Elon Musk attends the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany, March 22, 2022. Patrick Pleul/Pool via REUTERS/File Photo
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Orlando, Fla., June 16 (Reuters) – A group of SpaceX employees derided flamboyant billionaire Chief Executive Officer Elon Musk as a “distraction and embarrassment” in an internal letter to executives.
Musk, also head of electric automaker Tesla Inc(TSLA.O), has been in headlines and late-night comedy monologues in recent months for a tumultuous quest to buy social media giant Twitter, a reported allegation of sexual harassment that Musk has denied as well as crude comments online and a foray into political discourse.
“Elon’s behavior in the public sphere is a frequent source of distraction and embarrassment for us, particularly in recent weeks,” read the letter, which does not single out any controversy in particular. Reuters was provided a copy of the letter.
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“As our CEO and most prominent spokesperson, Elon is seen as the face of SpaceX – every tweet that Elon sends is a de facto public statement by the company,” the letter added.
SpaceX did not immediately respond to a request for comment.
The open letter, earlier reported by The Verge, was drafted by SpaceX employees in recent weeks and shared as an attachment in an internal “Morale Boosters” group chat, which contains thousands of employees, according to a person familiar with the matter.
It was not clear who authored the letter or how many employees were involved in its drafting.
In a list of three demands, the letter says “SpaceX must swiftly and explicitly separate itself from Elon’s personal brand.” It added: “Hold all leadership equally accountable to making SpaceX a great place to work for everyone” and “define and uniformly respond to all forms of unacceptable behavior.”
On Twitter, Musk denied and mocked the reported accusation that he sexually harassed a flight attendant on a private jet in 2016. Some of his tweets displayed the crude levity that embarrassed and had some SpaceX employees cringing, according to three people familiar with private discussions among staff.
“He often doesn’t realize how something he says could affect others,” one SpaceX employee said of Musk. “The letter is a collective ‘Hey! We’re getting some heat for things that are unrelated to us.'”
Many SpaceX employees are frustrated by Musk’s controversies, the SpaceX employee said, yet “remain as focused as ever and excited for the future.”
Musk, also the company’s chief engineer, has been viewed as a central figure in many of SpaceX’s high-profile successes, such as pioneering reuse of orbital rocket boosters and returning routine human spaceflight from U.S. soil after a nine-year hiatus.
Much of the company’s day-to-day business operations are led by SpaceX President Gwynne Shotwell. After past workplace dust-ups she has vowed to enforce SpaceX’s “zero tolerance” standards against employee harassment.
In a talk about leadership at Stanford University in May, Shotwell, asked how she manages crises, said “employees were screaming to hear from me” about the reported sexual harassment allegations about Musk and that she addressed their concerns in a company-wide email.
“I have to speak to my employees,” Shotwell said. “They’re the reason SpaceX is what it is, and I care deeply about them.”
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Reporting by Joey Roulette; Editing by David Gregorio
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LONDON — The West united against Russia’s war on Ukraine more swiftly and solidly than almost anyone had expected. But as the war settles into a prolonged conflict, one that could rumble on for months or even years, it is testing the resolve of Western countries, with European and American officials questioning whether the rising economic toll will erode their solidarity over time.
So far, the fissures are mostly superficial: Hungary’s refusal to sign on to an embargo of Russian oil, thwarting the European Union’s effort to impose a continentwide ban; restiveness in Paris with the Biden administration’s aggressive goal of militarily weakening the Russian president, Vladimir V. Putin; a beleaguered President Biden blaming sky-high food and gas prices on a Putin price hike.
Alongside those tensions, there are further signs of solidarity: Finland and Sweden on Wednesday edged closer to joining NATO, with Britain offering both countries security assurances to gird against the Russian threat. In Washington, the House voted 368 to 57 on Tuesday in favor of a nearly $40 billion aid package for Ukraine.
Yet Russia’s tanks rolled across the Ukrainian frontier just 76 days ago, the blink of an eye in the scheme of history’s forever wars. As the fighting grinds on, the cascading effect on supply chains, energy pipelines and agricultural harvests will be felt more acutely at gas pumps and on supermarket shelves.
Mr. Putin, some experts say, is calculating that the West will tire before Russia does of a long twilight struggle for Ukraine’s contested Donbas region, especially if the price for the West’s continued support is turbocharged inflation rates, energy disruptions, depleted public finances and fatigued populations.
The Biden administration’s director of national intelligence, Avril D. Haines, crystallized those doubts on Tuesday, warning senators that Mr. Putin was digging in for a long siege and “probably counting on U.S. and E.U. resolve to weaken as food shortages, inflation and energy shortages get worse.”
On Wednesday, Mr. Biden traveled to a farm in Kankakee, Ill., to make the case that Mr. Putin’s war was to blame for food shortages and the cost-of-living squeeze on American families, a tacit sign that his steadfast support for Ukraine — a policy that has won bipartisan support in Washington — could carry a political cost.
Mr. Putin faces his own domestic pressures, which were evident in the calibrated tone he struck during a speech in Moscow’s Red Square on Monday, neither calling for a mass mobilization nor threatening to escalate the conflict. But he also made clear that there was no end in sight for what he falsely called Russia’s campaign to rid its neighbor of “torturers, death squads and Nazis.”
On the ground in Ukraine, the fighting shows signs of becoming a protracted battle. A day after Ukraine’s counteroffensive unseated Russian forces from a cluster of towns northeast of the city of Kharkiv, the region’s governor said on Wednesday that the Ukrainian efforts had driven Moscow’s forces “even further” from the city, giving them “even less opportunity to fire on the regional center.”
Ukraine’s apparent success at pushing back Russian troops outside Kharkiv — its second largest city, about 20 miles from the Russian border — appears to have contributed to reduced shelling there in recent days, even as Russia makes advances along parts of the front line in the Donbas region in eastern Ukraine.
That Ukraine would even find itself in an ongoing pitched battle, nearly three months after Russia launched a full-scale invasion, is remarkable. Analysts pointed out that a prolonged war would stretch the resources of a Russian military that has already suffered heavy losses of men and machinery. Given that, some argue that the West should press its advantage by tightening the economic chokehold on Moscow.
“I worry about Western fatigue,” said Michael A. McFaul, a former American ambassador to Russia, “which is why the leaders of the free world should do more now to hasten the end of the war.”
The United States and the European Union, he said, should impose a full range of crippling sanctions immediately, rather than rolling them out in escalating waves, as they have so far. Western countries had come close to such an all-in strategy with military aid, he said, which had helped the Ukrainians hold off the Russians.
But the halting negotiations on a European oil embargo show the limits of that approach when it comes to Russian energy supplies. European Union ambassadors held another fruitless meeting in Brussels on Wednesday, failing to break the fierce resistance of a single member of the bloc, Hungary.
Prime Minister Viktor Orban of Hungary, who has a warm relationship with Mr. Putin and has been at odds with Brussels, threw hopes for a show of unity into disarray when he blocked the latest measure, arguing that a ban on Russian oil would be the equivalent of an “atomic bomb” for the Hungarian economy.
Mr. Orban has continued to resist, even after concessions that would give Hungary more time to wean itself off Russian oil and intense lobbying by other leaders. Ursula von der Leyen, the president of the European Commission, flew to Budapest to try to sway him while President Emmanuel Macron telephoned him.
“We will only support this proposal if Brussels proposes a solution for the problem that Brussels created,” Hungary’s foreign minister, Peter Szijjarto, said, adding that modernizing Hungary’s energy sector would cost “many, many billions of euros.”
In Washington, Mr. Biden has encountered less trouble rounding up support for military and humanitarian aid to Ukraine. The House vote in favor of a massive aid package showed how the war’s brutality had overcome resistance from both the right and left to American involvement in military conflicts overseas.
And yet rising food and fuel prices, which are aggravated by the war, pose a genuine threat to Mr. Biden. The price of food rose 0.9 percent in April from the previous month, according to data released on Wednesday. Treasury Secretary Janet L. Yellen said the administration was “terribly concerned about global food supplies,” adding that 275 million people around the world face starvation.
“Putin’s war has cut off critical sources of food,” Mr. Biden said to farmers in Illinois. “Our farmers are helping on both fronts, reducing the price of food at home and expanding production and feeding the world in need.”
It remains to be seen whether the United States can increase agricultural production enough to ease the shortages. But the visit to a farm came as Mr. Biden, under pressure over the fastest pace of inflation in 40 years, tried to reassure Americans that the White House is taking price increases seriously.
While Mr. Putin faces arguably much greater pressures — from swelling combat casualties to the economic pain caused by sanctions — he is exploiting nationalist feelings, which some analysts note will give him staying power.
The Kremlin signaled on Wednesday that it could annex the strategically important southern Ukrainian region of Kherson, as the occupying authorities said they would prepare a formal request to Mr. Putin to absorb their region into Russia.
“They are motived by powerful nationalism,” said Francis Fukuyama, a political scientist at Stanford University, “for which they are willing to undergo extraordinary economic damage.” Still, he added, the West’s muscular response could be “a moment of turnaround in the self-confidence of democracies.”
For some Europeans, the United States might be going too far. French diplomats with ties to Mr. Macron described the evolving American policy as essentially arming Ukraine to the hilt and maintaining sanctions on Russia indefinitely. France, they said, wants to push hard for negotiations with Mr. Putin because there was no other path to lasting European security.
Other analysts argue that the threats to Western unity are overdone. The moves by Finland and Sweden to join NATO suggest not only that the alliance is pulling together but also that its center of gravity is shifting eastward.
Even before he invaded Ukraine, Mr. Putin warned those countries that they would face “retaliation” if they joined NATO. On a visit to Stockholm, Prime Minister Boris Johnson suggested that the mutual security declaration Britain signed with Sweden — under which both countries pledged come to each other’s aid if they face a military threat or natural disaster — would counter that threat.
“Sovereign nations must be free to make those decisions without fear or influence or threat of retaliation,” Mr. Johnson said, alongside Prime Minister Magdalena Andersson of Sweden. The declaration “will allow us to share more intelligence, bolster our military exercises and further our joint development of technology,” he said.
Despite Germany’s ambivalence about cutting off Russian gas, it seems highly unlikely to reverse course from its landmark commitment to increase military spending. On Wednesday, Germany started training the first class of Ukrainian gun crews on the use of self-propelled howitzers in western Germany. The German military plans to donate seven of the heavy weapons to Ukraine.
“The Russians, because of their barbarity, keep on generating images and news that will help the cause of Western unity,” said Eliot A. Cohen, a political scientist who served in the State Department during the George W. Bush administration. “If the Ukrainians continue to succeed, I think people will cheer them on.”
Reporting was contributed by Matina Stevis-Gridneff from Brussels, Roger Cohen from Paris, Matthew Mpoke Bigg and Cora Engelbrecht from London, Ana Swanson and Alan Rappeport from Washington, Ivan Nechepurenko from Tbilisi, Georgia, and Christopher F. Schuetze from Berlin.
WASHINGTON — When President Biden signed a modern-day Lend-Lease Act on Monday, 81 years after the original version helped lead the way into World War II, he effectively thrust the United States even deeper into another war in Europe that has increasingly become an epic struggle with Russia despite his efforts to define its limits.
Recent days have underscored just how engaged the United States has become in the conflict in Ukraine. In addition to the new lending program, which will waive time-consuming requirements to speed arms to Ukraine, Mr. Biden has proposed $33 billion more in military and humanitarian aid, a package that congressional Democrats plan to increase by another $7 billion. He sent the first lady for a secret visit to the war zone. And he provided intelligence helping Ukraine to kill a dozen generals and sink Russia’s flagship.
But even after two and a half months, Mr. Biden is still anxious about looking like the United States is fighting the proxy war that President Vladimir V. Putin of Russia says it is. While Mr. Biden publicly sends aid and signed the lend-lease bill on camera, off camera he was livid over leaks about the American intelligence assistance to Ukraine that led to the deaths of Russian generals and the sinking of the cruiser Moskva out of concern that it would provoke Mr. Putin into the escalation Mr. Biden has strenuously sought to avoid.
After reports in The New York Times and NBC News about the intelligence, Mr. Biden called Defense Secretary Lloyd J. Austin III; Avril D. Haines, the director of national intelligence; and William J. Burns, the C.I.A. director, to chastise them, according to a senior administration official. That seemed to be where Mr. Biden was drawing a line — providing Ukraine with guns to shoot Russian soldiers was OK, providing Ukraine with specific information to help them shoot Russians was best left secret and undisclosed to the public.
“There’s this constant balancing act the administration has been trying to strike between supporting Ukraine and making sure it can defend itself militarily and at the same time being very concerned about escalation,” said Alina Polyakova, the president of the Center for European Policy Analysis and a specialist on Russia policy.
“It’s increasingly untenable to maintain this kind of hand-wringing,” she added. “It’s probably more effective to say this is what our policy is and we will deal and manage the potential escalation responses we see from the Kremlin.”
From the start of the war, the administration sought to parse its response, deciding which weapons could be called defensive and therefore were acceptable to send to Ukraine and which ones could be called offensive and therefore should not be delivered.
But the line has shifted in recent weeks with the administration shipping ever more sophisticated military equipment and expressing more openly its ambitions not just to help the Ukrainians but to defeat and even enfeeble Russia. After a visit to the war-torn capital, Kyiv, two weeks ago, Mr. Austin declared that “we want to see Russia weakened to the degree that it can’t do the kinds of things” it has done in Ukraine again, while Speaker Nancy Pelosi said during her own subsequent trip to Kyiv that America “will stand with Ukraine until victory is won.”
Some veteran government officials said Mr. Biden was right to be cautious about too overtly poking Mr. Putin because the consequences of an escalation with a nuclear-armed Russia are too devastating to take chances with.
“Putin wants us to make it a proxy war,” said Fiona Hill, a former Russia adviser to two presidents now at the Brookings Institution. “Putin is still telling people outside Europe this is just a repeat of the Cold War, nothing to look at here. This isn’t a proxy war. It’s a colonial land grab.”
Michael A. McFaul, a former ambassador to Russia now at Stanford University, said there was a difference between clandestinely helping Ukrainian forces target Russian forces and flaunting it. “Yes, Putin knows that we are providing intelligence to Ukraine,” he said. “But saying it out loud helps his public narrative that Russia is fighting the U.S. and NATO in Ukraine, not just the Ukrainians. That doesn’t serve our interests.”
Angela Stent, a former national intelligence officer on Russia and the author of a book on American relations with Mr. Putin, said being too open about what the United States was doing in Ukraine could undermine efforts to turn China, India and other countries against Russia. “For global public opinion, it’s not a good idea,” she said. “They should do whatever they do, but not talk about it.”
Mr. McFaul said he also believed it undermined Ukrainians, making it look like they were dependent on the Americans, a concern that Mr. Biden was said to share in his phone calls with his security officials, which were first reported by the Times columnist Thomas L. Friedman.
But others said the administration has been too cautious in letting Russia set the rules of the conflict — or rather Washington’s guesswork about what would push Russia into escalation. No one in Washington really knows the line that should not be crossed with Mr. Putin, and instead the United States has simply been making assumptions. “Are we having a conversation about red lines with ourselves?” asked Frederick W. Kagan, a military scholar at the American Enterprise Institute. “Because I rather think we are.”
The consequence, he added, is being too slow to provide what Ukraine really needs. “They’ve done amazingly well at making stuff happen in a relatively timely fashion,” Mr. Kagan said of the Biden administration. “But there does seem to be a certain brake on the timeliness of our support driven by this kind of parsing and self-negotiation that is a problem.”
The legislation that Mr. Biden signed on Monday reflected the historical echoes and reversals of the current war. President Franklin D. Roosevelt signed the original Lend-Lease Act in 1941 to help the British fend off Nazi aggressors in World War II, and it was later expanded to help other allies — including the Soviet Union.
Now, Moscow will be on the other side of the arms channel as the modern-day version, called the Ukraine Democracy Defense Lend-Lease Act, will direct weapons and equipment not to Russian soldiers but to those fighting them.
“Every day, Ukrainians pay with their lives,” Mr. Biden said in the Oval Office as he approved the legislation. “And the atrocities that the Russians are engaging in are just beyond the pale. And the cost of the fight is not cheap, but caving to aggression is even more costly. That’s why we’re staying in this.”
Mr. Biden signed the law on the same day that Russia celebrated Victory Day, the 77th anniversary of the allied defeat of Nazi Germany, a feat facilitated in part by the original Lend-Lease Act.
“This day is supposed to be about celebrating peace and unity in Europe and the defeat of Nazis in World War II,” said Jen Psaki, the White House press secretary. “And instead, Putin is perverting history, changing history, or attempting to change it, I should say, to justify his unprovoked and unjustified war.”
The lending program came as congressional Democrats moved quickly to consider the $33 billion aid package proposed by Mr. Biden and indicated they would increase it substantially. With Republicans pushing to add more military spending, Democrats insisted on an equal boost for humanitarian aid, nudging the price tag to $39.8 billion, according to two people familiar with the proposal who previewed it on the condition of anonymity.
Ms. Pelosi and Senator Chuck Schumer of New York, the Democratic majority leader, spoke by telephone with Mr. Biden on Monday as they finalized the details of the proposal, one of the people said. House leaders want to bring up the measure as early as Tuesday.
The increase reflects a striking consensus in both parties to pour vast amounts of money into the war against Russia, even as lawmakers remain deeply divided on domestic spending. In March, Congress approved $13.6 billion in emergency aid for Ukraine, and Mr. Biden has warned that those resources would run out soon without new legislation.
It was not clear, however, whether Republicans, whose support would be needed in the Senate, had agreed on the specifics of the proposal. A spokeswoman for Republicans on the Senate Appropriations Committee said that a deal had not been reached, but that discussions were continuing.
Democrats plan to advance the package separately from the administration’s emergency coronavirus aid measure, which has become snarled in an election-year dispute over immigration restrictions.
“We cannot afford delay in this vital war effort,” Mr. Biden said in a statement. “Hence, I am prepared to accept that these two measures move separately, so that the Ukrainian aid bill can get to my desk right away.”
May 6 (Reuters) – Two of the Federal Reserve’s most outspoken policy hawks on Friday pushed back on the view that the U.S. central bank missed the boat on the fight against high inflation, citing a tightening of financial conditions that began well before the Fed began raising interest rates in March.
“How far behind the curve could we have possibly been in terms of time if, using forward guidance, one views rate hikes effectively beginning in September 2021?” Fed Governor Christopher Waller said, noting that yields on the two-year Treasury note rose last fall as the Fed began to signal the end of its super-easy policy.
The movereflected the equivalent of two Fed rate hikes through December, he said.
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Speaking at the same Stanford University conference, titled “How monetary policy got behind the curve,” St. Louis Fed President James Bullard argued that the Fed is “not as far behind the curve as you might have thought.”
Earlier this week the Fed raised its policy rate to a range of 0.75% to 1%. Critics say that is far too low to fight inflation running at three times the Fed’s 2% target.
Bullard said he agrees, calling inflation “far too high,” and call for ratesto rise “expeditiously,” toperhaps 3.6%, to bring inflation under control. But he noted that markets are already pricing much of that increase in.
Traders of rate futures are currently pricing in a Fed funds rate of 3% to 3.25% by year end.
“It’s going in the right direction … hopefully we’ll be able to get away from this behind-the-curve characterization soon,” Bullard said.
The two were among the first Fed policy makers last year to call for a rapid removal of easy monetary policy and a quicker start to raising interest rates.
Bullard, in fact, dissented on the Fed’s March quarter-point rate hike as too little.
But both joined their colleagues in approving the half-point rate hike delivered this week. Fed Chair Jerome Powell, speaking after the rate decision was announced, signaled further increases ahead, including half-point rate hikes in both June and July.
Waller used his talk Friday to trace how economic data first seemed to ratify, then challenge, his own view from last spring: that inflation would prove transitory as supply chains healed and one-time fiscal stimulus faded, and that the labor market was primed to roar back as COVID-19 receded.
Most of his colleagues shared in the first view; opinions were more divided on the second. In the end, Waller said, inflation proved to be much higher and more persistent than he had thought.
At the same time he described the “punch in the gut” he felt as two weaker-than-expected monthly jobs reports in August and September seemed to undercut the thesis of labor market healing.
As it turned out, later data revisions showed the U.S. labor market had been stronger than the real-time data suggested.
“If we knew then what we know now, I believe the (Fed) would have accelerated tapering and raised rates sooner,” Waller said. “But no one knew, and that’s the nature of making monetary policy in real time.”
By early November, most policymakers had come around to the view that high and rising inflationwould not drop quickly enough on its own, and business demand for workers was far outpacing a slow-to-recover labor market supply.
“It was at this point … that the FOMC pivoted,” Waller said. The Federal Open Market Committee, known as the FOMC, is the Fed’s policy-setting body.
The conference featured several former Fed policymakers and economists who argued that the Fed had fallen so far behind the curve that it would almost surely end up causing a recession as it sought to catch up by raising rates faster. read more
Former Fed Vice Chair of Supervision Randal Quarles, who says he was the Fed’s most hawkish member until Waller joined late last year, told the conference that in hindsight it’s clear “it would have been better to start raising rates last September.”
It wasn’t a failure of nerve, or politics, or stupidity, he said Friday. “It was a complicated situation with little precedent, and people make mistakes.”
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Reporting by Ann Saphir; Editing by Leslie Adler and Stephen Coates
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When Google employees returned to their mostly empty offices this month, they were told to relax. Office time should be “not only productive but also fun.” Explore the place a little. Don’t book back-to-back meetings.
Also, don’t forget to attend the private show by Lizzo, one of the hottest pop stars in the country. If that’s not enough, the company is also planning “pop-up events” that will feature “every Googler’s favorite duo: food and swag.”
But Google employees in Boulder, Colo., were still reminded of what they were giving up when the company gave them mouse pads with the image of a sad-eyed cat. Underneath the pet was a plea: “You’re not going to RTO, right?”
R.T.O., for return to office, is an abbreviation born of the pandemic. It is a recognition of how Covid-19 forced many companies to abandon office buildings and empty cubicles. The pandemic proved that being in the office does not necessarily equal greater productivity, and some firms continued to thrive without meeting in person.
a happy hour with its chief executive, Cristiano Amon, at its San Diego offices for several thousand employees with free food, drink and T-shirts. The company also started offering weekly events such as pop-up snack stands on “Take a Break Tuesday” and group fitness classes for “Wellness Wednesday.”
the surveys, is that employees want to see colleagues in person.
After a number of postponements, Google kicked off its hybrid work schedule on April 4, requiring most employees to show up at U.S. offices a few days a week. Apple started easing staff back to the office on Monday, with workers expected to check in at the office once a week at first.
reimburse $49 monthly leases for an electric scooter as part of its transportation options for staff. Google also plans to also start experimenting with different office designs to adapt to changing work styles.
When Microsoft employees returned to their offices in February as part of a hybrid work schedule, they were greeted with “appreciation events” and lawn games such as cornhole and life-size chess. There were classes for spring basket making and canvas painting. The campus pub transformed into a beer, wine and “mocktail” garden.
And, of course, there was free food and drink: pizzas, sandwiches and specialty coffees. Microsoft paid for food trucks with offerings including fried chicken, tacos, gyros, Korean food and barbecue.
Unlike other technology companies, Microsoft expects employees to pay for their own food at the office. One employee marveled at how big a draw the free food was.
signed a letter urging management to be more open to flexible work arrangements. It was a rare show of dissent from the company’s rank-and-file, who historically have been less willing to openly challenge executives on workplace matters.
But as tech companies grapple with offering employees greater work flexibility, the firms are also scaling back some office perks.
cutting back or eliminating free services like laundry and dry cleaning. Google, like some other companies, has said it approved requests from thousands of employees to work remotely or transfer to a different office. But if employees move to a less expensive location, Google is cutting pay, arguing that it has always factored in where a person was hired in setting compensation.
Clio, a legal software company in Burnaby, British Columbia, won’t force its employees back to the office. But last week, it gave a party at its offices.
There was upbeat music. There was an asymmetrical balloon sculpture in Clio’s signature bright blue, dark blue, coral and white — perfect for selfies. One of Clio’s best-known workers donned a safari costume to give tours of the facility. At 2 p.m., the company held a cupcake social.
To make its work spaces feel more like home, the company moved desks to the perimeter, allowing Clions — what the company calls its employees — to gaze out at the office complex’s cherry blossoms while banging out emails. A foosball table was upgraded to a workstation with chairs on either end, “so you could have a meeting while playing foosball with your laptop on it,” said Natalie Archibald, Clio’s vice president of people.
Clio’s Burnaby office, which employs 350, is open at only half capacity. Spaced-out desks must be reserved, and employees got red, yellow and green lanyards to convey their comfort levels with handshakes.
Only around 60 people came in that Monday. “To be able to have an IRL laugh rather than an emoji response,” Ms. Archibald said. “People are just excited for that.”
LONDON — In the five weeks since Russia invaded Ukraine, the United States, the European Union and their allies began an economic counteroffensive that has cut off Russia’s access to hundreds of billions of dollars of its own money and halted a large chunk of its international commerce. More than 1,000 companies, organizations and individuals, including members of President Vladimir V. Putin’s inner circle, have been sanctioned and relegated to a financial limbo.
But Mr. Putin reminded the world this past week that he has economic weapons of his own that he could use to inflict some pain or fend off attacks.
Through a series of aggressive measures taken by the Russian government and its central bank, the ruble, which had lost nearly half of its value, clawed its way back to near where it was before the invasion.
And then there was the threat to stop the flow of gas from Russia to Europe — which was set off by Mr. Putin’s demand that 48 “unfriendly countries” violate their own sanctions and pay for natural gas in rubles. It sent leaders in the capitals of Germany, Italy and other allied nations scrambling and showcased in the most visible way since the war began how much they need Russian energy to power their economies.
Russian oil exports normally represent more than one of every 10 barrels the world consumes.
Europe’s ongoing energy purchases send as much as $850 million each day into Russia’s coffers, according to Bruegel, an economics institute in Brussels. That money helps Russia to fund its war efforts and blunts the impact of sanctions. Because of soaring energy prices, gas export revenues from Gazprom, the Russian energy giant, injected $9.3 billion into the country’s economy in March alone, according an estimate by Oxford Economics, a global advisory firm.
Ursula von der Leyen, said as much when she announced the new energy plan last month: “We simply cannot rely on a supplier who explicitly threatens us.”
Security concerns aren’t the only development that has undermined Russia’s standing as a long-term energy supplier. What seemed surprising to economists, lawyers and policymakers about Mr. Putin’s demand to be paid in rubles was that it would have violated sacrosanct negotiated contracts and revealed Russia’s willingness to be an unreliable business partner.
As he has tried to wield his energy clout externally, Mr. Putin has taken steps to insulate Russia’s economy from the impact of sanctions and to prop up the ruble. Few things can undermine a country as systemically as an abruptly weakened currency.
The Russia-Ukraine War and the Global Economy
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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.
When the allies froze the assets of the Russian central bank and sent the ruble into a downward spiral, the bank increased the interest rate to 20 percent, while the government mandated that companies convert 80 percent of the dollars, euros and other foreign currencies they earn into rubles to increase demand and drive up the price.
S&P Global survey of purchasing managers at Russian manufacturing companies showed severe declines in production, employment and new orders in March, as well as sharp price increases.
500 foreign companies have pulled up stakes in Russia, scaled back operations and investment, or pledged to do so.
“Russia does not have the capabilities to replicate domestically the technology that it would otherwise have gained from overseas,” according to an analysis by Capital Economics, a research group based in London. That is not a good sign for increasing productivity, which even before the war, was only 35 to 40 percent of the United States’.
The result is that however the war in Ukraine ends, Russia will be more economically isolated than it has been in decades, diminishing whatever leverage it now has over the global economy as well as its own economic prospects.
One of the paradoxical things about Vladimir V. Putin’s increasingly authoritarian rule of Russia was how relatively open society always remained.
For all the state’s control of media, people could read or watch what they wanted, including foreign newscasts like BBC and CNN. The internet was largely unfettered, a portal to the rest of the world. Unlike, say, China, you could criticize the president with some assurance that the police would not knock at the door.
As the war in Ukraine grinds on, Mr. Putin has strangled the vestiges of a free press to justify an invasion that has been almost universally condemned — and with that moved closer to the stultifying orthodoxy of the Soviet Union. The result will be to isolate the country, as Mr. Putin has isolated himself, leaving it with a one-sided view of the world no longer subject to debate.
Two of the remaining flagships of the country’s own independent media — Ekho Moskvy, the liberal radio station, and TV Dozhd, or Rain, a digital upstart — went off the air last week, hounded by the authorities for reporting accurately on Ukraine. Access to Facebook, Twitter and TikTok, platforms pulsing with opposition to Mr. Putin’s war, have been blocked, as have other online sites in Russia.
Many foreign news organizations have withdrawn correspondents or stopped reporting in Russia after Mr. Putin on Friday signed into law a measure to punish anyone spreading “false information” with up to 15 years in prison.
“Just two weeks ago it was not possible to imagine how quickly most of it would get closed,” said Nina L. Khrushcheva, a professor of international affairs at the New School in New York City. “And yet it is.”
Beyond the immediate impact on Russians’ ability to learn about the war next door, Mr. Putin seems to have crossed a threshold in the country’s history. He is sequestering Russian society to a greater extent than at any time since the last Soviet leader, Mikhail S. Gorbachev, launched a policy in 1986 called glasnost, which became known as “openness” but more precisely means “the act of giving voice.”
Access to foreign news reporting and independent voices on social media have challenged the Kremlin’s monopoly on state media — as Mr. Gorbachev’s effort broke the Soviet monopoly on truth. Independent outlets have, at great risk to reporters’ personal safety, uncovered abuses during Russia’s war in Chechnya, repression of political and human rights, and the extraordinary wealth of people close to Mr. Putin — all taboo subjects in state media.
The impact of silencing them could be much broader and last much longer than the war, pushing the country from authoritarian rule to something worse.
“Putin is trying to turn Russia back into a totalitarian dictatorship of the pre-Gorbachev days,” said Michael McFaul, the former American ambassador to Russia who is director of the Freeman Spogli Institute for International Studies at Stanford University. “He will eventually fail, but he will do great damage to Russian society in trying.”
The Kremlin’s propaganda and restrictions have already disconnected ordinary Russians from the horrific violence ravaging cities across Ukraine — even those with relatives on the ground telling them otherwise. They have covered up the Russian military’s difficulties, as well as the human costs to Ukrainians that Mr. Putin claims to be defending.
Those who watch Russian television instead see the country’s troops taking part in a largely bloodless “special military operation,” to protect Ukrainian civilians from a neo-Nazi government. In this alternate reality, Russian troops are distributing aid to civilians or helping evacuate them to safety; Ukrainians are fabricating reports about Russian military setbacks — or even shelling their own cities.
The result has been to create a blinkered view of the war that few dare pierce. Not a single deputy in the State Duma, the lower house of Parliament, voted against the bill criminalizing “fake news.”
“There is less and less access to accurate information from the West amid the relentless pounding from increasingly hysterical state propaganda, which admittedly, is having its effect,” said Sergey Radchenko, a professor at the Johns Hopkins School of Advanced International Studies Europe.
Mr. Putin was a lieutenant colonel in the K.G.B., serving in the former East Germany, when glasnost was introduced. He later said that he, too, recognized the need for the Soviet Union to become more open. Only up to a point, though.
From the start of his presidency in 2000, he understood that the media — especially television — had the power not only to shape his political image but also to help him govern. He moved quickly to regain control of the main television networks from two oligarchs, Vladimir A. Gusinsky and Boris A. Berezovsky, who championed agendas not always in line with the Kremlin.
But printed media faced less direct pressure, and the internet burst with new outlets, making Russian and foreign sources widely accessible. Independent media like Ekho Moskvy were mostly left alone, serving as quasi independent sources of news and debate, at least for the educated elite. The station was itself a child of glasnost, founded in 1990 by frustrated employees of state radio who wanted a platform for genuine political discussion.
Russians attributed the station’s survival to its savvy editor in chief, Aleksei A. Venediktov, and the Kremlin’s need for both a safety valve for liberal debate and a source of information separate from its own propaganda. It was there that opposition figures long barred from state television could give interviews, and anchors could debate the impact of Kremlin policies on regular people.
Before it closed last week, the outlet promoted voices critical of the war and of Mr. Putin himself. Russia’s prosecutor general accused it of spreading “deliberately false information.”
As in many spheres of Russian life, tolerance for contrary or unorthodox views in the media has been eroding for years. Maria Snegovaya, a visiting scholar at George Washington University and a fellow at the Center for New American Security in Washington, said there has been a “qualitative change” in Mr. Putin’s government.
She dated it to the protests that shook Mr. Putin’s ally in Belarus in 2020; the poisoning of the Kremlin’s arch critic, Aleksei A. Navalny, and his subsequent imprisonment; and the constitutional changes enacted last year allowing Mr. Putin, now 69, to extend his presidential terms to 2036.
All generated significant opposition in Russia that seeped into the public discourse, despite the Kremlin’s effort. Mr. Navalny became famous for investigations devoted to exposing corruption, including a 143-minute documentary on YouTube after his arrest that accused Mr. Putin of secretly building a palace on the Black Sea coast.
“I always refrained from calling Russia totalitarian, but I think the military situation, the war, has pushed the authorities toward that,” Ms. Snegovaya said from Bulgaria where she was assisting Russians who fled the country in recent days.
A more severe step would be creating an analog to China’s Great Firewall, which restricts access to foreign websites on the outside and strictly controls what is allowed inside. Russia calls its vision for a sovereign cyberspace the RuNet, though it has so far stopped short of imposing total control.
In today’s digitally connected world, Mr. Putin could have a difficult time cutting off Russia entirely. Even in the Soviet Union, information flowed back and forth over borders. Virtual private networks, or VPNs, that allow people to evade internet restrictions by disguising which country they are logging in from, can help spread information the way samizdat, illegal copies of censored books or articles, circulated clandestinely in Soviet times.
“It will be difficult for the Russian government to block all outside information,” Jamie Fly, the chief executive of Radio Free Europe/Radio Liberty, the U.S.-financed network founded during the Cold War, said after the announcement that it, too, was ceasing operations inside Russia. “History shows that people will go to great lengths to seek out the truth.”
Those who do so now will be a small minority. As Mr. Putin’s rule continues, critics fear he will take even stronger measures to maintain the Kremlin’s uncontested grip on power.
“We have a long way to go before we get to 1937,” Mr. Radchenko said, evoking the year of Stalin’s Great Terror, “but for the first time the road is clear. You can see far ahead, like on a cold, crisp winter morning, and there, in the distance, you can just about make out the outlines of the guillotines.”
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.”
Research by Rebecca Diamond, an economist at Stanford University, and Enrico Moretti, an economist at the University of California, Berkeley, explains the attraction. They worked out how costs affect living standards in various parts of the country.
Workers without a four-year college degree earn little in the Cookeville commuting zone — their income puts them among the poorest 10 percent of households in hundreds of commuting zones across the country. After adjusting for the local cost of living, however, their purchasing power rises to the top 10 percent.
They can live more comfortable lives than if they moved to a bigger city, like Nashville or Knoxville. According to Ms. Diamond and Mr. Moretti’s work, which is based on data from 2014, the household income of a typical worker who never finished high school in Cookeville is about $43,000. In New York it is $58,000; in San Francisco, $62,000.
Still, adjusting for the local cost of living, the workers in San Francisco and New York could afford much less — roughly what someone with an income of $37,000 could buy in a city like Cleveland, which ranks in the middle of the national income distribution. The Cookeville workers, by contrast, live as if they were making $46,000 in Cleveland.
Big cities are not that good a deal for even highly educated workers. They do earn much higher wages in New York than in Cookeville — indeed, the college educated reap a bigger pay premium if they work in bigger cities than their less-educated peers. But according to the researchers, all the extra wages are eaten up by higher costs.
It’s mostly about housing. Last November, the typical home in Cookeville cost $217,303, according to Zillow. That’s one-fourth of the median price of a home in Los Angeles and one-sixth of the price in San Francisco. Median rent in Jackson County is $548 per month.
Housing costs are putting a big dent in the case for urban America. “If you are trying to raise people’s standard of living you want to move them away from big cities not towards them,” said Jesse Rothstein, an economist at the University of California, Berkeley. He wrote a research paper with David Card, his colleague at Berkeley, and Moises Yi of the Census Bureau that pours more cold water on the supposed advantages of America’s megalopolises.
SAN JOSE, Calif. — For the past 11 weeks, prosecutors revealed emails from desperate investors. They held up falsified documents side by side with the originals. They called dozens of witnesses who lobbed accusations of deceit and evasiveness.
And on Friday, the person whom prosecutors have been making their case against — Elizabeth Holmes, the founder of the failed blood testing start-up Theranos — took the stand to defend herself. She faces 11 counts of defrauding investors over Theranos’s technology and business in a case that has been billed as a referendum on Silicon Valley’s start-up culture. She has pleaded not guilty.
tech industry’s hubris and the last decade’s culture of grift — began her testimony by answering a series of questions about Theranos. She delved into her background and how she began the Silicon Valley start-up, which had promised to revolutionize health care by using just a drop of blood from patients to deduce their illnesses.
trial finally began in September, prosecutors called former investors, partners and Theranos employees to testify. Jim Mattis, the retired four-star Marine Corps general and former defense secretary, who was a Theranos director, took the stand, as did a former Theranos lab director who endured six grueling days of questioning. In one surreal moment, a forensics expert recited text messages between Ms. Holmes and Ramesh Balwani, her boyfriend at the time and business partner at Theranos, who is known as Sunny.
This week, Alan Eisenman, an early investor in Theranos, testified that Ms. Holmes cut him off and threatened him when he asked her for more information about the company. Yet even after that treatment, Mr. Eisenman poured more money into the start-up, believing its seemingly fast-growing business would deliver riches to backers like him.
When asked about his understanding of the value of his Theranos stock today, Mr. Eisenman said: “It’s not an understanding, it’s a conclusion. It’s worth zero.”
a series of validation reports that Ms. Holmes sent to potential investors and partners that made it look as though pharmaceutical companies including Pfizer and Schering-Plough had endorsed Theranos’s technology. Representatives from each company testified that they had not endorsed Theranos’s blood test and were surprised to see their companies’ logos added to the report.
testified that the start-up faked demonstrations of its machines for potential investors, hid technology failures and threw out abnormal blood test results.
Mr. Mattis testified that he was not aware of any contracts between Theranos and the military to put its machines on medevac helicopters or on the battlefield, as Ms. Holmes had frequently told investors.
testimony from Roger Parloff, the journalist who wrote a magazine cover story about Ms. Holmes, helping propel her to acclaim. Mr. Parloff’s article was sent to numerous investors as part of Ms. Holmes’s pitch.
Yet notably absent from the courtroom were some of the most prominent witnesses on the prosecution’s list. Ms. Holmes’s rise was aided by her association with business titans such as the media mogul Rupert Murdoch, elder statesmen such as Henry Kissinger and Adm. Gary Roughead, and the lawyer David Boies. Theranos was felled, in part, by whistle-blowers such as Tyler Shultz, a grandson of George Shultz, the former secretary of state, who sat on Theranos’s board. None of them testified.
Also absent was Mr. Balwani, who was charged with fraud alongside Ms. Holmes and faces trial next year. His role as a fiery defender of Theranos who went after anyone who questioned the company has been in the background of much of the testimony.
At nearly every turn, Ms. Holmes’s lawyers sought to limit testimony and evidence. They attacked the credibility of investors, using legal disclaimers to show that investors knew they were gambling on a young start-up. The lawyers also poked holes in investors’ limited due diligence on Theranos’s claims. At one point, they directed Erika Cheung, a key whistle-blower who worked in Theranos’s lab, to read the entire organizational chart of the people employed in lab to show she played a small role in the overall operation.
she said in one of the videos. “Anything that happens in this company is my responsibility.”