The Economic Stakes of the Ukraine Crisis

A tank on the move in Donetsk, one of two separatist-controlled areas in Ukraine.Credit…Alexander Ermochenko/Reuters

Counting the cost

The conflict in Ukraine has reached a perilous new chapter, with Russian troops reportedly crossing over the country’s eastern border after Moscow yesterday formally recognized two Russian-leaning separatist enclaves there. The humanitarian cost of a full-scale Russian invasion, and a fight by Ukraine to defend its territory, could be enormous. “There will be losses,” Ukraine’s defense minister, Oleksiy Reznikov, told troops today.

The global economic implications of the conflict remain hard to figure, with Western sanctions on Russia potentially ramping up in response to how far and how aggressively its troops push into Ukraine. Stock markets fell sharply and the price of commodities like oil soared in early trading today, but these moves moderated in the past few hours, as investors tried to assess what it all means.

Western officials are ratcheting up their economic threats against Russia. Chancellor Olaf Scholz of Germany today halted certification of Nord Stream 2, a crucial pipeline designed to ferry Russian natural gas to his country. The Biden administration issued an initial, narrow set of sanctions on the breakaway Ukrainian regions, while European and British officials prepared to impose sanctions on Russia itself.

  • The biggest concern is over disruption to supplies of oil and gas, with prices rising since Moscow backed the separatists. That could inflict pain on Europe, which relies heavily on Russian supplies of natural gas in particular and is already suffering from spiking energy prices.

  • Global oil producers and traders are also worried that sanctions could severely hit their businesses, with even limited sanctions on Russian assets likely to create problems. Multinational banks will also have to react to how sanctions are designed.

  • Russia and Ukraine are major producers of wheat, acting as crucial suppliers to Africa, Europe and the Middle East. Economists fear that disruptions to food supplies could spur social unrest.

  • Russia is a leading exporter of palladium, a crucial metal used in cars, smartphones and even dental fillings.

  • Analysts at Goldman Sachs estimate that the S&P 500 is now trading at a 5 percent discount because of geopolitical uncertainty, and the index could fall another 6 percent if the tensions escalate.

There is fear that these disruptions could further fuel global inflation, which has already been running high. “You have to look at the backdrop against which this is coming,” Gregory Daco, the chief economist for EY-Parthenon, told The Times. “There is high inflation, strained supply chains and uncertainty about what central banks are going to do.”

Further reading:

  • Inside the Biden administration’s efforts to unite Western allies and expose Russia’s plans.

  • Has Putin chosen a “forever war” against the modern international order?

  • Mohamed El-Erian outlines how the Fed’s options to counter inflation have narrowed because of the Ukraine crisis.


Covid booster shots provide long-lasting protection. New studies have found that three doses of a coronavirus vaccine can protect people for years, making additional shots unnecessary for most. Meanwhile, England will lift its remaining pandemic restrictions on Thursday and end most free coronavirus testing in April.

The Winter Olympics draw record low ratings. The just-concluded games in Beijing attracted an average of just 11.4 million prime-time viewers across all of NBC’s platforms, the smallest audience since the network began broadcasting the event decades ago. NBC said it gave advertisers additional commercial time to make up for the poor ratings.

The feud between Elon Musk and the S.E.C. continues. The regulator rejected Tesla’s claim that it was harassing the carmaker’s C.E.O. Days later, lawyers for Musk accused the S.E.C. of leaking information about an investigation as retaliation for his criticism of government officials.

More Starbucks workers will vote on whether to unionize. Employees at a Seattle store will receive ballots on Friday, after federal labor officials rejected arguments by the coffee chain against store-by-store votes.

Donald Trump’s social media platform is off to a rocky start. Truth Social, which is meant to rival the likes of Facebook and Twitter, quickly became one of the most downloaded apps on Apple’s App Store yesterday. But users reported having trouble registering for accounts.

Carl Icahn vs. McDonald’s

Carl Icahn has picked a fight with McDonald’s, taking a small stake in the restaurant chain and nominating two candidates to its board. The billionaire investor is pushing McDonald’s to change the way it sources pork, calling on the company to fulfill a 2012 pledge to phase out the tiny stalls in which sows are housed while pregnant.

Icahn and the Humane Society of the U.S. argue that the chain’s suppliers are sidestepping the pledge by limiting confinement in the stalls to part of the pigs’ pregnancy. McDonald’s, which buys 1 percent of all U.S. pork production, says the activists’ demands are unreasonable.

Icahn has only 200 shares in McDonald’s, but his demands are noteworthy, given the success that other activist investors with small stakes have had in pushing environmental, social and governance issues — known as E.S.G. — at big companies like Exxon. An important difference: While Exxon’s shares were lagging when it was targeted by activists, McDonald’s stock is up 18 percent over the past year.

The fight highlights the tension between moving quickly toward E.S.G. goals and protecting profits. While retailers like Whole Foods and Chipotle have cut out suppliers that cage pregnant pigs, some question the ability of large, low-price chains to make similar moves at scale. Chris Oliviero, the general manager at Niman Ranch, a meat producer that doesn’t use cages, said the industry was seeing “an artificial supply crisis created by companies that didn’t want to comply.”

There are also questions about consistency. “I really do feel emotional about these animals and the unnecessary suffering you put them through,” Icahn told Bloomberg. (Icahn said he got involved with the Humane Society at the behest of his daughter, a vegetarian animal lover.) As of September, Icahn Enterprises was a majority owner of Viskase, a maker of pork casings. Neither Viskase nor Icahn Enterprises responded to multiple queries about whether Viskase asks its customers (pork producers) to abide by the same principles that Icahn wants McDonald’s suppliers to follow.

The Felicity Ace, adrift and on fire.Credit…Portuguese Navy/EPA-EFE/Shutterstock

A cargo ship carrying thousands of luxury vehicles that caught fire on Wednesday continues to burn, fueled in part by the lithium-ion batteries in the electric cars aboard. The ship’s crew has been evacuated and the vessel remains adrift in the Atlantic, near the Azores.

A whistle-blower spills Credit Suisse’s secrets

The client rosters of Swiss banks are among the world’s most closely guarded secrets, but leaked data on about 18,000 accounts at Credit Suisse — collectively holding more than $100 billion — has exposed the bank’s dealings with people with obviously problematic backgrounds.

Account holders included strongmen, spies and their sons. The sons of the former Egyptian president Hosni Mubarak, the sons of a Pakistani intelligence chief who funneled billions of dollars to Afghanistan in the 1980s and Venezuelan officials ensnared in a long-running corruption scandal were all Credit Suisse clients, based on data about accounts opened from the 1940s until well into the 2010s. The information was provided by a self-described whistle-blower to the German newspaper Süddeutsche Zeitung.

Swiss bank-secrecy laws have attracted more scrutiny in recent years, making the country’s banks a target for authorities trying to crack down on tax evasion, money laundering and other crimes. The Credit Suisse leak is likely to intensify this scrutiny, and comes as the bank is reeling from the abrupt ousters of its two top executives and a $475 million settlement last fall with U.S. and British authorities looking into a kickback and bribery scheme in Mozambique. It is also accused of allowing drug traffickers to launder millions of euros in a trial now underway in Switzerland.

A spokeswoman for Credit Suisse said that the bank “strongly rejects the allegations and inferences about the bank’s purported business practices.” Many of the accounts date back to “a time where laws, practices and expectations of financial institutions were very different from where they are now,” she added.

The dark side of NFT marketplaces

Nonfungible tokens, or NFTs, are a booming business. Transactions in the digital assets, which are verified using blockchain technology, were worth about $44 billion in 2021, up from $106 million in 2020, according to Chainalysis. But this new marketplace operates in largely uncharted legal territory, with risks for investors, as demonstrated by an attack on the NFT platform OpenSea this weekend and a recent NFT auction by Melania Trump.

More than 250 NFTs worth $1.7 million were stolen in three hours on Saturday. According to OpenSea, 17 users were victims of a phishing scheme on the digital marketplace, the latest in a series of problems for the platform, which was valued at $13 billion in a recent funding round. It’s a central player in the NFT boom but faces a surge in thefts and other complications; in January, OpenSea limited the number of NFTs creators could generate on the platform, noting that its tools were being used for the “minting” of“plagiarized works, fake collections and spam.”

The antifraud principles that apply in other marketplaces are not yet established for NFT platforms. Wash trading — when a seller also acts as a buyer to inflate an asset’s value — is an issue in the NFT market. Chainalysis found that about 110 profitable wash traders made nearly $8.9 million from this activity last year, “most likely derived from sales to unsuspecting buyers who believe the NFT they’re purchasing has been growing in value.” But crypto proponents say the technology underlying NFTs makes it easier to trace activity. Indeed, that is how it was recently discovered that Melania Trump auctioned an NFT to a buyer apparently associated with the NFT’s creator for about $170,000.

In other news, dating apps are an increasingly popular target for crypto scammers.



  • Volkswagen is preparing to spin off Porsche via an I.P.O. (FT)

  • The online marketplace Zazzle has reportedly hired Citigroup and Barclays to lead its I.P.O. (Bloomberg)

  • Standard General and Apollo Global Management are said to be near a deal to buy the TV broadcaster Tegna for more than $5 billion. (Bloomberg)


  • A federal court’s ruling on the social cost of carbon has upended the Biden administration’s efforts to fight climate change. (WaPo)

  • How the asphalt industry became one of the big winners of Biden’s $1 trillion infrastructure plan. (NYT)

  • Black farmers are struggling financially as $4 billion in federal debt relief is being held up by lawsuits from white farmers who argue the program is discriminatory. (NYT)

Best of the rest

  • Tesla’s effort to build a crucial manufacturing hub in Germany is being held up by concerns about insufficient water supply for the region. (Bloomberg)

  • Salesforce employees are protesting the tech company’s plans to enter the market for NFTs, citing environmental and economic concerns. (Thomson Reuters Foundation)

  • Inside Peloton’s efforts to conceal rust on thousands of its fitness bikes. (FT)

  • “The Elaborate Con that Tricked Dozens into Working for a Fake Design Agency” (BBC)

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