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Globalization, which has both fans and detractors alike, is being tested like never before after the one-two punch of COVID and war.

The pandemic had already raised questions about the world’s reliance on an economic model that has broken trade barriers but made countries heavily reliant on each other as production was delocalized over the decades.

Companies have been struggling to cope with major bottlenecks in the global supply chain.

Russia’s war in Ukraine has raised fears about further disruptions, with everything from energy supplies to auto parts to exports of wheat and raw materials under threat.

Larry Fink, the head of financial giant BlackRock, put it bluntly: “The Russian invasion of Ukraine has put an end to the globalization we have experienced over the last three decades.”

“We had already seen connectivity between nations, companies and even people strained by two years of the pandemic,” Fink wrote in a letter to shareholders Thursday.

But U.S. Treasury Secretary Janet Yellen disagrees.

“I really have to push back on that,” she told CNBC in an interview. 

“We’re deeply involved in the global economy. I expect that to remain, it is something that has brought benefits to the United States, and many countries around the world.”

‘An animal that evolves’

Shortages of surgical masks at the outset of the pandemic in 2020 became a symbol of the world’s dependence on Chinese factories for all sorts of goods.

The conflict between Russia and Ukraine has raised concerns about food shortages around the globe as the two agricultural powerhouses are among the major breadbaskets of the world.

It has also put a spotlight on Europe’s — and especially Germany’s — heavy dependence on gas supplies from Russia, now a state under crippling sanctions.

“A number of vulnerabilities” have emerged that show the limits of having supply chains spread out in different locations, the former director general of the World Trade Organization, Pascal Lamy, told AFP.

The global trade tensions have prompted the European Union, for instance, to seek “strategic autonomy” in critical sectors.

The production of semiconductors — microchips that are vital to industries ranging from video games to cars — is now a priority for Europe and the United States.

“The pandemic did not bring radical changes in terms of reshoring (bringing back business from overseas),” said Ferdi De Ville, professor at Ghent Institute for International & European Studies.

“But this time it might be different because (the conflict) will have an impact on how businesses think about their investment decisions, their supply chains,” he said.

“They have realized that what was maybe unthinkable before the past month has now become realistic, in terms of far-reaching sanctions,” said de Ville, author of an article on “The end of globalization as we know it.”

The goal now is to redirect strategic dependence towards allies, what he coined as “friend-shoring” instead of “off-shoring.”

A U.S.-EU agreement Friday to create a task force to wean Europe off its reliance on Russian fossil fuels is the most recent example of friend-shoring.

For Lamy, this shows “there is no de-globalization.”

Globalization, he said, is “an animal that evolves a lot.”

Decoupling from China

Globalization had already faced an existential crisis when former U.S. President Donald Trump launched a trade war with China in 2018, triggering a tit-for-tat exchange of punitive tariffs.

His successor, Joe Biden, invoked the need to “buy American” in his sweeping investment plan to “rebuild America.”

“We will buy American to make sure everything from the deck of an aircraft carrier to the steel on highway guardrails are made in America,” he said in his State of the Union speech.

One concept that emerged during the Trump years was “decoupling” — the idea of untangling the U.S. and Chinese economies.

The threat has not subsided, especially with China refusing to condemn Russia’s invasion of Ukraine.

The United States has warned the world’s second-biggest economy would face “consequences” if it provides material support to Russia in its war in Ukraine.

China already had other contentious issues with the West, such as Taiwan, the self-ruled democracy which Beijing has vowed to seize one day, by force if necessary.

“It is not in China’s interest for now to go into competition with the West,” said Xiaodong Bao, portfolio manager at the Edmond de Rothschild Asset Management firm.

But the war in Ukraine is a chance for China to reduce its reliance on the U.S. dollar. The Wall Street Journal reported that Beijing is in talks with Saudi Arabia to buy oil in yuan instead of dollars.

“China will continue to build foundations for the future,” Bao said. “The financial decoupling is accelerating.” 
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President Joe Biden intends to propose a spending plan for the 2023 budget year that would cut projected deficits by more than $1 trillion over the next decade, according to a fact sheet released Saturday by the White House budget office. 

In his proposal, expected Monday, the lower deficits reflect the economy’s resurgence as the United States emerges from the pandemic, as well as likely tax law changes that would raise more than enough revenue to offset additional investments planned by the Biden administration. It’s a sign that the government’s balance sheet will improve after a historic burst of spending to combat the coronavirus. 

The fading of the pandemic and the growth has enabled the deficit to fall from $3.1 trillion in fiscal 2020 to $2.8 trillion last year and a projected $1.4 trillion this year. That deficit spending paid off in the form of the economy expanding at a 5.7% pace last year, the strongest growth since 1984. But inflation at a 40-year high also accompanied those robust gains as high prices have weighed on Biden’s popularity. 

For the Biden administration, the proposal for the budget year that begins October 1 shows that the burst of spending helped to fuel growth and put government finances in a more stable place for years to come as a result. One White House official, insisting on anonymity because the budget has yet to be released, said the proposal shows that Democrats can deliver on what Republicans have often promised without much success: faster growth and falling deficits. 

Republicans focus on inflation

But Republican lawmakers contend that the Biden administration’s spending has led to greater economic pain in the form of higher prices. The inflation that came with reopening the U.S. economy as the closures from the pandemic began to end has been amplified by supply chain issues, low interest rates and, now, disruptions in the oil and natural gas markets because of Russia’s invasion of Ukraine. 

Senate Republican leader Mitch McConnell of Kentucky pinned the blame on Biden’s coronavirus relief as well as his push to move away from fossil fuels. 

“Washington Democrats’ response to these hardships has been as misguided as the war on American energy and runaway spending that helped create them,” McConnell said last week. “The Biden administration seems to be willing to try anything but walking back their own disastrous economic policies.” 

Biden inherited from the Trump administration a budget deficit that was equal in size to 14.9% of the entire U.S. economy. But the deficit starting in the upcoming budget year will be below 5% of the economy, putting the country on a more sustainable path, according to people familiar with the budget proposal who insisted on anonymity to discuss forthcoming details. 

The planned deficit reduction is relative to current law, which assumes that some of the 2017 tax cuts signed into law by former President Donald Trump will expire after 2025. The lower deficit totals will also be easier to manage even if interest rates rise. Still, Biden’s is offering a blueprint for spending and taxes that will eventually be decided by Congress and could vary from the president’s intentions. 

Economy expands

The expected deficit decrease for fiscal 2022 reflects the solid recovery in hiring that occurred in large part because of Biden’s $1.9 trillion coronavirus relief package. The added jobs mean additional tax revenue, with the government likely collecting $300 billion more in revenues compared to fiscal 2021, a 10% increase. 

Still, the country will face several uncertainties that could reshape Biden’s proposed budget, which will have figures that don’t include the spending in the omnibus bill recently signed into law. Biden and U.S. allies are also providing aid to Ukrainians who are fighting against Russian forces, a war that could possibly reshape spending priorities and the broader economic outlook. 
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The announcement Friday that the United States will help Europe find alternative sources for the 15 billion cubic meters of liquefied natural gas (LNG) that it imports from Russia every year sparked hopes that the region can reduce its reliance on Russia for energy — but it does nothing to reduce the vastly larger amount of pipeline gas that Europe buys from Moscow.

European Commission President Ursula von der Leyen and U.S. President Joe Biden announced the agreement in a joint appearance. Biden is in Europe for a series of meetings with other leaders to coordinate further responses to Russia’s invasion of Ukraine.

In prepared remarks, Biden said that Russian President Vladimir Putin “has used Russia’s energy resources to coerce and manipulate its neighbors.” He said reducing European demand for Russian gas would increase pressure on Russia to stop the war.

He noted that the U.S. had already banned all imports of Russian energy, saying that “the American people would not be part of subsidizing Putin’s brutal, unjustified war against the people of Ukraine.”

“The trans-Atlantic partnership stands stronger and more united than ever,” von der Leyen said. “And we are determined to stand up against Russia’s brutal war. This war will be a strategic failure for Putin.”

A mammoth task

In the wake of Russia’s invasion of Ukraine, countries across Europe have been reassessing their dependence on Russia for energy. Most notable was Germany’s decision to scrap the controversial Nord Stream 2 pipeline, which would have doubled the flow of Russian gas directly to Europe under the Baltic Sea.

Completely detaching Europe from Russian energy supplies will be extremely difficult, however.

While the 15 billion cubic meters (15 bcm) of LNG that the U.S. has pledged to help Europe find would replace virtually all the LNG that comes in from Russia, the countries of Europe buy an additional 150 bcm of Russian natural gas that is delivered via pipeline.

LNG and pipeline gas are the same product in different forms. LNG is compressed into a liquid for storage and transport and is “re-gasified” for use.

Europe ‘at capacity’ for LNG

Experts said that while the new sources of LNG could replace existing Russian LNG imports, they wouldn’t be able to reduce the region’s reliance on pipeline gas.

“Europe has an import capability that is limited, and they don’t have any additional infrastructure that is going to come online,” Charlie Riedl, executive director of the Center for Liquefied Natural Gas, told VOA. “Infrastructure that’s currently operational is basically running at capacity right now, and I would expect that it will run at capacity for the remainder of this year.”

Riedl said that coming into 2022, the amount of gas held in storage by European countries was well below recent averages, making the region especially vulnerable to potential supply disruptions.

In the longer term, Europe will be able to increase its capacity to import LNG, and the U.S. in turn can then increase the amount of LNG it produces and ships to Europe. On Friday, the Biden administration said that it would commit to “maintaining an enabling regulatory environment” with regard to “any additional export LNG capacities that would be needed to meet this emergency energy security objective.”

US energy industry

U.S. energy industry representatives appeared pleased with the announcement.

In a statement sent to VOA, American Petroleum Institute President and CEO Mike Sommers said, “We stand ready to work with the administration to follow this announcement with meaningful policy actions to support global energy security, including further addressing the backlog of LNG permits, reforming the permitting process, and advancing more natural gas pipeline infrastructure.”

He said that the industry had already begun the process of supplying Europe with more U.S.-sourced fuel.

“Over the past few months, American producers have significantly expanded LNG shipments to our allies, establishing Europe as the top U.S. LNG export destination,” Sommers said. “With effective policies on both sides of the Atlantic, we could do even more to support Europe’s long-term energy security and reduce their reliance on Russian energy.”

Reconciling with climate strategy

The creation of new fossil fuel infrastructure might seem difficult to square with pledges by both the European Union and the U.S. to move toward a carbon-neutral future.

However, Biden and von der Leyen on Friday reiterated their commitment to climate pledges and said that new LNG facilities will be constructed in a way that will allow them to be converted for a transition to hydrogen-based power.

In a statement, the White House said, “The United States and the European Commission will undertake efforts to reduce the greenhouse gas intensity of all new LNG infrastructure and associated pipelines, including through using clean energy to power onsite operations, reducing methane leakage, and building clean and renewable hydrogen-ready infrastructure.”

The U.S. and the European Commission also indicated that Europe, with U.S. assistance, will take other steps to reduce reliance on Russian gas, including reducing demand by bringing more renewable power resources online.
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U.N. economists warn prospects for global growth this year are rapidly fading as the adverse impact of the war in Ukraine kicks in.

The U.N. Conference on Trade and Development, UNCTAD, has downgraded a previous more optimistic projection of the world economy to reflect the new reality.

UNCTAD’S updated trade and development report estimates global economic growth will decrease to 2.6% from 3.6% in 2022. It said the main factor behind the significant downgrade is the great uncertainty surrounding the war in Ukraine.

The report said the extent of military destruction, the duration of the war and sanctions against the Russian Federation will compound the ongoing economic slowdown globally and weaken the recovery from the COVID-19 pandemic. It said Russia will experience a deep recession this year.

Director of UNCTAD’s division on globalization and development strategies, Richard Kozul-Wright, said the war likely will increase geopolitical tensions, determine national monetary policies, add to inflationary pressures and hike fuel and commodity prices. He said all regions of the global economy will be adversely affected by the crisis, some more than others.

European Union faces downgrade

“The European Union will see a fairly significant downgrade in its growth performance this year, but so will parts of central and southern Asia as well,” Kozul-Wright said. “… And countries that might not see a very significant downgrade in their growth performance, such as sub-Saharan Africa, are particularly vulnerable to some of the commodity price hikes that we see in those countries that are very large food importers, particularly wheat.”

Kozul-Wright said the very large level of external debt facing developing countries is of particular concern. The report projects developing countries will require $310 billion to service their external public debt this year.

“Partly as a consequence of the additional debt that was acquired during the COVID-19 shock … developing countries still cannot get the necessary fiscal support from the multilateral financial institutions that they need to be able to respond to unanticipated economic shocks,” Kozul-Wright said.

U.N. economists said measures to help developing countries cope with the crisis must be strengthened. They said there must be a more rigorous, serious, effective attempt to restructure their external debt so they can get back to a reasonable growth path.

 
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The number of Americans applying for unemployment benefits last week fell to its lowest level in 52 years as the U.S. job market continues to show strength in the midst of rising costs and an ongoing virus pandemic.

Jobless claims fell by 28,000 to 187,000 for the week ending March 19, the lowest since September of 1969, the Labor Department reported Thursday. First-time applications for jobless aid generally track the pace of layoffs.

The four-week average for claims, which compensates for weekly volatility, also fell to levels not seen in five decades. The Labor Department reported that the four week moving average tumbled to 211,750 from the previous week’s 223,250.

In total, 1,350,000 Americans were collecting jobless aid the week that ended March 12, another five-decade low.

Earlier this month, the government reported that employers added a robust 678,000 jobs in February, the largest monthly total since July. The unemployment rate dropped to 3.8%, from 4% in January, extending a sharp decline in joblessness to its lowest level since before the pandemic erupted two years ago.

U.S. businesses posted a near-record level of open jobs in January — 11.3 million — a trend has helped pad workers’ pay and added to inflationary pressures.

The Federal Reserve launched a high-risk effort last week to tame the worst inflation since the early 1980s, raising its benchmark short-term interest rate and signaling up to six additional rate hikes this year.

The central bank’s policymakers have projected that inflation will remain elevated, ending 2022 at 4.3%.

Earlier this month, the government reported that consumer inflation jumped 7.9% over the past year, the sharpest spike since 1982.
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The world is feeling the effects of the war in Ukraine from the gas pump all the way to the dinner table.

Food prices are climbing just about everywhere, raising the risk of civil unrest, especially in countries dependent on imported wheat from Russia and Ukraine. That includes much of the Middle East and North Africa.

Experts say the food price increases are happening at an especially bad time.

“It’s kind of a perfect storm,” said Cornell University economics professor Chris Barrett. “It’s not just a matter of, food prices are going high. It’s food prices are going high at a moment when many places are already crippled by the challenges posed by COVID, by political disruptions elsewhere, by droughts and floods and other natural disasters.”

“And there’s only so much that people can take before they grow displeased with their political leadership if it’s failing to take care of them,” he added. “So, unrest is, unfortunately, increasingly likely right now.”

Conflict worsens inflation

Russia is the world’s leading wheat exporter. Ukraine is number five. Together, they grow up to a third of the world’s wheat exports.

But when war broke out, the Black Sea became a combat zone. Some cargo ships took fire. It didn’t take sanctions to cut off exports.

“There wasn’t a ban on grain trade, but in effect the ports were closed. And so shipment has stopped,” said Texas A&M University economist Mark Welch.

“Countries that import from Ukraine and Russia have suddenly found their contracts canceled and they’re not getting food shipments they were expecting, which forces them into the market to pay a premium to replace food shipments that just aren’t going to arrive,” Barrett said. “And that bids up the price of food around the world.”

But food prices have been rising for almost two years.

Bad weather cut harvests in some of the world’s breadbaskets. Reserves are low.

That’s helped push prices to record highs even before the conflict started.

“We’ve tipped over that edge where every change, every little thing, has a very large impact,” University of Illinois economist Joe Janzen said.

More problems coming

Now, Ukraine’s next harvest is in doubt. Farmers should be getting ready for the next growing season. But that’s hard to do right now.

“Logistical lines are obviously heavily disrupted right now,” Barrett said. “Seeds aren’t arriving. Fuel isn’t arriving. Fertilizer isn’t arriving.”

Russia’s farmers are getting hit, too. They’re not under sanctions. But Russia’s banks are. That basically shuts Russian farmers out of the financial system.

“We’re not going to say, ‘You can’t ship grain,'” Welch said. “But will they ship it if they can’t get paid?”

Then there’s the sharp increase in energy prices that makes shipping everything more expensive.

Also, natural gas is a main ingredient in fertilizers commonly used to boost grain yields. So fertilizer costs more to make.

“Fertilizer prices last year were already quite high. They had come down somewhat in the last few months and now are very high again,” Janzen said, “in part because Russia and its ally Belarus are major fertilizer exporters.”

And Russia and Belarus are both under sanctions for the Ukraine invasion.

But those are problems for the next crop. People in parts of the Middle East and North Africa are feeling the effects now.

Fragile situations

“Yemen is a good case in point,” Barrett said. “There’s not a lot of wheat being grown in Yemen. They depend entirely upon wheat imports, and that requires transportation to get there.”

“The spike in global wheat prices plus the spike in global oil prices mean that prices for flour and for bread products in Yemen are already increasing significantly in a place where people really can’t afford to face an even higher cost of feeding their family basic daily rations,” he added.

In 2011, rising bread prices were one of the factors that set off the Arab Spring protests. When people already have grievances with their government, food inflation can tip them over the edge. A lot of places fit that description, according to U.N. World Food Program Chief Economist Arif Husain.

“If you look at Yemen, if you look at Lebanon, if you look at Syria, if you look at South Sudan, if you look at Ethiopia, and I can keep going,” Husain said in an interview with The Associated Press. “These countries are already in trouble because of conflicts.”

On the plus side, spring planting hasn’t started yet in some big wheat-growing countries. Farmers will probably switch some land where they planned to grow corn or soybeans to planting wheat. That should eventually bring the price down.

“That seems to be the main way that these crises are inevitably resolved is by production somewhere else in the world responding,” Janzen said. “We are fortunate that we have a global food system. We have the ability to produce and consume commodities like wheat all around the world.”

It will be months before the markets have a sense of how big the new crop will be, however. Those will be nail-biting months of watching the weather. Experts say, be ready for a wild ride.
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Kenya’s tea and flower exporters say global sanctions to punish Russia for invading Ukraine have halted millions of dollars of Kenyan trade with Russian importers. While they hope for peace, Kenyan traders are looking for alternative buyers. Victoria Amunga reports from Kajiado, Kenya.
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Companies would be required to disclose the greenhouse gas emissions they produce and how climate risk affects their business under new rules proposed Monday by the Securities and Exchange Commission as part of a drive across the government to address climate change. 

Under the proposals adopted on a 3-1 SEC vote, public companies would have to report on their climate risks, including the costs of moving away from fossil fuels, as well as risks related to the physical impact of storms, drought and higher temperatures caused by global warming. They would be required to lay out their transition plans for managing climate risk, how they intend to meet climate goals and progress made, and the impact of severe weather events on their finances. 

The number of investors seeking more information on risk related to global warming has grown dramatically in recent years. Many companies already provide climate-risk information voluntarily. The idea is that, with uniform required information, investors would be able to compare companies within industries and sectors. 

“Companies and investors alike would benefit from the clear rules of the road” in the proposal, SEC Chairman Gary Gensler said. 

The required disclosures would include greenhouse gas emissions produced by companies directly or indirectly — such as from consumption of the company’s products, vehicles used to transport products, employee business travel and energy used to grow raw materials. 

The SEC issued voluntary guidance in 2010, but this is the first-time mandatory disclosure rules were put forward. The rules were opened to a public comment period of around 60 days and they could be modified before any final adoption. 

Climate activists and investor groups have clamored for mandatory disclosure of information that would be uniformly required of all companies. The advocates estimate that excluding companies’ indirect emissions would leave out some 75% of greenhouse gas emissions. 

“Investors can only assess risks if they know they exist,” Mike Litt, consumer campaigns director of the U.S. Public Interest Research Group, said in a prepared statement. “Americans’ retirement accounts and other savings could be endangered if we don’t acknowledge potential liabilities caused by climate change and take them seriously.” 

“Climate risks and harms are growing across our communities with threats to our economy,” said Rep. Kathy Castor, D-Fla., chair of the House Select Committee on the Climate Crisis. “Investors, pension fund managers and the public need better information about the physical and transition-related risks that climate change poses to hard-earned investments,” 

On the other hand, major business interests and Republican officials — reaching down to the state level — began mobilizing against the climate disclosures long before the SEC unveiled the proposed rules Monday, exposing the sharply divided political dynamic of the climate issue. 

Hester Peirce, the sole Republican among the four SEC commissioners, voted against the proposal. “We cannot make such fundamental changes without harming” companies, investors and the SEC, she said. “The results won’t be reliable, let alone comparable.” 

The SEC action is part of a government-wide effort to identify climate risks, with new regulations planned from various agencies touching on the financial industry, housing and agriculture, among other areas. President Joe Biden issued an executive order last May calling for concrete steps to blunt climate risks, while spurring job creation and helping the U.S. reduce greenhouse gas emissions that contribute to climate change. 

Biden has made slowing climate change a top priority and has set a target to cut U.S. greenhouse gas emissions by as much as 52% below 2005 levels by 2030. He also has said he expects to adopt a clean-energy standard that would make electric power carbon-free by 2035, along with the wider goal of net-zero carbon emissions through the economy by 2050. 

“This is a huge step forward to protect our economy and boost transparency for investors and the public,” White House national climate adviser Gina McCarthy tweeted as the SEC acted. 

The premier business lobby, the U.S. Chamber of Commerce, and the American Petroleum Institute, the oil industry’s top trade group, expressed objections in letters to the SEC last year. 

Frank Macchiarola, senior vice president of policy, economics and regulatory affairs at API, said Monday the group is concerned that the SEC’s proposal could require disclosure of information that isn’t significant for investors’ decisions, “and create confusion for investors and capital markets.” 

“As the (SEC) pursues a final rule, we encourage them to collaborate with our industry and build on private-sector efforts that are already underway to improve consistency and comparability of climate-related reporting,” Macchiarola said in a statement. 

The threat that opponents could take the SEC to court over the regulations has loomed. 

Last June, a group of 16 Republican state attorneys general, led by Patrick Morrisey of West Virginia, raised objections in a letter to SEC Chairman Gensler. “Companies are well positioned to decide whether and how to satisfy the market’s evolving demands, for both customers and investors,” they said. “If the (SEC) were to move forward in this area, however, it would be delving into an inherently political morass for which it is ill-suited.” 

Morrisey previously threatened to sue the SEC over expanded disclosures from companies of environmental, social and governance information. 

 
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India is considering establishing a payment mechanism in local currencies to allow it to continue trade with Russia, which has been hit with Western sanctions in response to its invasion of Ukraine.

New Delhi is proceeding with purchases of Russian crude at discounted prices despite pressure from the United States.

The state-run Indian Oil Corp. has concluded a deal to buy 3 million barrels of Russian crude, according to local media reports.

Although it has not officially confirmed the deal, India has defended the country’s decision to look at purchasing Russian oil.

“A number of countries are importing energy from Russia, especially in Europe,” Indian External Affairs Ministry spokesman Arindam Bagchi told reporters earlier this week. He said India, which imports most of its oil, is “always exploring all possibilities in global energy markets.”

While the United States has banned Russian oil imports, several European countries, such as Germany, which are dependent on Russian imports of energy, continue to buy it. India, the world’s third-largest oil importer, imports only about 3% of its crude from Russia, but cheap Russian oil could help cushion its economy from spiraling international crude prices.

India will study the impact of Western sanctions against Russia while devising a payment mechanism to settle its trade with Moscow officials say.

“We will await details to examine the impact on our economic exchanges with Russia,” according to Bagchi.

As sanctions limit Russia’s ability to do business in major currencies such as the dollar or the euro, an Indian business body has asked the government to set up a rupee-ruble mechanism to facilitate trade.

“We have proposed that local currency trading may be explored in the given situation. It is one of the plausible options that are on the table,” according to Ajay Sahai, director general of the Federation of Indian Export Organizations. Indian exporters say payments of about $500 million are stuck because Russian buyers cannot pay in foreign exchange.

Work was ongoing to set up a rupee-ruble trade mechanism to be used to pay for oil and other goods, an Indian official, who refused to be identified, has told Reuters.

The trade in local currencies could take place between Russian banks and companies with accounts in Indian state-run banks.

This is not the first time that such a mechanism is being considered — India and the former Soviet Union had a rupee-ruble exchange plan in place during the Cold War to bypass the U.S. dollar.

India has also used a similar program with Iran, under Western sanctions for its nuclear weapons program.

New Delhi has taken a neutral stance on the Russian invasion, calling for a cease-fire and diplomacy to resolve the crisis, but abstaining from condemning Moscow, with which it has longstanding ties.

It has been under pressure from Washington, which has been urging India to the U.S. and other countries’ tough stand on the invasion.

When asked if the U.S. plans to reach out to India for curbs on oil purchases from Russia, White House press secretary Jen Psaki said Friday that Washington has been in touch with Indian leaders but added that countries have different “economic reasoning,” including some in Europe.

“But what we would project or convey to any leader around the world is that the world — the rest of the world is watching where you’re going to stand as it relates to this conflict, whether its support for Russia in any form as they are illegally invading Ukraine,” she told reporters.

New Delhi however has shown no indication that it will weaken trade or strategic ties to Russia — Moscow supplies India with more than 70% of its weapons, which are critical for New Delhi as it faces Chinese troops all along its Himalayan border. During a visit three months ago by Russian President Vladimir Putin to New Delhi, both countries pledged to increase trade in the defense and energy sectors.

Analysts in New Delhi are optimistic that differences over Russia will not harm ties with Washington, which have grown in recent years as both India and the United States look at how to contain a more assertive China.

“It is not as if U.S. and India are on the same page on every issue,” said Sreeram Chaulia, dean of the Jindal School of International Affairs at O.P. Jindal University. Pointing out that India’s focus is primarily Asia and Indo-Pacific region, he said, “We are really fearful of what China could do along our borders and that remains our primary concern. And New Delhi feels that whether or not we take a joint position on Ukraine with the U.S., the Europeans and others, they will still partner with us to counterbalance China.”

That is why India believes that it can navigate its partnerships with both Russia and the United States for the time being, analysts such as Chaulia say.

However, if the war in Ukraine does not wind down and the crisis drags on, he said “then we will have to readjust our position.”
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Weeks of scarce fuel coupled with a failing national electricity grid are hurting countless small businesses across Nigeria. Some businesses have temporarily shut down, while others reduced hours to cope with the energy shortage.

In January, Toochukwu Ohatu started a tailoring business to supplement her laundry business and make some extra cash.

But barely three weeks after she set up, the business was almost grounded by the electricity issues affecting millions of Nigerians. Without power, there’s no way to run a sewing machine.

“It’s just impossible to work and then as a new mom, everything,” she said. “I mean starting my tailoring business in January was a major leap for me and then we’re struck with the fuel scarcity, no power supply.”

The electricity supply was interrupted some two weeks ago when the national power grid malfunctioned due to glitches in the operating system.

Ohatu said she barely has one hour of electricity a day and it’s affecting her productivity and income.

Authorities blame the fuel scarcity on the recall in January of about 170 million liters of tainted fuel imported from Europe. In February, the government announced it has released one billion liters of fuel from the national reserve to normalize distribution.

But amid a worldwide rise in oil and gas prices, the situation has dragged on and is affecting the overall economy.  This week, Nigeria’s Statistics Bureau said the country’s annual inflation rate has increased to 15.7 percent.

“It’s been a tussle, it’s almost becoming a new normal,” said Abuja resident and driver Mohammed Enesi. “Because we’re so resilient, we feel we can adapt.”

Nigeria is Africa’s biggest oil producer but struggles to meet its energy needs.

Only about 47 percent of Nigerians have access to electricity when it is available, according to World Bank estimates. Nigerian authorities in 2020 signed an electricity deal with German counterparts to improve the supply.

But analysts say the energy shortage is impacting citizens negatively.

“Somehow we’ve not been able to get the dynamics right,” said analyst Rotimi Olawale. “To be very fair and honest in the last couple of years we have not witnessed this fuel scarcity that we’re seeing now. The initial explanation they gave to us I don’t think it holds water anymore. It puts a lot of pressure on people.”

This week, Nigeria’s president, Muhammadu Buhari, promised citizens that the fuel and electricity issues will soon be over.

But until the situation improves, millions of people and businesses will continue to suffer.
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Many western companies and brands have temporarily closed their locations in Russia or stopped selling products there. But officials for the some of the companies say they will continue to support their employees. Karina Bafradzhian has the story, narrated by Anna Rice. VOA footage by Artyom Kohkan.
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One man’s loss may be another’s unfortunate gain, and the Ukraine conflict is proving a boon to some energy-producing nations as oil prices soar.

The war has given an unexpected boost to Norway’s oil revenues and now the country, concerned it will be seen as a war profiteer, is mulling what to do with its sudden windfall.

Fueled by the sanctions imposed on Russia after its invasion of Ukraine, the surge in oil and natural gas prices could see Norway racking up almost $170 billion in extra oil and gas revenue this year, according to Nordea bank.

Western Europe’s biggest oil and gas exporter and one of the richest countries in the world, Norway could pocket nearly $5,680 more than expected every second of the day without lifting a finger.

But the boon is giving it a guilty conscience.

“There are times when it’s not fun to make money, and this is one of them, given the situation,” said Petroleum and Energy Minister Terje Aasland in an interview with television channel TV2.

Most of Norway’s oil revenue ends up in the state’s coffers, through taxes, dividends and direct holdings in oil and gas fields, which it then places in its sovereign wealth fund, already the world’s biggest.

The fund has suffered from the global stock market falls in recent weeks but is still worth around $227,000 for each of Norway’s 5.4 million inhabitants.

“Norway cannot escape the unpleasant fact: This is a form of war profit,” the daily Dagbladet wrote in an editorial.

“While Ukraine is being destroyed, and most other countries are mainly feeling the negative effects of the war, such as higher energy prices, higher food prices and general inflation, we are making a gain,” it said.

“This must be reflected in the way we think about the use of money,” it added.

Multiuse Marshall Plan?

Many want to see a redistribution of all or part of the war gains.

Norway’s Green Party has called for the billions of additional petrodollars to be placed in a solidarity fund to be used as a sort of Marshall Plan for various needs.

It could be used to finance both humanitarian aid and the reconstruction of Ukraine, help Europe reduce its dependence on Russian gas and help the poorest countries counter soaring costs for energy and food, the party suggested.

“The extra oil revenue from the war should go to Ukraine, not us,” it said.

The center-left government has so far pledged up to $227 million in humanitarian aid to Ukraine.

‘Display leadership’

Prime Minister Jonas Gahr Store has insisted that Norway can help most by supplying as much gas as possible to Europe to help reduce its dependency on Russia.

Norway covers between 20% and 25% of the European Union’s and Britain’s needs via a vast network of gas pipelines, compared with between 45% and 50% for Russia.

European Climate Pact ambassador Paal Frisvold meanwhile suggested that Norway should forgo the profits and cap the price of gas sold to European countries, which are just emerging from the pandemic, some with heavy debts.

“Our profits are the invoices of others,” he told AFP.

“The most important thing is to show solidarity, to display leadership at a historic moment. My kids are going to ask me, ‘Dad, what did Norway do during the Ukraine war?’ I don’t want to tell them that we made a killing,” he said.

Norway’s government, which is currently drawing up its spring budget, said there was currently no plan for such a cap.
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Fewer Americans applied for unemployment benefits last week as layoffs continue to fall amid a strong job market rebound.

Jobless claims fell by 15,000 to 214,000 for the week ending March 12, down from the previous week’s 229,000, the Labor Department reported Thursday. First-time applications for jobless aid generally track the pace of layoffs.

The four-week average for claims, which compensates for weekly volatility, fell to 223,000 from the previous week’s 231,750.

In total, 1,419,000 Americans — a 50-year low — were collecting jobless aid the week that ended March 5, down 71,000 from the week before that.

Earlier this month, the government reported that employers added a robust 678,000 jobs in February, the largest monthly total since July. The unemployment rate dropped to 3.8%, from 4% in January, extending a sharp decline in joblessness to its lowest level since before the pandemic erupted two years ago.

U.S. businesses posted a near-record level of open jobs in January — 11.3 million — a trend has helped pad workers’ pay and added to inflationary pressures.

The Federal Reserve launched a high-risk effort Wednesday to tame the worst inflation since the early 1980s, raising its benchmark short-term interest rate and signaling up to six additional rate hikes this year.

The Fed’s quarter-point hike in its key rate, which it had pinned near zero since the pandemic recession struck two years ago, marks the start of its effort to curb the high inflation that followed the recovery from the recession. The rate hikes will eventually mean higher loan rates for many consumers and businesses.

The central bank’s policymakers expect inflation to remain elevated, ending 2022 at 4.3%, according to quarterly projections they released Wednesday.

Last week, the government reported that consumer inflation jumped 7.9% over the past year, the sharpest spike since 1982.

 
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Reports of counterfeit banknotes circulating in Myanmar have skyrocketed in recent weeks amid the junta’s mismanagement of the economy, but experts say the military regime is ill-equipped to address the problem because officials “only know how to give orders” but not implement them.

Since February, a growing number of posts have appeared on social media allegedly documenting fake high-denomination bills involved in public cash transactions, while offers for counterfeit kyats are commonly advertised online or papered on walls at bus terminals in cities and towns across the country.

Earlier this week, Facebook user “Rose Angle” posted a video in which he complained about a growing number of fake kyats and provided a demonstration of how the dye could be washed off one he claimed to have obtained simply by holding it under a running faucet. The post received several responses by users who included photos of what they claimed were counterfeit bills they had received in cash transactions.

RFA’s Myanmar Service spoke with sources in the business and banking communities, as well as other members of the public, who said they had personally dealt with fake currency and described the problem as increasingly severe.

A salesperson based in the seat of Bago region’s Pyay township told RFA that he was recently made to cover his company’s loss after he accepted counterfeit banknotes in one cash transaction.

“We didn’t realize it at first, but when we brought the notes to the bank, they determined that some of them were counterfeits,” he said, speaking on condition of anonymity.

“When such fake notes are discovered, we must pay from our own pockets and it’s not easy to do that when there are two or three 10,000-kyat counterfeit notes. It hurts a lot. Thirty thousand kyats [$17] is a lot for us.”

The salesperson said a similar incident occurred in mid-February and that he had discovered counterfeit currency twice that month. He now regularly examines the watermarks and thickness of all bills during cash transactions but noted that spotting fakes is difficult for average people who lack the tools to detect them.

Soe Tun, a businessman in the commercial capital Yangon, told RFA he had been forced to obtain a counterfeit bill detector because of the increase in fake bills in circulation.

“We have to be very careful these days as counterfeits are now more common than ever before,” he said, suggesting the problem had worsened since the junta seized power in a Feb. 1, 2021, coup, sending the economy into a freefall.

“For money changers, there are machines to detect these counterfeit notes, but they aren’t accessible to ordinary people. Otherwise, your best option is to deal with payments through bank accounts, particularly if there is a large amount of money involved.”

Other sources noted a proliferation of advertisements in recent weeks offering 1 million kyats [$560] worth of counterfeit bills for as little as 100,000 kyats [$56], which they said had exacerbated the problem.

Investigation under way

Aung Kyaw Than, the junta’s director general of the Central Bank’s financial management department, told RFA that efforts are being made to crack down on the sale of counterfeit notes online.

But he said that reports of such services are overblown.

“These are likely rumors, as I haven’t seen such sales being made,” he said, adding that the junta’s Ministry of Home Affairs “is investigating the matter to take proper action.”

Junta Deputy Information Minister Zaw Min Tun outright dismissed concerns over the reports of counterfeiting.

“We have discovered some counterfeit notes, but it wasn’t a lot,” he said, adding that the fakes “were not of high quality.”

“We’re also watching what’s happening on social media and trying to find out the source of the reports. We have found that [offers of counterfeit bills] weren’t being acted on. I just want to say that there’s no need to worry about this problem.”

The junta comments follow media reports citing an official announcement in January which said a police raid on counterfeit bill producers in Karen state’s Myawaddy township had nabbed more than 1,700 fake 10,000-kyat denomination bills along with uncut sheets of paper used to print currency.

Economist Zaw Pe Win said the problem will continue if the junta fails to put systematic controls in place.

“The problem with the military is that it only knows how to give orders, but it offers no systematic or technical policy for how to implement them. The junta just tries to fix problems however it sees fit,” he said.

“If the military doesn’t change that approach, things won’t get any better. Criminals will produce counterfeits, if given a chance, and they will be distributed to the public. Unless the junta can find an effective way to stop this, the situation will become worse.”

Zaw Pe Win said that the junta’s violent repression of anti-coup protests had destroyed investor confidence in Myanmar and the resulting economic turmoil, but ordinary people are the ones suffering the consequences.

He said the military must normalize foreign trade relations and provide stability if it hopes to repair the economy but has so far been unable or unwilling to do so.

Meanwhile, the proliferation of counterfeit notes has only added to the anxiety of a population already grappling with a rapidly depreciating kyat, rising commodity prices, and worsening food shortages in the wake of the coup.
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The U.S. Federal Reserve launched a high-risk effort Wednesday to tame the worst inflation since the early 1980s, raising its benchmark short-term interest rate and signaling up to six additional rate increases this year. 

The Fed’s quarter-point hike in its key rate, which had been pinned near zero since the pandemic recession struck two years ago, marks the start of its effort to curb the high inflation that followed the recovery from the recession. The rate hikes will eventually mean higher loan rates for many consumers and businesses. 

The central bank, in a policy statement, along with quarterly projections and remarks by Chair Jerome Powell at a news conference, pointed to a somewhat more aggressive approach to rate hikes than many analysts had expected. 

The projections showed that seven of the central bank’s 16 policymakers favor at least one half-point rate hike this year, suggesting that such a large increase is possible, said Michael Feroli, an economist at JPMorgan Chase. 

At his news conference, Powell stressed his confidence that the economy is strong enough to withstand higher interest rates. But he also made clear that the Fed is focused on doing whatever it takes to reduce inflation, over time, to its 2% annual target. Otherwise, Powell warned, the economy might not sustain its recovery from the pandemic recession. 

“We’re acutely aware of the need to restore price stability,” the Fed chair said. “In fact, it’s a precondition for achieving the kind of labor market that we want. You can’t have maximum employment for any sustained period without price stability.” 

Quarterly projections  

The Fed also released a set of quarterly economic projections Wednesday that underscored the potential for extended interest rate increases in the months ahead. Seven hikes would raise its short-term rate to between 1.75% and 2% at the end of 2022. Fed officials also forecast four more rate increases in 2023, which would boost its benchmark rate to 2.8%. 

That would be the highest level since March 2008. Borrowing costs for mortgage loans, credit cards and auto loans will likely rise as a result. 

“Clearly, inflation has moved front and center into the Fed’s thinking,” said Tim Duy, chief U.S. economist at SGH Macro Advisors. 

The central bank’s policymakers expect inflation to remain elevated, ending 2022 at 4.3%, according to quarterly projections they released Wednesday. The officials also forecast a much slower economic growth of 2.8% this year, down from a 4% estimate in December. 

But many economists worry that with inflation already so high — it reached 7.9% in February, the worst in four decades — and with Russia’s invasion of Ukraine driving up gas prices, the Fed may have to raise rates even higher than it now expects and potentially cause a recession. 

By its own admission, the central bank underestimated the breadth and persistence of high inflation after the pandemic struck. And many economists say the Fed has made its task riskier by waiting too long to begin raising rates. 

The Fed’s projections show that by the end of next year, the policymakers expect their short-term rate to be above “neutral” — the level at which they think the rate neither fuels nor slows economic growth. 

Roberto Perli, an economist at Piper Sandler, questioned Powell’s assurances that the economy could withstand such higher rates. 

“In the past, whenever the Fed has approached — let alone exceeded — neutral, the economy weakened sharply,” Perli wrote in a note to clients. “The risk of recession in 2023 and beyond is increasing.” 

Powell’s predictions 

Yet Powell downplayed the likelihood of an economic setback. 

“The probability of a recession in the next year is not particularly elevated,” he said. 

At his news conference, Powell said he believed that inflation would slow later this year as supply chain bottlenecks clear and more Americans return to the job market, easing upward pressure on wages. 

He also suggested that over time, the Fed’s higher rates will reduce consumer spending on interest rate-sensitive items such as autos and cars. Americans may also buy less as credit card rates increase. Those trends would eventually reduce businesses’ demand for workers and slow pay raises, which are running at a robust 6% annual rate, and ease inflation pressures. 

Powell noted that there are a near-record number of job openings, leaving 1.7 available jobs, on average, for every unemployed person. As a result, he expressed confidence that the Fed can lower demand for workers and wage growth without increasing unemployment. 

“All signs are that this is a strong economy,” he said, “one that will be able to flourish in the face of less accommodative monetary policy.” 

The Fed’s forecast for numerous additional rate hikes in the coming months initially disrupted a strong rally on Wall Street, weakening stock gains and sending bond yields up. But stock prices more than recovered their gains soon after the press conference began. 

Most economists say that sharply higher rates are long overdue to combat the escalation of inflation across the economy. 

“With the unemployment rate below 4%, inflation nearing 8%, and the war in Ukraine likely to put even more upward pressure on prices, this is what the Fed needs to do to bring inflation under control,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association. 

Powell is steering the Fed into a sharp U-turn. Officials had kept rates ultra-low to support growth and hiring during the recession and its aftermath. As recently as December, Fed officials had expected to raise rates just three times this year. 

One member of the Fed’s rate-setting committee, James Bullard, head of the Federal Reserve Bank of St. Louis, dissented from Wednesday’s decision. Bullard favored a half-point rate hike, a position he has advocated in interviews and speeches. 

The Fed also said it would begin to reduce its nearly $9 trillion balance sheet, which has more than doubled in size during the pandemic, “at a coming meeting.” That step will also have the effect of tightening credit for many consumers and businesses. 

Since its last meeting in January, the challenges and uncertainties for the Fed have escalated. Russia’s invasion has magnified the cost of oil, gas, wheat and other commodities. China has closed ports and factories again to contain a new outbreak of COVID-19, which will worsen supply chain disruptions and likely further fuel price pressures. 

In the meantime, the sharp rise in average gas prices since the invasion, up more than 60 cents to $4.31 a gallon nationally, will send inflation higher while also probably slowing growth — two conflicting trends that are notoriously difficult for the Fed to manage simultaneously. 

 
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India is exploring the possibility of buying oil from Russia amid sanctions imposed by Western countries in the wake of its invasion of Ukraine.

India’s petroleum and natural gas minister, Hardeep Singh Puri, said in parliament Tuesday that the government was having discussions with Russia on crude oil purchases.

“I myself have had a conversation with the appropriate levels of the Russian federation. There are discussions currently underway,” he told lawmakers. Puri said that the government was looking at issues such as availability and payment for the crude.

A report in the Times of India newspaper said that India is close to finalizing a deal to buy 3.5 million barrels of Russian crude at “deep discounts.” It attributed the report to people aware of the development but who requested anonymity to discuss the matter.

India is the world’s third largest importer of oil, depending on crude from overseas for over 80% of its needs.

The bulk of its supplies come from the Middle East and the United States, with Russian crude accounting for only about three per cent of its imports.

But the wild fluctuation in international prices following the outbreak of fighting in Ukraine has raised worries about the impact of a ballooning oil import bill on the nascent economic recovery that the country has posted in the last year.

Analysts say New Delhi’s talks on the purchase of crude from Moscow signal that India will keep the doors to trade with Russia open.

Russia has urged India to increase oil exports and investment. In a statement last Friday, Russian Deputy Prime Minister Alexander Novak said that Russia’s oil and petroleum product exports to India have approached $1 billion and there are “clear opportunities to increase this figure.” He also told Petroleum Minister Puri that Moscow was “interested in further attracting Indian investment to the Russian oil and gas sector and expanding Russian companies’ sales networks in India.”

Asked about the possibility that India could take up the Russian offer of discounted crude oil at her daily press briefing on Tuesday, White House Press Secretary Jen Psaki said, “Our message to any country continues to be that abide by the sanctions that we have put in place and recommended. But I don’t believe this would be violating that (sanctions).”

“But also think about where you want to stand when history books are written in this moment in time. And support for the Russian leadership is support for an invasion that obviously is having a devastating impact,” she added.

While the United States has banned Russian oil imports, the European Union has issued sanctions against some Russian companies without banning the purchase of Russian oil.

Resisting pressure from the United States and other Western allies, India has abstained from voting against Moscow at the United Nations. Analysts cite the country’s huge dependence on Russian weapons for its position.

India has called for an end to violence and a diplomatic solution to the crisis in Ukraine. But New Delhi has found itself in a difficult situation as it tries to balance its longstanding ties with Russia with its growing strategic partnership with Washington, that is seen as critical in countering China.
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Traditional Kashmiri carpet weavers are turning to a 21st century technology already embraced by French winemakers and other international purveyors to boost sales by reassuring buyers that they are buying authentic made-in-Kashmir carpets, not cheap imitations.

The technology, used to authenticate wine from Cabo Verde, watches made in Switzerland, Bashkir honey from Russia and Tushuri Guda cheese from Georgia, combines a digital QR code with geo-locational features to guarantee to buyers that a carpet was actually woven in Kashmir.

Carpets from the region are ranked among the finest in the world because of the fineness of the weaving and the quality of the wool and silk yarn.

Mahmood Ahmad Shah, director of Handloom & Handicrafts in Kashmir, says this is the first time the region’s pashmina or Kashmir silk carpets have received QR code-based geographical indications.

With QR code tagging, Shah expects to attract more clients, benefiting local artisans in Indian-administered Kashmir.

“We are optimistic that it would give boost to the $40 million [export] business and would benefit 54,000 artisans registered with the Department of Handloom & Handicrafts in Kashmir,” he told VOA.

The origin of Kashmir’s hand-knotted carpets, locally called as “Kalbaffi,” dates back to the 15th century. Sultan Zain-ul-Abidinis is believed to have sent Persian and Central Asian carpet weavers to Kashmir to teach the locals.

But Shah said the widespread sale of misbranded Kashmiri carpets has eroded trust among the consumers and led to the marginalization of local weavers such as Nissar Ahmad, a 50-year-old weaver from the outskirts of Srinagar who told VOA he works from 9:30 a.m. until 5 p.m. earning the equivalent of just $4.15.

“I have been into carpet weaving for over 35 years and at this age I can’t shift to any other economic activity to earn my living. With this earning, it is hard to manage daily expenses,” he said.

Shah said the certification will help the industry to regain customer trust, leading to a better life for the artisans.

From Gruyère cheese to Tequila, appellations of origin are jealously guarded by local growers and makers, especially in industries in which the quality of the product is directly linked to the place where it was made or grown. Many agricultural products, for example, are impacted by factors such as the climate and quality of soil.

The Srinagar-based Indian Institute of Carpet Technology (IICT) started labeling the Kashmiri carpets earlier this month, embedding such factors into the QR codes as the identity of the weaver, district, raw material, size, knots per square inch, pile height, quality and whether the weaver is an authorized GI user.

That information is readable on digital devices including smart phones, marking the first time the technology has been used in India. “Every piece of information you could ever want to know about a piece of carpet may be found in its QR code,” said Zubair Ahmad, director of the IICT.

Customers who are unable to scan the barcode can verify the product’s legitimacy by typing an alphanumeric code found on the label into a web browser. Ahmad said the label also bears certain information that can be read with infrared equipment, and which cannot be reproduced or damaged.

In order to participate in the program, artisans and manufacturers needs to register with the Indian federal government’s office of the Controller General of Patents, Designs & Trade Marks. According to the Geographical Indications Registry of India, so far there are 25 authorized users in Kashmir.

Shah said the government will be able to map the movement of each carpet in order to better evaluate the international market.

“When a customer scans the QR-tag through a smart phone fixed on the carpet, the department through block-chain technology will be able to trace the geographic location of the carpet and assess the demand from the various countries and will accordingly formulate market strategy.”

The institute has already received hundreds of carpets for labeling and expects the process to standardize the quality of hand knotted carpets. Shah hopes that will lead to Kashmiri carpets being valued on a par for price and quality with the best Iranian and Turkish hand knotted carpets.

A geographical indication can also highlight a product’s human-made attributes, such as manufacturing skills and traditions. The quality of handicrafts often depends on local natural resources and techniques handed down from one generation to the next.
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