This combination of pictures created on December 06, 2021 shows US President Joe Biden during a signing ceremony at the White House in Washington, DC on November 18, 2021 and Russian President Vladimir Putin in a congress of the United Russia party in Moscow, on December 4, 2021.
WASHINGTON – President Joe Biden will warn Russian leader Vladimir Putin that the U.S. is prepared to impose severe economic countermeasures if Moscow carries out an attack on Ukraine, a senior administration official told reporters Monday.
The video call, which is set for Tuesday, will happen against a backdrop of amped-up tensions triggered in part by an alarming deployment of Russian troops and defense equipment along the country’s border with Ukraine.
“These movements are consistent with the planning that we see underway for a military escalation in Ukraine,” said the official, who declined to be named in order to discuss details of the upcoming call between Biden and Putin.
“We have had intensive discussions with our European partners about what we would do collectively in the event of a major Russian military escalation in Ukraine,” the official said. “We believe that we have a path forward that would involve substantial economic countermeasures by both Europe and the United States that would impose significant and severe economic harm on the Russian economy, should they choose to proceed.”
The administration official declined to say whether the U.S. would take direct military action against Russia if there were an invasion.
In recent weeks, Ukraine has warned Washington and European allies that Russian troops have amassed along its eastern border, a development that mimics Moscow’s 2014 invasion of Crimea. The annexation of Crimea sparked international uproar and triggered a series of sanctions on Moscow. Shortly after the invasion, a war broke out in eastern Ukraine between government forces and Russian-backed separatists.
An unclassified U.S. intelligence document obtained by Reuters shows Russian military activity on the territory of Russia and Russian-annexed Crimea close to the border with Ukraine.
“To be clear, we do not know whether President Putin has made a decision about further military escalation in Ukraine. But we do know that he is putting in place the capacity to engage in such escalation should he decide to do so,” the senior Biden administration official said.
“We’ve seen this Russian playbook before in 2014, when Russia last invaded Ukraine,” the official added.
Meanwhile, the Kremlin has dismissed suggestions that Moscow was preparing for an attack on Ukraine and defended its right to deploy troops on its own territory.
Ukraine has previously pointed to Russian aggression as justification to accelerate its membership bid to join the North Atlantic Treaty Organization, the world’s most powerful military alliance. Ukraine announced in 2002 that it would seek to join NATO. Moscow has called Ukraine’s ambition to join the alliance a “red line.”
Earlier on Monday, Kremlin spokesperson Dmitry Peskov described the state of U.S. and Russian relations as “lamentable” and reiterated Moscow’s opposition to NATO’s expansion.
“The tense situation around Ukraine and NATO close-up to our borders will be discussed. And President Putin’s initiative on long-term guarantees of Russia’s security. All of these topics will be discussed,” Peskov said at a news conference previewing the call.
“Of course, the bilateral relations will be discussed which are still in a lamentable state,” he added.
Last week, NATO Secretary General Jens Stoltenberg called on Moscow to deescalate tensions and reiterated that the alliance’s commitment to Ukraine’s sovereignty and territorial integrity “remains unwavering.”
“Ukraine is a sovereign, independent nation. And every sovereign, independent nation has the right to choose its own path, including what kind of security arrangements it wants to be part of. So it is up to Ukraine and 30 allies to decide when Ukraine is ready to join the alliance,” Stoltenberg said during a NATO meeting in Riga, Latvia.
“[Russia] has no veto, no right to interfere in that process,” Stoltenberg said.
European Central Bank heads into pivotal meeting with omicron infections rising
Christine Lagarde, president of the ECB, speaks at the Bank’s press conference in Frankfurt, Germany.
Boris Roessler | picture alliance | Getty Images
With inflation surging and the omicron Covid variant expected to spread through the region, the European Central Bank has the unenviable task of presenting its policy outlook for 2022 on Thursday.
The rise in the cost of living for the euro area (the 19 nations that share the euro) reached a record high of 4.9% in November, while omicron looks likely to become the dominant coronavirus strain with some European economies already locked down due to the delta variant.
“The sharp rise in infections and inflation and the emergence of the new Omicron variant has complicated the picture to an extent that the Governing Council may need more time to decide on all the details of adjusting its non-conventional policy tool,” said Dirk Schumacher, an ECB watcher with Natixis, in a recent research note.
The institution led by Christine Lagarde developed a new bond-buying program in the wake of the coronavirus in March 2020 to support the euro zone. The PEPP is due to end in March 2022 with a potential total envelope of 1.85 trillion euros ($2.19 trillion).
The ECB has also kept its asset purchase program, known as APP, amid the pandemic which has a current monthly pace of 20 billion euros. The central bank has been using this program in combination with PEPP to sustain the 19-member economy.
Schumacher added that Natixis still expects an announcement that the PEPP program will end by March and “we expect a clear signal that the APP will be used in a more flexible way.”
A big focus of this week’s meeting will be the new staff projections for inflation and growth. They show whether the inflation target of 2% will be met over the medium term, which is ultimately ECB’s primary mandate.
“I see an inflation profile which looks like a hump. So it has clearly increased over the last three quarters and we know how painful it is,” Lagarde said at a Reuters conference on Dec. 3,
“And a hump eventually declines and this is what we project for 2022,” she added.
Another key question is how the ECB will bridge the end of the PEPP program at the end of March into a more flexible and potentially larger APP without provoking major market volatility and keeping financial conditions on “favourable” terms. The ECB is expected to stress the need for flexibility.
“Flexibility, in our view, means varying purchases depending on the inflation outlook and financing conditions, i.e. preserving the principle of ‘favourable financing conditions’ that characterises the PEPP,” Spyros Andreopoulos, a senior European economist at BNP Paribas, said in a note.
“This view has been supported by recent ECB rhetoric that has emphasised the need to maintain flexibility, as opposed to pre-committing to a fixed volume of purchases.”
UK inflation hits 10-year high ahead of key Bank of England meeting
Shoppers wearing protective face masks walk through the rain on Oxford Street in London on June 18, 2020, as some non-essential retailers reopen from their coronavirus shutdown.
Tolga Akmen/AFP/Getty Images
LONDON — U.K. inflation climbed to a 10-year high in November as consumer prices continued to soar ahead of the Bank of England‘s crunch monetary policy meeting on Thursday.
The Consumer Price Index rose by 5.1% in the 12 months to November, up from 4.2% in October, which was itself the steepest incline for a decade and more than double the central bank’s target.
Economists polled by Reuters had expected a reading of 4.7% for November, and the Bank of England had projected that inflation would hit 5% in the spring of 2022 before moderating towards its 2% target in late 2023.
On a monthly basis, U.K. inflation rose 0.7% in November from October, above a Reuters poll for a 0.4% increase.
Core CPI, which excludes volatile energy, food, alcohol and tobacco prices, rose by 4% year-on-year against a Reuters forecast of 3.7%, and 0.5% month-on-month versus a 0.3% projection.
The Bank of England’s Monetary Policy Committee meets Thursday to decide whether to tighten monetary policy, with inflation surging and the labor market remaining robust, but the rapid spread of the omicron Covid-19 variant has cast fresh uncertainty over the economic recovery in the short term.
The MPC defied market expectations in November by voting 7-2 to hold interest rates at their historic low of 0.1%, but analysts are split on whether it will pull the trigger on rate hikes on Thursday in light of the emergence of omicron.
“Unfortunately for consumers, peak inflation may still be a few months off. Today’s CPI data only serves to increase the pressure on the Bank of England to raise interest rates at its MPC meeting tomorrow,” said Richard Carter, head of fixed interest research at Quilter Cheviot.
“However, the Bank of England may well decide that discretion is the better part of valour and instead opt to wait until next year given the current uncertainty surrounding the impact of the Omicron variant on the economy, coupled with the risk that further restrictions may need to be introduced before long.”
Most Chinese companies could delist from US, says TCW Group
Budrul Chukrut | LightRocket | Getty Images
Chinese companies listed on Wall Street will likely to be cut off from U.S. capital markets in the next three years as tensions between Beijing and Washington persist, says one global asset management firm.
“I think for a lot of Chinese companies listed in U.S. markets, it’s essentially game over,” David Loevinger, managing director for emerging markets sovereign research at TCW Group, told CNBC Wednesday. “This is an issue that’s been hanging out there for 20 years — we haven’t been able to solve it.”
TCW Group had $265.8 billion in assets under management as of September 30, 2021, according to the company’s website.
The U.S. Securities and Exchange Commission this month finalized rules to implement a law that would allow the market regulator to ban foreign companies listed in the U.S. from trading if their auditors do not comply with requests for information from American regulators.
The law was passed in 2020 after Chinese regulators repeatedly denied requests from the Public Company Accounting Oversight Board to inspect the audits of Chinese firms that list and trade in the United States.
Given the current level of distrust between the U.S. and Chinese governments, and with the bilateral relationship unlikely to improve anytime soon, there is “no way we are going to solve this in the next few years,” Loevinger said.
“So the reality is, I think, by 2024, most Chinese companies listed on U.S. exchanges are no longer going to be listed in the United States. Most are going to gravitate back to Hong Kong or Shanghai,” he told CNBC’s “Street Signs Asia.”
Less than six months after going public, Chinese ride-hailing giant Didi said it will start delisting from the New York Stock Exchange, and make plans to list in Hong Kong instead.
When a company delists from an exchange like the Nasdaq or the New York Stock Exchange, it loses access to a broad pool of buyers, sellers and intermediaries.
Chinese regulators were reportedly unhappy with Didi’s decision to list in the U.S. without first resolving outstanding cybersecurity concerns. Regulators told the firm’s executives to come up with a plan to delist from the U.S. due to concerns around data leakage, according to reports.
Beyond Didi, many of China’s top internet companies listed in the U.S. have already undertaken dual listings in Hong Kong. Some high-profile names include e-commerce giant Alibaba, its rival JD.com, search engine giant Baidu, gaming firm NetEase and social media giant Weibo.
“We have already hit the turning point,” Loevinger said, pointing to Didi’s delisting announcement. “I just don’t think China’s government is going to allow U.S. regulators to have unfettered access to internal auditing documents of Chinese companies.”
“And if U.S. regulators can’t get access to those documents, then they can’t protect U.S. markets from fraud,” he added.