016 and March 2017, according to one document.
Nokia performed SORM-related work at facilities in at least 12 cities in Russia, according to the documents, which show how the network linked the surveillance system. In February 2017, a Nokia employee was sent to three cities south of Moscow to examine SORM, according to letters from a Nokia executive informing MTS employees of the trip.
Nokia worked with Malvin, a Russian firm that manufactured the SORM hardware the F.S.B. used. One Malvin document instructed Malvin’s partners to ensure that they had entered the correct parameters for operating SORM on switching hardware. It also reminded them to notify Malvin technicians of passwords, user names and IP addresses.
Malvin is one of several Russian companies that won lucrative contracts to make equipment to analyze and sort through telecommunications data. Some of those companies, including Malvin, were owned by a Russian holding company, Citadel, which was controlled by Alisher Usmanov. Mr. Usmanov, an oligarch with ties to Mr. Putin, is now the subject of sanctions in the United States, the European Union, Britain and Switzerland.
Malvin and Citadel did not respond to requests for comment.
Other Nokia documents specified which cables, routers and ports to use to connect to the surveillance system. Network maps showed how gear from other companies, including Cisco, plugged into the SORM boxes. Cisco declined to comment.
For Nokia engineers in Russia, the work related to SORM was often mundane. In 2017, a Nokia technician received an assignment to Orel, a city about 225 miles south of Moscow.
“Carry out work on the examination of SORM,” he was told.
Russia signaled a possible recalibration of its war aims in Ukraine on Friday as the Kremlin faced spreading global ostracism for the brutal invasion, hardened Western economic punishments and a determined Ukrainian resistance that appeared to be making some gains on the ground.
A statement by Russia’s Defense Ministry said the goals of the “first stage of the operation” had been “mainly accomplished,” with Ukraine’s combat capabilities “significantly reduced,” and that it would now focus on securing Ukraine’s eastern Donbas region, where Russia-backed separatists have been fighting for eight years.
The Defense Ministry statement was ambiguous about further possible Russian territorial ambitions in Ukraine, where its ground forces have been mostly stymied by the unexpectedly strong Ukrainian military response.
But on a day when President Biden was visiting U.S. soldiers in Poland near the Ukrainian border, the statement suggested the possibility that the Russians were looking for a way to salvage some kind of achievement before the costs of the war they launched a month ago became impossibly onerous.
While Russia “does not exclude” that its forces will storm major Ukrainian cities such as Chernihiv, Mykolaiv and the capital, Kyiv, the Defense Ministry statement said that taking them over was not the primary objective.
“As individual units carry out their tasks — and they are being solved successfully — our forces and means will be concentrated on the main thing: the complete liberation of the Donbas,” Col. Gen. Sergei Rudskoi, a senior Russian military commander, said in the statement, his first since Russia’s invasion on Feb. 24.
Whether General Rudskoi’s statement was sincere or simply strategic misdirection was difficult to assess. But the statement amounted to the most direct acknowledgment yet that Russia may be unable to take full control of Ukraine and would instead target the Donbas region, where Russia has recognized the independence of two Kremlin-backed separatist areas that it calls the “Donetsk People’s Republic” and the “Luhansk People’s Republic.”
Russia has also insisted that Ukraine recognize its control of Crimea, which President Vladimir V. Putin’s forces seized from Ukraine in 2014.
President Volodymyr Zelensky of Ukraine has ruled out ceding those regions to stop the war.
Pavel Luzin, a Russian military analyst, cautioned that the public pronouncements of Russian military commanders should be regarded skeptically. While Russia could indeed be narrowing its war aims, he said, General Rudskoi’s statement could also be a feint as Russia regroups for a new offensive.
“We could say that this is a signal that we’re no longer insisting on dismantling Ukrainian statehood,” Mr. Luzin said. “But I would rather see it as a distracting maneuver.”
General Rudskoi’s statement came as Ukraine acknowledged that Russian forces had been “partially successful” in achieving one of their key objectives — securing a land corridor from Russia to the Crimean Peninsula.
While Russia already controlled much of the area, the Ukrainian Defense Ministry said the route allowed Russian troops and supplies to flow between Crimea and Russia.
But some Ukrainian officials said the significance of such a route might be overstated. Oleksandr Danylyuk, a former secretary of the National Security and Defense Council of Ukraine under Mr. Zelensky, described the land bridge as a minor Russian victory and said the Kremlin was moving to secure Donetsk and Luhansk to “sell to the Russian public as a potential victory.”
In Moscow, Mr. Putin, who has made any criticism of the war a potential crime, used a televised videoconference with the winners of a presidential arts prize on Friday to deliver a diatribe about “cancel culture” that made no mention of the war in Ukraine.
In embracing a term that has become a favorite of the American political right to reprise his contention that the West is trying to erase Russian culture and history, Mr. Putin cited J.K. Rowling, author of the “Harry Potter” books, whose comments about transgender women have been criticized as transphobic.
“Not so long ago, the children’s writer J.K. Rowling was also ‘canceled’ for the fact that she — the author of books that have sold hundreds of millions of copies around the world — did not please fans of so-called gender freedoms,” Mr. Putin said.
Ms. Rowling responded on Twitter that, “Critiques of Western cancel culture are possibly not best made by those currently slaughtering civilians for the crime of resistance, or who jail and poison their critics.” She added the hashtag #IStandWithUkraine.
As Mr. Putin spoke, there were indications that Ukrainian forces were making some progress in the second week of their counteroffensive. A senior Pentagon official said that Russian forces no longer had full control of the southern port of Kherson and that the city, the first major urban center to be captured in the Russian invasion, was now “contested territory.”
The Pentagon assessment contradicted General Rudskoi’s claim on Friday that the Kherson region was “under full control.”
In another sign of the bloody stalemate in Ukraine, Russian soldiers have adopted “defensive positions” near Kyiv, the Pentagon official said, adding that Russia appeared to be “prioritizing” the fight in eastern Ukraine, as General Rudskoi had indicated.
“Clearly, they overestimated their ability to take Kyiv and overestimated their ability to take any population center,” the Pentagon official said.
Mr. Biden, on the second day of his three-day visit to Europe because of the Ukraine crisis, traveled to Rzeszow, Poland, about 50 miles from the Ukrainian border, where he met with members of the 82nd Airborne Division who are serving as part of NATO’s efforts to protect Poland and other member states from Russian aggression.
Greeting American service members who were eating pizza in a cafeteria, Mr. Biden called them “the finest fighting force in the history of the world,” and added, “I personally thank you for what you do.”
Later, Mr. Biden met with President Andrzej Duda of Poland and officials managing the humanitarian response to the more than two million Ukrainian refugees who have fled to Poland to escape the shelling and deprivation.
Mr. Biden also announced a deal to increase U.S. shipments of natural gas to help wean Europe off Russian energy. But it remained unclear exactly how the administration would achieve its goals.
The deal calls for the United States to send an additional 15 billion cubic meters of liquefied natural gas — roughly 10 to 12 percent of current annual U.S. exports to all countries. But it does not address the lack of port capacity to ship and receive more gas on both sides of the Atlantic.
Still, American gas executives welcomed a renewed emphasis on exports as a sign that the Biden administration was now seeking to promote the U.S. oil and gas industry rather than punish it for contributions to climate change.
“I have no idea how they are going to do this, but I don’t want to criticize them because for the first time they are trying to do the right thing,” said Charif Souki, executive chairman of Tellurian, a U.S. gas producer that is planning to build an export terminal in Louisiana.
Robert Habeck, the vice chancellor and economic minister of Germany, said his country expected to halve imports of Russian oil by midsummer and nearly end them by year’s end — sooner than many thought possible. He estimated that Germany, Europe’s biggest economy, could be free of Russian gas by mid-2024.
Images and videos from Ukraine that emerged on Friday underscored the escalating death toll and destruction.
Newly surfaced security camera footage, verified by The New York Times, showed an attack on people in line for emergency aid outside a post office and shopping center in the battered northeastern city of Kharkiv on Thursday. Oleg Sinegubov, the head of the regional government there, said that at least six civilians had been killed and 15 wounded.
Photographs out of Kharkiv on Friday also showed a large fireball and nearby cars and buildings on fire, as residents fled on foot and bicycle, carrying whatever belongings they could grab in the aftermath of the attack.
In the central city of Dnipro, Russian missile strikes on a military facility destroyed buildings late Thursday night, according to Ukrainian officials, who said that casualties were still being assessed.
And in Mariupol, the southern port savaged by Russian attacks, Ukrainian officials said that an estimated 300 people had been killed in a March 16 strike on a theater used as a bomb shelter.
It was unclear how officials had arrived at that estimate. Ukrainian officials have said that about 130 people were rescued from the theater, which was attacked even though “children” had been written in giant letters on the pavement on both sides of the building.
The United Nations said on Friday that more than 1,000 civilians have been killed, including 93 children, since Russia’s invasion began, many in what appeared to have been indiscriminate bombardments that could constitute war crimes.
The United Nations cautioned that it had not been able to verify the death toll in areas of intense conflict, including Mariupol, and said the actual number of injured and dead was likely to be considerably higher.
In a sign that diplomatic efforts were struggling, Dmytro Kuleba, Ukraine’s foreign minister, rejected comments by President Recep Tayyip Erdogan of Turkey, who had suggested that Ukraine was open to concessions in four key areas.
In an interview released Friday, Mr. Erdogan, who is hosting talks between Ukrainian and Russian delegations, said that Ukraine was willing to drop its bid for NATO membership, accept Russian as an official language, make “certain concessions” about disarmament and agree to “collective security.”
But Mr. Kuleba said the negotiations had proved “very difficult” and that Ukraine had “taken a strong position and does not relinquish its demands.”
“We insist, first of all, on a cease-fire, security guarantees and territorial integrity of Ukraine,” he said, adding that there was “no consensus with Russia on the four points mentioned by the president of Turkey.”
“In particular,” he said, “the Ukrainian language is and will be the only one state language in Ukraine.”
Anton Troianovski reported from Istanbul, Michael D. Shear from Warsaw and Michael Levenson from New York. Reporting was contributed by Helene Cooper from Washington, Ivan Nechepurenko from Istanbul, Valerie Hopkins from Lviv, Ukraine, Andrew E. Kramer from Kyiv, Megan Specia from Krakow, Poland, Nick Cumming-Bruce from Geneva and Clifford Krauss from Houston.
After war began last month, President Volodymyr Zelensky of Ukraine turned to Mykhailo Fedorov, a vice prime minister, for a key role.
Mr. Fedorov, 31, the youngest member of Mr. Zelensky’s cabinet, immediately took charge of a parallel prong of Ukraine’s defense against Russia. He began a campaign to rally support from multinational businesses to sunder Russia from the world economy and to cut off the country from the global internet, taking aim at everything from access to new iPhones and PlayStations to Western Union money transfers and PayPal.
To achieve Russia’s isolation, Mr. Fedorov, a former tech entrepreneur, used a mix of social media, cryptocurrencies and other digital tools. On Twitter and other social media, he pressured Apple, Google, Netflix, Intel, PayPal and others to stop doing business in Russia. He helped form a group of volunteer hackers to wreak havoc on Russian websites and online services. His ministry also set up a cryptocurrency fund that has raised more than $60 million for the Ukrainian military.
The work has made Mr. Fedorov one of Mr. Zelensky’s most visible lieutenants, deploying technology and finance as modern weapons of war. In effect, Mr. Fedorov is creating a new playbook for military conflicts that shows how an outgunned country can use the internet, crypto, digital activism and frequent posts on Twitter to help undercut a foreign aggressor.
McDonald’s have withdrawn from Russia, with the war’s human toll provoking horror and outrage. Economic sanctions by the United States, European Union and others have played a central role in isolating Russia.
Mr. Zelensky was elected in 2019, he appointed Mr. Fedorov, then 28, to be minister of digital transformation, putting him in charge of digitizing Ukrainian social services. Through a government app, people could pay speeding tickets or manage their taxes. Last year, Mr. Fedorov visited Silicon Valley to meet with leaders including Tim Cook, the chief executive of Apple.
Russia invaded Ukraine, Mr. Fedorov immediately pressured tech companies to pull out of Russia. He made the decision with Mr. Zelensky’s backing, he said, and the two men speak every day.
“I think this choice is as black and white as it ever gets,” Mr. Fedorov said. “It is time to take a side, either to take the side of peace or to take the side of terror and murder.”
On Feb. 25, he sent letters to Apple, Google and Netflix, asking them to restrict access to their services in Russia. Less than a week later, Apple stopped selling new iPhones and other products in Russia.
Russia damaged the country’s main telecommunications infrastructure. Two days after contacting Mr. Musk, a shipment of Starlink equipment arrived in Ukraine.
Since then, Mr. Fedorov said he has periodically exchanged text messages with Mr. Musk.
were put on pause following the invasion. Russia, a signatory to the accord, has tried to use final approval of the deal as leverage to soften sanctions imposed because of the war.
But while many companies have halted business in Russia, more could be done, he said. Apple and Google should pull their app stores from Russia and software made by companies like SAP was also being used by scores of Russian businesses, he has noted.
In many instances, the Russian government is cutting itself off from the world, including blocking access to Twitter and Facebook. On Friday, Russian regulators said they would also restrict access to Instagram and called Meta an “extremist” organization.
Some civil society groups have questioned whether Mr. Fedorov’s tactics could have unintended consequences. “Shutdowns can be used in tyranny, not in democracy,” the Internet Protection Society, an internet freedom group in Russia, said in a statement earlier this week. “Any sanctions that disrupt access of Russian people to information only strengthen Putin’s regime.”
Mr. Fedorov said it was the only way to jolt the Russian people into action. He praised the work of Ukraine-supporting hackers who have been coordinating loosely with Ukrainian government to hit Russian targets.
“After cruise missiles started flying over my house and over houses of many other Ukrainians, and also things started exploding, we decided to go into counter attack,” he said.
Mr. Fedorov’s work is an example of Ukraine’s whatever-it-takes attitude against a larger Russian army, said Max Chernikov, a software engineer who is supporting the volunteer group known as the IT Army of Ukraine.
“He acts like every Ukrainian — doing beyond his best,” he said.
Mr. Fedorov, who has a wife and young daughter, said he remained hopeful about the war’s outcome.
“The truth is on our side,” he added. “I’m sure we’re going to win.”
Daisuke Wakabayashi and Mike Isaac contributed reporting.
Behind a set of imposing metal doors in an easy-to-miss office building in a New York City suburb, a small team manages billions of dollars for a Russian oligarch.
For years, a group of wealthy Russians have used Concord Management, a financial-advisory company in Tarrytown, N.Y., to secretly invest money in large U.S. hedge funds and private equity firms, according to people familiar with the matter.
A web of offshore shell companies makes it hard to know for sure whose money Concord manages. But several of the people said the bulk of the funds belonged to Roman Abramovich, a close ally of President Vladimir V. Putin of Russia.
Concord is part of a constellation of American and European advisers — including some of the world’s largest law firms — that have long helped Russian oligarchs navigate the Western financial, legal, political and media landscapes.
both said they were leaving Russia. A spokeswoman for another large firm, Debevoise & Plimpton, said it was terminating several client relationships and would not take any new clients in Moscow. Ashurst, a large London-based law firm, said it would not “act for any new or existing Russian clients, whether or not they are subject to sanctions.”
The accounting giants PwC, KPMG, Deloitte and EY — which have provided extensive services to oligarchs and their networks of offshore shell companies — also said they were leaving Russia or severing ties with their local affiliates.
wrote a letter to the White House arguing that Russia’s Sovcombank shouldn’t face sanctions, citing the bank’s commitment to gender equity, environmental and social responsibility.
Sovcombank had agreed to pay the lobbyist’s firm, Mercury Public Affairs, $90,000 a month for its work.
The Biden administration recently imposed sanctions on Sovcombank. Within hours of the announcement, Mercury filed paperwork with the Justice Department indicating that it was terminating its contract with Sovcombank.
As recently as mid-February, the British law firm Schillings represented the Russian oligarch Alisher Usmanov, a longtime ally of Mr. Putin.
Two weeks later, the European Union and the U.S. Treasury placed sanctions on Mr. Usmanov. Nigel Higgins, a spokesman for Schillings, said the firm is “not acting for any sanctioned individuals or entities.”
say on its website that it represents “some of Russia’s largest companies,” including Gazprom and VTB. The firm said it was “reviewing and adjusting our Russia-related operations and client work” to comply with sanctions.
In Washington, Erich Ferrari, a leading sanctions lawyer, is suing the Treasury on behalf of Mr. Deripaska, who is seeking to overturn sanctions imposed on him in 2018 that he claims have cost him billions of dollars and made him “radioactive” in international business circles.
And the lobbyist Robert Stryk said he had recently had conversations about representing several Russian oligarchs and companies currently under sanctions. He previously represented clients targeted by sanctions, including the administrations of President Nicolás Maduro of Venezuela and former President Joseph Kabila of the Democratic Republic of Congo.
Mr. Stryk said he would consider taking the work if the Treasury Department provided him with the necessary licenses, and if the prospective clients opposed Russia’s aggression in Ukraine.
online profiles of current and former Concord employees.
The Russia-Ukraine War and the Global Economy
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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 intended 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.
Wall Street bankers and hedge fund managers who have interacted with Concord and its founder, Michael Matlin,said it oversaw between $4 billion and $8 billion.
It isn’t clear how much of that belongs to Mr. Abramovich, whose fortune is estimated at $13 billion.
Mr. Abramovich has not been placed under sanctions. His spokeswoman, Rola Brentlin, declined to comment on Concord.
Over the years, Concord has steered its clients’ money into marquee financial institutions: the global money manager BlackRock, the private equity firm Carlyle Group and a fund run by John Paulson, who famously anticipated the collapse of the U.S. housing market. Concord also invested with Bernard Madoff, who died in prison after being convicted of a vast Ponzi scheme.
panel focused on European security, requested that the U.S. government impose sanctions on Mr. Abramovich and seize the assets at Concord, “as this blood money presents a flight risk.”
The work performed by law, lobbying and public relations firms often plays out in public or is disclosed in legal or foreign agent filings, but that is rarely the case in the financial arena.
While Russian oligarchs make tabloid headlines for shelling out for extravagant superyachts and palatial homes, their bigger investments often occur out of public view, thanks to a largely invisible network of financial advisory firms like Concord.
Hedge fund managers and their advisers said they were starting to examine their investor lists to see if any clients were under sanctions. If so, their money needs to be segregated and disclosed to the Treasury Department.
Some hedge funds are also considering returning money to oligarchs who aren’t under sanctions, fearful that Russians might soon be targeted by U.S. and European authorities.
Paradise Papers project, involved the files of the Appleby law firm in Bermuda. At least four clients owned private jets through shell companies managed by Appleby.
When sanctions were imposed on companies and individuals linked to Mr. Putin in 2014, Appleby jettisoned clients it believed were affected.
The Russians found other Western firms, including Credit Suisse, to help fill the void.
Ben Freeman, who tracks foreign influence for the Quincy Institute for Responsible Statecraft, said Russians were likely to find new firms this time, too.
“There is that initial backlash, where these clients are too toxic,” Mr. Freeman said. “But when these lucrative contracts are out there, it gets to be too much for some people, and they can turn a blind eye to any atrocity.”
David Segal contributed reporting. Susan Beachy contributed research.
KHARKIV, Ukraine — Ukraine’s military on Friday was waging a fierce battle to push Russian forces back from Ukraine’s second-largest city, Kharkiv, a day after a vicious fight that littered the highway leading into the city with burned-out Russian troop carriers and at least one body.
The troop carriers had been halted at the entrance to the city, in the shadow of huge blue and yellow letters spelling KHARKIV. Nearby, the body of a Russian soldier, dressed in a drab green uniform, lay on the side of the road, dusted in a light coating of snow that fell overnight.
Soldiers sent to hold the position had few details of the fight that took place, saying only that it happened Thursday morning, shortly after Russia’s president, Vladimir V. Putin, gave the order to attack.
“Putin wants us to throw down our weapons,” said a Ukrainian soldier named Andrei, positioned in trench hastily dug into the black mud on the side of the road. “I think we could operate more slyly, gather up our forces and launch a counterattack.”
Off in the distance but close enough to feel, artillery shells boomed. Russian forces, which on Thursday pushed over the border from their staging area near Belgorod, about 40 miles from Kharkiv, have gathered in strength north of the city. It was not clear where or whether they would advance.
Most of the fighting appeared to be taking place a few miles outside the city limits, near a village called Tsyrkuny. The number of military and civilian casualties resulting from the fight were unclear, but on Friday the local police said a 14-year-old boy had been killed in a village near Kharkiv when a shell hit near his home. But strikes occasionally hit close enough to the city to elicit shrieks of terror from pedestrians, sending them fleeing into metro stations for cover.
Inside an underground station in central Kharkiv, terrified residents have been holed up for two days with their babies, pets and the few belongings — blankets, yoga mats and spare clothing — they could grab in short dashes to home and back, during breaks in the shelling. The city has parked trains in the station and allowed people to sleep in them.
Lidiya Burlina and her son, Mark, work in Kharkiv and were cut off from their home village, a two-hour train ride away, when the Russians moved in. They’ve been living in the metro station ever since. The stores in town are working only in the morning, Ms. Burlina said, and there is very little bread, which has dramatically increased in price in the two days since the war started. They cannot reach anyone in their village because the local power station was blown up.
“They’re sitting there in the cold, they can’t buy anything, and there’s no heat,” Ms. Burlina said. “And we’re here in the metro.”
Victoria Ustinova, 60, was sheltering in the metro with her daughter, two grandchildren and a fuzzy Chihuahua named Beauty, who was wearing a sweater. The family could have taken shelter in the basement of their apartment building, but from there the booms of artillery and tank fire were still audible.
“When everything started it was a total shock, when you don’t know where to run and what to expect from ‘the comrade,’” Ms. Ustinova said, referring to Mr. Putin. “Now we’ve already settled down. We’ve have accepted it and are trying to continue living. It was worse during World War II.”
For her 13-year-old grandson, Danil, the main worry now is the potential for World War III.
“If things will become totally inflamed, then Europe will join in, and if they start launching nuclear weapons then that’s it,” he said.
Up on the surface, most of the stores and restaurants were closed and few people walk the streets. One of the few exceptions was Tomi Piippo, a 26-year-old from the Finnish city of Iisalmi, who said he came to Kharkiv on holiday on Monday and now couldn’t get out.
“I don’t know how to leave. No planes,” he said.
While Russian officials have said their military was endeavoring to avoid civilian areas, the body of a Smerch rocket, which Ukrainian officials said was fired by Russian forces, was stuck vertically in the middle of the street outside the headquarters of the National Guard. A few kilometers away, the rocket’s tail section had buried itself in the asphalt across from an onion-domed Orthodox church.
A team of emergency services officers, dressed in flack jackets and helmets, was attempting to extract the tail from the pavement, but having difficulties. A member of the team said that the tail and the body were different stages of the rocket, likely jettisoned as the explosive ordnance hurtled toward its target near the front lines.
“This is 200 kilos of metal,” the emergency officer said, pointing to the rocket’s tale. “It could have fallen through a building or hit people.”
Even as the artillery barrages intensified, not everyone was ready to hide. Walking with intention toward the source of the artillery booms on the outskirts of Kharkiv was Roman Balakelyev, dressed in camouflage, a double-barreled shotgun slung over his shoulder.
“I live here, this is my home. I’m going to defend it,” said Mr. Balakelyev, who also pulled out a large knife he had strapped to his back as if to show it off. “I don’t think the Russians understand me like I understand them.”
A short while later, Mr. Balakelyev reached the edge of the city, where the Ukrainian troops were huddled around the abandoned Russian troop transports. They watched as he passed. No one moved to stop him. One soldier uttered: “Intent on victory.”
Mr. Balakelyev, his gaze fixed and his shotgun ready, headed down the road in the direction of the booms and a tall billboard that read: “Protect the future: UKRAINE-NATO-EUROPE.”