Russia’s invasion of Ukraine and the continuing effects of the pandemic have hobbled countries around the globe, but the relentless series of crises has hit Europe the hardest, causing the steepest jump in energy prices, some of the highest inflation rates and the biggest risk of recession.
The fallout from the war is menacing the continent with what some fear could become its most challenging economic and financial crisis in decades.
While growth is slowing worldwide, “in Europe it’s altogether more serious because it’s driven by a more fundamental deterioration,” said Neil Shearing, group chief economist at Capital Economics. Real incomes and living standards are falling, he added. “Europe and Britain are just worse off.”
eightfold increase in natural gas prices since the war began presents a historic threat to Europe’s industrial might, living standards, and social peace and cohesion. Plans for factory closings, rolling blackouts and rationing are being drawn up in case of severe shortages this winter.
China, a powerful engine of global growth and a major market for European exports like cars, machinery and food, is facing its own set of problems. Beijing’s policy of continuing to freeze all activity during Covid-19 outbreaks has repeatedly paralyzed large swaths of the economy and added to worldwide supply chain disruptions. In the last few weeks alone, dozens of cities and more than 300 million people have been under full or partial lockdowns. Extreme heat and drought have hamstrung hydropower generation, forcing additional factory closings and rolling blackouts.
refusing to pay their mortgages because they have lost confidence that developers will ever deliver their unfinished housing units. Trade with the rest of the world took a hit in August, and overall economic growth, although likely to outrun rates in the United States and Europe, looks as if it will slip to its slowest pace in a decade this year. The prospect has prompted China’s central bank to cut interest rates in hopes of stimulating the economy.
“The global economy is undoubtedly slowing,” said Gregory Daco, chief economist at the global consulting firm EY- Parthenon,but it’s “happening at different speeds.”
In other parts of the world, countries that are able to supply vital materials and goods — particularly energy producers in the Middle East and North Africa — are seeing windfall gains.
And India and Indonesia are growing at unexpectedly fast paces as domestic demand increases and multinational companies look to vary their supply chains. Vietnam, too, is benefiting as manufacturers switch operations to its shores.
head-spinning energy bills this winter ratcheted up this week after Gazprom, Russia’s state-owned energy company, declared it would not resume the flow of natural gas through its Nord Stream 1 pipeline until Europe lifted Ukraine-related sanctions.
Daily average electricity prices in Western Europe have reached record levels, according to Rystad Energy, surging past 600 euros ($599) per megawatt-hour in Germany and €700 in France, with peak-hour rates as high as €1,500.
In the Czech Republic, roughly 70,000 angry protesters, many with links to far-right groups, gathered in Wenceslas Square in Prague this past weekend to demonstrate against soaring energy bills.
The German, French and Finnish governments have already stepped in to save domestic power companies from bankruptcy. Even so, Uniper, which is based in Germany and one of Europe’s largest natural gas buyers and suppliers, said last week that it was losing more than €100 million a day because of the rise in prices.
International Monetary Fund this week to issue a proposal to reform the European Union’s framework for government public spending and deficits.
caps blunt the incentive to reduce energy consumption — the chief goal in a world of shortages.
Central banks in the West are expected to keep raising interest rates to make borrowing more expensive and force down inflation. On Thursday, the European Central Bank raised interest rates by three-quarters of a point, matching its biggest increase ever. The U.S. Federal Reserve is likely to do the same when it meets this month. The Bank of England has taken a similar position.
The worry is that the vigorous push to bring down prices will plunge economies into recessions. Higher interest rates alone won’t bring down the price of oil and gas — except by crashing economies so much that demand is severely reduced. Many analysts are already predicting a recession in Germany, Italy and the rest of the eurozone before the end of the year. For poor and emerging countries, higher interest rates mean more debt and less money to spend on the most vulnerable.
“I think we’re living through the biggest development disaster in history, with more people being pushed more quickly into dire poverty than has every happened before,” said Mr. Goldin, the Oxford professor. “It’s a particularly perilous time for the world economy.”
Energy experts said the reserve release would pack more punch if other countries, like China, also sold oil from their stockpiles. The International Energy Agency, an organization of more than 30 countries, will meet Friday and may recommend further releases from national reserves.
Russian oil exports normally represent more than one of every 10 barrels the world consumes. The United States, Britain and Canada have stopped importing Russian oil, and many oil companies and shippers in Europe have voluntarily stopped buying Russia’s energy products. That has produced a deficit so far of about three million barrels a day.
The average price of regular gasoline in the United States is $4.23 a gallon, according to AAA, the motor club. That’s about the same as it was a week ago but up 62 cents a gallon in the last month.
Oil prices had dropped this week after peace talks between Russia and Ukraine showed the first signs of progress. Energy traders are also concerned that demand could fall as China, the world’s largest oil importer, imposes lockdowns in Shanghai and other places to deal with coronavirus outbreaks.
“The price effect is likely to be short term,” David Goldwyn, who was a senior State Department official in the Obama administration, said about Mr. Biden’s announcement. “But part of the benefit of this release is that it will provide a bridge to when new physical supply comes online in the second half of this year from the U.S., Canada, Brazil and other countries.”
Some environmentalists criticized the reserve release. “Putting more oil on the market is not the solution to our problem but the perpetuation of our problem,” said Mark Brownstein, a senior vice president at the Environmental Defense Fund.
But Meghan L. O’Sullivan, director of the Geopolitics of Energy Project at Harvard’s Kennedy School, said releasing reserves to ease shortages would not imperil the transition to clean energy. “What the last month has told us is that if there is no energy security today, the appetite for taking hard steps on the path of transition will evaporate,” she said.
“For the moment I do plan to work in Russia,” he said. “How this may change in the future, especially if YouTube will be blocked, I don’t know.”
Unlike China, where domestic internet companies have grown into behemoths over more than a decade, Russia does not have a similarly vibrant domestic internet or tech industry.
Russia-Ukraine War: Key Things to Know
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Protests in Russia. Amid antiwar rallies across Russia, the police said more than 3,000 people were arrested Sunday, the highest nationwide total in any single day of protest in recent memory. An activist group that tracks arrests reported detentions in 49 different Russian cities.
So as it is cordoned off into its own digital ecosystem, the fallout may be severe. In addition to access to independent information, the future reliability of internet and telecommunications networks, as well as the availability of basic software and services used by businesses and government, is at risk.
Already, Russian telecom companies that operate mobile phone networks no longer have access to new equipment and services from companies like Nokia, Ericsson and Cisco. Efforts by Russian companies to develop new microprocessors were in doubt after Taiwan Semiconductor Manufacturing Company, the largest maker of essential semiconductors, halted shipments to the country. Yandex, Russia’s largest internet company, with a search engine more widely used than Google in Russia, warned it might default on its debts because of the crisis.
“The whole IT, hardware and software market that Russia relies on is gravely damaged right now,” said Aliaksandr Herasmenka, a researcher at the University of Oxford’s program on democracy and technology. The Russian authorities could respond by loosening rules that have made it illegal to download pirated software, he said.
The Ukrainian government has also pressured internet service providers to sever access in Russia. Officials from Ukraine have asked ICANN, the nonprofit group that oversees internet domains, to suspend the Russian internet domain “.ru.” The nonprofit has resisted these requests.
Denis Lyashkov, a self-taught web developer with more than 15 years of experience, said Russia’s censorship campaign was “devastating” for those who had grown up with a less restricted internet.
In exercising discretion over how unverified or false content is moderated, social media companies have decided to “pick a side,” according to Alex Stamos, the director of the Stanford Internet Observatory and a former head of security at Facebook.
“I think this demonstrates the limits of ‘fact-checking’ in a fast-moving battle with real lives at stake,” Mr. Stamos said. He added that technology platforms never created rules against misinformation overall, instead targeting specific behaviors, actors and content.
Russia-Ukraine War: Key Things to Know
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A Ukrainian city falls. Russian troops gained control of Kherson, the first city to be overcome during the war. The overtaking of Kherson is significant as it allows the Russians to control more of Ukraine’s southern coastline and to push west toward the city of Odessa.
That leaves the truth behind some wartime narratives, like an apparent assassination plot against Mr. Zelensky or simply the number of troops killed in battle, fairly elusive, even as official accounts and news media share the information.
Those narratives have continued as the war marches on, revealing the contours of an information war aimed not just at Western audiences but also Russian citizens. At the United Nations on Monday, the Ukrainian ambassador, Sergiy Kyslytsya, shared a series of text messages that he said were retrieved from the phone of dead Russian soldier.
“Mama, I’m in Ukraine. There is a real war raging here. I’m afraid,” the Russian soldier apparently wrote, according to Mr. Kyslytsya’s account, which he read in Russian. The tale seemed to evoke a narrative advanced by officials and shared extensively on social media that Russian soldiers are poorly trained, too young, and don’t want to be fighting their Ukrainian neighbors. “We are bombing all of the cities together, even targeting civilians.”
The story, whether true or not, appears tailor-made for Russian civilians — particularly parents fretting over the fate of their enlisted children, experts said.
“This is an age-old tactic that the Ukrainians are trying to use, and that is to draw the attention of the mothers and the families in Russia away from the more grandiose aims for war, onto, instead, the human costs of war,” said Ian Garner, a historian focusing on Russia who has followed Russian-language propaganda during the conflict. “We know that this is really effective.”
“If they don’t comply with the U.S., they’re in trouble with the U.S., but if they don’t comply with China, they could also face penalties in China,” he said.
Of course, collecting fines from companies that are unwilling to pay and monitoring whether businesses comply with the rules could be difficult, Mr. Chorzempa added. “It’s already proving difficult to monitor the things that are already controlled, and if you expand that list, that’s going to be a real challenge to verify what’s going to Russia,” he said.
Russia’s Attack on Ukraine and the Global Economy
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A rising concern. Russia’s attack on Ukraine could cause dizzying spikes in prices for energy and food and could spook investors. The economic damage from supply disruptions and economic sanctions would be severe in some countries and industries and unnoticed in others.
The cost of energy. Oil prices already are the highest since 2014, and they have risen as the conflict has escalated. Russia is the third-largest producer of oil, providing roughly one of every 10 barrels the global economy consumes.
Gas supplies. Europe gets nearly 40 percent of its natural gas from Russia, and it is likely to be walloped with higher heating bills. Natural gas reserves are running low, and European leaders have accused Russia’s president, Vladimir V. Putin, of reducing supplies to gain a political edge.
Shortages of essential metals. The price of palladium, used in automotive exhaust systems and mobile phones, has been soaring amid fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, another key Russian export, has also been rising.
Financial turmoil. Global banks are bracing for the effects of sanctions designed to restrict Russia’s access to foreign capital and limit its ability to process payments in dollars, euros and other currencies crucial for trade. Banks are also on alert for retaliatory cyberattacks by Russia.
The Biden administration’s export controls apply to goods produced in any country as long as they use U.S. technology — including chip makers like Taiwan Semiconductor Manufacturing Company and the Shanghai-based Semiconductor Manufacturing Industry Corporation.
Both of those companies continue to rely on the United States for certain components and manufacturing technology, said Gabriel Wildau, a managing director at Teneo, a consulting firm. If they continue supplying to Russia, SMIC and other Chinese companies could be cut off from U.S. technology, the same kind of penalty that crippled Huawei. On Friday, Taiwan Semiconductor said it was committed to complying with the export controls.
“If Beijing is viewed as Moscow’s enabler, pressure will rise in the U.S. Congress to extend these restrictions,” Mr. Wildau wrote in a note to clients. Beijing would also face the risk that other major technology exporters, like Japan, South Korea and the Netherlands, “would adopt Washington’s tougher line,” he said.
China’s state-owned banks could also face risks for continuing to lend to Russia. China and Russia have been settling more of their trade using the renminbi and the ruble. Beijing has also been trying to develop the digital use of its currency as an alternative to the dollar, which could help Russia limit the effect of financial sanctions.
But Chinese banks are still deeply reliant on the U.S. dollar. While major Chinese banks already appeared to be pulling back their financing for Russia, Mr. Wildau said, Beijing could choose to support Russia using smaller state-owned banks that don’t do a lot of international business that requires the use of the dollar.
Federal Reserve officials are turning a wary eye to Russia’s invasion of Ukraine, though several have signaled in recent days that geopolitical tensions are unlikely to keep them from pulling back their support for the U.S. economy at a time when the job market is booming and prices are climbing rapidly.
Stock indexes are swooning and the price of key commodities — including oil and gas — have risen sharply and could continue to rise as Russia, a major producer, responds to American and European sanctions.
That makes the invasion a complicated risk for the Fed: On one hand, its fallout is likely to further push up price inflation, which is already running at its fastest pace in 40 years. On the other, it could weigh on growth if stock prices continue to plummet and nervous consumers in Europe and the United States pull back from spending.
The magnitude of the potential economic hit is far from certain, and for now, central bank officials have signaled that they will remain on track to raise interest rates from near-zero in a series of increases starting next month, a policy path that will make borrowing money more expensive and cool down the economy.
invasion could disrupt the post-Cold War world order and warned that the jump in energy prices and fallout from sanctions “will complicate the ability of central banks on both sides of the Atlantic to engineer a soft landing from the pandemic inflation surge.”
Economists have been warning that a “soft landing” — in which central banks guide the economy onto a sustainable path without causing a recession — might be difficult to achieve at a time when prices have taken off and monetary policies across much of Europe and North America may need to readjust substantially.
“The shock of war adds to the enormous challenges facing central banks worldwide,” Isabel Schnabel, an executive board member at the European Central Bank, said during a Bank of England event on Thursday. She added that policymakers are monitoring the situation in Ukraine “very closely.”
Inflation is high around much of the world, and though it is slightly less pronounced in Europe, and E.C.B. policymakers are reacting more slowly to it than some of their global counterparts, recent high readings there have prompted some officials to edge toward policy changes.
dizzying spikes in prices for energy and food and could spook investors. The economic damage from supply disruptions and economic sanctions would be severe in some countries and industries and unnoticed in others.
The cost of energy. Oil prices already are the highest since 2014, and they have risen as the conflict has escalated. Russia is the third-largest producer of oil, providing roughly one of every 10 barrels the global economy consumes.
Gas supplies. Europe gets nearly 40 percent of its natural gas from Russia, and it is likely to be walloped with higher heating bills. Natural gas reserves are running low, and European leaders have accused Russia’s president, Vladimir V. Putin, of reducing supplies to gain a political edge.
Shortages of essential metals. The price of palladium, used in automotive exhaust systems and mobile phones, has been soaring amid fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, another key Russian export, has also been rising.
Financial turmoil. Global banks are bracing for the effects of sanctions designed to restrict Russia’s access to foreign capital and limit its ability to process payments in dollars, euros and other currencies crucial for trade. Banks are also on alert for retaliatory cyberattacks by Russia.
“The current situation is different from past episodes when geopolitical events led the Fed to delay tightening or ease because inflation risk has created a stronger and more urgent reason for the Fed to tighten today,” researchers at Goldman Sachs wrote in an analysis note.
Plus, with wages rising and consumers increasingly expecting high inflation in the coming years, the fact that the conflict has the potential to further elevate prices could strike the central bank as problematic.
“Further increases in commodity prices might be more worrisome than usual,” they wrote.
Some economists warned that the Russian invasion in some ways echoed the inflationary episode of the 1970s: Back then, price increases were already rapid, and a sharp oil price increase pushed inflation up further and made it stick around. The Arab oil embargo of 1973-74 and the Iranian revolution of 1979 both contributed to an oil supply shortage.
“There is something eerily reminiscent of the 1970s and the surge in energy prices associated with Russia’s invasion of the Ukraine,” Diane Swonk, chief economist at Grant Thornton, wrote on Twitter Thursday. “It couldn’t happen at a worse time as it is pouring fuel over an already kindled fire of inflation.”
Economists have released varying estimates of how much an oil price shock could bolster inflation in the coming months.
If oil increases to $120 per barrel by the end of February, past the $95 mark it hovered around last week, inflation as measured by the Consumer Price Index could climb close to 9 percent in the next couple of months, instead of a projected peak of a little below 8 percent, said Alan Detmeister, an economist at UBS who formerly led the prices and wages section at the Fed.
The Goldman researchers said that as a rule of thumb, a $10 per barrel increase in the price of oil would increase headline inflation in the United States by about a fifth of a percentage point, and lowers gross domestic product growth by just under 0.1 percentage point.
“The growth hit could be somewhat larger if geopolitical risk tightens financial conditions materially and increases uncertainty for businesses,” they wrote.
Russia’s threatened invasion of Ukraine could have economic repercussions globally and in the United States, ramping up uncertainty, roiling commodity markets and potentially pushing up inflation as gas and food prices rise around the world.
Russia is a major producer of oil and natural gas, and the brewing geopolitical conflict has sent prices of both sharply higher in recent weeks. It is also the world’s largest wheat exporter, and is a major food supplier to Europe.
The United States imports relatively little directly from Russia, but a commodities crunch caused by a conflict could have knock-on effects that at least temporarily drive up prices for raw materials and finished goods when much of the world, including the United States, is experiencing rapid inflation.
Global unrest could also spook American consumers, prompting them to cut back on spending and other economic activity. If the slowdown were to become severe, it could make it harder for the Federal Reserve, which is planning to raise interest rates in March, to decide how quickly and how aggressively to increase borrowing costs. Central bankers noted in minutes from their most recent meeting that geopolitical risks “could cause increases in global energy prices or exacerbate global supply shortages,” but also that they were a risk to the outlook for growth.
contending with quickly rising prices, businesses are trying to navigate roiled supply chains and people report feeling pessimistic about their financial outlooks despite strong economic growth.
“The level of economic uncertainty is going to rise, which is going to be negative for households and firms,” said Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics, noting that the effect would be felt most acutely in Europe and to a lesser degree in the United States.
A major and immediate economic implication of a showdown in Eastern Europe ties back to oil and gas. Russia produces 10 million barrels of oil a day, roughly 10 percent of global demand, and is Europe’s largest supplier of natural gas, which is used to fuel power plants and provide heat to homes and businesses.
The United States imports comparatively little Russian oil, but energy commodity markets are global, meaning a change in prices in one part of the world influences how much people pay for energy elsewhere.
It is unclear how much a conflict would push up prices, but energy markets have already been jittery — and fuel prices have risen sharply — on the prospect of an invasion.
loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.
What causes inflation? It can be the result of rising consumer demand. But inflation can also rise and fall based on developments that have little to do with economic conditions, such as limited oil production and supply chain problems.
Is inflation bad? It depends on the circumstances. Fast price increases spell trouble, but moderate price gains can lead to higher wages and job growth.
Can inflation affect the stock market? Rapid inflation typically spells trouble for stocks. Financial assets in general have historically fared badly during inflation booms, while tangible assets like houses have held their value better.
If a conflict drives global uncertainty and causes investors to pour money into dollars, pushing up the value of the currency, it could actually make United States imports cheaper.
Other trade risks loom. Unrest at the nexus of Europe and Asia could pose risk for supply chains that have been roiled by the pandemic.
Phil Levy, the chief economist at Flexport, said that Russia and Ukraine were far less linked into global supply chains than a country like China, but that conflict in the area could disrupt flights from Asia to Europe. That could pose a challenge for industries that move products by air, like electronics, fast fashion and even automakers, he said at an event at the National Press Foundation on Feb. 9.
“Air has been a means of getting around supply chain problems,” Mr. Levy said. “If your factory was going to shut because you don’t have a key part, you might fly in that key part.”
Some companies may not yet realize their true exposure to a potential crisis.
Victor Meyer, the chief operating officer of Supply Wisdom, which helps companies analyze their supply chains for risk, said that some companies were surprised by the extent of their exposure to the region during the Russian invasion of Ukraine in 2014, when it annexed Crimea.
Mr. Meyer noted that if he were a chief security officer of a company with ties to Ukraine, “I would militate rather strongly to unwind my exposure.”
There could also be other indirect effects on the economy, including rattling consumer confidence.
Households are sitting on cash stockpiles and probably could afford higher prices at the pump, but climbing energy costs are likely to make them unhappy at a moment when prices overall are already climbing and economic sentiment has swooned.
“The hit would be easily absorbed, but it would make consumers even more miserable, and we have to assume that a war in Europe would depress confidence directly too,” Ian Shepherdson at Pantheon Macroeconomics wrote in a Feb. 15 note.
Another risk to American economic activity may be underrated, Mr. Obstfeld said: The threat of cyberattack. Russia could respond to sanctions from the United States with digital retaliation, roiling digital life at a time when the internet has become central to economic existence.
“The Russians are the best in the world at this,” he said. “And we don’t know the extent to which they have burrowed into our systems.”
After getting battered by the pandemic, supply chain chokeholds and leaps in prices, the global economy is poised to be sent on yet another unpredictable course by an armed clash on Europe’s border.
Even before the Kremlin ordered Russian troops into separatist territories of Ukraine on Monday, the tension had taken a toll. The promise of punishing sanctions in return by President Biden and the potential for Russian retaliation had already pushed down stock returns and driven up gas prices.
An outright attack by Russian troops could cause dizzying spikes in energy and food prices, fuel inflation fears and spook investors, a combination that threatens investment and growth in economies around the world.
However harsh the effects, the immediate impact will be nowhere near as devastating as the sudden economic shutdowns first caused by the coronavirus in 2020. Russia is a transcontinental behemoth with 146 million people and a huge nuclear arsenal, as well as a key supplier of the oil, gas and raw materials that keep the world’s factories running. But unlike China, which is a manufacturing powerhouse and intimately woven into intricate supply chains, Russia is a minor player in the global economy.
spikes in heating and gas bills, which are already soaring. Natural gas reserves are at less than a third of capacity, with weeks of cold weather ahead, and European leaders have already accused Russia’s president, Vladimir V. Putin, of reducing supplies to gain a political edge.
United Nations report. Russia is the world’s largest supplier of wheat, and together with Ukraine, accounts for nearly a quarter of total global exports. For some countries, the dependence is much greater. That flow of grain makes up more than 70 percent of Egypt and Turkey’s total wheat imports.
This will put further strain on Turkey, which is already in the middle of an economic crisis and struggling with inflation that is running close to 50 percent, with skyrocketing food, fuel and electricity prices.
And as usual, the burden falls heaviest on the most vulnerable. “Poorer people spend a higher share of incomes on food and heating,” said Ian Goldin, a professor of globalization and development at Oxford University.
Ukraine, long known as the “breadbasket of Europe,” actually sends more than 40 percent of its wheat and corn exports to the Middle East or Africa, where there are worries that further food shortages and price increases could stoke social unrest.
Lebanon, for example, which is experiencing one of the most devastating economic crises in more than a century, gets more than half of its wheat from Ukraine, which is also the world’s largest exporter of seed oils like sunflower and rapeseed.
On Monday, the White House responded to Mr. Putin’s decision to recognize the independence of two Russian-backed territories in the country’s east by saying it would begin imposing limited sanctions on the so-called Donetsk and Luhansk People’s Republics. Jen Psaki, the White House press secretary, said Mr. Biden would soon issue an executive order prohibiting investment, trade and financing with people in those regions.
range of scenarios from mild to severe. The fallout on working-class families and Wall Street traders depends on how an invasion plays out: whether Russian troops stay near the border or attack the Ukrainian capital, Kyiv; whether the fighting lasts for days or months; what kind of Western sanctions are imposed; and whether Mr. Putin responds by withholding critical gas supplies from Europe or launching insidious cyberattacks.
“Think about it rolling out in stages,” said Julia Friedlander, director of the economic statecraft initiative at the Atlantic Council. “This is likely to play out as a slow motion drama.”
As became clear from the pandemic, minor interruptions in one region can generate major disruptions far away. Isolated shortages and price surges— whether of gas, wheat, aluminum or nickel — can snowball in a world still struggling to recover from the pandemic.
“You have to look at the backdrop against which this is coming,” said Gregory Daco, chief economist for EY-Parthenon. “There is high inflation, strained supply chains and uncertainty about what central banks are going to do and how insistent price rises are.”
at 7.5 percent in January, and is expected to start raising interest rates next month. Higher energy prices set off by a conflict in Europe may be transitory but they could feed worries about a wage-price spiral.
“We could see a new burst of inflation,” said Christopher Miller, a visiting fellow at the American Enterprise Institute and an assistant professor at Tufts University.
Also fueling inflation fears are possible shortages of essential metals like palladium, aluminum and nickel, creating another disruption to global supply chains already suffering from the pandemic, trucker blockades in Canada and shortages of semiconductors.
The price of palladium, for example, used in automotive exhaust systems, mobile phones and even dental fillings, has soared in recent weeks because of fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, used to make steel and electric car batteries, has also been jumping.
Understand How the Ukraine Crisis Developed
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Failed diplomatic efforts. The United States, NATO and Russia have been engaged in a whirlwind of diplomacy to prevent an escalation of the conflict. In December, Russia put forth a set of demands, including a guarantee that Ukraine would never join NATO. The West dismissed those demands and threatened economic consequences.
It’s too early to gauge the precise impact of an armed conflict, said Lars Stenqvist, the chief technology officer of Volvo, the Swedish truck maker. But he added, “It is a very, very serious thing.”
“We have a number of scenarios on the table and we are following the developments of the situation day by day,” Mr. Stenqvist said Monday.
The West has taken steps to blunt the impact on Europe if Mr. Putin decides to retaliate. The United States has ramped up delivery of liquefied natural gas and asked other suppliers like Qatar to do the same.
negotiations to revive a deal to curb Iran’s nuclear program. Iran, which is estimated to have as many as 80 million barrels of oil in storage, has been locked out of much of the world’s markets since 2018, when President Donald J. Trump withdrew from the nuclear accord and reimposed sanctions.
Some of the sanctions against Russia that the Biden administration is considering, such as cutting off access to the system of international payments known as SWIFT or blocking companies from selling anything to Russia that contains American-made components, would hurt anyone who does business with Russia. But across the board, the United States is much less vulnerable than the European Union, which is Russia’s largest trading partner.
Americans, as Mr. Biden has already warned, are likely to see higher gasoline prices. But because the United States is itself a large producer of natural gas, those price increases are not nearly as steep and as broad as elsewhere. And Europe has many more links to Russia and engages in more financial transactions — including paying for the Russian gas.
Oil companies like Shell and Total have joint ventures in Russia, while BP boasts that it “is one of the biggest foreign investors in Russia,” with ties to the Russian oil company Rosneft. Airbus, the European aviation giant, gets titanium from Russia. And European banks, particularly those in Germany, France and Italy, have lent billions of dollars to Russian borrowers.
“Severe sanctions that hurt Russia painfully and comprehensively have potential to do huge damage to European customers,” said Adam Tooze, director of the European Institute at Columbia University.
Depending on what happens, the most significant effects on the global economy may manifest themselves only over the long run.
economic ties to China. The two nations recently negotiated a 30-year contract for Russia to supply gas to China through a new pipeline.
“Russia is likely to pivot all energy and commodity exports to China,” said Carl Weinberg, chief economist at High Frequency Economics.
The crisis is also contributing to a reassessment of the global economy’s structure and concerns about self-sufficiency. The pandemic has already highlighted the downsides of far-flung supply chains that rely on lean production.
Now Europe’s dependence on Russian gas is spurring discussions about expanding energy sources, which could further sideline Russia’s presence in the global economy.
“In the longer term, it’s going to push Europe to diversify,” said Jeffrey Schott, a senior fellow working on international trade policy at the Peterson Institute for International Economics. As for Russia, the real cost “would be corrosive over time and really making it much more difficult to do business with Russian entities and deterring investment.”
Last Wednesday, a message appeared in a new WhatsApp channel called “Death to the Arabs.” The message urged Israelis to join a mass street brawl against Palestinian citizens of Israel.
Within hours, dozens of other new WhatsApp groups popped up with variations of the same name and message. The groups soon organized a 6 p.m. start time for a clash in Bat Yam, a town on Israel’s coast.
“Together we organize and together we act,” read a message in one of the WhatsApp groups. “Tell your friends to join the group, because here we know how to defend Jewish honor.”
That evening, live scenes aired of black-clad Israelis smashing car windows and roaming the streets of Bat Yam. The mob pulled one man they presumed to be Arab from his car and beat him unconscious. He was hospitalized in serious condition.
violence between Israelis and Palestinians escalated last week, at least 100 new WhatsApp groups have been formed for the express purpose of committing violence against Palestinians, according to an analysis by The New York Times and FakeReporter, an Israeli watchdog group that studies misinformation.
The WhatsApp groups, with names like “The Jewish Guard” and “The Revenge Troops,” have added hundreds of new members a day over the past week, according to The Times’s analysis. The groups, which are in Hebrew, have also been featured on email lists and online message boards used by far-right extremists in Israel.
While social media and messaging apps have been used in the past to spread hate speech and inspire violence, these WhatsApp groups go further, researchers said. That’s because the groups are explicitly planning and executing violent acts against Palestinian citizens of Israel, who make up roughly 20 percent of the population and live largely integrated lives with Jewish neighbors.
That is far more specific than past WhatsApp-fueled mob attacks in India, where calls for violence were vague and generally not targeted at individuals or businesses, the researchers said. Even the Stop the Steal groups in the United States that organized the Jan. 6 protests in Washington did not openly direct attacks using social media or messaging apps, they said.
The proliferation of these WhatsApp groups has alarmed Israeli security officials and disinformation researchers. In the groups, attacks have been carefully documented, with members often gloating about taking part in the violence, according to The Times’s review. Some said they were taking revenge for rockets being fired onto Israel from militants in the Gaza Strip, while others cited different grievances. Many solicited names of Arab-owned businesses they could target next.
do not plan attacks on the services for fear of being discovered.
The Israeli-Palestinian Conflict
A WhatsApp spokeswoman said the messaging service was concerned by the activity from Israeli extremists. She said the company had removed some accounts of people who participated in the groups. WhatsApp cannot read the encrypted messages on its service, she added, but it has acted when accounts were reported to it for violating its terms of service.
“We take action to ban accounts we believe may be involved in causing imminent harm,” she said.
In Israel, WhatsApp has long been used to form groups so people can communicate and share interests or plan school activities. As violence soared between Israel’s military and Palestinian militants in Gaza over the past week, WhatsApp was also one of the platforms where false information about the conflict has spread.
Tensions in the area ran so high that new groups calling for revenge against Palestinians began emerging on WhatsApp and on other messaging services like Telegram. The first WhatsApp groups appeared last Tuesday, Mr. Schatz said. By last Wednesday, his organization had found dozens of the groups.
People can join the groups through a link, many of which are shared within existing WhatsApp groups. Once they have joined one group, other groups are advertised to them.
The groups have since grown steadily in size, Mr. Schatz said. Some have become so big that they have branched off into local chapters that are dedicated to certain cities and towns. To evade detection by WhatsApp, organizers of the groups are urging people to vet new members, he said.
On Telegram, Israelis have formed roughly 20 channels to commit and plan violence against Palestinians, according to FakeReporter. Much of the content and messaging in those groups imitates what is in the WhatsApp channels.
On one new WhatsApp group that The Times reviewed, “The Revenge Troops,” people recently shared instructions for how to build Molotov cocktails and makeshift explosives. The group asked its 400 members to also provide addresses of Arab-owned businesses that could be targeted.
In another group with just under 100 members, people shared photos of guns, knives and other weapons as they discussed engaging in street combat in mixed Jewish-Arab cities. Another new WhatsApp group was named “The unapologetic right-wing group.”
After participating in attacks, members of the groups posted photos of their exploits and encouraged others to mimic them.
“We destroyed them, we left them in pieces,” said one person in “The Revenge Troops” WhatsApp group, alongside a photo showing smashed car windows. In a different group, a video was uploaded of black-clad Jewish youths stopping cars on an unnamed street and asking drivers if they were Jewish or Arab.
We beat “the enemy car-by-car,” said a comment posted underneath the video, using an expletive.
Over the weekend, Prime Minister Benjamin Netanyahu of Israel visited Lod, a mixed Jewish-Arab city in central Israel that has been the scene of recent clashes.
“There is no greater threat now than these riots, and it is essential to bring back law and order,” said Mr. Netanyahu.
Within some of the WhatsApp groups, Mr. Netanyahu’s calls for peace were ridiculed.
“Our government is too weak to do what is necessary, so we take it into our own hands,” wrote one person in a WhatsApp group dedicated to city of Ramle in central Israel. “Now that we have organized, they can’t stop us.”
NAIROBI, Kenya — Eritrean troops continue to commit atrocities in the northern Ethiopian region of Tigray, despite assurances by Ethiopia’s prime minister, Abiy Ahmed, that they were leaving, a senior United Nations official said Thursday.
Mr. Abiy has come under pressure over reports of massacres, looting and sexual assaults by Eritrean troops. Last month, he flew to the Eritrean capital, Asmara, and announced that his ally, the autocratic Eritrean leader Isaias Afwerki, had agreed to bring his soldiers home.
But the U.N. and its humanitarian partners have seen no evidence that such a withdrawal has taken place, Mark Lowcock, the top U.N. humanitarian official, told the Security Council. In fact, Mr. Lowcock said, Eritrean soldiers had begun to disguise their identities by wearing Ethiopian military uniforms, and some had killed civilians during indiscriminate attacks as recently as Monday.
The Times obtained a transcript of Mr. Lowcock’s remarks, which were made in a private briefing. They paint a grim picture of the violence in Tigray, where a clash between Mr. Abiy and regional leaders in November has degenerated into a chaotic and pitiless conflict that threatens to destabilize the entire Horn of Africa region.
“ethnic cleansing” earlier this month by the United States Secretary of State, Antony J. Blinken.
Hunger is spreading with up to 150 people starving to death recently in one district south of the Tigrayan capital, Mekelle, Mr. Lowcock told the Security Council.
involve sexual violence, the majority by men in uniform, he said. Girls as young as eight have been targeted.
In one instance, Mr. Lowcock said, Eritrean soldiers gang raped a woman in front of her children, days after her husband had been killed and she had lost a newborn baby.
said in a statement. “The U.N.’s most powerful body needs to end its paralysis.”
Rick Gladstone contributed reporting from New York.
