Allies Consider Ways to Further Squeeze the Russian Economy.

"NIIGATA, Japan -- The U.S. and its allies are grasping for ways to further tighten the screws on Russia's economy as the conflict in Ukraine grinds on despite the broad sanctions the West has levied on Moscow.

The U.S. and European Union are weighing fresh steps to prevent Russia from working aroundtheir efforts to deprive the Kremlin of key technologies and revenue needed for the conflict, according to officials at a Group of Seven meeting here this past week. Officials across Europe and in Washington also are looking at how they could use Russian assets to finance rebuilding Ukraine, they say.

Discussions among finance ministers from the G-7 advanced democracies about how to better enforce sanctions on Russia are continuing, and President Biden and other leaders from G-7 nations are expected to take up the issue when they meet in Hiroshima this month.

Treasury Secretary Janet Yellen said the U.S. would take further actions to disrupt Russia's attempts to evade sanctions, including by focusing on sharing intelligence about potential sanctions violations and pressuring companies and governments to comply with the rules. The U.S. and its allies already have targeted much of Russia's economy, cutting off exports of advanced technology, imposing novel sanctions on oil exports and freezing Russia's central bank reserves. Western officials acknowledge they have gone as far as they can to squeeze Russia's economy without hurting it so much that they endanger their own economic growth.

While Western officials see their sanctions hampering the Kremlin's conflict effort, the penalties have been less effective than some officials had hoped. The Russian economy is on track to grow 0.3% this year, according to the International Monetary Fund, and Ukrainian officials have found banned Western technology in Russian munitions on the battlefield.

European and U.S. officials have dispersed across Europe and Central Asia to warn governments and companies that they risk facing penalties if sanctioned goods pass through their jurisdictions en route to Russia. Of particular concern are countries showing large increases in trade with Russia, a group that officials say includes Turkey, Kazakhstan and Serbia.

In meetings in Kazakhstan and Kyrgyzstan, U.S. officials distributed a list of sanctioned Western technologies that they were concerned were being routed into Russia via their countries. On the list were integrated electronic circuits, as well as radio equipment, according to a copy of the list viewed by The Wall Street Journal. The U.S. officials also provided documents illustrating common ways that Russians try to evade sanctions by setting up front companies to send materials through third countries.

U.S. officials provided similar warnings in meetings across Europe, where officials have at times struggled with enforcing their own sanctions.

In a sign that the EU is starting to embrace more aggressive measures long used by the U.S., the bloc is looking at sanctioning eight Chinese companies that have provided electronics to Moscow.

Enforcing the sanctions is expected to be a long-term effort. Ms. Yellen has said some sanctions on Russia could remain even after the end of the conflict. Russian schemes to evade sanctions will continue to evolve over time, creating a challenge for Western officials charged with preventing that.

"It's a cat-and-mouse game ultimately," said Maria Snegovaya, a senior fellow at the Center for Strategic and International Studies." [1]

 The fact that sanctions against Russia are practically ineffective is bad news for those who dream of imposing serious sanctions on an even bigger economy - China.

1.  World News: Allies Consider Ways to Further Squeeze the Russian Economy. Duehren, Andrew. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 13 May 2023: A.7.

JAV naujienos: baimės dėl federalinės įsipareigojimų nevykdymo slegia gynybos pramonę ir Zelenskį

  „Jei JAV nevykdys savo skolų ir šią vasarą nesugebės apmokėti visų sąskaitų, skausmai eis tiesiai į gynybos pramonę.

 

     Nacionalinis saugumas yra neabejotinai didžiausia federalinių išlaidų kategorija, o biudžetai per pastaruosius dvejus metus didėjo, siekiant atremti Kinijos karinę plėtrą ir spręsti konfliktą Ukrainoje. Diskrecinės karinės išlaidos pernai siekė tris ketvirtadalius trilijonų dolerių, o prieš penkerius metus – 590 mlrd. dolerių.

 

     Atstovų rūmų respublikonai, vadovaujami pirmininko Kevino McCarthy, pareikalavo visuotinai sumažinti išlaidas mainais į vyriausybės galimybių skolintis pinigų ribos, vadinamos skolos lubomis, padidinimą. Artėjant birželio 1 d. terminui, prezidentas Bidenas ir Kongreso demokratai teigia, kad skolinimosi limitas turėtų būti padidintas be išankstinių sąlygų, ir pavadino GOP poziciją neatsakinga.

 

     Dėl šio trūkumo investuotojai atsitraukė nuo gynybos akcijų ir tai paskatino Pentagoną dėti pastangas sušvelninti bet kokį platesnio biudžeto sumaišties poveikį.

 

     „Goldman Sachs“ akcijų, kurios labai priklauso nuo vyriausybės pajamų, indeksas atsiliko nuo bendros rinkos ir šiais metais pabrango mažiau, nei 4%, palyginti su 7,4% platesniame S&P 500 indekse.

 

     Net jei Kongresas ir prezidentas laikinai išspręstų krizę, sustabdydami skolos viršutines ribas, kad liktų laiko tolesnėms deryboms, tai sunaudotų laiką, kurio Kongresui reikia parašyti ir patvirtinti fiskalinių metų biudžetą nuo spalio 1 d. Tai padidintų tikimybę. Gynybos departamentas turės tenkintis laikinu biudžetu, žinomu, kaip tęstinis sprendimas.

 

     Dėl skolų lubų nesutarimo Atstovų rūmų Ginkluotųjų tarnybų komitetas jau atidėliojo kitų metų gynybos biudžeto darbą.

 

     „Respublikonų vadovybės sprendimas paimti įkaitais skolos lubų padidinimą, iš esmės žaisti su visa mūsų šalies tikėjimu ir kreditu, taip pat negali padaryti nieko kito, tik kelti pavojų mūsų nacionaliniam saugumui“, – sakė atstovas Adamas Smithas (D., Wash.), komiteto reitingo narys.

 

     Tikėtina, kad atitolintas sprendimas padidintų karinių programų išlaidas, atidėtų naujų paleidimą ir užkirstų kelią gamybos didinimui.

 

     Į naujausią Pentagono biudžeto prašymą įtraukta daug naujų programų, įskaitant be įgulos reaktyvinių lėktuvų bendradarbiavimo sistemą. „Boeing“ ir „Kratos“ yra tarp bendrovių, kuriančių orlaivį.

 

     Susirūpinimas, kad karinės išlaidos gali būti sumažintos arba, geriausiu atveju, atidėtos, kovojant dėl skolų lubų, stipriai paveikė investuotojų nuotaikas didžiausių karinių rangovų atžvilgiu. „Lockheed Martin“ akcijos šiais metais sumažėjo daugiau, nei 7%, „General Dynamics“ ir „Northrop Grumman“ atitinkamai sumažėjo 15% ir 20%.

 

     Robas Stallardas, „Vertical Research Partners“ gynybos analitikas, teigė, kad akcijų rezultatai atspindi investuotojų „nerimo sieną“ dėl platesnių diskusijų dėl biudžeto.

 

     Atstovų rūmų respublikonai pasiūlė apriboti diskrecines federalines išlaidas iki 2022 m. lygio ir apriboti augimą iki 1 % per metus ateinantį dešimtmetį. Kongreso biudžeto biuro duomenimis, šios ribos būtų taikomos savo nuožiūra vykdomoms karinėms išlaidoms, kurios – 751 mlrd. dolerių - sudarė 44 valstybės diskrecinių išlaidų procentus praėjusiais metais. Nors respublikonai siekia įšaldyti išlaidas, daugelis narių išreiškė paramą didesniam karinio biudžeto padidinimui, nors tai kainuotų mažinimą kitose srityse.

 

     Nors gynybos įmonių vadovai nenorėjo kiekybiškai įvertinti sutrikusio biudžeto poveikio, kai kurie bandė save laikyti labiau apsaugotais, nei kiti.

 

     KBR, bendrovė, teikianti logistinę paramą karinėms pajėgoms užsienyje ir JAV kosmoso programai, mano, kad paslaugos šiose srityse yra tokios svarbios, kad vyriausybė negali sumažinti sutarčių, sakė generalinis direktorius Stuartas Bradie.

 

     „Tai, ką mes darome kosmose, negali būti išjungta“, – sakė jis.

 

     Pentagono ir kitų agentūrų, vykdančių nacionalinio saugumo misijas, išlaidos paprastai būna nevienodos, o dideli sutarčių sudarymai iškreipia išlaidas bet kurį mėnesį. Dėl šio modelio jie dažnai nesuderinami su mokesčių įplaukomis į iždą, todėl, norint užpildyti atotrūkį, reikia skolintis.

 

     Ypač nerimą kelia federalinių išlaidų sutrikimo tikimybė vasaros mėnesiais. Vadovai ir analitikai teigė, kad sutarčių skaičius linkęs išaugti, artėjant vyriausybės fiskalinių metų pabaigai rugsėjo 30 d.“ [1]

 

Zelenskis gali lengvai patirti didžiulį stresą. Pirmas Trumpas, dabar įsipareigojimų nevykdymas, – kas dar galėtų sugadinti Zelenskio šou finansus?

 

 
1. U.S. News: Default Fears Weigh on Defense Industry. Cameron, Doug; Grossman, Matt. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 13 May 2023: A.4.

U.S. News: Default Fears Weigh on Defense Industry and Zelensky.

"If the U.S. defaults on its debt and is unable to pay all its bills this summer, the pain will fall squarely on the defense industry.

National security is by far the largest category of discretionary federal spending, with budgets rising over the past two years to counter China's military expansion and tackle the conflict in Ukraine. Discretionary military spending reached three-quarters of a trillion dollars last year, up from $590 billion five years ago.

House Republicans led by Speaker Kevin McCarthy have demanded across-the-board spending cuts in exchange for raising the limit of the government's ability to borrow money, known as the debt ceiling. With a June 1 deadline looming, President Biden and Congressional Democrats maintain that the borrowing limit should be raised without preconditions and have called the GOP stance irresponsible.

The brinkmanship has driven investors from defense stocks and prompted efforts inside the Pentagon to mitigate any impact from the broader budget morass.

A Goldman Sachs index of stocks that depend heavily on government revenue has lagged behind the market overall, gaining less than 4% this year, compared with 7.4% for the broader S&P 500.

Even if Congress and the president temporarily resolve the crisis by suspending the debt ceiling to leave time for further talks, it would eat into the time Congress needs to write and pass a budget for the fiscal year starting Oct. 1. That would raise the likelihood the Defense Department will have to make do with a temporary budget known as a continuing resolution.

The debt-ceiling standoff has already led the House Armed Services Committee to delay its work on next year's defense budget.

"The Republican leadership's decision to take the debt ceiling increase hostage, to basically play chicken with the full faith and credit of our country, also cannot do anything but jeopardize our national security," said Rep. Adam Smith (D., Wash.), the committee's ranking member.

A continuing resolution likely would inflate the costs of military programs, delay the launch of new ones and prevent production increases.

The latest Pentagon budget request includes numerous new program starts, including the Collaborative Combat Aircraft system of uncrewed jets. Boeing and Kratos are among companies developing the aircraft.

Concerns that military spending could be cut -- or, at best delayed -- in a debt-ceiling fight have weighed heavily on investor sentiment toward the biggest military contractors. Shares in Lockheed Martin are down this year more than 7%, with General Dynamics and Northrop Grumman off 15% and 20%, respectively.

Rob Stallard, a defense analyst at Vertical Research Partners, said the stocks' performance reflects a "wall of worry" among investors over the broader budget debate.

House Republicans have proposed capping discretionary federal spending at 2022 levels and limiting growth to 1% a year for the next decade. Those limits would apply to discretionary military spending, which -- at $751 billion -- made up about 44% of the government's discretionary spending last year, according to the Congressional Budget Office. While Republicans are seeking a spending freeze, many members have voiced support for a larger increase in the military budget, though it would come at the cost of cuts in other areas.

While defense-company executives have been loath to quantify the impact of a disrupted budget, some have tried to position themselves as more protected than others.

KBR, a company that provides logistical support for the military overseas and for the U.S. space program, thinks services in those areas are so critical that the government can't cut back on contracts, Chief Executive Stuart Bradie said.

"What we're doing in space can't be turned off," he said.

Spending by the Pentagon and other agencies with national security missions tends to be uneven, with large contract awards skewing spending in any given month. That pattern often leaves them unaligned with the flow of tax revenue into the Treasury, requiring borrowing to close the gap.

The prospect of a disruption in federal spending during the summer months is particularly concerning. Contract awards tend to surge in the run up to the end of the government's fiscal-year end on Sept. 30, said executives and analysts." [1]

Zelensky could easily get huge stress. First Trump, now default, - what else could ruin finances of Zelensky's show?

1. U.S. News: Default Fears Weigh on Defense Industry. Cameron, Doug; Grossman, Matt. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 13 May 2023: A.4.