Sanctions on Russia Over Ukraine Have Some Big Holes

Some Russian troops have entered Kyiv, with missile strikes also reported in the Ukrainian capital. President Volodymyr Zelensky of Ukraine said in a televised address that he was a primary target, and called on all Ukrainians to fight “the occupier.”

The conflict has whipsawed markets as governments impose more sanctions and companies scramble to ensure the safety of workers in the region. The initial fall in stocks and rise in energy prices after Russia’s invasion has moderated, but the world remains on edge as the broader geopolitical implications of the war take shape.

Multinationals have halted operations in Ukraine and moved employees to safety, with Russia’s assault sending shudders through boardrooms around the world. Many corporate contingency plans did not anticipate the scale or swiftness of the invasion. Now executives in a range of industries are coming to grips with the impact that fighting will have on their facilities in Ukraine, as well as the ripple effects that sanctions and shortages of key resources will have. The market volatility generated by the crisis has also chilled I.P.O.s and complicated dealmaking.

  • Bob Sulentic, the C.E.O. of the property services company CBRE, captured the mood on an earnings call yesterday: “Everybody is concerned about what the impact might be on the global economy. And when I say everybody, everybody in our sector, but everybody pretty much in every sector.”

Governments hit Russia with another round of sanctions, which President Biden said would turn Vladimir Putin into an international “pariah.” Russia’s two biggest lenders, Sberbank and VTB, were cut off from much of the international financial system, and Russian billionaires close to Putin were hit by more sanctions. Britain banned all flights from Aeroflot from its airspace; Russia retaliated with a similar prohibition today. And the U.S. and E.U. barred the export of key technologies to Russia. European officials said yet another package of potential punishments is “under urgent preparation.”

But the latest sanctions avoided two key areas:

  • Both the E.U. and the U.S. pointedly refused to take aim at Russia’s biggest export, energy. As we’ve noted before, Russia is one of the single biggest providers of natural gas to Europe, and hitting that could cause as much pain for the E.U. as it would Moscow.

  • Western officials also disagreed about barring Russian banks from SWIFT, the payments system that undergirds international finance. (Britain is for it, while Germany is against.) Taking that step could complicate Europe’s ability to buy energy from Russia, and weaken the dollar’s role as the global reserve currency if it pushed Russia to develop an alternative system with allies like China (more on that below).

Critics say these omissions mean that the new sanctions “do everything but block the most important transactions that might actually impose severe costs both on Russia and America’s major European allies.”

The geopolitical consequences of the Russian invasion are widening:

  • China, which rebuffed U.S. efforts to help avert the invasion, has refrained from publicly criticizing Putin, including after a call between Xi Jinping and Putin today. Experts worry that Beijing is ready to help soften the blow of sanctions, and — more importantly — has grown emboldened by the lack of a united Western response to Putin’s move. Taiwan said it has already had to warn off more Chinese fighter jets entering its airspace.

  • Other Western allies, like India and Israel, have also refrained from harsh criticism of Russia, suggesting that the U.S.-led alliance is far from united.

Further reading: Ukraine and allied nonprofits are raising money from donors (including in cryptocurrency) to fund resistance forces. European soccer’s governing body moved its Champions League final to Paris from St. Petersburg and F1 canceled the Russian Grand Prix. Russia confirmed that it now controls the former Chernobyl nuclear plant. Some Fox News hosts played down the invasion — though Tucker Carlson backpedaled last night — and Donald Trump praised Putin.

Follow The Times’s live blog for the latest updates, including updated maps and videos tracking the Russian invasion.

A key measure of inflation is likely to show prices accelerating. The latest Personal Consumption Expenditures index, which is closely followed by the Fed, will be released this morning, expected to show the fastest inflation since the early 1980s. The war in Ukraine promises to push prices even higher, putting pressure on the Fed to raise interest rates.

Elon Musk’s stock trades are reportedly under investigation. The S.E.C. is examining whether share sales by the Tesla chief and his brother, Kimbal, the day before Musk polled Twitter about potential stock sales constituted insider trading, according to The Wall Street Journal. Separately, a federal judge denied Musk’s effort to bring the S.E.C. to court to address what Musk calls “harassment” by the agency.

President Biden may announce his Supreme Court pick within days. He told advisers yesterday that he had settled on a candidate to replace Justice Stephen Breyer. Biden has promised to pick a Black woman; he has interviewed three finalists over the past two weeks.

Moderna forecasts the pandemic will end this year. The drugmaker’s C.E.O. said that the coronavirus was likely to become endemic, requiring annual boosters to keep in check. For its part, the C.D.C. is expected to relax mask guidelines today.

Citigroup joins other banks in ending overdraft fees. Citi is the biggest U.S. lender so far to eliminate the charges, which have been widely criticized by regulators and consumer advocates. Bigger U.S. banks, including Bank of America and Chase, have tweaked their fees but not scrapped them.

The Justice Department sued yesterday to block UnitedHealth’s $13 billion acquisition of Change Healthcare via its subsidiary, Optum. The agency argued that the deal would give UnitedHealth sensitive data that it could wield against its competitors in insurance.

It’s the latest action by federal regulators to counter corporate consolidation. In a statement, Attorney General Merrick Garland said the agency “is committed to challenging anticompetitive mergers, particularly those at the intersection of health care and data.”

Data takes center stage. The Justice Department’s lawsuit focused on the data that Change Healthcare gathers when it helps process insurance claims, which, according to the suit, was what UnitedHealth considered the “foundation” of the reasoning behind the deal. The suit charges that access to that data would enable UnitedHealth to see the rules that its competitors used to process claims, helping it undercut them. The lawsuit also argued that UnitedHealth could withhold Change Healthcare’s products from its rivals or save innovations for itself.

The companies say the acquisition will improve the industry’s efficiency. A spokeswoman for Optum said that the suit was “deeply flawed position is based on highly speculative theories that do not reflect the realities of the health care system,” adding the company would “defend our case vigorously.” A spokeswoman for Change Healthcare said it was still “working toward closing the merger as we comply with our obligations under the merger agreement.”

— Ben McKenzie, the actor best known for his starring role in “The O.C.”, has become an outspoken cryptocurrency skeptic. He recently announced that he will co-author a book criticizing the technology.

Some of the academic research that caught our eye this week, summarized in one sentence:

In recent years, investors have pulled back from the oil and gas industry. That was in part because of growing environmental concerns, but also low prices and write-downs on past investments. Apollo and Blackstone are among the private equity firms reportedly turning away from fossil-fuel investments.

But as energy prices soar and the geopolitical landscape has shifted dramatically — and perhaps permanently — might dealmaking return to the oil patch?

“What looked terrible just six months ago now looks good,” said Henning Gloystein, the director of energy, climate and resources at the Eurasia Group, in reference to the investing landscape. (He also acknowledged the terrible human hardships that come from war in Ukraine.) A patriotic framing of fracking as a weapon to hurt Russia after it annexed Crimea in 2014 helped spur U.S. more natural gas production and exports to more countries around the world.

“The environmental groups will still decry it, but the geopolitical background now looks much more favorable for midterm investments in this space, and to make money out of it,” Gloystein said. Still, investors and drillers will look for assurances from the administration that it will ease some of its environmentally inspired regulatory scrutiny of oil and gas permits, an industry lobbyist said.

But the long-term shift toward clean energy is likely here to stay, with war in Ukraine the latest reminder of the strategic benefits of a robust clean energy infrastructure, Gloystein said. (Adam Ozimek, an economist, proposed a “Manhattan Project” for “cheap green energy that bankrupts petrol states like Russia.”) And with a midterm election looming that could swing energy policy in one direction or another, some fossil-fuel investors may wait to decide on any large scale or long-term investments. In the meantime, proceeds from oil and gas windfalls could also be put toward accelerating a green energy transition.


  • Shareholders in Zendesk are reportedly poised to reject the company’s $4 billion deal for the parent of SurveyMonkey. (Bloomberg)

  • Morgan Stanley formally disclosed that the Justice Department and the S.E.C. are investigating its block-trade business. (FT)

  • Volkswagen said it still plans to take its Porsche division public, despite market turmoil from the Ukraine crisis. (Reuters)

  • “Europe’s M&A Market Was Lagging Even Before War” (Bloomberg)

  • Ken Griffin’s Citadel is said to have redeemed more of its $2 billion investment in Melvin Capital, the hedge fund it helped rescue during the meme-stock market surge. (WSJ)


  • Rising prices for labor and materials could dampen the impact of President Biden’s $1 trillion infrastructure initiative. (WSJ)

  • Progressives want Biden to go further on blaming big corporations for driving up inflation. (Axios)

  • Jared Kushner is reportedly citing his diplomatic work in the Trump administration to pitch prospective Middle Eastern investors on his new investment fund. (WSJ)

Best of the rest

  • A federal judge ordered a hearing into whether a juror lied during the selection process for the Ghislaine Maxwell trial, imperiling the conviction. (NYT)

  • The consulting giant EY is offering its 312,000 employees the chance to earn a master’s in sustainability. (Insider)

  • Sotheby’s called off an auction of 104 CryptoPunks after the seller withdrew the NFTs from sale — and then posted memes about it on Twitter. (NYT)

  • “Ditch the branded vest? How companies are gifting now” (Protocol)

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Fry Electronics Team

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